What changed in this filing

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Item 1A. Risk Factors

2022-06-23 compared with 2021-06-14 · 43 added, 37 removed, 352 unchanged (19% of the section changed)

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” See “ Forward-Looking Statements.

Risks Related to Our Business and Expansion Strategy

Risks Related to Our Business, Industry and Operations:

Our cannabinoid strategy makes it difficult to raise money as a public company.

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Most countries differentiate hemp from marijuana by the amount of THC.

Under the 2018 Farm Bill, hemp is classified as a cannabis plant that has THC 0.3% or less by dry weight.

Under the 2018 Farm Bill, hemp is classified as a cannabis plant that has 0.3% or less THC by dry weight.

Marijuana is classified as a cannabis plant that has THC above 0.3% by dry weight.

Both marijuana and hemp produce other cannabinoids such as CBD.

CBD mentioned in the context of products, refers to hemp extracts naturally rich in cannabinoids like CBD, but with THC 0.3% or less by dry weight.

CBD mentioned in the context of products, refers to hemp extracts naturally rich in cannabinoids like CBD, but with 0.3% or less THC by dry weight.

Despite having no direct involvement in selling marijuana, the Company is often incorrectly classified as a “cannabis company” or a “marijuana company,” with all the nuances that accompany that label, including being blacklisted by banks, investment banks, and until recently by the largest stock clearing services company.

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Additional potential transactions that we may consider may include a variety of different business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings, divestitures, business combinations, and investments.

Any such transaction may require us to incur non-recurring or other charges, may increase our near and long-term expenditures and may pose significant integration challenges or disrupt our management or business, which could adversely affect our operations and financial results.

Any such transaction may require us to incur non-recurring or other charges that may increase our near and long-term expenditures, and may pose significant integration challenges or disrupt our management or business, which could adversely affect our operations and financial results.

For example, these transactions may entail numerous operational and financial risks, including:

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disruption of our business and diversion of our management’s time and attention to develop acquired products, product candidates, or technologies;

incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions, which we may not be able to obtain on favorable terms, if at all;

the incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions, which we may not be able to obtain on favorable terms, if at all;

higher than expected acquisition and integration costs;

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In addition, the COVID-19 pandemic may affect the operations of the FDA and other health authorities, which could result in delays of reviews and approvals, including with respect to our product candidates.

The evolving COVID-19 pandemic is also likely to directly or indirectly impact the pace of enrolment in our clinical trial for IGC-AD1 for at least the next several months and possibly longer as patients may avoid or may not be able to travel to healthcare facilities and physicians' offices unless due to a health emergency.

The evolving COVID-19 pandemic is also likely to directly or indirectly impact the pace of enrollment in our clinical trial for IGC-AD1 for at least the next several months and possibly longer as patients may avoid or may not be able to travel to healthcare facilities and physicians' offices unless due to a health emergency.

Such facilities and offices may also be required to focus limited resources on non-clinical trial matters, including treatment of COVID-19 patients, and may not be available, in whole or in part, for clinical trial services or our other product candidates.

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The continued impact of the ongoing COVID-19 pandemic on the Company as well as on the regions in which we do business cannot be predicted.

Global Operations

We operate on a global scale and could be affected by currency fluctuations, capital and exchange controls, global economic conditions including inflation, expropriation and other restrictive government actions, changes in intellectual property legal protections and remedies, trade regulations, tax laws and regulations, and procedures and actions affecting approval, production, pricing, and marketing of, reimbursement for and access to our products, as well as impacts of political or civil unrest or military action, including but not limited to the current conflict between Russia and Ukraine, terrorist activity, unstable governments, and legal systems, inter-governmental disputes, public health outbreaks, epidemics, pandemics, natural disasters or disruptions related to climate change.

Some emerging market countries may be particularly vulnerable to periods of financial or political instability or significant currency fluctuations or may have limited resources for healthcare spending.

As a result of these and other factors, our strategy to grow in emerging markets may not be successful, and growth rates in these markets may not be sustainable.

Government financing and economic pressures can lead to negative pricing pressure in various markets where governments take an active role in setting prices, access criteria (e.g., through health technology assessments) or other means of cost control.

We continue to monitor the global trade environment and potential trade conflicts and impediments that could impact our business.

If trade restrictions or tariffs reduce global economic activity, potential impacts could include declining sales;

increased costs;

volatility in foreign exchange rates;

a decline in the value of our financial assets and pension plan investments;

required increases of our pension funding obligations;

increased government cost control efforts;

delays or failures in the performance of customers, suppliers and other third parties on whom we may depend for the performance of our business;

and the risk that our allowance for doubtful accounts may not be adequate.

We may fail to expand our growing and manufacturing capability in time to meet market demand for our products and product candidates, and the FDA may refuse to accept our facilities or those of our contract manufactures as being suitable for the production of our products and product candidates.

Any problems in our growing or manufacturing process could have a material adverse effect on our business, results of operations, and financial condition.

In addition, before we can begin commercial manufacture of any medicinal product candidates for sale in the U.S., we must obtain FDA regulatory approval for the product, which requires a successful FDA inspection of the manufacturing facilities, which includes the facilities of the processor(s) and quality systems in addition to other product-related approvals.

The Company also established an approximately $3.4 million facility it intends to qualify as a Good Manufacturing Practice (“GMP”) certified processing facility in the State of Washington for processes such as:

In addition, before we can begin commercial manufacture of any medicinal product candidates for sale in the U.S., we must obtain FDA regulatory approval for the product, which requires a successful FDA inspection of the manufacturing facilities, which in turn includes the facilities of the processor(s) and quality systems in addition to other product-related approvals.

The Company established a Good Manufacturing Practice (“GMP”) certified processing facility in the State of Washington for processes such as:

a) production of products such as lotions, creams, and oils, among others, to support our products and to support white labeling;

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and c) distillation of crude oil into hemp extracts.

There can be no assurance that the facility will receive the GMP certification.

Due to the complexity of the processes used to manufacture our product candidates, we may be unable to initially or continue to pass federal, state, or international regulatory inspections in a cost-effective manner.

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We may also incur unexpected interruptions to our operations, administrative injunctions requiring operation stoppages, fines judgments, settlements, or other financial obligations or penalties, which could negatively impact our financial condition and results of operations.

See Item 3, Legal Proceedings of this report for further information on the current shareholder class action pending against the Company and some of its officers and directors.

See Item 3, Legal Proceedings of this report for further information on the current status of legal proceedings, if any.

There can also be no assurance that any insurance coverage we take will be adequate or that we will prevail in any future cases.

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And the legal fees necessary to defend against multiple lawsuits can be significant, impacting the Company’s overall bottom line when not covered by insurance or where the fees exceed the Company’s insurance policy limits.

The Company is a defendant in a shareholder class action lawsuit, and the outcome of litigation cannot be accurately predicted.

On November 2, 2018, an IGC shareholder initiated a shareholder class action complaint against the Company and two of its officers and directors on behalf of himself and all others similarly situated.

After the close of Fiscal 2021, the Company reached an agreement in principle to settle the litigation.

The settlement is subject to court approval, and finalization of the settlement is expected to take place sometime in Fiscal 2022, although there can be no assurance.

In addition, litigation is inherently unpredictable, and the potential future results of this specific litigation turn on many factors that cannot be accurately anticipated at this stage of the litigation.

For instance, the decision to approve the settlement is entirely within the court’s discretion.

An adverse decision in the litigation, to the extent the same is not adequately covered by insurance, could substantially impact the Company’s finances and its ability to conduct trials, develop and innovate its brands and products, and compete in the market.

Our Company is in a highly regulated industry.

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Any one of these factors could slow or halt use and handling of cannabinoids in the U.S.

or in other jurisdictions, which would negatively impact our development of phytocannabinoid-based therapies and our ability to test and productize these therapies.

or in other jurisdictions, which would negatively impact our development of phytocannabinoids-based therapies and our ability to test and productize these therapies.

state laws conflict with the federal Controlled Substances Act.

While we do not, and we do not intend, to distribute or sell marijuana in the U.S., it is unclear whether regulatory authorities in the U.S.

While we do not, and do not intend, to distribute or sell marijuana in the U.S., it is unclear whether regulatory authorities in the U.S.

would object to the registration or public offering of securities in the U.S.

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We may experience delays in initiating and completing any clinical trials that we intend to conduct, and we do not know whether planned clinical trials will begin on time, need to be redesigned, enroll patients on time or be completed on schedule, or at all.

Clinical trials can be delayed for a variety of reasons, including delays related to:

Clinical trials can be delayed or terminated for a variety of reasons, including but not limited to:

the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical studies;

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We are not permitted to market any of our pharmaceutical product candidates in the United States until we receive regulatory approval of an NDA from the FDA.

The regulatory approval process can be affected by, among other things, the following:

we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication;

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the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;

the data collected from clinical trials of our product candidates may not be acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere, and we may be required to conduct additional clinical trials;

the data collected from clinical trials of our product candidates may not be acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere, and/or we may be required to conduct additional clinical trials;

the FDA or comparable foreign authorities may disagree regarding the formulation, labeling and/or the specifications of our product candidates;

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Results from preclinical studies and clinical trials can be interpreted in different ways.

Even if we believe the preclinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities.

Even if the preclinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities.

For diseases like Alzheimer’s disease, the FDA has stated that one single Phase 3 trial is adequate for approval if it demonstrates robust and unquestionable efficacy.

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We cannot be certain that our approach will lead to the development of approvable or marketable products.

The only drugs approved by the FDA to treat Alzheimer’s Disease to date address the diseases’ symptoms.

No new treatments have been approved for Alzheimer’s Disease since 2003 as of March 31, 2021.

The only drugs approved by the FDA to treat Alzheimer’s Disease to date address the disease’s symptoms.

Alzheimer’s Disease drug candidates have the highest failure rate of approximately 99.6%.

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Business interruptions could delay us in the process of developing our product candidates and could disrupt our product sales.

Loss of our manufacturing facilities, stored inventory or laboratory facilities through fire, theft, natural disasters or other causes, or loss of our botanical raw material due to pathogenic infection, waste, destruction, or other causes, could have an adverse effect on our ability to meet demand for hemp-based CBD products or to continue product development activities and to conduct our business.

Loss of our manufacturing facilities, stored inventory or laboratory facilities through fire, theft, natural disasters or other causes, or loss of our botanical raw material due to pathogenic infection, waste, destruction, or other causes, could have an adverse effect on our ability to meet demand for our products or to continue product development activities and to conduct our business.

Failure to supply our partners with commercial products may lead to adverse consequences.

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We may not successfully register the provisional patents with the USPTO.

We have filed twelve provisional patents with the USPTO, in the combination therapy space, for the indications of pain, medical refractory epilepsy, eating disorders, and cachexia as part of our intellectual property strategy focused on the phytocannabinoid-based health care industry.

Although, three patents have been issued, there is no guarantee that our remaining applications will result in a successful registration with the USPTO.

We have filed fifteen (15) provisional patents with the USPTO, in the combination therapy space, for the indications of pain, Alzheimer’s, medical refractory epilepsy, eating disorders, and cachexia as part of our intellectual property strategy focused on the phytocannabinoid-based health care industry.

Although, six patents have been issued, there is no guarantee that our remaining applications will result in a successful registration with the USPTO.

If we are unsuccessful in registering patents, our ability to create a valuable line of products can be adversely affected.

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We may face risks relating to health care privacy and security laws.

We may be subject to various privacy and security regulations, including but not limited to Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by The Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their respective implementing regulations, including the related final published omnibus rule.

We may be subject to various privacy and security regulations, including but not limited to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by The Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their respective implementing regulations, including the related final published omnibus rule.

HIPAA mandates, among other things, the adoption of uniform standards for the electronic exchange of information in common health care transactions, as well as standards relating to the privacy and security of individually identifiable health information.

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If we supply inaccurate information or experience interruptions in our ability to capture, store and supply information in near real time or at all, our reputation could be harmed, we could lose customers, or we could be found liable for damages or incur other losses.

All our data is stored on the cloud on multiple servers that helps us mitigate the overall risk of losing data.

We have a cybersecurity policy in place and are in the process of implementing tighter cybersecurity measures to safeguard against hackers.

All our data is stored on the cloud on multiple servers which helps us mitigate the overall risk of losing data.

We are in the process of implementing tighter cybersecurity measures to safeguard against hackers.

Complying with these security measures and compliances would incur further costs.

The states in which we and our distributers and suppliers and their service providers operate require that we maintain certain information about our customers and transactions.

The states in which we and our distributors and suppliers and their service providers operate require that we maintain certain information about our customers and transactions.

If we fail to maintain such information, we could be in violation of state laws.

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Future sales of common stock by us could cause our stock price to decline and dilute your ownership in our Company.

Our certificate of incorporation authorizes the issuance of up to 150,000,000 shares of common stock, par value $0.0001 per share and 1,000,000 shares of preferred stock, par value $0.0001 per share.

Our certificate of incorporation authorizes the issuance of up to 150,000,000 shares of common stock, par value of $0.0001 per share, and 1,000,000 shares of preferred stock, par value of $0.0001 per share.

We are not restricted from issuing additional shares of our common stock or preferred stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock or preferred stock or any substantially similar securities.

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We believe that the recent volatility in our common stock may be due, in part, to short squeezes that may be temporarily increasing the price of our common stock, which could result in a loss of some or all of your investment in our common stock.

Our management team will have broad discretion over the use of the funds.

Our management will use their discretion to direct the funds.

We intend to use the net proceeds from the sale of IGC shares in ATM offering, sales proceeds, sale of capital assets and other funds to fund working capital and capital expenditure requirements.

Our management team will have broad discretion over the use of Company funds.

Our management will use their discretion to direct the use of Company funds.

We intend to use the net proceeds from the sale of IGC shares in ATM offerings, sales proceeds, sale of capital assets, and other funds to fund working capital and capital expenditure requirements.

It may also be used for clinical trials, share repurchases, debt repayments, investments, including but not limited to, mutual funds, treasury bonds, cryptocurrencies, and other asset classes.

Management’s judgments may not result in positive returns on investor investment and the investor will not have an opportunity to evaluate the economic, financial, or other information upon which the Management bases its decisions.

Company may invest the funds, pending their use, in a manner that does not produce income or that loses value.

The Company may invest the funds, pending their use, in a manner that does not produce income or that loses value.

The failure by management to apply these funds effectively could result in financial losses, and these financial losses could have a material adverse effect on our business and cause the price of our common stock to decline.

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SEC reviews may be initiated at any time.

We could be required to modify, amend, or reformulate information contained in prior filings as a result of an SEC review, as well as state in filings that we have inadequate control or expertise over financial reporting.

We could be required to modify, amend, or reformulate information contained in prior filings as a result of an SEC review, as well as the state in filings that we have inadequate control or expertise over financial reporting.

Any modification, amendment, or reformulation of information contained in such reports could be significant and result in material liability to us and have a material and adverse impact on the trading price of our common stock.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors