What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-06-23 compared with 2021-06-14 · 153 added, 162 removed, 624 unchanged (34% of the section changed)

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Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firms

Report of Independent Registered Public Accounting Firms (PCAOB ID 5341 )

Consolidated Balance Sheets

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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.

The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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.

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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:

Critical audit matters 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.

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.

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.

We determined that there are no critical audit matters.

Manohar Chowdhry & Associates

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Cash and cash equivalents

Marketable securities

Accounts receivable, net

Non-Marketable securities

Investment in non-marketable securities

Deposits and advances

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Common Shares

Common Stock and

Additional Paid in

and Additional

Paid in Capital

Accumulated Other

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Common stock-based compensation & expenses, net

Cancellation of IGC shares

Loss on foreign currency translation

Issuance of common stock through offering (net of expenses)

Common stock issued for investment

Other adjustments

Gain on foreign currency translation

Balances as of March 31, 2021

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Common stock-based compensation & expenses, net

Common stock issued for ATM

Issuance of common stock through offering (net of expenses)

Common stock issued for investment

Deconsolidation adjustment

Other adjustments

Gain on foreign currency translation

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Depreciation and amortization

Impairment of investment

Provision against debtors and advances

Permanent impairment of PPE

Impairment of non-marketable securities

Common stock-based compensation and expenses, net

Forgiveness of PPP Loan

Accounts receivables, net

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Accrued and other liabilities

Operating lease asset

Operating lease liability

Net cash used in operating activities

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Purchase of property, plant, and equipment

Sale of property, plant, and equipment

Proceed from marketable securities

Investment in marketable securities

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Acquisition and filing cost of patents and rights

Net cash (used in)/provided by investing activities

Net cash used in investing activities

Cash flows from financing activities:

Issuance of equity stock through public offering (net of expenses)

Issuance of equity stock through private placement (net of expenses)

Repayment of loan

Proceeds from borrowings, net

Net cash (used in)/provided by financing activities

Issuance of equity stock through offering (net of expenses)

Proceeds from/repayment of long-term loan

Net cash provided by financing activities

Effects of exchange rate changes on cash and cash equivalents

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Non-cash items:

Common stock issued/granted including ESOP, consultancy

Common stock issued/granted other than ESOP, consultancy

Common stock issued/granted for stock-based compensation, including patent acquisition

Forgiveness of PPP Loan

Amortization of operating lease

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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.

Since 2014, our team has been committed to researching the application of cannabinoids such as THC and 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 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, 2020).

To the best of our knowledge, this is the first human clinical trial using ultra low doses of THC, in combination with another molecule, to treat symptoms of dementia in Alzheimer’s patients.

THC is a naturally occurring cannabinoid produced by the cannabis plant.

It is known for being a psychoactive substance that can impact mental processes in a positive or negative way depending on the dosage.

THC is biphasic, meaning that low and high doses of the substance may affect mental and physiological processes in substantially different ways.

For example, in some patients, low doses may relieve a symptom, whereas high doses may amplify a symptom.

Ultimately, the goal of IGC’s research is to discover and analyze whether, and at what level of dosing, IGC-AD1 provides relief of a given symptom.

IGC’s trial is based on micro dosing on patients suffering from Alzheimer’s disease.

With further trials, subject to FDA approvals, the Company intends to pursue the efficacy of IGC-AD1 for indications of Agitation in patients with dementia from Alzheimer’s.

The Company has filed fifteen (15) patent applications to address various diseases such as Alzheimer’s, Central Nervous System (“CNS”) disorders, pain, stammering, seizures in cats and dogs, eating disorders, stress-relief, and calm-restoring beverage, and fatigue.

As of March 31, 2022, our portfolio includes six granted patents..

In addition, we license 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.

On November 11, 2021, Hamsa Biopharma India Pvt.

Ltd., a directly owned subsidiary of the Company, executed a Term Sheet with JNCASR and subsequently entered into an agreement for exclusive global rights corresponding to the molecules, technology, patent, and patent filings that were the subject of JNCASR’s research into naphthalene monoimide (NMI) compounds and the role of NMI compounds have on neurotoxicity associated with Alzheimer’s.

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

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.

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).

Infrastructure and Life Sciences.

Infrastructure Segment

The India and Hong Kong based infrastructure business includes:

(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

Biopharmaceutical :

Since 2014, this part of our business has focused on the potential uses of phytocannabinoids, including THC and Cannabidiol (“CBD”), in combination with other compounds to treat multiple diseases, including Alzheimer’s.

Over the Counter Products :

We have created a cannabinoid-based women’s wellness brand, Holief™ available through online channels and a CBD-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.

The Company’s principal office is in Maryland.

Additionally, the Company has a facility in Washington state, Colombia South America, and India.

As of March 31, 2022, the Company had the following operating subsidiaries:

Techni Bharathi Private Limited (TBL), IGCare LLC, Holi Hemp LLC, IGC Pharma LLC, SAN Holdings LLC, Sunday Seltzer, LLC, Hamsa Biopharma India Pvt.

and Colombia-based beneficially-owned subsidiary Hamsa Biopharma Colombia SAS (formerly Hamsa Biochem SAS) (Hamsa).

The Company’s fiscal year is the 52- or 53-week period that ends on March 31.

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future obligations under employee benefit plans;

the useful lives of property, plant, equipment;

the useful lives of property, plant, and equipment;

intangible assets;

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(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.

The computation of basic loss per share for Fiscal 2022, excludes potentially dilutive securities of approximately 6,302,149 shares which includes share options, unvested shares such as restricted shares and restricted share units, granted to employees, non-employees and advisors, and shares from the conversion of outstanding units, if any, because their inclusion would be anti-dilutive.

The weighted average number of shares outstanding for Fiscal 2022 and 2021, used for the computation of basic earnings per share (“EPS”) is 49,991,631 and 41,963,382 , respectively.

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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.

For financial statement purposes, the Company considers all highly liquid debt instruments with a 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.

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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.

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 Monte Carlo simulations.

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

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The Company has never declared or paid any cash dividends.

For further information refer to Note 14, “Stock-Based Compensation” of Notes to Consolidated Financial Statements.

n) Commitments and contingencies

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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.

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 the 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.

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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.

If 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.

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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,” for further information.

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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

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.

Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows, or disclosures.

NOTE 3 – INVENTORY

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Finished goods

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.

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.

Inventory in the form of work-in-progress as of March 31, 2022, comprises, but it is 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, gummies, lotions, beverages, and personal protective equipment, among others.

During Fiscal 2022, the Company wrote off approximately $ 252 thousand of inventory due to abnormal amounts of idle facility expense, freight, handling costs, scrap, and wasted material (spoilage) as compared to approximately $ 307 thousand for Fiscal 2021.

The Company also made an NRV adjustment of $ 1.7 million due to fall in the price of hemp derivatives because of COVID, leading to lower foot traffic and store closures.

As a result, it impacts decrease in demand and price.

These charges were recorded in Selling, General and Administrative Expenses.

NOTE 4 – DEPOSITS AND ADVANCES

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Advances to suppliers and consultants

Advances for Property, Plant and Equipment

Other receivables

Other receivables and deposits

Prepaid expense and other current assets

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.

Advances for Property, Plant, and Equipment include an advance paid for the equipment.

Prepaid and other current assets include approximately $ 170 thousand statutory advances for Fiscal 2022, as compared to $ 36 thousand in Fiscal 2021.

Please refer to Note 3, “Inventory,” for details of Other receivables.

Other receivables and deposits as of March 31, 2021, consist of an inventory of $ 1.7 million that was on deposit with a vendor.

The vendor reported the inventory as stolen and filed an insurance claim.

The Company created a provision for the $ 1.9 million on stolen inventory and other advances and receivables during Fiscal 2022.

We are simultaneously pursuing the vendor for compensation.

The Company decided to move advances paid to some suppliers worth approximately $ 586 thousand to claims and advances, considering recovering might take more than 12 months.

NOTE 5 – INTANGIBLE ASSETS

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March 31, 2022

March 31, 2021

Other intangibles

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Total amortized intangible assets

Indefinite lived intangible assets

Other intangible assets

Other intangibles

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The value of intangible assets includes the cost of acquiring patent rights, supporting data, and the expense associated with filing 13 patents.

It also includes acquisition costs related to brands, domains, and licenses.

It also includes acquisition costs related to 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.

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Total property, plant and equipment, net

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.

The depreciation expense in Fiscal 2022 and 2021, amounted to approximately $ 627 thousand and $ 462 thousand, respectively.

The net decrease in total Property, Plant & Equipment is primarily due to depreciation and foreign exchange translations because of a decrease in value of foreign currencies.

In fiscal 2022, Company found cost efficient and advance facility outside the US, so it decided to impair facility worth of $ 833 thousand.

The construction in progress relates to the Maryland office extension.

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.

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Investment in Evolve I (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.

On May 12, 2020, the Company acquired approximately 19.8 % shareholding in Evolve I, Inc.

(“Evolve”), 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 of 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.

During Fiscal 2022, the Company received back partial shares of IGC common stock, which had been given pursuant to the SSA, in exchange for the return of its shareholding in Evolve.

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

Long-term investment

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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.

Due to the impact of COVID-19 on our infrastructure business, the Company impaired its investment.

NOTE 8 – CLAIMS AND ADVANCES

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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.

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.

The decrease in claims receivable was mainly due to foreign exchange translation as a result of decrease in value of Indian Rupee.

Includes a loan of $ 200 thousand to one of our manufacturers for the purchase of equipment.

In addition to that, the Company decided to move advances paid to some suppliers worth approximately $ 586 thousand to claims and advances, considering recovering might take more than 12 months

NOTE 9 – LEASES

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The total short- term lease expense and cash paid for Fiscal 2022 and 2021 are approximately $ 178 thousand and $ 233 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.

The Company also has four operating leases as of March 31, 2022.

In November 2019, the Company entered into a 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.

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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 remaining lease term for the operating lease is 3.7 years with a 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.

The Company renewed three lease agreements for terms between three to four years expiring between 2023 and 2024.

The total annual lease expense is approximately $ 27 thousand.

The lease contracts do not contain any material residual value guarantees or material restrictive covenants.

The remaining lease term for the operating leases is between 2.00 - 2.75 years with a 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)

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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:

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.

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.

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%.

Forgiveness of Paycheck Protection Program Promissory Note:

On May 3, 2020, the Company signed the Paycheck Protection Program Promissory Note (the “PPP Note”) for a loan of approximately $ 430 thousand.

The PPP Note was to mature after 2 years on May 3, 2022, with monthly repayments of approximately $18 thousand commencing November 1, 2020, and interest accrued on the outstanding principal balance at an annual fixed rate of 1.00%.

On June 10, 2021, the Company received forgiveness for the full amount borrowed of approximately $430 thousand.

This is accounted in the company’s consolidated statements of operations and comprehensive loss for Fiscal 2022, as other income, net.

Loan as of March 31, 2022:

On June 11, 2020, the Company received an Economic Injury Disaster Loan (“EIDL”) 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.

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All remaining principal and accrued interest is due and payable in 30 years from the date of the loan.

For Fiscal 2022, the interest expense and principal payment for the EIDL was approximately $ 5 thousand and $ 3 thousand, respectively.

As of March 31, 2022, approximately $ 144 thousand of the loan is classified as Long-term loans and approximately $ 3 thousand as Short-term loans.

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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.

There are no such matters that are deemed material to the consolidated financial statements as of March 31, 2022, except as disclosed in 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.

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This security also trades on the Frankfurt, Stuttgart, and Berlin stock exchanges (ticker symbol:

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.

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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.

On January 13, 2021, the Company entered into a Sales Agreement (the “Agreement”) with The Benchmark Company, LLC (“Benchmark” or 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”).

During Fiscal 2022, the Company raised approximately $ 4.1 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.

As of March 31, 2022, 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, non-employees, and advisors.

In addition, 6 million restricted share units (RSUs) fair valued at $ 7 million with a weighted average value of $ 1.18 per share, have been granted but not yet issued from different Incentive Plans and Grants.

This includes 4 million RSUs granted to employees and directors, which consists of a vesting schedule based entirely on the attainment either operational milestones (performance conditions) or market conditions, assuming continued employment either as an employee, or director with the Company.

The performance based RSUs are accounted upon certification by the management confirming the probability of achievement of milestones.

As of March 31, 2022, the management confirmed none of the milestones had been achieved but were considered probable to be achieved by September 30, 2024.

Additionally, options held by advisors and directors to purchase 300 thousand shares of common stock fair valued at $ 278 thousand with a weighted average of $ 0.93 per share, which have been granted but are to be issued over a vesting period, between Fiscal 2022 and Fiscal 2026.

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:

The options are fair valued using a Black-Scholes Pricing Model and market based RSU are valued based on lattice model with the following assumptions:

Expected life of options

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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.

For Fiscal 2022, the Company’s share-based expense and option-based expense shown in Selling, general and administrative expenses (including research and development) was $ 2.1 million and $ 8 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.

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Options outstanding as of March 31, 2022

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.

There was a combined unrecognized expense of $ 5.35 million related to non-vested shares and share options that the Company expects to be recognized over weighted average life of 4.23 years.

NOTE 15 – FAIR VALUE OF FINANCIAL INSTRUMENTS

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Net operating loss carry-forwards foreign

Non-capital loss carry-forwards – USA

Non-capital loss carry-forwards – U.S.

Temporary differences

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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.

NOTE 18 – SEGMENT INFORMATION

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For information for revenue by product and service, refer Note 17, “Revenue Recognition.”

2) The table below shows the revenue attributed to the country of domicile (U.S.) and foreign countries.

2) The table below shows the attributed to the country of domicile (U.S.) and foreign countries.

Revenue is generally attributed to the geographic location of customers:

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Total Revenue

(2) Hong Kong

(in thousands)

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Total Revenue

(2) Hong Kong

3) The table below shows the non-current assets other than financial instruments held in the country of domicile and foreign countries.

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Nature of Assets

USA (Country of Domicile)

(Country of Domicile)

Foreign Countries

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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.

On November 11, 2021, Hamsa Biopharma India Pvt.

(“Hamsa Biopharma”), a directly owned subsidiary of the Company, executed a Term Sheet with JNCASR, and on March 28, 2022, entered into an agreement for exclusive global rights corresponding to the molecules, technology, patent, and patent filings.

The completion of outstanding items in the agreement occurred on May 10, 2022, and the agreement with JNCASR was filed on Form 8K on May 12, 2022.

IGC acquired exclusive global rights to the molecule and plans to develop this lead candidate further.

On June 7, 2022, the USPTO issued a patent (#11,351,152) to the Company titled “Method and Composition for Treating Seizures Disorders”.

The patent relates to compositions and methods for treating multiple types of seizure disorders and epilepsy in humans and animals using a combination of the CBD with other compounds.

Subject to further research and study, the combination is intended to reduce side effects caused by hydantoin anticonvulsant drugs such as phenobarbital, by reducing the dosing of anticonvulsant drugs in humans, dogs, and cats.

ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data