IGC Pharma, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firms 42 Consolidated Balance Sheets 44 Consolidated Statements of Operations and Comprehensive Loss 45 Consolidated Statements of Stockholders’ Equity 46 Consolidated Statements of Cash Flows 47 Notes to Consolidated Financial Statements 48 41 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of India Globalization Capital, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of India Globalization Capital, Inc. and its subsidiaries (the “Company”) as of March 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows, for each of the two years in the period ended March 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at March 31, 2021 and 2020, and the consolidated results of its operations and its cash flows for each of the two years in the period ended March 31, 2021, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 1. Commitments and Contingencies Description of the Matter As described in Note 12 to the consolidated financial statements as at March 31, 2021, the Company is involved in a legal proceeding and has made accrual with respect to the same, where appropriate. Where a liability is reasonably possible and may be material, such matters have been disclosed. Management assessed the probability of occurrence and the estimation of any potential loss based on whether any loss or range of loss can be reasonably estimated. For example, in assessing the probability of occurrence in a particular legal proceeding, management exercises judgment to determine whether it can reasonably estimate any loss or range of loss that may arise from that proceeding. Auditing management’s accounting for and disclosure of loss contingencies was complex and highly judgmental as it involved our assessment of the significant judgments made by management when assessing the probability of occurrence for contingencies or when determining whether an estimate of the loss or range of loss could be made. 42 Table of Contents How we addressed the matter in our audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the identification and evaluation of contingencies and related indemnities. For example, we tested controls over the Company’s assessment of the likelihood of loss and the Company’s determinations regarding the measurement of loss. To test the Company’s assessment of the probability of occurrence or determination of an estimate of loss, or range of loss, among other procedures, we read the minutes of the meetings of the Board of Directors and committees of the Board of Directors, read letters received directly by us from external counsel, and evaluated the current status of contingencies based on discussions with management. We also evaluated the appropriateness of the related disclosures. Manohar Chowdhry & Associates Chartered Accountants We have served as the Company’s auditor since 2018. Chennai, India Date: June 12, 2021 43 Table of Contents India Globalization Capital, Inc. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) March 31, 2021 ($) March 31, 2020 ($) ASSETS Current assets: Cash and cash equivalents 14,548 7,258 Marketable securities - 5,081 Accounts receivable, net 175 133 Inventory 5,478 4,245 Non-Marketable securities 80 - Deposits and advances 3,236 1,040 Total current assets 23,517 17,757 Intangible assets, net 407 252 Property, plant and equipment, net 10,840 9,780 Non-Marketable securities 12 11 Claims and advances 603 610 Operating lease asset 488 574 Total long-term assets 12,350 11,227 Total assets 35,867 28,984 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 476 762 Accrued liabilities and others 1,588 1,134 Short-term loans 304 50 Total current liabilities 2,368 1,946 Long-term loans 276 - Other liabilities 15 16 Operating lease liability 405 485 Total non-current liabilities 696 501 Total liabilities 3,064 2,447 Commitments and Contingencies – See Note 12 Stockholders' equity: Preferred stock, $0.0001 par value: authorized 1,000,000 shares, no shares issued or outstanding as of March 31, 2021 or March 31, 2020. - - Common stock and additional paid-in capital, $0.0001 par value: 150,000,000 shares authorized; 47,827,273 and 39,320,116 shares issued and outstanding as of March 31, 2021 and March 31, 2020, respectively. 109,720 94,754 Accumulated other comprehensive loss (2,774 ) (2,850 ) Accumulated deficit (74,143 ) (65,367 ) Total stockholders' equity 32,803 26,537 Total liabilities and stockholders' equity 35,867 28,984 The accompanying notes should be read in connection with these consolidated financial statements. 44 Table of Contents India Globalization Capital, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands, except loss per share and share data) Years Ended March 31, 2021 ($) 2020 ($) Revenue 898 4,072 Cost of revenue (785 ) (3,957 ) Gross Profit 113 115 Selling, general and administrative expenses (7,908 ) (5,968 ) Research and development expenses (929 ) (1,011 ) Operating loss (8,724 ) (6,864 ) Impairment of investment (169 ) (782 ) Other income, net 82 331 Loss before income taxes (8,811 ) (7,315 ) Income tax expense/benefit - - Net loss attributable to common stockholders (8,811 ) (7,315 ) Foreign currency translation adjustments 76 (431 ) Comprehensive loss (8,735 ) (7,746 ) Loss per share attributable to common stockholders: Basic & diluted $ (0.21 ) $ (0.19 ) Weighted-average number of shares used in computing loss per share amounts: 41,963,382 39,490,014 The accompanying notes should be read in connection with these consolidated financial statements. 45 Table of Contents India Globalization Capital, Inc. CONSOLIDATED STATEMENT OF STOCKHOLDERS ’ EQUITY (in thousands) Number of Common Shares Common Stock and Additional Paid in Capital ($) Accumulated Deficit ($) Accumulated Other Comprehensive Loss ($) Total Stockholders' Equity ($) Balances as of April 1, 2019 39,502 94,043 (58,052 ) (2,419 ) 33,572 Common stock-based compensation & expenses, net 70 711 - - 711 Cancellation of IGC shares (252 ) Net loss - - (7,315 ) - (7,315 ) Loss on foreign currency translation - - - (431 ) (431 ) Balances as of March 31, 2020 39,320 94,754 (65,367 ) (2,850 ) 26,537 Balances as of April 1, 2020 39,320 94,754 (65,367 ) (2,850 ) 26,537 Common stock-based compensation & expenses, net 1,894 708 - - 708 Common stock issued for ATM 6,513 14,158 - - 14,158 Common stock issued for investment 100 100 - - 100 Deconsolidation adjustment - - 35 - 35 Net loss - - (8,811 ) - (8,811 ) Gain on foreign currency translation - - - 76 76 Balances as of March 31, 2021 47,827 109,720 (74,143 ) (2,774 ) 32,803 The accompanying notes should be read in connection with these consolidated financial statements. 46 Table of Contents India Globalization Capital, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended March 31, 2021 ($) 2020 ($) Cash flows from operating activities: Net loss (8,811 ) (7,315 ) Adjustment to reconcile net loss to net cash: Depreciation and amortization 478 144 Impairment of investment 169 782 Common stock-based compensation and expenses, net 658 770 Changes in: Accounts receivables, net (42 ) (49 ) Inventory (1,233 ) (3,998 ) Deposits and advances (2,198 ) (259 ) Claims and advances 93 (307 ) Accounts payable (287 ) 442 Accrued and other liabilities 373 1,113 Net cash used in operating activities (10,800 ) (8,677 ) Cash flow from investing activities: Purchase of property, plant, and equipment (1,470 ) (4,389 ) Sale of property, plant, and equipment 47 - Investment in marketable securities 5,081 (5,081 ) Investment in non-marketable securities (149 ) - Acquisition and filing cost of patents and rights (122 ) (77 ) Net cash (used in)/provided by investing activities 3,387 (9,547 ) Cash flows from financing activities: Issuance of equity stock through public offering (net of expenses) 14,158 (59 ) Issuance of equity stock through private placement (net of expenses) - - Repayment of loan (50 ) - Proceeds from borrowings, net 580 - Net cash (used in)/provided by financing activities 14,688 (59 ) Effects of exchange rate changes on cash and cash equivalents 15 (69 ) Net increase/(decrease) in cash and cash equivalents 7,290 (18,352 ) Cash and cash equivalents at the beginning of the period 7,258 25,610 Cash and cash equivalents at the end of the period 14,548 7,258 Supplementary information: Cash paid for interest - 8 Non-cash items: Common stock issued/granted including ESOP, consultancy 658 770 Common stock issued/granted other than ESOP, consultancy 150 - Amortization of operating lease 22 7 The accompanying notes should be read in connection with these consolidated financial statements. 47 Table of Contents India Globalization Capital, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For Fiscal Years Ended March 31, 2021 and 2020 Unless the context requires otherwise, all references in this report to “IGC,” “we,” “our” and “us” refer to India Globalization Capital, Inc., together with our subsidiaries. NOTE 1 – NATURE OF OPERATIONS AND MANAGEMENT ’ S PLANS Since 2014, our team has been committed to researching the application of cannabinoids such as Tetrahydrocannabinol (“THC”) and Cannabidiol (“CBD”) in combination with other compounds to address various ailments, including Alzheimer's disease. With our research, we have developed intellectual property, formulations, and wellness and lifestyle brands. In Fiscal 2021, we were awarded a patent for our cannabinoid-based formulation treatment of seizures in humans and veterinary animals. This followed our Fiscal 2019 and Fiscal 2020 awards of patents for our formulation addressing pain and formulations addressing Cachexia and eating disorders, respectively. Since 2014, the Company has also filed nine other patent applications to address various diseases such as Alzheimer's, pain, stammering, seizures, eating disorders, and fatigue, among others. IGC has two segments: Life Sciences and Infrastructure. The Company’s Life Sciences segment, managed from the United States, involves: a) the development of potential new drugs, subject to applicable regulatory approvals, b) hand sanitizers and several hemp-based CBD products and brands, in various stages of development, for sale online and through stores, c) wholesale of hemp extracts including hemp crude extract and hemp isolate, among others, d) white labeling of hemp-based products and e) the offering of tolling services like extraction and distillation to hemp farmers. Our revenue in Fiscal 2021 was primarily derived from this business segment. The Company’s Infrastructure segment, managed from India, involves: (a) the execution of construction contracts, (b) the rental of heavy construction equipment, and (c) the purchase and resale of physical commodities used in infrastructure. Our revenue in Fiscal 2020 was primarily derived from this business. Information about our infrastructure products and service offerings is available at www.igcinc.us. In the Pharmaceutical channel, we created a patent-pending formulation based on ultra-low dosing of THC in combination with other compounds that, in Fiscal 2021, under an INDA filed with the FDA, underwent the first phase of a phase 1 trial on safety and tolerability. The phase 1 trial is ongoing at the time of this filing. We are motivated by the potential that, with future successful results after appropriate further trials, IGC-AD1 could contribute to symptom relief for some of the 50 million people around the world that are expected to be impacted by Alzheimer's disease by 2030 (WHO, 2020). Data from pre-clinical studies, including cell lines and animal models, showed the formulation, IGC-AD1, inhibited the accumulation of the neurotoxic protein beta-amyloid (“Aβ”) that leads to the buildup of plaques, as well as the hyperphosphorylation of tau that leads to Neuro Fibrillary Tangles (“NFT”) two of the hallmarks of Alzheimer's disease. In pre-clinical studies, certain combinations of IGC-AD1 also showed memory improvement and neurogenesis. For the Retail Channel, in Fiscal 2021, we developed wellness and lifestyle brands, Holief™, Herbo™, and Sunday Seltzer™. We plan on marketing these brands, including to the U.S. based Latino market, which is among the fastest-growing segment in the U.S. GDP that in 2018 was around $2.6 Trillion. (Forbes, 2020). It is projected that the Hispanic population will reach 111.22 million by 2060 from 59 million in 2018 (Statista, 2021). The Company’s principal office is located in the U.S. in Maryland. Additionally, the Company has a facility in Washington and offices in Colombia, Hong Kong, and India. As of March 31, 2021, the Company had the following direct operating subsidiaries: Techni Bharathi Private Limited (TBL), IGCare LLC, Holi Hemp LLC, IGC Pharma LLC, SAN Holdings LLC, Sunday Seltzer, LLC and Colombia-based beneficially-owned subsidiary Hamsa Biochem SAS (Hamsa). The Company’s fiscal year is the 52- or 53-week period that ends on March 31. The Company is a Maryland corporation established in 2005. The Company’s filings are available on www.sec.gov. 48 Table of Contents NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES a) Principles of consolidation The consolidated financial statements include the accounts of the Company and all its subsidiaries. Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. Transactions between the Company and its subsidiaries are eliminated in the consolidated financial statements. b) Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Management believes that the estimates and assumptions used in the preparation of the consolidated financial statements are prudent and reasonable. Significant estimates and assumptions are generally used for, but not limited to allowance for uncollectible accounts receivable; sales returns; normal loss during production; future obligations under employee benefit plans; the useful lives of property, plant, equipment; intangible assets; valuations; impairment of goodwill and investments; recoverability of advances; the valuation of options granted, and warrants issued; and income tax and deferred tax valuation allowances, if any. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Critical accounting estimates could change from period to period and could have a material impact on IGC’s results, operations, financial position, and cash flows. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the consolidated financial statements. c) Revenue recognition The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of this standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 prescribes a 5-step process to achieve its core principle. The Company recognizes revenue from trading, rental, or product sales as follows: I. Identify the contract with the customer. II. Identify the contractual performance obligations. III. Determine the amount of consideration/price for the transaction. IV. Allocate the determined amount of consideration/price to the contractual obligations. V. Recognize revenue when or as the performing party satisfies performance obligations. The consideration/price for the transaction (performance obligation(s)) is determined as per the agreement or invoice (contract) for the services and products in the Infrastructure segment and Life Sciences segment. Refer to Note 17 - “Revenue Recognition.” d) Cost of Revenue Our cost of revenue includes costs associated with in-house and outsourced distribution, labor expense, components, manufacturing overhead, and outbound freight for our products division. In our products division, cost of revenue also includes the cost of refurbishing or repackaging, if required, on products returned by customers that will be offered for resale. (e) Earnings/(Loss) per Share The computation of basic loss per share for Fiscal 2021, excludes potentially dilutive securities of approximately 1.8 million shares which includes share options, unvested shares such as restricted shares and restricted share units, granted to employees and advisors, and shares from the conversion of outstanding units, if any, because their inclusion would be anti-dilutive. 49 Table of Contents The weighted average number of shares outstanding for Fiscal 2021 and 2020, used for the computation of basic earnings per share (“EPS”) is 41,963,382 and 39,490,014, respectively. Due to the loss incurred during Fiscal 2021 and 2020, all the potential equity shares are anti-dilutive and accordingly, the fully diluted EPS is equal to the basic EPS. f) Income taxes The Company accounts for income taxes under the asset and liability method, in accordance with ASC 740, Income Taxes, which requires an entity to recognize deferred tax liabilities and assets. Deferred tax assets and liabilities are recognized for the future tax consequence attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. A valuation allowance is established and recorded when management determines that some or all of the deferred tax assets are not likely to be realized and therefore, it is necessary to reduce deferred tax assets to the amount expected to be realized. In evaluating a tax position for recognition, management evaluates whether it is more-likely-than-not that a position will be sustained upon examination, including resolution of related appeals or litigation processes, based on technical merits of the position. If the tax position meets the more-likely-than-not recognition threshold, the tax position is measured and recognized in the Company’s financial statements as the largest amount of tax benefit that, in management’s judgment, is greater than 50% likely of being realized upon settlement. As of March 31, 2021, and 2020, there was no significant liability for income tax associated with unrecognized tax benefits. g) Accounts receivable We make estimates of the collectability of our accounts receivable by analyzing historical payment patterns, customer concentrations, customer creditworthiness, and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required. We had $175 thousand of accounts receivable, net of provision for doubtful debt of $63 thousand as of March 31, 2021, as compared to $133 thousand of accounts receivable, net of provision for doubtful debt of $9 thousand as of March 31, 2020. h) Cash and cash equivalents For financial statement purposes, the Company considers all highly liquid debt instruments with maturity of three months or less, to be cash equivalents. The Company maintains its cash in bank accounts in the U.S., India, Colombia, and Hong Kong, which at times may exceed applicable insurance limits. The cash and cash equivalents in the Company on March 31, 2021 and 2020, was approximately $14,548 thousand and $7,258 thousand, respectively. i) Short-term and long-term investments Our policy for short-term and long-term investments is to establish a high-quality portfolio that preserves principal, meets liquidity needs, avoids inappropriate concentrations, and delivers an appropriate yield in relationship to our investment guidelines and market conditions. Short-term and long-term investments consist of corporate, various government agency and municipal debt securities, as well as certificates of deposit that have maturity dates that are greater than 90 days. Certificates of deposit and commercial paper are carried at cost which approximates fair value. Available-for-sale securities: Investments in debt securities that are classified as available for sale shall be measured subsequently at fair value in the statement of financial position. Investments are initially measured at cost, which is the fair value of the consideration given for them, including transaction costs. Where the Company’s ownership interest is in excess of 20% and the Company has a significant influence, the Company has accounted for the investment based on the equity method in accordance with ASC Topic 323, “ Investments – Equity method and Joint Ventures. ” Under the equity method, the Company’s share of the post-acquisition profits or losses of the equity investee is recognized in the consolidated statements of operations and its share of post-acquisition movements in accumulated other comprehensive income / (loss) is recognized in other comprehensive income / (loss). Where the Company does not have significant influence, the Company has accounted for the investment in accordance with ASC Topic 321, “ Investments-Equity Securities. ” As of March 31, 2021, investment in marketable securities is valued at fair value and investment in non-marketable securities with ownership less than 20% is valued at cost as per ASC Topic 321, “ Investments-Equity Securities. ” 50 Table of Contents j) Property, plant, and equipment (PP&E) Property and equipment are recorded at cost net of accumulated depreciation and depreciated over their estimated useful lives using the straight-line method. Upon retirement or disposition, cost and related accumulated depreciation of the property and equipment are de-recognized, and any gain or loss is reflected in the results of operation. Cost of additions and substantial improvements to property and equipment are capitalized. The cost of maintenance and repairs of the property and equipment are charged to operating expenses as incurred. k) Fair value of financial instruments ASC 820, “Fair Value Measurement” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The carrying amounts of the Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate their fair values due to the nature of the items. Please refer to Note 15, “Fair value of financial instruments,” for further information. l) Concentration of credit risk and significant customers Financial instruments, which potentially expose the Company to concentrations of credit risk, are primarily comprised of cash and cash equivalents, investments, accounts receivable and unbilled accounts receivable, if any. The Company places its cash, investments in highly rated financial institutions. The Company adheres to a formal investment policy with the primary objective of preservation of principal, which contains credit rating minimums and diversification requirements. Management believes its credit policies reflect normal industry terms and business risk. The Company does not anticipate non-performance by the counterparties and, accordingly, does not require collateral. During Fiscal 2021, sales were spread across customers in Asia and U.S. and the credit concentration risk is low. m) Stock – Based Compensation The Company accounts for stock-based compensation to employees and non-employees in conformity with the provisions of ASC Topic 718, “ Stock-Based Compensation. ” The Company expenses stock-based compensation to employees over the requisite vesting period based on the estimated grant-date fair value of the awards. The Company accounts for forfeitures as they occur. Stock-based awards are recognized on a straight-line basis over the requisite vesting period. For stock-based employee compensation cost recognized at any date will be at least equal to the amount attributable to the share-based compensation that is vested at that date. The Company estimates the fair value of stock option grants using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based awards represent Management’s best estimates. Generally, the closing share price of the Company’s common stock on the date of grant is considered the fair-value of the share. The volatility factor is determined based on the Company’s historical stock prices. The expected term represents the period that our stock-based awards are expected to be outstanding. The Company has never declared or paid any cash dividends. n) Commitments and contingencies Liabilities for loss contingencies arising from claims, assessments, litigations, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. We record associated legal fees as incurred. Information regarding our commitments and contingencies is incorporated by reference in Note 12, “Commitments and contingencies” of this Annual Report on Form 10-K. 51 Table of Contents o) Impairment of long – lived assets The Company reviews its long-lived assets, with finite lives, for impairment whenever events or changes in business circumstances indicate that the carrying amount of assets may not be fully recoverable. Such circumstances include, though are not limited to, significant or sustained declines in revenues or earnings, future anticipated cash flows, business plans and material adverse changes in the economic climate, such as changes in operating environment, competitive information, and impact of changes in government policies. For assets that the Company intends to hold for use, if the total of the expected future undiscounted cash flows produced by the assets or subsidiary company is less than the carrying amount of the assets, a loss is recognized for the difference between the fair value and carrying value of the assets. For assets, the Company intends to dispose of by sale, a loss is recognized for the amount by which the estimated fair value less cost to sell is less than the carrying value of the assets. Fair value is determined based on quoted market prices, if available, or other valuation techniques including discounted future net cash flows. Unlike goodwill, long-lived assets are assessed for impairment only where there are any specific indicators for impairment. p) Intangible assets The Company's intangible assets are accounted for in accordance with ASC Topic 350, Intangibles – Goodwill and Other. Intangible assets having indefinite lives are not amortized, but instead are reviewed annually or more frequently if events or changes in circumstances indicate that the assets might be impaired, to assess whether their fair value exceeds their carrying value. We perform an impairment analysis on March 1 annually on the indefinite-lived intangible assets following the steps laid out in ASC 350-30-35-18. Our annual impairment analysis includes a qualitative assessment to determine if it is necessary to perform the quantitative impairment test. In performing a qualitative assessment, we review events and circumstances that could affect the significant inputs used to determine if the fair value is less than the carrying value of the intangible assets. If a quantitative analysis is necessary, we would analyze various aspects including revenues from the business, associated with the intangible assets. In addition, intangible assets will be tested on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. The Company has analyzed a variety of factors in light of the known impact to date of the COVID-19 pandemic on its business to determine if a circumstance could trigger an impairment loss, and, at this time and based on the information presently known, does not believe it is more likely than not that an impairment loss has been incurred. Intangible assets with finite useful lives are amortized using the straight-line method over their estimated period of benefit. In accordance with ASC 360-10-35-21, definite lived intangibles are reviewed annually or more frequently if events or changes in circumstances indicate that the assets might be impaired, to assess whether their fair value exceeds their carrying value. The Company intends to capitalize trademarks and related expenses exceeding $2,500 per trademark. Management may also capitalize trademarks and related expenses up to $2,500 per trademark based on its potential and benefit in coming years. q) Inventory Inventory is valued at the lower of cost or net realizable value, which is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Inventory consists of raw materials, finished goods related to wellness products, hand sanitizers, finished hemp-based products, beverages, among others as well as work-in-progress such as extracted crude oil, hemp-based isolate, growing crops, and herbal oils, among others. Work-in-progress also includes product manufacturing in process, costs of growing hemp, in accordance with applicable laws and regulations including but not limited to labor, utilities, fertilizers and irrigation. Inventory is primarily accounted for using the weighted average cost method. Primary costs include raw materials, packaging, direct labor, overhead, shipping and the depreciation of manufacturing equipment. Manufacturing overhead and related expenses include salaries, wages, employee benefits, utilities, maintenance, and property taxes. Harvested crops are measured at net realizable value, with changes recognized in profit or loss only when the harvested crop: - has a reliable, readily determinable, and realizable market value; - has relatively insignificant and predictable costs of disposal; and - is available for immediate delivery. The Company believes its harvested crops do not have a readily available market. Hence, the Company values its harvested crops at cost. Please refer to Note 3, “Inventory,” for further information. Abnormal amounts of idle facility expense, freight, handling costs, scrap, discontinued products and wasted material (spoilage) are expensed in the period they are incurred. 52 Table of Contents r) Cybersecurity We have a cybersecurity policy in place and tighter cybersecurity measures to safeguard against hackers. In Fiscal 2021, there were no impactful breaches in cybersecurity. s) Research and Development Expenses During Fiscal 2021 and 2020, the Company recorded research and development expenses of approximately $0.9 million and $1 million, respectively. All research and development costs are expensed in the period in which they are incurred. t) Leases Lessor Accounting Under the current ASU guidance, contract consideration will be allocated to its lease components and non-lease components (such as maintenance). For the Company as a lessor, any non-lease components will be accounted for under ASC Topic 606, “ Revenue from Contracts with Customers, ” unless the Company elects a lessor practical expedient to not separate the non-lease components from the associated lease component. The amendments in ASU 2018-11 also provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (“Topic 606”). To elect the practical expedient, the timing and pattern of transfer of the lease and non-lease components must be the same and the lease component must meet the criteria to be classified as an operating lease if accounted for separately. If these criteria are met, the single component will be accounted for under either Topic 842 or Topic 606 depending on which component(s) are predominant. The lessor practical expedient to not separate non-lease components from the associated component must be elected for all existing and new leases. As lessor, the Company expects that post-adoption substantially all existing leases will have no change in the timing of revenue recognition until their expiration or termination. The Company expects to elect the lessor practical expedient to not separate non-lease components such as maintenance from the associated lease for all existing and new leases and to account for the combined component as a single lease component. The timing of revenue recognition is expected to be the same for the majority of the Company’s new leases as compared to similar existing leases; however, certain categories of new leases could have different revenue recognition patterns as compared to similar existing leases. For leases that are accounted for as operating leases, income is recognized on a straight-line basis over the term of the lease contract. Generally, when a lease is more than 180 days delinquent (where more than three monthly payments are owed), the lease is classified as being on nonaccrual and the Company stops recognizing leasing income on that date. Payments received on leases in nonaccrual status generally reduce the lease receivable. Leases on nonaccrual status remain classified as such until there is sustained payment performance that, in the Company’s judgment, would indicate that all contractual amounts will be collected in full. Lessee Accounting The Company adopted ASU 2016-02 effective April 1, 2019 using the modified retrospective approach. The standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. In connection with the adoption, the Company will elect to utilize the modified retrospective presentation whereby the Company will continue to present prior period financial statements and disclosures under ASC Topic 840. In addition, the Company will elect the transition package of three practical expedients permitted within the standard, which eliminates the requirements to reassess prior conclusions about lease identification, lease classification and initial direct costs. Further, the Company will adopt a short-term lease exception policy, permitting us to not apply the recognition requirements of this standard to short-term leases (i.e., leases with terms of 12 months or less), and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets. Under ASU 2016-02 (Topic 842), lessees are required to recognize the following for all leases (with the exception of short-term leases) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. 53 Table of Contents At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. There was no impairment for right-of-use lease assets as of March 31, 2021. The Company categorizes leases at their inception as either operating or finance leases. On certain lease agreements, the Company may receive rent holidays and other incentives. The Company recognizes lease costs on a straight-line basis without regard to deferred payment terms, such as rent holidays, that defer the commencement date of required payments. Please refer to Note 9, “Leases,” for further information. u) Recently issued and adopted accounting pronouncements Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. Newly issued ASUs not listed below are expected to have no impact on the Company’s consolidated financial position and results of operations, because either the ASU is not applicable, or the impact is expected to be immaterial. Recently adopted Disclosures: In August 2018, the FASB issued ASU 2018-13. Fair Value Measurement (Topic 820) Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in the standard apply to all entities that are required, under existing GAAP, to make disclosures about recurring or nonrecurring fair value measurements. ASU 2018-13 removes, modifies, and adds certain disclosure requirements in ASC 820, Fair Value Measurement. The standard was effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this standard did not have a material impact on our consolidated financial statements Collaborative Arrangement : Clarifying the Interaction Between Topic 808 and Topic 606, which clarifies when transactions between participants in a collaborative arrangement are within the scope of the FASB’s revenue standard, Topic 606. The standard was effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, with early adoption permitted. The adoption of this guidance did not have a material impact on our consolidated financial statements. Intangibles-Goodwill and Other-Internal-Use Software : In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. ASU 2018-15 (Subtopic 350-40) which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. The adoption of this guidance did not have a material impact on our consolidated financial statements. NOTE 3 – INVENTORY (in thousands) As of March 31, 2021 ($) As of March 31, 2020 ($) Raw Materials 2,294 227 Work-in-Progress 2,199 3,713 Finished Goods 985 305 Total 5,478 4,245 Inventory in the form of work-in-progress as of March 31, 2021, is comprised of, but not limited to, various hemp-based extracts such as crude oil, hemp distillate, and hemp isolate. Inventory also includes cost related to growing crops like seeds, fertilizer, other raw materials, labor, farm related overheads and the depreciation of farming equipment, hand sanitizers, beverages, and personal protection equipment, among others. 54 Table of Contents During Fiscal 2021, the Company wrote off approximately $307 thousand of inventory due to abnormal amounts of idle facility expense, freight, handling costs, scrap, and wasted material (spoilage) as compared to approximately zero for Fiscal 2020. This charge was recorded in Selling, general and administrative expenses. One of our vendors that holds $1.74 million of our inventory reported a theft at their facility. The Company moved the amount associated with the inventory to Deposits and Advances. NOTE 4 – DEPOSITS AND ADVANCES (in thousands) As of March 31, 2021 ($) As of March 31, 2020 ($) Advances to suppliers and consultants 1,295 558 Advances for Property, Plant and Equipment 4 259 Other receivables 1,741 - Prepaid expense and other current assets 196 223 Total 3,236 1,040 The Advances to suppliers and consultants primarily relate to advances to suppliers in our Life Sciences and Infrastructure segment. Advances for Property, Plant and Equipment include an advance paid for equipment. Prepaid and other current assets include approximately $36 thousand statutory advances for Fiscal 2021, as compared to 27 thousand in Fiscal 2020. Please refer to Note 3, “Inventory,” for details of Other receivables. NOTE 5 – INTANGIBLE ASSETS Amortized intangible assets (in thousands) As of March 31, 2021 ($) As of March 31, 2020 ($) Patents 220 125 Other intangibles 32 20 Accumulated amortization (26 ) (10 ) Total amortized intangible assets 226 135 Indefinite lived intangible assets Patents 181 107 Other intangibles - 10 Total unamortized intangible assets 181 117 Total Intangible assets 407 252 The value of intangible assets includes the cost of acquiring patent rights, supporting data, and the expense associated with filing 12 patents. It also includes acquisition costs related to brands, domains, and licenses. The amortization of patent and patent rights with finite life is up to 20 years, commencing from the date of grant or acquisition. The amortization expense in Fiscal 2021 and 2020, amounted to approximately $16 thousand and $10 thousand, respectively. The Company regularly reviews its intangible assets to determine if any intangible asset is other-than-temporarily impaired, which would require the Company to record an impairment charge in the period and concluded that, as of March 31, 2021, there was no impairment. Estimated amortization expense (in thousands) ($) For the year ended 2022 18 For the year ended 2023 19 For the year ended 2024 21 For the year ended 2025 23 For the year ended 2026 26 55 Table of Contents NOTE 6 – PROPERTY, PLANT, AND EQUIPMENT (in thousands, except useful life) Useful Life (years) As of March 31, 2021 ($) As of March 31, 2020 ($) Land N/A 4,606 4,508 Buildings & facilities 25 3,817 2,540 Plant and machinery 5-20 4,579 3,867 Computer equipment 3 216 194 Office equipment 3-5 111 106 Furniture and fixtures 5 130 104 Vehicles 5 165 120 Construction in progress N/A 50 768 Total Gross Value 13,674 12,207 Less: Accumulated depreciation (2,834 ) (2,427 ) Total Property, plant and equipment, net 10,840 9,780 Depreciation expense in Fiscal 2021 and 2020, amounted to approximately $462 thousand and $134 thousand, respectively. The net increase in total Property, Plant & Equipment is primarily due to the set-up of product manufacturing, processing, and packaging facilities, in the U.S. subsidiaries. The net increase in land is primarily due to foreign exchange translations because of an increase in value of foreign currencies. The construction in progress relates to the Washington facility under construction. For more information, please refer to Note 18, “Segment Information” for the non-current assets other than financial instruments held in the country of domicile and foreign countries. NOTE 7 – INVESTMENTS IN NON-MARKETABLE SECURITIES Short-term investment (in thousands) As of March 31, 2021 ($) As of March 31, 2020 ($) Investment in Evolve I (i) 80 - Total 80 - (i) On May 12, 2020, the Company acquired approximately 19.8% shareholding in Evolve I, Inc., a Washington corporation (“Evolve”) under the terms of a Share Subscription Agreement (“SSA”) for a consideration of approximately $249 thousand. However, based on an assessment of the business environment, the Company decided to dispose the holding and amicably exit the acquisition. In light of the above, the Company recorded an impairment charge of $169 thousand as of March 31, 2021. Long-term investment (in thousands) As of March 31, 2021 ($) As of March 31, 2020 ($) Investment in equity shares of unlisted company 12 11 Total 12 11 The Company regularly reviews its investment portfolio to determine if any security is permanently impaired, which would require the Company to record an impairment charge in the period. 56 Table of Contents NOTE 8 – CLAIMS AND ADVANCES (in thousands) As of March 31, 2021 ($) As of March 31, 2020 ($) Claims receivable (1) 382 374 Non-current deposits 18 24 Non-current advances (2) 203 212 Total 603 610 (1) The claims receivable is due from the Cochin International Airport (“CIA”) that is partially owned by the State Government of Kerala. While the Company has initiated collection proceedings in the Commercial Court of Ernakulam, it believes it will be difficult to receive the amount in the next 12 months because of the time required for legal collection proceedings. The increase in claims receivable was mainly due to foreign exchange translation as a result of an increase in value of Indian Rupee. (2) Includes a loan of $200 thousand to one of our manufacturers for the purchase of equipment, at an annual interest rate of three percent (3%), due on April 1, 2021. NOTE 9 – LEASES The Company has short-term leases primarily consisting of spaces with the remaining lease term being less than or equal to 12 months. The total short- term lease expense and cash paid for Fiscal 2021 and 2020 are approximately $233 thousand and $206 thousand, respectively. The Company also has an operating lease as of March 31, 2021. In November 2019, the Company entered into an office lease agreement with a lease term of less than 12 months. This lease was amended in March 2020, with a new lease term from March 1, 2020 to November 30, 2025. The annual lease expense is approximately $122 thousand. The lease contract does not contain any material residual value guarantees or material restrictive covenants. The weighted average remaining lease term for the operating lease is 4.67 year and discount rate of 7%. The lease does not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate. (in thousands) Year Ended March 31, 2021 ($) (in thousands) Year Ended March 31, 2020 ($) Operating lease costs 123 10 Short term lease costs 233 206 Total lease costs 356 216 Right of use assets and lease liabilities for our operating leases were recorded in the consolidated balance sheet as follows: (in thousands) (in thousands) Year Ended March 31, 2021 ($) Year Ended March 31, 2020 ($) Assets Operating lease asset 488 574 Total lease assets 488 574 Liabilities Current liabilities: Accrued liabilities and others (current portion – operating lease liability) 90 89 Noncurrent liabilities: Operating lease liability (non-current portion – operating lease liability) 405 485 Total lease liability 495 574 57 Table of Contents Supplemental cash flow and non-cash information related to leases is as follows: (in thousands) Year Ended March 31, 2021 ($) (in thousands) Year Ended March 31, 2020 ($) Cash paid for amounts included in the measurement of lease liabilities –Operating cash flows from operating leases 79 10 Right-of-use assets obtained in exchange for operating lease obligations 488 581 As of March 31, 2021, the following table summarizes the maturity of our lease liabilities: Mar-22 119 Mar-23 122 Mar-24 125 Mar-25 128 Mar-26 87 Less: Present value discount (86 ) Total Lease liabilities 495 NOTE 10 – ACCRUED LIABILITIES AND OTHERS (in thousands) As of March 31, 2021 ($) As of March 31, 2020 ($) Compensation and other contributions 849 424 Provision for expenses 309 412 Other current liability 430 298 Total 1,588 1,134 Compensation and other contribution related liabilities consist of accrued salaries to employees. Provision for expenses include provision for legal, professional, and marketing expenses. Other current liability also includes $90 thousand and $89 thousand of current operating lease liability and statutory payables of approximately $24 thousand and $27 thousand as of March 31, 2021 and March 31, 2020, respectively. NOTE 11 – LOANS AND OTHER LIABILITIES Short-term and Long -term loans: During Fiscal 2021, the Company repaid a secured loan of $50 thousand. As of March 31, 2021, the Company has the following loans: a) On May 3, 2020, the Company signed the Paycheck Protection Program Promissory Note (the “PPP Note”) and Agreement for a loan of approximately $430 thousand. The Loan is established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). The PPP Note matures after 2 years on May 3, 2022, with monthly repayments of approximately $18 thousand commencing November 1, 2020. Interest will accrue on the outstanding principal balance at an annual fixed rate of 1.00%. For the year ended March 31, 2021, the interest expense for the PPP Note was approximately $3 thousand. As of March 31, 2021, approximately $302 thousand of the loan is classified as Short-term loans and approximately $128 thousand of the loan as Long-term loans. 58 Table of Contents The CARES Act and the PPP Note provide a mechanism for forgiveness of up to the full amount borrowed. Under the PPP Note, the Company may apply for and be granted forgiveness for all or part of the PPP Note. The amount of loan proceeds eligible for forgiveness is based on a formula that takes into account a number of factors, including the amount of loan proceeds used by the Company during the eight or twenty-four week period after the loan origination for certain purposes including payroll costs, rent payments on certain leases, and certain qualified utility payments, provided that at least 60% of the loan amount is used for eligible payroll costs; the employer maintaining or rehiring employees and maintaining salaries at certain levels; and other factors. Subject to the other requirements and limitations on loan forgiveness, only loan proceeds spent on payroll and other eligible costs during the covered eight or twenty-four-week period will qualify for forgiveness. Forgiveness of the loan is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on future adherence to the forgiveness criteria. As of March 31, 2021, the loan liability for the PPP Note principal repayment was approximately $90 thousand. The Company believes it has used the entire loan amount for qualifying expense, though no assurance is provided that the Company will obtain forgiveness of the PPP Note in whole or in part. b) On June 11, 2020, the Company also received an Economic Injury Disaster Loan for approximately $150 thousand at an annual interest rate of 3.75%. The Company must pay principal and interest payments of $731 every month beginning June 5, 2021. The SBA will apply each installment payment first to pay interest accrued to the day SBA receives the payment and will then apply any remaining balance to reduce principal. All remaining principal and accrued interest is due and payable in 30 years from the date of the loan. As of March 31, 2021, approximately $148 thousand of the loan is classified as Long-term loans and approximately $2 thousand as Short-term loans. Other Liability: (in thousands) As of March 31, 2021 ($) 2020 ($) Statutory reserve 15 16 Total 15 16 The statutory reserve is a gratuity reserve for employees in our subsidiaries in India. NOTE 12 – COMMITMENTS AND CONTINGENCIES The Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such matters that are deemed material to the consolidated financial statements as of March 31, 2021, except as disclosed below. As of March 31, 2021, several law firms have filed shareholder lawsuits, two of which have been consolidated and remain pending, citing, among other things, the Company’s September 25, 2018 press release and the NYSE American delisting proceedings initiated in October 2018 (and overturned in February 2019) and subsequent fall in share price. Class Action Defendants, including the Company, have reached a preliminary agreement in principle to settle the litigation, subject to agreement to final settlement terms and approval by the United States District Court for the District of Maryland. The Company anticipates that a final settlement will be executed and approved sometime in Fiscal 2022, although there can be no assurance thereof. The Company has created a provision for $200,000 as of March 31, 2021. For the current state of the consolidated Shareholder Class Action Litigation, please refer to Item 3 – Legal Proceedings, and Note 19 - Subsequent Events. In the U.S., we provide health insurance, life insurance, and a 401(k) plan wherein the Company matches up to 6% of the employee’s pre-tax contribution up to a maximum annual amount determined by the IRS. In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (“Gratuity Plan”) covering certain categories of employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and the years of employment with the Company. In addition, employees receive benefits from a provident fund, a defined contribution plan. The employee and employer each make monthly contributions to the plan equal to 12% of the covered employee’s salary. The contribution is made to the Indian Government’s provident fund. 59 Table of Contents NOTE 13 – SECURITIES As of March 31, 2021, the Company was authorized to issue up to 150,000,000 shares of common stock, par value $0.0001 per share, and 47,827,273 shares of common stock were issued and outstanding. The Company is also authorized to issue up to 1,000,000 shares of preferred stock, par value $0.0001 per share, and no preferred shares were issued and outstanding as of March 31, 2021. We have one security listed on the NYSE American: common stock, $.0001 par value (ticker symbol: IGC). This security also trades on the Frankfurt, Stuttgart, and Berlin stock exchanges (ticker symbol: IGS1). The Company had 11,672,178 outstanding public warrants (IGC: IW) to purchase 1,167,217 shares of common stock by surrendering 10 warrants and a payment of $5.00 in exchange for each share of common stock. The warrants expired on March 8, 2021. As on March 31, 2021 the Company has no outstanding warrants. The Company also has 91,472 units outstanding that can be separated into common stock. Ten units may be separated into one share of common stock. The unit holders are requested to contact the Company or our transfer agent, Continental Stock Transfer & Trust, to separate their units into common stock. On January 13, 2021, the Company entered into a Sales Agreement (the “Agreement”) with The Benchmark Company, LLC (“Benchmark”) (the “Sales Agent”) pursuant to which the Sales Agent is acting as the Company’s sales agent with respect to the issuance and sale of up to $75,000,000 of the Company’s shares of common stock, par value $0.0001 per share (the “Shares”), from time to time in an “at the market” (“ATM”) offering as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended (the “Offering”). As of March 31, 2021, the Company raised approximately $14.2 million from the ATM, net of commission. The management may use these funds for working capital and capital expenditure requirements, along with clinical trials, share repurchases, debt repayments, investments, including but not limited to, mutual funds, treasury bonds, cryptocurrencies, and other asset classes. NOTE 14 – STOCK-BASED COMPENSATION As of March 31, 2021, under both the Company’s previous 2008 and current 2018 Omnibus Incentive Plans, a total of 8,337,627 shares of common stock have been issued to employees and advisors. In addition, 1.6 million restricted share units fair valued at $703 thousand with a weighted average value of $0.43 per share, have been granted but not yet issued from different Incentive Plans and Grants. Additionally, options held by advisors to purchase 210,000 shares of common stock fair valued at $96 thousand with a weighted average of $0.46 per share, have been granted but are to be issued over a vesting period, between Fiscal 2023 and Fiscal 2025. Options granted and issued before the vesting period are expensed when issued. The options are fair valued using a Black-Scholes Pricing Model with the following assumptions: Granted in Fiscal 2021 Granted in Fiscal 2020 Expected life of options 5 years 5 years Vested options 100 % 100 % Risk free interest rate 0.68 % 2.57 % Expected volatility 249 % 249.5 % Expected dividend yield Nil Nil The expense associated with share-based payments to employees, directors, advisors, and contractors is allocated over the vesting or service period and recognized in the Selling, general and administrative expenses (including research and development). For Fiscal 2021, the Company’s share-based expense and option-based expense shown in Selling, general and administrative expenses (including research and development) was $589 thousand and $69 thousand, respectively. The expense associated with share-based payments to employees, directors, advisors, and contractors is allocated over the vesting or service period and recognized in the Common Stock and Additional Paid in Capital. For Fiscal 2020, the Company’s share-based expense and option-based expense shown in Selling, general and administrative expenses (including research and development) was $747 thousand and $23 thousand, respectively. Non-vested shares Shares (in thousands) (#) Weighted average grant date fair value ($) Non-vested shares as of March 31, 2020 1,851 0.40 Granted 60 1.17 Vested (1,518 ) 0.39 Cancelled/Forfeited (220 ) 0.39 Non-vested shares as of March 31, 2021 173 0.85 60 Table of Contents Options Shares (in thousands) (#) Weighted average grant date fair value ($) Weighted average exercise price ($) Options outstanding as of March 31, 2020 160 0.40 0.39 Granted 150 0.64 0.30 Exercised (100 ) 0.64 0.30 Cancelled/Forfeited - - - Options outstanding as of March 31, 2021 210 0.46 0.36 There was a combined unrecognized expense of $140 thousand related to non-vested shares and share options that the Company expects to be recognized over weighted average life of 2.07 years. NOTE 15 – FAIR VALUE OF FINANCIAL INSTRUMENTS As of March 31, 2021, the Company’s marketable securities consist of liquid funds, which have been classified as Level 1 of the fair value hierarchy because they have been valued using quoted prices in active markets. The Company’s cash and cash equivalents have also been classified as Level 1 on the same principle. Financial instruments are classified as current if they are expected to be liquidated within the next twelve months. The Company’s remaining investments have been classified as Level 3 instruments as there is little or no market data. Level 3 investments are valued using cost-method. For further information refer Note 7, “Investments in Non-Marketable Securities.” The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of March 31, 2021 and 2020, and indicates the fair value hierarchy of the valuation techniques the Company used to determine such fair value: (in thousands) Level 1 ($) Level 2 ($) Level 3 ($) Total ($) March 31, 2021 Cash and cash equivalents: 14,548 - - 14,548 Total cash and cash equivalents 14,548 - - 14,548 Investments: -Marketable securities - - - - -Non-marketable securities - - 92 92 Total Investments - - 92 92 Level 1 ($) Level 2 ($) Level 3 ($) Total ($) March 31, 2020 Cash and cash equivalents: 7,258 - - 7,258 Total cash and cash equivalents 7,258 - - 7,258 Investments: -Marketable securities 5,081 - - 5,081 -Non-marketable securities - - 11 11 Total Investment 5,081 - 11 5,092 61 Table of Contents NOTE 16 – INCOME TAXES The Company calculates its provision for foreign and U.S. federal income taxes based on the current tax law. As the Company maintains a full valuation allowance against its deferred tax assets, there is no income tax expense recorded related to this change other than the Federal AMT credit which are refundable due to the passage of tax reform. Due to the Company’s history of losses and uncertainty of future taxable income, a valuation allowance sufficient to fully offset net operating losses and other deferred tax assets has been established. The valuation allowance will be maintained until sufficient positive evidence exists to support a conclusion that a valuation allowance is not necessary. Income tax expense/(benefit) for each of the years ended March 31 consists of the following: Year Ended March 31, (in thousands) Income Tax Expense 2021 ($) 2020 ($) Net Income Loss before tax (8,811 ) (7,315 ) Tax rate 21 % 21 % Expected income tax recovery (1,850 ) (1,536 ) Impact of tax rate differences in foreign jurisdictions (33 ) (7 ) Tax rate changes and other adjustments (78 ) (3,085 ) Permanent differences 19 243 Change in valuation allowance 1,942 4,385 - - The significant components of deferred income tax expense/(benefit) from operations before non-controlling interest for each of the years ended March 31 are approximated as following: Year Ended March 31, (in thousands) Deferred income taxes 2021 ($) 2020 ($) Net operating loss carry-forwards foreign 536 618 Non-capital loss carry-forwards – USA 7,373 5,087 Temporary differences (827 ) (562 ) Net deferred tax asset 7,082 5,143 Valuation allowance (7,082 ) (5,143 ) - - 62 Table of Contents The table below sets forth the details of expiration of the non-financial carried forward losses of the Company as of March 31, 2021 as under: Year Amount (in thousands) ($) 2022 394 2023 37 2024 1,627 2025 52 2026 345 2027 3 2028 14 2029 34 2030 37 2031 3,081 2032 4,141 2033 627 2034 1,269 2035 1,735 2036 1,176 2037 819 2038 1,256 2039 4,132 2040 7,932 2041 8,904 Total 37,615 Realization of deferred tax assets, including those related to net operating loss carryforwards, are dependent upon future earnings, if any, of which the timing and amount are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. Based upon the Company’s current operating results management cannot conclude that it is more likely than not that such assets will be realized. The Company files income tax returns in India, Hong Kong, Colombia, and the U.S. NOTE 17 – REVENUE RECOGNITION Revenue in the Infrastructure segment is recognized for the renting business when the equipment is rented, and terms of the agreement have been fulfilled during the period. The revenue from the purchase and resale of physical infrastructure commodities is recognized once the bill of lading along with the invoice have been transferred to the customer. Revenue from the execution of infrastructure contracts is recognized on the basis of the output method as and when part of the performance obligation has been completed and approval from the contracting agency has been obtained after survey of the performance completion as of that date. In the Life Sciences segment, the revenue from the wellness and lifestyle business is recognized once goods have been sold to the customer and the performance obligation has been completed. In retail sales, we offer consumer products through our online stores. Revenue is recognized when control of the goods is transferred to the customer. This generally occurs upon our delivery to a third-party carrier or, to the customer directly. Revenue from tolling services is recognized when the performance obligation, such as processing of the material, has been completed and output material has been transferred to the customer. We license our products to processors. The royalty income from licensing is recognized once goods have been sold by the processor to its customers. Net sales disaggregated by significant products and services for Fiscal 2021 and 2020 are as follows: (in thousands) Year ended March 31, 2021 ($) 2020 ($) Infrastructure segment Rental income (1) 1 7 Construction contracts (2) 174 101 Purchase and resale of physical commodities (3) - 3,553 Life Sciences segment Wellness and lifestyle (4) 688 386 Tolling/White labeling service (5) 35 25 Total 898 4,072 63 Table of Contents (1) Rental income consists of income from rental of heavy construction equipment. (2) Construction income consists of the execution of contracts directly or through subcontractors. (3) Relates to the income from purchase and resale of physical commodities used in infrastructure, like steel, wooden doors, marble, and tiles. (4) Relates to revenue from wellness and lifestyle segment such as sale of hand sanitizer, bath bombs, gummies, beverages, hemp crude extract, hemp isolate, and hemp distillate and royalty income from the sale of Hyalolex™, now named Hyalolex™ Drops of Clarity™. (5) Relates to income from tolling and white label services. NOTE 18 – SEGMENT INFORMATION FASB ASC 280, “ Segment Reporting ” establishes standards for reporting information about reportable segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group (“CODM”), in deciding how to allocate resources and in assessing performance. The CODM evaluates revenues and gross profits based on product lines and routes to market. Based on our integration and Management strategies, we operate in two reportable segments: (i) Infrastructure segment and (ii) Life Sciences segment. The Company’s CODM is the Company’s chief executive officer (“CEO”). The CEO reviews financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance. Therefore, and before our Life Sciences segment started, the Company had determined that it operated in a single operating and reportable segment. As of the date of this report and in preparation for the new and different source of revenue, the Company has determined that it operates in two operating and reportable segments: (a) Infrastructure segment and (b) Life Sciences segment. The Company does not include intercompany transfers between segments for Management reporting purposes. The following provides information required by ASC 280-10-50-38 “Entity-wide Information”: 1) The table below shows revenue reported by segment: Product & Service (in thousands) Segments Fiscal 2021 ($) Percentage of Total Revenue (%) Infrastructure segment 175 20 % Life Sciences segment 723 80 % Total 898 100 % (in thousands) Segments Fiscal 2020 ($) Percentage of Total Revenue (%) Infrastructure segment 3,661 90 % Life Sciences segment 411 10 % Total 4,072 100 % For information for revenue by product and service, refer Note 17, “Revenue Recognition.” 64 Table of Contents 2) The table below shows the revenue attributed to the country of domicile (U.S.) and foreign countries. Revenue is generally attributed to the geographic location of customers: (in thousands) Segments Country Fiscal 2021 ($) Percentage of Total Revenue (%) Asia (1) India 175 20 % (2) Hong Kong - - % America U.S. and Colombia 723 80 % Total 898 100 % (in thousands) Segments Country Fiscal 2020 ($) Percentage of Total Revenue (%) Asia (1) India 108 3 % (2) Hong Kong 3,553 87 % America U.S. and Colombia 411 10 % Total 4,072 100 % 3) The table below shows the non-current assets other than financial instruments held in the country of domicile and foreign countries. (in thousands) Nature of Assets USA (Country of Domicile) ($) Foreign Countries (India, Hong Kong, and Colombia) ($) Total as of March 31, 2021 ($) Intangible assets, net 407 - 407 Property, plant and equipment, net 6,228 4,612 10,840 Investments in unlisted securities - 12 12 Claims and advances 200 403 603 Operating lease asset 488 - 488 Total non-current assets 7,323 5,027 12,350 (in thousands) Nature of Assets USA (Country of Domicile) ($) Foreign Countries (India Hong Kong and Colombia) ($) Total as of March 31, 2020 ($) Intangible assets, net 252 - 252 Property, plant and equipment, net 5,216 4,564 9,780 Investments in unlisted securities - 11 11 Claims and advances 200 410 610 Operating lease asset 574 - 574 Total non-current assets 6,242 4,985 11,227 65 Table of Contents NOTE 19 – SUBSEQUENT EVENTS After March 31, 2021, the Company raised approximately $790 thousand from the ATM, net of commission, as of June 7, 2021. On May 14, 2021, the Company announced it had completed Cohort 1 of three cohorts in its Phase 1 trial. This was followed by Company announcement for completion of Cohort 2 on June 7, 2021. On April 6, 2021, after the close of the Company’s Fiscal Year 2021, the plaintiffs and the Class Action Defendants in the Tchathou shareholder class action litigation reached a preliminary agreement in principle to settle all pending shareholder litigation matters, including the Tchatchou and Harris-Carr matters described above in Item 3 – Legal Proceedings. The settlement is subject to the agreement and execution of formal settlement documentation and approval by the United States District Court for the District of Maryland. At present, the vast majority of the settlement is expected to be paid by the Company’s insurance policy. The Company and the Class Action Defendants are represented by counsel in the litigation. 66 Table of Contents ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.