What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-07-07 compared with 2022-06-23 · 132 added, 172 removed, 605 unchanged (33% of the section changed)

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Report of Independent Registered Public Accounting Firm

To the shareholders and the board of directors of India Globalization Capital, Inc.

To the shareholders and the board of directors of IGC Pharma, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of India Globalization Capital, Inc.

and its subsidiaries (the "Company") as of March 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows, for each of the two years in the period ended March 31, 2022, and the related notes (collectively referred to as the "consolidated financial statements").

We have audited the accompanying consolidated balance sheets of IGC Pharma, Inc.

(formerly known as ‘India Globalization Capital, Inc.’) and its subsidiaries (the “Company”) as of March 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows, for each of the two years in the period ended March 31, 2023, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at March 31, 2023 and 2022, and the consolidated results of its operations and its cash flows for each of the two years in the period ended March 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

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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.

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgements.

We determined that there are no critical audit matters.

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Chennai, India

June 10, 2022

India Globalization Capital, Inc.

23237830BGZGZQ9446

IGC Pharma, Inc.

CONSOLIDATED BALANCE SHEETS

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Accounts receivable, net

Investment in non-marketable securities

Short term investments

Deposits and advances

Total current assets

Non-current assets:

Intangible assets, net

Property, plant and equipment, net

Non-marketable securities

Claims and advances

Operating lease asset

Total long-term assets

Total non-current assets

LIABILITIES AND STOCKHOLDERS ’ EQUITY

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Accrued liabilities and others

Short-term loans

Total current liabilities

Non-current liabilities:

Long-term loans

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The accompanying notes should be read in connection with these consolidated financial statements.

India Globalization Capital, Inc.

IGC Pharma, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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Comprehensive loss

Loss per share attributable to common stockholders:

Basic & diluted

Net loss per share attributable to common stockholders:

Basic and diluted

Weighted-average number of shares used in computing loss per share amounts:

The accompanying notes should be read in connection with these consolidated financial statements.

India Globalization Capital, Inc.

IGC Pharma, Inc.

CONSOLIDATED STATEMENT OF STOCKHOLDERS ’ EQUITY

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Common stock-based compensation & expenses, net

Issuance of common stock through offering (net of expenses)

Common stock issued for investment

Net proceeds from issuance of common stock

Other adjustments

Gain on foreign currency translation

Foreign currency translation adjustments

Balances as of March 31, 2022

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Common stock-based compensation & expenses, net

Issuance of common stock through offering (net of expenses)

Common stock issued for investment

Other adjustments

Gain on foreign currency translation

Net proceeds from issuance of common stock

Foreign currency translation adjustments

Balances as of March 31, 2023

The accompanying notes should be read in connection with these consolidated financial statements.

India Globalization Capital, Inc.

IGC Pharma, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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Depreciation and amortization

Provision against debtors and advances

Provision for bad debt

Permanent impairment of PPE

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Common stock-based compensation and expenses, net

Net loss on sale of property, plant, and equipment

Forgiveness of PPP Loan

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Purchase of property, plant, and equipment

Proceed from marketable securities

Investment in marketable securities

Investment in non-marketable securities

Sale of property, plant, and equipment

Investment in short-term investments

Acquisition and filing cost of patents and rights

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Cash flows from financing activities:

Issuance of equity stock through offering (net of expenses)

Proceeds from/repayment of long-term loan

Net proceeds from the issuance of common stock

Repayment of long-term loan

Net cash provided by financing activities

Effects of exchange rate changes on cash and cash equivalents

Net increase/(decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

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Supplementary information:

Cash paid for interest

Non-cash items:

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Forgiveness of PPP Loan

Amortization of operating lease

The accompanying notes should be read in connection with these consolidated financial statements.

India Globalization Capital, Inc.

IGC Pharma, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For Fiscal Years Ended March 31, 2023, and 2022

Unless the context requires otherwise, all references in this report to “IGC,” “we,” “our” and “us” refer to India Globalization Capital, Inc., together with our subsidiaries.

Unless the context requires otherwise, all references in this report to “IGC,” “we,” “our” and “us” refer to IGC Pharma, Inc., together with our subsidiaries.

NOTE 1 – NATURE OF OPERATIONS AND MANAGEMENT ’ S PLANS

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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..

The Company has filed forty-one (41) 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, 2023, our portfolio includes nine 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.

As of March 31, 2023, 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 IGC Pharma SAS (formerly Hamsa Biopharma Colombia SAS) (Hamsa).

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

The Company’ principal office is in Maryland established in 2005.

Additionally, the Company have offices in Washington state, Colombia, South America, and India.

The Company’s filings are available on www.sec.gov.

IGC has two segments:

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 and Infrastructure.

Life Sciences Segment

Biopharmaceutical :

Pharmaceutical :

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.

In addition, the Company has acquired and initiated work on TGR-63, a non-cannabinoid pre-clinical molecule, that exhibits an impressive affinity for reducing neurotoxicity in Alzheimer’s cell lines.

Neurotoxicity causes cell dysfunction and death in Alzheimer’s disease.

If shown to be efficacious, in AD cell lines, in halting this process, this inhibitor has the potential to treat Alzheimer’s disease by ameliorating Aβ plaques.

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.

We have created a women’s wellness brand, Holief™ available through online channels that are compliant with relevant federal, state, and local laws, and regulations.

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.

The Company is a Maryland corporation established in 2005.

The Company’s filings are available on www.sec.gov.

Holief™ is compliant with relevant federal, state, and local laws, and regulations.

Infrastructure Segment

The Company’s infrastructure business has been operating since 2008, it includes:

(i) Execution of Construction Contracts and (ii) Rental of Heavy Construction Equipment.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

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Due to the loss incurred during Fiscal 2023 and 2022, all the potential equity shares are anti-dilutive, and accordingly, the fully diluted EPS is equal to the basic EPS.

f) Income taxes

f) Going Concern:

The Company assesses and determines its ability to continue as a going concern in accordance with the provisions of ASC Subtopic 205-40, " Presentation of Financial Statements — Going Concern ", which requires the Company to evaluate whether there are conditions or events that raise substantial doubt about its ability to continue as a going concern.

The Company is currently in a clinical trial stage and, thus, has not yet achieved profitability.

The Company expects to continue to incur significant operating and net losses and negative cash flows from operations in the near future.

For the years ended March 31, 2023, and March 31, 2022, the Company incurred net losses of $ 11.5 million and $ 15 million, respectively.

As of March 31, 2023, the Company’s cash and cash equivalents totaled $3.2 million.

On June 30, 2023, the Company successfully obtained a working capital credit facility totaling $ 12 million and, in addition, sold 10,000,000 shares for $ 3,000,000 .

The equity and the credit facility serve to minimize ongoing liquidity requirements and ensure the Company’s ability to sustain its operations.

Furthermore, the Company intends to raise additional funds through private placement and ATM offerings, subject to market conditions.

Please refer to Note 19, “Subsequent Event,” for further information.

The Company estimates that its current cash and cash equivalents balance with working capital and equity investment is sufficient to support operations beyond the twelve months following the date these consolidated financial statements and footnotes were issued.

These estimates are based on assumptions that may prove to be wrong, and the Company could use its available capital resources sooner than it currently expects.

g) Income taxes

The Company accounts for income taxes under the asset and liability method, in accordance with ASC 740, Income Taxes, which requires an entity to recognize deferred tax liabilities and assets.

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As of March 31, 2023, and 2022, there was no significant liability for income tax associated with unrecognized tax benefits.

g) Accounts receivable

h) Accounts receivable

We make estimates of the collectability of our accounts receivable by analyzing historical payment patterns, customer concentrations, customer creditworthiness, and current economic trends.

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We had $ 107 thousand of accounts receivable, net of provision for doubtful debt of $ 17 thousand as of March 31, 2023, as compared to $ 125 thousand of accounts receivable, net of provision for doubtful debt of $ 93 thousand as of March 31, 2022.

h) Cash and cash equivalents

i) Cash and 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.

The cash and cash equivalents in the Company on March 31, 2022 and 2021, was approximately $ 10,460 thousand and $ 14,548 thousand, respectively.

i) Short-term and long-term investments

Our policy for short-term and long-term investments is to establish a high-quality portfolio that preserves principal, meets liquidity needs, avoids inappropriate concentrations, and delivers an appropriate yield in relationship to our investment guidelines and market conditions.

Short-term and long-term investments consist of corporate, various government agency and municipal debt securities, as well as certificates of deposit that have maturity dates that are greater than 90 days.

Certificates of deposit and commercial paper are carried at cost which approximates fair value.

The cash and cash equivalents in the Company on March 31, 2023, and 2022, were approximately $ 3,196 thousand and $ 10,460 thousand, respectively.

j) Short-term and long-term investments

Our policy for short-term and long-term investments is to establish a high-quality portfolio that preserves principal, meets liquidity needs, avoids inappropriate concentrations, and delivers an appropriate yield in relation to our investment guidelines and market conditions.

Short-term and long-term investments consist of corporate, various government agencies and municipal debt securities, as well as certificates of deposit that have maturity dates that are greater than 90 days.

Certificates of deposit and commercial paper are carried at a cost which approximates fair value.

Available-for-sale securities:

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As of March 31, 2023, investment in marketable securities is valued at fair value and investment in non-marketable securities with ownership less than 20% is valued at cost as per ASC Topic 321, “ Investments-Equity Securities.

j) Property, plant, and equipment (PP&E)

Property and equipment are recorded at cost net of accumulated depreciation and depreciated over their estimated useful lives using the straight-line method.

Upon retirement or disposition, cost and related accumulated depreciation of the property and equipment are de-recognized, and any gain or loss is reflected in the results of operation.

k) Property, plant, and equipment (PP&E)

Property, plant, and equipment are recorded at cost net of accumulated depreciation and depreciated over their estimated useful lives using the straight-line method.

Upon retirement or disposition, cost and related accumulated depreciation of the Property, plant and equipment are de-recognized, and any gain or loss is reflected in the results of operation.

Cost of additions and substantial improvements to property and equipment are capitalized.

The cost of maintenance and repairs of the property and equipment are charged to operating expenses as incurred.

k) Fair value of financial instruments

l) Fair value of financial instruments

ASC 820, “Fair Value Measurement” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

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Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The carrying amounts of the Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate their fair values due to the nature of the items.

The carrying amounts of the Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximately their fair values due to the nature of the items.

Please refer to Note 15, “Fair value of financial instruments,” for further information.

l) Concentration of credit risk and significant customers

m) Concentration of credit risk and significant customers

Financial instruments, which potentially expose the Company to concentrations of credit risk, are primarily comprised of cash and cash equivalents, investments, accounts receivable and unbilled accounts receivable, if any.

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and the credit concentration risk is low.

m) Stock – Based Compensation

n) Stock – Based Compensation

The Company accounts for stock-based compensation to employees and non-employees in conformity with the provisions of ASC Topic 718, “ Stock-Based Compensation.

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Stock-based awards are recognized on a straight-line basis over the requisite vesting period.

For stock-based employee compensation cost recognized at any date will be at least equal to the amount attributable to the share-based compensation that is vested at that date.

For stock-based employee compensation the 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.

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

n) Commitments and contingencies

o) Commitments and contingencies

Liabilities for loss contingencies arising from claims, assessments, litigations, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated.

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Information regarding our commitments and contingencies is incorporated by reference in Note 12, “Commitments and contingencies” of this Annual Report on Form 10-K.

o) Impairment of long – lived assets

p) Impairment of long – lived assets

The Company reviews its long-lived assets, with finite lives, for impairment whenever events or changes in business circumstances indicate that the carrying amount of assets may not be fully recoverable.

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Unlike goodwill, long-lived assets are assessed for impairment only where there are any specific indicators for impairment.

p) Intangible assets

q) Intangible assets

The Company’s intangible assets are accounted for in accordance with ASC Topic 350, Intangibles – Goodwill and Other.

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Inventory is valued at the lower of cost or net realizable value, which is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

Inventory consists of raw materials, finished goods related to wellness products, hand sanitizers, finished hemp-based products, beverages, among others as well as work-in-progress such as extracted crude oil, hemp-based isolate, growing crops, and herbal oils, among others.

Work-in-progress also includes product manufacturing in process, costs of growing hemp, in accordance with applicable laws and regulations including but not limited to labor, utilities, fertilizers and irrigation.

Inventory consists of finished goods related to wellness products, hand sanitizers, finished hemp-based products, beverages.

Work-and in-progress consist of products in the manufacturing process as on reporting date, including but not limited to primary cost.

Inventory is primarily accounted for using the weighted average cost method.

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Manufacturing overhead and related expenses include salaries, wages, employee benefits, utilities, maintenance, and property taxes.

Harvested crops are measured at net realizable value, with changes recognized in profit or loss only when the harvested crop:

- has a reliable, readily determinable, and realizable market value;

- has relatively insignificant and predictable costs of disposal;

- is available for immediate delivery.

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

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

Please refer to Note 3, “Inventory,” for further information.

We capitalize inventory costs related to our investigational drug, provided that management determines there is a potential alternative use for the inventory in future research and development projects or other purposes.

As of March 31, 2023, and 2022, our consolidated balance sheet reported approximately $ 407 thousand and no clinical trial-related inventory, respectively.

Abnormal amounts of idle facility expense, freight, handling costs, scrap, discontinued products and wasted material (spoilage) are expensed in the period they are incurred.

r) Cybersecurity

Please refer to Note 3, “Inventory,” for further information.

s) Cybersecurity

We have a cybersecurity policy in place and tighter cybersecurity measures to safeguard against hackers.

In Fiscal 2023, there were no impactful breaches in cybersecurity.

s) Research and Development Expenses

t) Research and Development Expenses

During Fiscal 2023 and 2022, the Company recorded research and development expenses of approximately $ 3.5 million and $ 2.3 million, respectively.

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The lessor practical expedient to not separate non-lease components from the associated component must be elected for all existing and new leases.

As lessor, the Company expects that post-adoption substantially all existing leases will have no change in the timing of revenue recognition until their expiration or termination.

As a lessor, the Company expects that post-adoption substantially all existing leases will have no change in the timing of revenue recognition until their expiration or termination.

The Company expects to elect the lessor practical expedient to not separate non-lease components such as maintenance from the associated lease for all existing and new leases and to account for the combined component as a single lease component.

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For leases that are accounted for as operating leases, income is recognized on a straight-line basis over the term of the lease contract.

Generally, when a lease is more than 180 days delinquent (where more than three monthly payments are owed), the lease is classified as being on nonaccrual and the Company stops recognizing leasing income on that date.

Generally, when a lease is more than 180 days delinquent (where more than three monthly payments are owed), the lease is classified as being nonaccrual and the Company stops recognizing leasing income on that date.

Payments received on leases in nonaccrual status generally reduce the lease receivable.

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Please refer to Note 9, “Leases,” for further information.

u) Recently issued and adopted accounting pronouncements

v) Recently issued and adopted accounting pronouncements

Changes to U.S.

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The Company considers the applicability and impact of all ASUs.

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.

Newly issued ASUs not listed 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.

NOTE 3 – INVENTORY

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Finished goods

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.

Work-and in-progress consist of products in the manufacturing process as on reporting date, including but not limited to gummies, tincture, and hemp derivatives.

Finished goods comprise, but is not limited to, hand sanitizers, gummies, lotions, and beverages, among others.

During Fiscal 2023, the Company charged $ 376 thousand of inventory in selling, general and administration due to product expiration, handling costs, scrap, and wasted material (spoilage) as compared to approximately $ 252 thousand for Fiscal 2022.

This charge was recorded in Selling, general, and administrative expenses.

NOTE 4 – DEPOSITS AND ADVANCES

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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 the equipment.

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

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.

Prepaid and other current assets include approximately $ 25 thousand in statutory advances for Fiscal 2023, as compared to $ 170 thousand in Fiscal 2022.

The Company decided to move advances paid to suppliers worth approximately $ 164 thousand to claims and advances, considering recovering might take more than 12 months.

NOTE 5 – INTANGIBLE ASSETS

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Total amortized intangible assets

Other intangible assets

Unamortized intangible assets

Other intangibles

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Total intangible assets

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

The value of intangible assets includes the cost of acquiring patent rights, supporting data, and the expense associated with filing of forty-one (41) patent applications in different countries along with nine (9) granted patents.

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

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March 31, 2022

Buildings & facilities

Buildings and facilities

Plant and machinery

Computer equipment

Office equipment

Computer equipment’s

Office equipment’s

Furniture and fixtures

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The depreciation expense in Fiscal 2023 and 2022 amounted to approximately $ 600 thousand and $ 627 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.

The net decrease in total property, plant, and equipment (net) is primarily due to depreciation and foreign exchange translations because of a decrease in value of foreign currencies.

In addition, Fiscal 2023, the Company disposed of fully depreciated assets in the amount of approximately $ 1.6 million from its subsidiaries.

This resulted in a reduction in the value of total gross assets but did not affect the net value of assets as the disposed assets had previously been fully depreciated.

The Company sold a property in Puerto Rico for net proceeds of approximately $ 485 thousand (acquired for approximately $ 480 thousand) and accounted for a profit of approximately $ 5 thousand in other income.

For more information, please refer to Note 18, “Segment Information” for the non-current assets other than financial instruments held in the country of domicile and foreign countries.

NOTE 7 – INVESTMENTS IN NON-MARKETABLE SECURITIES

Short-term investment

(in thousands)

Investment in Evolve I (i)

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

(in thousands)

Investment in equity shares of unlisted company

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 7 – LEFT BLANK INTENTIONALLY

NOTE 8 – CLAIMS AND ADVANCES

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Non-current advances

The claims receivable is due from the Cochin International Airport (“CIA”) that is partially owned by the State Government of Kerala.

While the Company has initiated collection proceedings in the Commercial Court of Ernakulam, it believes it will be difficult to receive the amount in the next 12 months because of the time required for legal collection proceedings.

The 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

The claims receivable is due from different vendors.

While the Company has initiated collection proceedings internally or with the appropriate authorities, it believes receiving the amount in the next 12 months will be challenging because of the time required for collection proceedings.

The Company decided to move advances paid to some suppliers worth approximately $ 164 thousand to claims and advances, considering recovering might take more than 12 months.

Includes $ 140 thousand owed to one of our manufacturers for the equipment purchase.

NOTE 9 – LEASES

The Company has short-term leases primarily consisting of spaces with the remaining lease term being less than or equal to 12 months.

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

The total short- term lease expense and cash paid for Fiscal 2023 and 2022 are approximately $ 178 thousand.

The Company also has four operating leases as of March 31, 2023.

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Provision for expenses

Short-term lease liability

Other current liability

Compensation and other contribution-related liabilities consist of accrued salaries to employees.

Provision for expenses include provision for legal, professional, and marketing expenses.

Other current liability also includes $ 123 thousand and $ 90 thousand of current operating lease liability and statutory payables of approximately $ 55 thousand and $ 24 thousand as of March 31, 2022 and March 31, 2021, respectively.

In addition, provision for expenses includes provision for legal, professional, and marketing expenses.

Other current liability also includes statutory payables of approximately $ 31 thousand and 55 thousand as of March 31, 2023, and March 31, 2022, respectively, and approximately $ 3 thousand of short-term loans as of March 31, 2023, and March 31, 2022, respectively.

NOTE 11 – LOANS AND OTHER LIABILITIES

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, 2023:

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The SBA will apply each installment payment first to pay interest accrued to the day SBA receives the payment and will then apply any remaining balance to reduce principal.

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

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

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

For Fiscal 2023, the interest expense and principal payment for the EIDL were approximately $ 5 thousand and $ 3 thousand, respectively.

As of March 31, 2023, approximately $ 141 thousand of the loan is classified as Long-term loans and approximately $ 3 thousand as Short-term loans.

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In the U.S., we provide health insurance, life insurance, and a 401(k) plan wherein the Company matches up to 6 % of the employee’s pre-tax contribution up to a maximum annual amount determined by the IRS.

In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (“Gratuity Plan”) covering certain categories of employees.

In addition, under applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Plan) covering certain categories of employees.

The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and the years of employment with the Company.

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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.

During Fiscal 2023, the Company raised approximately $ 103 thousand 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.

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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.

As of March 31, 2023, the management confirmed two milestones had been achieved, and the rest were probable to be achieved by March 31, 2027.

Additionally, options held by advisors and directors to purchase 150 thousand shares of common stock fair valued at $ 69 thousand with a weighted average of $ 0.46 per share, which have been granted but are to be issued over a vesting period, between Fiscal 2022 and Fiscal 2026.

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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 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.

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 2023, the Company’s common stock-based compensation and expenses shown in Selling, general and administrative expenses (including research and development) was $ 2.8 million.

For Fiscal 2022, the Company’s common stock-based compensation and expenses shown in Selling, general and administrative expenses (including research and development) was $ 2.2 million.

Non-vested shares

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Options outstanding as of March 31, 2023

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.

There was a combined unrecognized expense of $ 2.7 million related to non-vested shares and share options that the Company expects to be recognized over a life of four years .

NOTE 15 – FAIR VALUE OF FINANCIAL INSTRUMENTS

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The Company’s remaining investments have been classified as Level 3 instruments as there is little or no market data.

Level 3 investments are valued using cost-method.

Level 3 investments are valued using the cost method.

For further information refer Note 7, “Investments in Non-Marketable Securities.”

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NOTE 17 – REVENUE RECOGNITION

Revenue in the Infrastructure segment is recognized for the renting business when the equipment is rented, and terms of the agreement have been fulfilled during the period.

The revenue from the purchase and resale of physical infrastructure commodities is recognized once the bill of lading along with the invoice have been transferred to the customer.

Revenue in the Infrastructure segment is recognized for the renting business when the equipment is rented, and the terms of the agreement have been fulfilled during the period.

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.

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This generally occurs upon our delivery to a third-party carrier or to the customer directly.

Revenue from tolling services is recognized when the performance obligation, such as processing of the material, has been completed and output material has been transferred to the customer.

We license our products to processors.

The royalty income from licensing is recognized once goods have been sold by the processor to its customers.

Revenue from white label services is recognized when the performance obligation has been completed and output material has been transferred to the customer.

Net sales disaggregated by significant products and services for Fiscal 2023 and 2022 are as follows:

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Wellness and lifestyle (3)

White label services (4)

White labeling 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 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.

(3) Revenue from wellness and lifestyle consists of sale of products such as gummies, hand sanitizers, bath bombs, lotions, beverages, hemp crude extract, hemp isolate, and hemp distillate.

(4) Revenue from white label services consists of rebranding our formulations or the customer’s products as per customer’s requirement.

NOTE 18 – SEGMENT INFORMATION

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The Company’s CODM is the Company’s Chief Executive Officer (CEO).

The CEO reviews financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance.

The CEO reviews financial information presented on an operating segment basis for the purposes of making operating decisions and assessing financial performance.

Therefore, and before our Life Sciences segment started, the Company had determined that it operated in a single operating and reportable segment.

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Property, plant and equipment, net

Investments in unlisted securities

Claims and advances

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Property, plant and equipment, net

Investments in unlisted securities

Claims and advances

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NOTE 19 – SUBSEQUENT EVENTS

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.

On June 30, 2023, the Company successfully obtained a working capital credit facility totaling $ 12 million and in addition sold 10,000,000 shares for $ 3,000,000 .

The equity and the credit facility serve to minimize ongoing liquidity requirements and ensure the Company’s ability to sustain its operations.

Furthermore, the Company intends to raise additional funds through private placement and ATM offerings, subject to market conditions.

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

There were no changes in and disagreements with accountants on accounting and financial disclosures.

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