What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2022-06-23 compared with 2021-06-14 · 140 added, 117 removed, 196 unchanged (57% of the section changed)

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The common stock of the Company is also quoted on the Frankfurt, Berlin, and Stuttgart (XETRA2) stock exchanges in Germany (ticker symbol:

In Fiscal 2020 we had public warrants that expired on March 8, 2021.

We also have 91,472 units outstanding that can be separated into common stock.

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See Note 14, “Stock-Based Compensation” of the Notes to the Consolidated Financial Statements included in this report.

(2) Consists of 2 million shares as a special grant of common stock, as approved by our stockholders on January 7, 2020 and 2.5 million shares as a special grant of common stock, as approved by our stockholders on January 11, 2021.

(2) Consists of 2 million shares as a special grant of common stock, as approved by our stockholders on January 7, 2020, 2.5 million shares as a special grant of common stock, as approved by our stockholders on January 11, 2021, and 3.5 million shares as a special grant of common stock, as approved by our stockholders on October 15, 2021.

Holders of Record

As of June 6, 2022, we had approximately 41 registered shareholders of record of our common stock and 2 registered unit holders.

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Dividend policy

We have not paid any dividends on our common stock to date and do not intend to pay dividends.

It is the present intention of our Board of Directors to retain all earnings, if any, for use in our business operations.

Accordingly, our Board does not anticipate declaring any dividends in the foreseeable future.

We have not declared or paid any dividends on our common stock.

We currently anticipate that we will retain future earnings, if any, for the development, operation, and expansion of our business and do not anticipate declaring or paying any dividends in the foreseeable future.

Any future determinations related to dividend policy will be made at the discretion of our Board of Directors.

Unregistered sales of equity securities

Purchases of equity securities by the issuer and affiliated purchasers

SELECTED FINANCIAL DATA

Not Applicable.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis apply to Fiscal 2021 that ends on March 31, 2021, and Fiscal 2020 that ends on March 31, 2020.

The following is a discussion and analysis of the consolidated statement of operations, liquidity and capital resources, and summary of cash flows, which apply to Fiscal 2022 ending on March 31, 2022 and Fiscal 2021 ending on March 31, 2021.

These statements should be read in conjunction with our consolidated financial statements and the related notes that appear elsewhere in this Annual Report on Form 10-K.

In addition to historical information, this report contains forward-looking statements that involve risks and uncertainties that may cause our actual results to differ materially from plans and results discussed in forward-looking statements.

In addition to historical information, this report contains forward-looking statements that involve risks and uncertainties that may cause our actual results to differ materially from the plans and results discussed in forward-looking statements.

We encourage you to review the risks and uncertainties discussed in the sections entitled Item 1A.

“Risk Factors” and “Forward-Looking Statements” included at the beginning of this Annual Report on Form 10-K.

“Risk Factors” and “Forward-Looking Statements” are included at the beginning of this Annual Report on Form 10-K.

The risks and uncertainties can cause actual results to differ significantly from those in our forward-looking statements or implied in historical results and trends.

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We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

Our primary source of revenue in Fiscal 2021, was from our Life Sciences segment, which includes a biopharmaceutical component, and a wellness and lifestyle business, which involves:

development of potential new drugs, subject to applicable regulatory approvals, that use ultra-low doses of phytocannabinoids including cannabidiol (“CBD”) and tetrahydrocannabinol (“THC”), among others, in combination with other compounds, believed to assist in managing symptoms of diseases like Alzheimer’s,

hand sanitizers and several hemp-based CBD products and brands, in various stages of development, for sale online and/or through stores,

wholesale of hemp extracts including hemp crude extract, and hemp isolate, among others,

white labeling of hemp-based products, and

the offering of tolling services like extraction and distillation to hemp-farmers and retailers.

Our primary source of revenue in Fiscal 2020, was from our Infrastructure segment.

In Fiscal 2021, we significantly reduced the buying and selling of construction materials in Hong Kong because of what we perceive to be a slow-down in the Hong Kong economy due, in part, to COVID-19.

The Company’s Infrastructure segment, involves:

Execution of Construction Contracts – The Company is executing a road building contract in Kerala, India valued at approximately $1.2 million.

Work on this project is sporadic based on COVID-19 restrictions.

Purchase and Resale of Physical Commodities Used in Infrastructure – This business line includes the purchase and resale of commodities, including steel, wooden doors, marble, and tiles, among others.

This work has been adversely affected due to COVID-19.

There was no revenue from this business line during Fiscal 2021, in part due to the COVID-19 pandemic.

Rental of Heavy Construction Equipment – We own heavy construction equipment such as motor grader and rollers, that we rent to construction contractors.

This business is seasonal and had minimal revenue during Fiscal 2021, in part due to the COVID-19 pandemic.

We have a two-pronged strategy for our Life Sciences, biopharmaceutical component:

the initial prong is to investigate IGC-AD1 for safety and efficacy in managing the symptoms of Alzheimer’s disease.

This involves conducting Phase 1 through Phase 3 trials on IGC-AD1 over the next several years, with the anticipated goal of demonstrating safety and efficacy and potentially obtaining FDA approval for IGC-AD1 as a cannabinoid-based formulation that can help manage some symptoms for patients suffering from Alzheimer’s disease.

The second prong is to investigate the potential efficacy of IGC-AD1 on memory and/or decreasing or managing plaques and tangles, some of the hallmarks of Alzheimer’s disease.

Our pipeline of investigational cannabinoid formulations also includes pain creams and tinctures for pain relief.

We believe that the biopharmaceutical component of our Life Sciences strategy will take several years to implement and involves considerable risk;

however, we believe it may involve greater defensible growth potential and first-to-market advantage.

Our shorter-term strategy also includes becoming vertically integrated in the hemp industry, as we believe this may afford us the opportunity to create the right processes, quality, and replicability for eventually creating pharmaceutical grade formulations.

We also believe this may provide us with several profit opportunities, all conducted in accordance with applicable laws and regulations, and only in locations where it is legal to do so, such as:

sale of our products, under the Herbo™, Hyalolex™, Holief™, and Sunday Seltzer™ brand lines, among others;

white labeling of products such as hemp-based CBD infused lotions, creams, and oils for other brands;

wholesale of hemp extracts including hemp crude extract and hemp isolate;

processing of hemp biomass and crude oil for farmers in the Northwest U.S.

using our manufacturing and trading platform for trading in infrastructure commodities to assist in delivering emergency products such as hand sanitizers, gloves, and other personal protection equipment for the length of the COVID-19 pandemic.

We believe that the additional investment in clinical trials, research, and development (“R&D”), facilities, marketing, and advertising, as well and the acquisition of products and businesses supporting our Life Sciences segment, are likely to be critical to the development and delivery of innovative products and positive patient and customer experiences.

Part of our strategy is to leverage our R&D and our intellectual property to develop products that we believe are likely to be well-differentiated and -supported by science through planned pre-clinical and clinical trials.

We believe this strategy has the potential to improve existing products and lead to the creation of new products, which, based on scientific study and research, may offer positive results for the management of certain conditions, symptoms, and side effects.

In Fiscal 2021, we received a notice from the FDA to proceed with a 12-subject Phase 1 human clinical trial (“removal of full clinical hold”) on our INDA, submitted under Section 505(i) of the Federal Food, Drug, and Cosmetic Act, for our tetrahydrocannabinol (“THC”)-based formulation, “IGC-AD1,” intended to alleviate the symptoms of participants suffering from Alzheimer’s disease.

On May 14, 2021, the Company announced it had completed Cohort 1 of its Phase 1 clinical trial.

This was followed by Company announcement for completion of Cohort 2 on June 7, 2021.

The Company operates both business segments in compliance with applicable state, national, and local laws, and regulations and only in locations and regions where it is legal to do so.

IGC has two segments:

Life Sciences and Infrastructure.

Infrastructure Segment

The infrastructure business, operating since 2008.

The Company intends to continue infrastructure operations as the COVID-19 pandemic permits, including:

(i) Execution of Construction Contracts – The Company is executing a $1.2 million road-building contract in Kerala, India and was recently awarded another road reconstruction project for $289 thousand.

(ii) Rental of Heavy Construction Equipment – We rent equipment, such as motor grader and rollers, to construction contractors.

There was minimal revenue from rentals in Fiscal 2022 due to seasonality and COVID-19 pandemic disruptions.

Life Sciences Segment

Over the Counter Products :

We have created a cannabinoid-based women’s wellness brand, Holief™ for the online channel and a CBD and caffeine infused energy drink, Sunday Seltzer™, for distribution in wholesale channels.

Holief™ is an all-natural, non-GMO, vegan, line of over the counter (“OTC”) products aimed at treating menstrual cramps (dysmenorrhea) and premenstrual symptoms (“PMS”).

The products are available online and through Amazon and other online channels.

Sunday Seltzer™ is an all-natural, organic, carbonated energy drink with natural caffeine from green tea extract, CBD, vitamins B, vitamin C, no added sugars, and no preservatives.

The energy drink is available in two flavors, pomegranate-lemon, and peach-ginger.

In addition, Sunday Seltzer™ is also available in four flavors with CBD, vitamins B, vitamin C, and no caffeine.

Both Holief™, and Sunday Seltzer™ are compliant with relevant federal, state, and local laws, and regulations.

Biopharmaceutical :

Since 2014, we have focused a portion of our business on the application of phytocannabinoids such as Tetrahydrocannabinol (“THC”) and Cannabidiol (“CBD”), among others, in combination with other compounds, to address efficacy for various ailments and diseases such as Alzheimer’s disease.

As previously disclosed, IGC submitted IGC-AD1, our investigational drug candidate for Alzheimer’s, to the FDA under Section 505(i) of the Federal Food, Drug, and Cosmetic Act and received approval on July 30, 2020, to proceed with the Phase 1 trial on Alzheimer’s patients.

The Company completed all dose escalation studies, and as announced by the Company on December 2, 2021, the results of the clinical trial have been submitted in the Clinical/Statistical Report (“CSR”) filed with the FDA.

The Company is motivated by the potential that, with future successful results from appropriate further trials, IGC-AD1 could contribute to relief for some of the 55 million people around the world expected to be impacted by Alzheimer’s disease by 2030 (WHO, 2021).

We have a two-pronged approach for our Alzheimer’s drug development strategy, the first prong is to investigate IGC-AD1 as an Alzheimer’s symptoms modifying agent and the second is to investigate TGR-63 as a disease modifying agent.

This involves conducting more trials on IGC-AD1 over the next few years, subject to FDA approval, with the anticipated goal of demonstrating safety and efficacy and potentially obtaining FDA approval for IGC-AD1 as a cannabinoid-based new drug that can help manage agitation for patients suffering from Alzheimer’s disease.

The second prong is to investigate the potential efficacy of TGR-63 on memory and/or decreasing or managing plaques and tangles, some of the hallmarks of Alzheimer’s disease.

Our pipeline of investigational and development cannabinoid formulations also includes pain creams and tinctures for pain relief.

We believe that the biopharmaceutical component of our Life Sciences strategy will take several more years to mature and involves considerable risk;

however, we also believe it may involve greater defensible growth potential and first-to-market advantage.

Although there can be no assurance, we believe that additional investment in clinical trials, research, and development (“R&D”), facilities, marketing, advertising, and acquisition of complementary products and businesses supporting our Life Sciences segment will be critical to the development and delivery of innovative products and positive patient and customer experiences.

We hope to leverage our R&D and intellectual property to develop ground-breaking, science-based products that are proven effective through planned pre-clinical and clinical trials.

Although there can be no assurance, we believe this strategy has the potential to improve existing products and lead to the creation of new products, which, based on scientific study and research, may offer positive results for the management of certain conditions, symptoms, and side effects.

While the bulk of our medium and longer-term focus is on clinical trials and getting IGC-AD1 to be an FDA approved drug, our shorter-term strategy, is to use our resources to provide white label services and market Holief™ and Sunday Seltzer™.

We believe this may provide us with several profit opportunities, although there can be no assurance of such profit opportunities.

COVID-19 Update

As our infrastructure business is based in Asia (India and Hong Kong), the COVID-19 pandemic and restrictions imposed by governmental entities adversely impacted, and continues to impact, our financial condition, liquidity, and operations.

In Fiscal 2021, we experienced substantially reduced revenue from Infrastructure.

We anticipate that reduced revenue from Infrastructure will continue in Fiscal 2022 as the pandemic continues to affect the regions where we do business.

In particular, during Fiscal 2021:

Our revenue from the infrastructure business was adversely affected with increased expenses.

We are executing a road building contract in Kerala, India valued at approximately $1.2 million.

Work on this project is sporadic based on COVID-19 restrictions.

In response to the COVID-19 pandemic, we manufactured and distributed alcohol-based hand sanitizers.

The majority of our revenue for Fiscal 2021 is from the sale of hand sanitizers.

In an effort to help some of the hardest hit communities, we donated hand sanitizers to the Federal Emergency Management Agency (FEMA), the Navajo Nation in Arizona, the Crow reservation in Montana, and the Sioux reservation in South Dakota.

Due to the pandemic, we were unable to process our harvested hemp crop grown in Arizona because of difficulties associated with transportation and third-party processing.

The infrastructure business, based in India and Hong Kong, had significantly lower revenue in Fiscal Year 2022 due to the continued impact of the COVID-19 pandemic and restrictions imposed by governmental entities.

We have limited visibility into when economic conditions will recover in India and especially Hong Kong.

Specifically:

We incurred increased expenses on a $1.2 million road-building contract in India due to COVID-19 restrictions.

We manufactured, distributed, and donated alcohol-based hand sanitizers to help communities hit hard by the COVID-19 pandemic.

We incurred the expense to provide hand sanitizers to the Federal Emergency Management Agency (“FEMA”), the Navajo Nation in Arizona, the Crow reservation in Montana, and the Sioux reservation in South Dakota.

Pandemic restrictions made it difficult to transport and process our harvested hemp crop in Arizona on a timely basis.

This resulted in a $1.7 million adjustment to our inventory that also increased our SG&A.

The Global Economic Environment

In addition to the industry-specific factors such as regulations around cannabinoid research, we are exposed to economic cycles.

Factors in the global economic environment that may impact our operations include, among other things, currency fluctuations, capital and exchange controls, global economic conditions including inflation, 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 our products, as well as impacts of political or civil unrest or military action, including 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.

Operational Excellence

We remain focused on continuing to build excellence broadly in three areas, cannabinoid-based investigations, drug development and product manufacturing, and online marketing.

We believe these will give us a competitive advantage, including building an increasingly agile and adaptable commercialization engine with a strong customer-focused market expertise.

Workplace and Employees

We support broad public health strategies designed to prevent the spread of COVID-19 and are focused on the health and welfare of our employees.

We have mobilized to enable our employees to accomplish our most critical goals through a combination of remote work and in-person initiatives.

In addition to rolling out new technologies and collaboration tools, we have implemented processes and resources to support our employees in the event an employee receives a positive COVID-19 diagnosis.

We have developed plans regarding the opening of our sites to enable our employees to return to work in our global offices, the field, and our manufacturing facilities, which take into account applicable public health authority and local government guidelines, and which are designed to ensure community and employee safety.

We are moving to a more flexible mix of virtual and in-person working to advance our culture, drive innovation and agility and enable greater balance and well-being for our workforce.

Research and Development

With respect to our clinical trial activities, we have taken measures to implement remote and virtual approaches, including remote data monitoring where possible, to maintain safety and trial continuity, and to preserve study integrity.

We have seen delays in initiating trial sites, due to COVID-19.

We cannot guarantee that we will continue to perform our trials in a timely and satisfactory manner as a result of the evolving effects of the COVID-19 pandemic.

Similarly, our ability to recruit and retain patients and principal investigators, and site staff who, as health care providers, may have heightened exposure to COVID-19, may adversely impact our clinical trial operations.

Fiscal 2022 Highlights

• 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.

• On December 2, 2020, we filed a provisional patent application with the USPTO for our IGC-512 formulation for a cannabidiol-based composition and method for stress relief and calm restoring beverage.

• On August 5, 2020, the USPTO issued the Company a patent (#10751300) for the Company’s cannabinoid formulation (IGC-502) for the treatment of seizures in humans and veterinary animals.

• On July 17, 2020, the Company filed a provisional patent application with the USPTO for its IGC-511 formulation for a Cannabidiol-based composition and method for treating pain.

On March 28, 2022, Hamsa Biopharma India Pvt.

Ltd., a directly owned subsidiary of the Company, signed a License Agreement with Jawaharlal Nehru Centre for Advanced Scientific Research (“JNCASR”), an autonomous institution under the Department of Science and Technology, Government of India, to obtain an exclusive license on the developed proprietary technology and know-how, and ownership or assignment of certain patents and patent filings relating to small molecule inhibitors with a naphthalene monoimide scaffold.

The agreement with JNCASR is filed on Form 8K on May 12, 2022.

On February 11, 2022, the Company received a Good Manufacturing Practice (“GMP“) certification for its R&D facility in Maryland.

The Company completed all dose escalation studies, and as announced by the Company on December 2, 2021, the results of the Phase 1 clinical trial on IGC’s THC based investigational new drug candidate, IGC-AD1, for patients with Alzheimer’s disease, have been submitted in the Clinical/Statistical Report (“CSR”) filed with the FDA.

October 28, 2021, the Company won Best CBD Topical award for its broad-spectrum hemp extract cream called Holi Wonder™ at the U.S.

CBD Expo event held in Chicago, Illinois, U.S.

On October 5, 2021, the Company received a Good Manufacturing Practice (“GMP”) certification for its facilities in Vancouver, Washington, U.S.

where it makes its products.

On September 17, 2021, the Company filed a provisional patent application with the USPTO for our IGC-513 for compositions and methods for treating patients with dementia due to Alzheimer's disease.

The Company licenses a patent filing from the University of South Florida titled “Ultra-Low dose THC as a potential therapeutic and prophylactic agent for Alzheimer’s Disease.” The USPTO issued a patent (#11,065,225) for this filing on July 20, 2021.

The granted patent relates to IGC’s proprietary formulation, IGC-AD1, intended to assist in the treatment of individuals living with Alzheimer’s disease.

During Fiscal 2022, the Company raised approximately $4.1 million of net proceeds from the issuance of equity stock.

The Company had entered an “at the market” (“ATM”) offering pursuant to the Sales Agreement (the “Agreement”) entered on January 13, 2021, with The Benchmark Company, LLC (the “Sales Agent”) for the issuance and sale of up to $75 million of the Company’s shares of common stock, par value $0.0001 per share (the “Shares”).

On June 10, 2021, the Company received forgiveness for the full amount borrowed as per the Paycheck Protection Program Promissory Note (the “PPP Note”) of approximately $430 thousand.

The PPP Note was established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and administered by the U.S.

Small Business Administration (“SBA”).

Results of Operations

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Operating loss

Impairment of investment

Other income, net

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Net loss attributable to common stockholders

Revenue – Revenue in Fiscal 2021, was primarily derived from our Life Sciences segment, which involved sales of products such as alcohol-based hand sanitizers, among others.

In Fiscal 2020, our revenue was primarily derived from the infrastructure segment.

Revenue was approximately $898 thousand and $4.1 million for Fiscal 2021 and Fiscal 2020, respectively.

Revenue in the Life Sciences segment in Fiscal 2020, was $411 thousand as compared to $723 thousand in Fiscal 2021, albeit with a change in product mix.

At the same time, revenue in our Infrastructure segment for Fiscal 2020 was $3.6 million and $175 thousand in Fiscal 2021.

Such revenue relates to execution of construction contract.

Primarily due to COVID-19, we have limited visibility on when either of our segments will stabilize, generate significant revenue, and become predictable.

We expect volatility in both segments in the foreseeable future.

We expect to be opportunistic in providing personal protection equipment, including hand sanitizers, as the country reopens from the pandemic.

Cost of revenue – Cost of revenue amounted to approximately $785 thousand for Fiscal 2021, compared to $4 million in Fiscal 2020.

The cost of revenue in Fiscal 2021, is primarily attributable to raw materials that are required to produce our products.

Revenue – Revenue in Fiscal 2022 and Fiscal 2021, was primarily derived from our Life Sciences segment, which involved sales of in-house brands and alcohol-based hand sanitizers, among others.

Revenue was approximately $397 thousand and $898 thousand for Fiscal 2022 and Fiscal 2021, respectively.

In Fiscal 2022 we de-emphasized the manufacturing and sale of low margin hand sanitizers and shifted our focus to higher margin white label services and the sale of products under our brands.

This decreased our revenue.

The infrastructure business had lower revenue in Fiscal 2022 due to the continued impact of the COVID-19 pandemic and restrictions imposed by government entities.

Cost of revenue – Cost of revenue amounted to approximately $203 thousand for Fiscal 2022, compared to $785 thousand in Fiscal 2021.

This decrease in the cost of revenue was attributable to decreased revenue.

The cost of revenue in Fiscal 2022 is primarily attributable to the cost of raw materials, labor, and other direct overheads required to produce our products.

Our gross margin increased from 12% to 48%, which reflects our increased focus on higher-margin services and the sale of products under our brand.

Selling, general and administrative expenses – Selling, general and administrative expenses consist primarily of employee-related expenses, sales commission, professional fees, legal fees, marketing, other corporate expenses, allocated general overhead and provisions, depreciation, and write-offs relating to doubtful accounts and advances, if any.

Selling, general, and administrative expenses increased by approximately $5.3 million or 68% to $13.2 million for Fiscal 2022, from approximately $7.9 million for Fiscal 2021.

The increase of approximately $1.9 million is attributed to one-time settlement expenses of approximately $225 thousand, provision for legal fees of approximately $200 thousand, $307 thousand inventory related adjustments, approximately $63 thousand provision for doubtful debt, compensation expenses attributed to increased head count and associated employee-related expenses, marketing and professional expenses related to expansion of brands and depreciation expense related to increase in Property, Plant and Equipment.

Research and Development expenses – Research and Development (“R&D”) expenses were attributed to our Life Sciences segment.

The R&D expenses for Fiscal 2021 are approximately $929 thousand and approximately $1 million for Fiscal 2020.

The cost associated with this work is mostly research comprising of plant extracts that could be productized and data to support the efficacy of the extracts, including preparing for and conducting FDA trials, product research, designing, formulating and market analysis.

We expect R&D expenses to increase with progression in Phase 1 trials on IGC-AD1.

Impairment loss – 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 of $169 thousand as of March 31, 2021.

Pursuant to the December 18, 2014 Purchase Agreement with Apogee, we issued Apogee 1.2 million shares of IGC’s common stock valued at $888 thousand for the purchase of a 24.9% ownership interest in Midtown Partners & Co., LLC (“MTP”).

During Fiscal 2018, after considering several factors, the Company concluded that it no longer had significant influence over MTP and hence maintained the same value of investment of approximately $773 thousand.

During Fiscal 2020, the Company decided to impair this investment.

The Company still owns 24.9% ownership in MTP as on March 31, 2021.

Other Income, net – Other net income decreased by approximately $249 thousand or 75% during Fiscal 2021.

The total other income for Fiscal 2021 and 2020 is approximately $82 thousand and $331 thousand, respectively.

The increase of approximately $5.3 million is attributed to one-time expenses, which include law-suit settlement expenses of approximately $264 thousand;

impairment of facility of $833 thousand;

net realizable value (“NRV”) adjustment of $1.7 million for the hemp crop;

approximately $475 thousand in provisions for advances paid;

and approximately $1.7 million in provisions against inventory that was stolen at our vendor’s facility.

In addition, the increase of approximately $1.3 million is attributable to an increase in non-cash expenses.

Adjusting for approximately $5.3 million in one-time and non-cash expenses, the SG&A for the fiscal year 2022 was lower by approximately $500 thousand.

Research and Development expenses:

Research and Development (“R&D”) expenses were attributed to our Life Sciences segment.

The R&D expenses increased by approximately $1.4 million or 151% to $2.3 million in Fiscal 2022, from approximately $929 thousand for Fiscal 2021.

Expenses increased by $1.4 million due to the now completed Phase 1 clinical trial.

We expect R&D expenses to increase with the progression of Phase 2 trials on IGC-AD1 and pre-clinical trials on TGR-63 .

Impairment loss – Impairment loss amounted to approximately $49 thousand for Fiscal 2022, compared to $169 thousand in Fiscal 2021.

This decrease in the impairment loss was attributable to the Company recording an impairment of $169 thousand as of March 31, 2021, in Evolve I.

During Fiscal 2022, the Company received 44 thousand shares of IGC common stock, which had been granted pursuant to the Purchase Agreement.

Accordingly, the Company canceled the shares and impaired its remaining investment of approximately $37 thousand.

Other Income, net –Other income for Fiscal 2022 and 2021 is approximately $461 thousand and $82 thousand, respectively.

The increase was due to the forgiveness of a PPP loan in the amount of $430 thousand.

Other income includes interest income, rental income, dividend income, and unrealized gains from marketable securities, net, and income from sale of scrap, among others.

Liquidity and capital resources

Our sources of liquidity are cash and cash equivalents, funds raised through “at the market” (“ATM”) offering, cash flows from operations, short-term and long-term borrowings, and short-term liquidity arrangements.

Our sources of liquidity are cash and cash equivalents, funds raised through “at the market” (“ATM”) offerings, cash flows from operations, short-term and long-term borrowings, and short-term liquidity arrangements.

The Company continues to evaluate various financing sources and options to raise working capital to help fund current research and development programs and operations.

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Shares issuable under the ATM could be dilutive to the Company’s shareholders.

In addition, the Company shifted its focus to higher margin white label services and the sale of products under our brands.

Management is actively monitoring the impact of COVID-19 on the Company’s financial condition, liquidity, operations, suppliers, industry, legal expenses, and workforce.

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Cash and cash equivalents

Cash and cash equivalents increased by approximately $7.3 million to $14.5 million in Fiscal 2021, from $7.3 million in Fiscal 2020, an increase of approximately 100%.

The major increase was due to approximately $14.2 million of net proceeds from ATM sales and approximately $5 million proceeds from investment in marketable securities, part of which was set-off with $1.5 million in purchase of property, plant, and equipment, approximately $1.2 million in inventory and a net cash loss of approximately $7.5 million.

Cash and cash equivalents decreased by approximately $4 million to $10.5 million in Fiscal 2022, from $14.5 million in Fiscal 2021, a decrease of approximately 28%.

The major decrease was due to approximately $741 thousand used in the purchase of property, plant, and equipment and acquisition of intangible assets and a net cash loss of approximately $7.5 million, part of which was set-off with approximately $4.1 million of net proceeds from the issuance of equity stock through an ATM offering.

Summary of Cash flows

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Cash used in operating activities

Cash provided by (used in) investing activities

Cash provided by (used in) financing activities

Cash (used in)/provided by investing activities

Cash provided by financing activities

Effects of exchange rate changes on cash and cash equivalents

Net increase/(decrease) in cash and cash equivalents

Cash and Cash Equivalents at the beginning of period

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

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Net cash used in operating activities for Fiscal 2022, was approximately $7.5 million.

This consists of a net loss of approximately $8.8 million and non-cash items totaling approximately $1.3 million, which in turn consist of an amortization/depreciation charge of approximately $478 thousand, impairment of investment of $169 thousand and stock-based expenses totaling approximately $658 thousand.

Changes in operating assets and liabilities had a negative impact of approximately $3.3 million on cash, of which approximately a $1.2 million is due to investment in inventory and approximately $2.2 million due to Deposits and advances.

Net cash used in operating activities for Fiscal 2020 was $8.7 million.

This consists of a net loss of $7.3 million and non-cash items totaling $1.7 million, which in turn consist of an amortization/depreciation charge of $144 thousand, impairment loss of $782 thousand, and stock-based expenses totaling $770 thousand.

Changes in operating assets and liabilities had a net negative impact of $3 million on cash of which approximately $4 million was due to increase in inventory.

It consists of a net loss of approximately $15 million, a positive impact on cash due to non-cash expenses of approximately $5 million, and changes in operating assets and liabilities of approximately $2.5 million.

Non-cash expenses consist of an amortization/depreciation charge of approximately $651 thousand, impairment of investment of $49 thousand, provision against debtor & advances of $1.7 million, stock-based expenses of approximately $2.2 million, and a one-time impairment of PPE of $833 thousand and an off set of $430 thousand due to the forgiveness of a PPP Loan.

In addition, changes in operating assets and liabilities had a positive impact of approximately $2.5 million on cash, of which approximately $1.9 million is due to an adjustment in inventory and approximately $504 thousand increase in accounts payable..

Net cash used in operating activities for Fiscal 2021 was approximately $10.8 million.

It consists of a net loss of approximately $8.8 million, a positive impact on cash due to non-cash expenses of approximately $1.3 million, and a negative impact due to changes in operating assets and liabilities of approximately $3.3 million.

Non-cash expenses consist of an amortization/depreciation charge of approximately $478 thousand, impairment of investment of $169 thousand, and stock-based expenses of approximately $658 thousand.

In addition, changes in operating assets and liabilities had a negative impact of approximately $3.3 million on cash, of which approximately $1.2 million is due to an adjustment in inventory, approximately $2.2 million due to deposits and advances, and a positive impact of approximately $100 thousand for other adjustments in net assets.

Investing Activities

Net cash provided by investing activities for Fiscal 2021, was approximately $3.4 million, which is comprised of expenses of approximately $122 thousand for the acquisition and filing expenses related to intellectual property, purchase of property, plant, and equipment of approximately $1.5 million, sale of property, plant, and equipment of approximately $47 thousand and investments of approximately $149 thousand in non-marketable securities, and proceeds from investment of approximately $5 million, in marketable securities.

Net cash used in investing activities during Fiscal 2020 was approximately $9.5 million which is comprised of approximately $77 thousand for the acquisition and filing expenses related to intellectual property, purchase of property, plant, and equipment of $4.3 million and investments of approximately $5 million in marketable securities.

Net cash used in investing activities for Fiscal 2022, was approximately $742 thousand, which comprises approximately $535 thousand for the acquisition and filing expenses related to intellectual property, approximately $207 thousand for the purchase of property, plant, and equipment.

Net cash provided by investing activities during Fiscal 2021 was approximately $3.4 million which comprises approximately $122 thousand for the acquisition and filing expenses related to intellectual property, purchase of property, plant, and equipment of $1.5 million, sale of property, plant, and equipment of approximately $47 thousand and investments of approximately $149 thousand in non-marketable securities, and proceeds from investment of approximately $5 million, in marketable securities.

Financing Activities

Net cash provided by financing activities was approximately $14.7 million for Fiscal 2021, which is comprised of proceeds from borrowings of approximately $580 thousand, repayment of loan of approximately $50 thousand and approximately $14.2 million, net proceeds from ATM sales.

Net cash used in financing activities was $59 thousand during Fiscal 2020, consisting of $18 thousand from the exercise of share options, and the $77 thousand share related expenses.

Net cash provided by financing activities was approximately $4.1 million for Fiscal 2022, which comprises net proceeds from issuance of equity stock through the ATM offering, net of all expenses related to the issuance of stock.

Net cash provided by financing activities was approximately $14.7 million for Fiscal 2021, which comprises proceeds from borrowings of approximately $580 thousand, repayment of loan of approximately $50 thousand, and approximately $14.2 million net proceeds from ATM sales.

Critical Accounting Policies and Estimates

16 unchanged sentences

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.

4 unchanged sentences

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 2022 and 2021 are as follows:

4 unchanged sentences

Construction contracts (2)

Purchase and resale of physical commodities (3)

Life Sciences segment

Wellness and lifestyle (3)

Tolling/White labeling service (5)

White label services (4)

(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.

(3) Relates to revenue from the Life Sciences segment including the sale of wellness and lifestyle products such as hand sanitizers, bath bombs, lotions, gummies, beverages, hemp crude extract, hemp isolate, and hemp distillate.

(4) Relates to revenue from the Life Sciences segment, including income white label services, which refers to a fully supported product or service that is made by us but sold by another company.

Accounts receivable

1 unchanged sentence

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.

We had $124 thousand of accounts receivable, net of provision for the doubtful debt of $93 thousand as of March 31, 2022, as compared to $175 thousand of accounts receivable, net of provision for the doubtful debt of $63 thousand as of March 31, 2021.

Most of our account receivables are from infrastructure segment.

Short-term and long-term investments

8 unchanged sentences

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 of less than 20% valued at cost as per ASC Topic 321, “ Investments-Equity Securities.

Impairment of investment

As of March 31, 2022, the Company does not have any investment in marketable securities.

The Company regularly reviews its investment portfolio to determine if any security is other-than-temporarily impaired, which would require the Company to record an impairment charge in the period any such determination is made.

16 unchanged sentences

The Company believes its harvested crops do not have a readily available market.

Hence, the Company values its harvested crops at cost.

Hence, in fiscal 2021, the Company values its harvested crops at cost.

Please refer to Note 3, “Inventory,” of Notes to Consolidated Financial Statements 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.

For further information refer to Note 3, “inventory” of Notes to Consolidated Financial Statements.

Stock-Based compensation

4 unchanged sentences

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.

For performance-based awards, stock-based compensation expense is recognized over the expected performance achievement period of individual performance milestones when the achievement of each individual performance milestone becomes probable by best of management estimate.

For performance-based awards with a vesting schedule based entirely on the attainment of performance conditions, stock-based compensation expense associated with each tranche is recognized over the expected achievement period for the operational milestone, beginning at the point in time when the relevant operational milestone is considered probable to be achieved.

For market-based awards, stock-based compensation expense is recognized over the expected achievement period.

The fair value of such awards is estimated on the grant date using binomial lattice model.

The Company estimates the fair value of stock option grants using the Black-Scholes option-pricing model.

44 unchanged sentences

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 5. Market for Registrant’s Common Equity