ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis of the consolidated statement of operations, liquidity and capital resources, and summary of cash flows, which apply to Fiscal 2022 ending on March 31, 2022 and Fiscal 2021 ending on March 31, 2021. These statements should be read in conjunction with our consolidated financial statements and the related notes that appear elsewhere in this Annual Report on Form 10-K.

In addition to historical information, this report contains forward-looking statements that involve risks and uncertainties that may cause our actual results to differ materially from the plans and results discussed in forward-looking statements. We encourage you to review the risks and uncertainties discussed in the sections entitled Item 1A. “Risk Factors” and “Forward-Looking Statements” are included at the beginning of this Annual Report on Form 10-K.

The risks and uncertainties can cause actual results to differ significantly from those in our forward-looking statements or implied in historical results and trends. We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

Overview

IGC has two segments: Life Sciences and Infrastructure.

Infrastructure Segment

The infrastructure business, operating since 2008. The Company intends to continue infrastructure operations as the COVID-19 pandemic permits, including:

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

(ii) Rental of Heavy Construction Equipment – We rent equipment, such as motor grader and rollers, to construction contractors. There was minimal revenue from rentals in Fiscal 2022 due to seasonality and COVID-19 pandemic disruptions.

Life Sciences Segment

Over the Counter Products:

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

Both HoliefTM, and Sunday SeltzerTM are compliant with relevant federal, state, and local laws, and regulations.

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Biopharmaceutical:

Since 2014, we have focused a portion of our business on the application of phytocannabinoids such as Tetrahydrocannabinol (“THC”) and Cannabidiol (“CBD”), among others, in combination with other compounds, to address efficacy for various ailments and diseases such as Alzheimer’s disease. As previously disclosed, IGC submitted IGC-AD1, our investigational drug candidate for Alzheimer’s, to the FDA under Section 505(i) of the Federal Food, Drug, and Cosmetic Act and received approval on July 30, 2020, to proceed with the Phase 1 trial on Alzheimer’s patients.

The Company completed all dose escalation studies, and as announced by the Company on December 2, 2021, the results of the clinical trial have been submitted in the Clinical/Statistical Report (“CSR”) filed with the FDA. The Company is motivated by the potential that, with future successful results from appropriate further trials, IGC-AD1 could contribute to relief for some of the 55 million people around the world expected to be impacted by Alzheimer’s disease by 2030 (WHO, 2021).

We have a two-pronged approach for our Alzheimer’s drug development strategy, the first prong is to investigate IGC-AD1 as an Alzheimer’s symptoms modifying agent and the second is to investigate TGR-63 as a disease modifying agent. This involves conducting more trials on IGC-AD1 over the next few years, subject to FDA approval, with the anticipated goal of demonstrating safety and efficacy and potentially obtaining FDA approval for IGC-AD1 as a cannabinoid-based new drug that can help manage agitation for patients suffering from Alzheimer’s disease. The second prong is to investigate the potential efficacy of TGR-63 on memory and/or decreasing or managing plaques and tangles, some of the hallmarks of Alzheimer’s disease.

Our pipeline of investigational and development cannabinoid formulations also includes pain creams and tinctures for pain relief. We believe that the biopharmaceutical component of our Life Sciences strategy will take several more years to mature and involves considerable risk; however, we also believe it may involve greater defensible growth potential and first-to-market advantage.

Although there can be no assurance, we believe that additional investment in clinical trials, research, and development (“R&D”), facilities, marketing, advertising, and acquisition of complementary products and businesses supporting our Life Sciences segment will be critical to the development and delivery of innovative products and positive patient and customer experiences. We hope to leverage our R&D and intellectual property to develop ground-breaking, science-based products that are proven effective through planned pre-clinical and clinical trials. Although there can be no assurance, we believe this strategy has the potential to improve existing products and lead to the creation of new products, which, based on scientific study and research, may offer positive results for the management of certain conditions, symptoms, and side effects.

While the bulk of our medium and longer-term focus is on clinical trials and getting IGC-AD1 to be an FDA approved drug, our shorter-term strategy, is to use our resources to provide white label services and market HoliefTM and Sunday SeltzerTM. We believe this may provide us with several profit opportunities, although there can be no assurance of such profit opportunities.

COVID-19 Update

The infrastructure business, based in India and Hong Kong, had significantly lower revenue in Fiscal Year 2022 due to the continued impact of the COVID-19 pandemic and restrictions imposed by governmental entities. We have limited visibility into when economic conditions will recover in India and especially Hong Kong. Specifically:

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The Global Economic Environment

In addition to the industry-specific factors such as regulations around cannabinoid research, we are exposed to economic cycles. Factors in the global economic environment that may impact our operations include, among other things, currency fluctuations, capital and exchange controls, global economic conditions including inflation, restrictive government actions, changes in intellectual property, legal protections and remedies, trade regulations, tax laws and regulations and procedures and actions affecting approval, production, pricing, and marketing of our products, as well as impacts of political or civil unrest or military action, including the current conflict between Russia and Ukraine, terrorist activity, unstable governments, and legal systems, inter-governmental disputes, public health outbreaks, epidemics, pandemics, natural disasters or disruptions related to climate change.

Operational Excellence

We remain focused on continuing to build excellence broadly in three areas, cannabinoid-based investigations, drug development and product manufacturing, and online marketing. We believe these will give us a competitive advantage, including building an increasingly agile and adaptable commercialization engine with a strong customer-focused market expertise.

Workplace and Employees

We support broad public health strategies designed to prevent the spread of COVID-19 and are focused on the health and welfare of our employees. We have mobilized to enable our employees to accomplish our most critical goals through a combination of remote work and in-person initiatives. In addition to rolling out new technologies and collaboration tools, we have implemented processes and resources to support our employees in the event an employee receives a positive COVID-19 diagnosis. We have developed plans regarding the opening of our sites to enable our employees to return to work in our global offices, the field, and our manufacturing facilities, which take into account applicable public health authority and local government guidelines, and which are designed to ensure community and employee safety. We are moving to a more flexible mix of virtual and in-person working to advance our culture, drive innovation and agility and enable greater balance and well-being for our workforce.

Research and Development

With respect to our clinical trial activities, we have taken measures to implement remote and virtual approaches, including remote data monitoring where possible, to maintain safety and trial continuity, and to preserve study integrity. We have seen delays in initiating trial sites, due to COVID-19. We cannot guarantee that we will continue to perform our trials in a timely and satisfactory manner as a result of the evolving effects of the COVID-19 pandemic. Similarly, our ability to recruit and retain patients and principal investigators, and site staff who, as health care providers, may have heightened exposure to COVID-19, may adversely impact our clinical trial operations.

Fiscal 2022 Highlights

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Results of Operations

Fiscal 2022 compared to Fiscal 2021

The following table presents an overview of our results of operations for Fiscal 2022 and Fiscal 2021:

Statement of Operations (in thousands, audited)

Fiscal

2022 ($) 2021 ($) Change ($) Percent Change

Selling, general and administrative expenses (13,292 ) (7,908 ) (5,384 ) 68 %

Income tax expense/benefit - - - -

Net loss attributable to common stockholders (15,016 ) (8,811 ) (6,205 ) 70 %

Revenue – Revenue in Fiscal 2022 and Fiscal 2021, was primarily derived from our Life Sciences segment, which involved sales of in-house brands and alcohol-based hand sanitizers, among others. Revenue was approximately $397 thousand and $898 thousand for Fiscal 2022 and Fiscal 2021, respectively. In Fiscal 2022 we de-emphasized the manufacturing and sale of low margin hand sanitizers and shifted our focus to higher margin white label services and the sale of products under our brands. This decreased our revenue. The infrastructure business had lower revenue in Fiscal 2022 due to the continued impact of the COVID-19 pandemic and restrictions imposed by government entities.

Cost of revenue – Cost of revenue amounted to approximately $203 thousand for Fiscal 2022, compared to $785 thousand in Fiscal 2021. This decrease in the cost of revenue was attributable to decreased revenue. The cost of revenue in Fiscal 2022 is primarily attributable to the cost of raw materials, labor, and other direct overheads required to produce our products. Our gross margin increased from 12% to 48%, which reflects our increased focus on higher-margin services and the sale of products under our brand.

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Selling, general and administrative expenses – Selling, general and administrative expenses consist primarily of employee-related expenses, sales commission, professional fees, legal fees, marketing, other corporate expenses, allocated general overhead and provisions, depreciation, and write-offs relating to doubtful accounts and advances, if any. Selling, general, and administrative expenses increased by approximately $5.3 million or 68% to $13.2 million for Fiscal 2022, from approximately $7.9 million for Fiscal 2021. The increase of approximately $5.3 million is attributed to one-time expenses, which include law-suit settlement expenses of approximately $264 thousand; impairment of facility of $833 thousand; net realizable value (“NRV”) adjustment of $1.7 million for the hemp crop; approximately $475 thousand in provisions for advances paid; and approximately $1.7 million in provisions against inventory that was stolen at our vendor’s facility. In addition, the increase of approximately $1.3 million is attributable to an increase in non-cash expenses. Adjusting for approximately $5.3 million in one-time and non-cash expenses, the SG&A for the fiscal year 2022 was lower by approximately $500 thousand.

Research and Development expenses: Research and Development (“R&D”) expenses were attributed to our Life Sciences segment. The R&D expenses increased by approximately $1.4 million or 151% to $2.3 million in Fiscal 2022, from approximately $929 thousand for Fiscal 2021. Expenses increased by $1.4 million due to the now completed Phase 1 clinical trial. We expect R&D expenses to increase with the progression of Phase 2 trials on IGC-AD1 and pre-clinical trials on TGR-63.

Impairment loss – Impairment loss amounted to approximately $49 thousand for Fiscal 2022, compared to $169 thousand in Fiscal 2021. This decrease in the impairment loss was attributable to the Company recording an impairment of $169 thousand as of March 31, 2021, in Evolve I. During Fiscal 2022, the Company received 44 thousand shares of IGC common stock, which had been granted pursuant to the Purchase Agreement. Accordingly, the Company canceled the shares and impaired its remaining investment of approximately $37 thousand.

Other Income, net –Other income for Fiscal 2022 and 2021 is approximately $461 thousand and $82 thousand, respectively. The increase was due to the forgiveness of a PPP loan in the amount of $430 thousand. Other income includes interest income, rental income, dividend income, and unrealized gains from marketable securities, net, and income from sale of scrap, among others.

Liquidity and capital resources

Our sources of liquidity are cash and cash equivalents, funds raised through “at the market” (“ATM”) offerings, cash flows from operations, short-term and long-term borrowings, and short-term liquidity arrangements. The Company continues to evaluate various financing sources and options to raise working capital to help fund current research and development programs and operations. The Company does not have any material long-term debt, capital lease obligations or other long-term liabilities, except as disclosed in this report. Please refer to Note 12, “Commitments and contingencies”, Note 11, “Loans and Other Liabilities” and Note 9, “Leases” in Item 8 of this report for further information on Company commitments and contractual obligations.

While the Company believes its existing balances of cash, cash equivalents and marketable securities and other short-term liquidity arrangements will be sufficient to satisfy its working capital needs, capital asset purchases, share repurchases, debt repayments, investments, including but not limited to, mutual funds, treasury bonds, cryptocurrencies, and other asset classes, clinical trials and other liquidity requirements, if any, associated with its existing operations over the next 12 months, it will raise money as and when it is able to do so. The Company continues to utilize the ATM to raise capital. Shares issuable under the ATM could be dilutive to the Company’s shareholders. In addition, the Company shifted its focus to higher margin white label services and the sale of products under our brands. Management is actively monitoring the impact of COVID-19 on the Company’s financial condition, liquidity, operations, suppliers, industry, legal expenses, and workforce.

Please refer to Item 1A. “Risk Factors” for further information on the risks related to the Company.

(in thousands, audited)

As of March 31, 2022 ($) As of March 31, 2021 ($) Change ($) Percent Change

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Cash and cash equivalents

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

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

Summary of Cash flows

(in thousands, audited)

Fiscal

2022 ($) 2021 ($) Change ($) Percent Change

Cash (used in)/provided by investing activities (742 ) 3,387 (4,129 ) (122 )%

Operating Activities

Net cash used in operating activities for Fiscal 2022, was approximately $7.5 million. It consists of a net loss of approximately $15 million, a positive impact on cash due to non-cash expenses of approximately $5 million, and changes in operating assets and liabilities of approximately $2.5 million. Non-cash expenses consist of an amortization/depreciation charge of approximately $651 thousand, impairment of investment of $49 thousand, provision against debtor & advances of $1.7 million, stock-based expenses of approximately $2.2 million, and a one-time impairment of PPE of $833 thousand and an off set of $430 thousand due to the forgiveness of a PPP Loan. In addition, changes in operating assets and liabilities had a positive impact of approximately $2.5 million on cash, of which approximately $1.9 million is due to an adjustment in inventory and approximately $504 thousand increase in accounts payable..

Net cash used in operating activities for Fiscal 2021 was approximately $10.8 million. It consists of a net loss of approximately $8.8 million, a positive impact on cash due to non-cash expenses of approximately $1.3 million, and a negative impact due to changes in operating assets and liabilities of approximately $3.3 million. Non-cash expenses consist of an amortization/depreciation charge of approximately $478 thousand, impairment of investment of $169 thousand, and stock-based expenses of approximately $658 thousand. In addition, changes in operating assets and liabilities had a negative impact of approximately $3.3 million on cash, of which approximately $1.2 million is due to an adjustment in inventory, approximately $2.2 million due to deposits and advances, and a positive impact of approximately $100 thousand for other adjustments in net assets.

Investing Activities

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

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

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Financing Activities

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

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

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions, and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes. We base our estimates on historical experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates, and such differences may be material.

Management believes that the following accounting policies are the most critical to understanding and evaluating our consolidated financial condition and results of operations.

Revenue Recognition

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers (ASC 606). The core principle of this standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

ASC 606 prescribes a 5-step process to achieve its core principle. The Company recognizes revenue from trading, rental, or product sales as follows:

I. Identify the contract with the customer.

II. Identify the contractual performance obligations.

III. Determine the amount of consideration/price for the transaction.

IV. Allocate the determined amount of consideration/price to the performance obligations.

V. Recognize revenue when or as the performing party satisfies performance obligations.

The consideration/price for the transaction (performance obligation(s)) is determined as per the agreement or invoice (contract) for the services and products in the Infrastructure and Life Sciences segment.

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. Revenue from the execution of infrastructure contracts is recognized on the basis of the output method as and when part of the performance obligation has been completed and approval from the contracting agency has been obtained after survey of the performance completion as of that date. In the Life Sciences segment, the revenue from the wellness and lifestyle business is recognized once goods have been sold to the customer and the performance obligation has been completed. In retail sales, we offer consumer products through our online stores. Revenue is recognized when control of the goods is transferred to the customer. This generally occurs upon our delivery to a third-party carrier or, to the customer directly. Revenue from tolling services is recognized when the performance obligation, such as processing of the material, has been completed and output material has been transferred to the customer.

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Net sales disaggregated by significant products and services for Fiscal 2022 and 2021 are as follows:

(in thousands) Year Ended March 31

Infrastructure segment

Rental income (1) 23 1

Construction contracts (2) 15 174

Life Sciences segment

White label services (4) 43 35

(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.

Accounts receivable

We make estimates of the collectability of our accounts receivable by analyzing historical payment patterns, customer concentrations, customer creditworthiness, and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required. We had $124 thousand of accounts receivable, net of provision for the doubtful debt of $93 thousand as of March 31, 2022, as compared to $175 thousand of accounts receivable, net of provision for the doubtful debt of $63 thousand as of March 31, 2021. Most of our account receivables are from infrastructure segment.

Short-term and long-term investments

Our policy for short-term and long-term investments is to establish a high-quality portfolio that preserves principal, meets liquidity needs, avoids inappropriate concentrations, and delivers an appropriate yield in relationship to our investment guidelines and market conditions. Short-term and long-term investments consist of corporate, various government agency and municipal debt securities, as well as certificates of deposit that have maturity dates that are greater than 90 days. Certificates of deposit and commercial paper are carried at cost which approximates fair value. Available-for-sale securities: Investments in debt securities that are classified as available for sale shall be measured subsequently at fair value in the statement of financial position.

Investments are initially measured at cost, which is the fair value of the consideration given for them, including transaction costs. Where the Company’s ownership interest is in excess of 20% and the Company has a significant influence, the Company has accounted for the investment based on the equity method in accordance with ASC Topic 323, “Investments – Equity method and Joint Ventures.” Under the equity method, the Company’s share of the post-acquisition profits or losses of the equity investee is recognized in the consolidated statements of operations and its share of post-acquisition movements in accumulated other comprehensive income / (loss) is recognized in other comprehensive income / (loss). Where the Company does not have significant influence, the Company has accounted for the investment in accordance with ASC Topic 321, “Investments-Equity Securities.”

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

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Impairment

The Company regularly reviews its investment portfolio to determine if any security is other-than-temporarily impaired, which would require the Company to record an impairment charge in the period any such determination is made. In making this determination, the Company evaluates, among other things, the duration and extent to which the fair value of a security is less than its cost; the financial condition of the issuer and any changes thereto; and the Company’s intent to sell, or whether it will more likely than not be required to sell, the security before recovery of its amortized cost basis. The Company’s assessment of whether a security is other-than-temporarily impaired could change in the future due to new developments or changes in assumptions related to any particular security, which would have an adverse impact on the Company’s financial condition and operating results. The estimated amount of liability is based on the information available to us with respect of bank debt and other borrowings. During Fiscal 2022 and Fiscal 2021 the Company impaired investments of approximately $49 thousand and $169 thousand, respectively.

Inventory

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

Inventory consists of raw materials, finished goods related to wellness products, hand sanitizers, finished hemp-based products, beverages, among others as well as work-in-progress such as extracted crude oil, hemp-based isolate, growing crops, and herbal oils, among others. Work-in-progress also includes product manufacturing in process, costs of growing hemp, in accordance with applicable laws and regulations including but not limited to labor, utilities, fertilizers, and irrigation. Inventory is primarily accounted for using the weighted average cost method. Primary costs include raw materials, packaging, direct labor, overhead, shipping, and the depreciation of manufacturing equipment. Manufacturing overhead and related expenses include salaries, wages, employee benefits, utilities, maintenance, and property taxes.

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

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

- has relatively insignificant and predictable costs of disposal; and

- is available for immediate delivery.

The Company believes its harvested crops do not have a readily available market. Hence, in fiscal 2021, the Company values its harvested crops at cost. Please refer to Note 3, “Inventory,” of Notes to Consolidated Financial Statements for further information.

Abnormal amounts of idle facility expense, freight, handling costs, scrap, discontinued products and wasted material (spoilage) are expensed in the period they are incurred. For further information refer to Note 3, “inventory” of Notes to Consolidated Financial Statements.

Stock-Based compensation

The Company accounts for stock-based compensation to employees and non-employees in conformity with the provisions of ASC Topic 718, “Stock-Based Compensation.” The Company expenses stock-based compensation to employees over the requisite vesting period based on the estimated grant-date fair value of the awards. The Company accounts for forfeitures as they occur. Stock-based awards are recognized on a straight-line basis over the requisite vesting period. For stock-based employee compensation cost recognized at any date will be at least equal to the amount attributable to the share-based compensation that is vested at that date.

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

For market-based awards, stock-based compensation expense is recognized over the expected achievement period. The fair value of such awards is estimated on the grant date using binomial lattice model.

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The Company estimates the fair value of stock option grants using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based awards represent Management’s best estimates. Generally, the closing share price of the Company’s common stock on the date of grant is considered the fair-value of the share. The volatility factor is determined based on the Company’s historical stock prices. The expected term represents the period that our stock-based awards are expected to be outstanding. The Company has never declared or paid any cash dividends. For further information refer to Note 14, “Stock-Based Compensation” of Notes to Consolidated Financial Statements.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax base of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating loss for financial-reporting and tax-reporting purposes. Accordingly, for Federal and State income tax purposes, the benefit for income taxes has been offset entirely by a valuation allowance against the related federal, state, and foreign deferred tax assets.

Foreign currency translation

IGC operates in India, U.S., Colombia, and Hong Kong, and a substantial portion of the Company’s financials are denominated in the Indian Rupee (“INR”), the Hong Kong Dollar (“HKD”), or the Colombian Peso (“COP”). As a result, changes in the relative values of the U.S. Dollar (“USD”), the INR, the HKD, or the COP affect financial statements.

The accompanying financial statements are reported in USD. The INR, HKD, and COP are the functional currencies for certain subsidiaries of the Company. The translation of the functional currencies into U.S. dollars is performed for assets and liabilities using the exchange rates in effect at the balance sheet date and for revenues and expenses using average exchange rates prevailing during the reporting periods. Adjustments resulting from the translation of functional currency financial statements to reporting currency are accumulated and reported as other comprehensive income/(loss), a separate component of shareholders’ equity. Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the consolidated statements of operations. The exchange rates used for translation purposes are as follows:

Period End Average Rate Period End Rate

Period (P&L rate) (Balance sheet rate)

HKD 7.78 Per USD HKD 7.83 Per USD

HKD 7.75 Per USD HKD 7.77 Per USD

Cybersecurity

We have a cybersecurity policy in place and have implemented tighter cybersecurity measures to safeguard against hackers. Complying with these security measures and compliances is expected to incur further expenses. In Fiscal 2022 and Fiscal 2021, there were no known or detected breaches in cybersecurity.

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Recently issued and adopted accounting pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASUs) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. Newly issued ASUs not listed 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. Recent accounting pronouncements which may be applicable to us are described in Note 2, “Significant Accounting Policies” in our Consolidated Financial Statements contained herein in Part II, Item 8.

Off-balance sheet arrangements

We do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity, or market risk support to such entity. We do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or research and development services with us.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Item 7A does not apply to us because we are a smaller reporting company.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements Page

Report of Independent Registered Public Accounting Firms (PCAOB ID 5341) 47

Consolidated Balance Sheets 48

Consolidated Statements of Operations and Comprehensive Loss 49

Consolidated Statements of Stockholders’ Equity 50

Consolidated Statements of Cash Flows 51

Notes to Consolidated Financial Statements 52

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Report of Independent Registered Public Accounting Firm

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

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of India Globalization Capital, Inc. and its subsidiaries (the "Company") as of March 31, 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"). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at March 31, 2022 and 2021, and the consolidated results of its operations and its cash flows for each of the two years in the period ended March 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Consolidated financial statements are free of material misstatement, whether due to error or fraud. 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. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

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. We determined that there are no critical audit matters.

Manohar Chowdhry & Associates

Chartered Accountants

We have served as the Company's auditor since 2018.

Chennai, India

June 10, 2022

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India Globalization Capital, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

ASSETS

Current assets:

Accounts receivable, net 125 175

Investment in non-marketable securities - 80

Property, plant and equipment, net 9,419 10,840

Non-marketable securities - 12

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accrued liabilities and others 1,457 1,588

Short-term loans 3 304

Other liabilities 16 15

Operating lease liability 341 405

Total non-current liabilities 501 696

Commitments and Contingencies – See Note 12

Stockholders' equity:

Accumulated other comprehensive loss (2,968 ) (2,774 )

Total liabilities and stockholders' equity 26,834 35,867

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

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India Globalization Capital, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except loss per share and share data)

Years Ended March 31,

Selling, general and administrative expenses (13,292 ) (7,908 )

Research and development expenses (2,330 ) (929 )

Impairment of investment (49 ) (169 )

Income tax expense/benefit - -

Net loss attributable to common stockholders (15,016 ) (8,811 )

Foreign currency translation adjustments (194 ) 76

Loss per share attributable to common stockholders:

Basic & diluted $ (0.30 ) $ (0.21 )

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

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India Globalization Capital, Inc.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(in thousands)

Common stock-based compensation & expenses, net 1,894 708 - - 708

Common stock issued for investment 100 100 - - 100

Other adjustments - - 35 - 35

Gain on foreign currency translation - - - - 76

Common stock-based compensation & expenses, net 1,520 2,197 - - 2,197

Common stock issued for investment - - - - -

Other adjustments (43 ) (43 ) - - (43 )

Gain on foreign currency translation - - - (194 ) (194 )

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

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India Globalization Capital, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Years Ended March 31,

Cash flows from operating activities:

Adjustment to reconcile net loss to net cash:

Depreciation and amortization 651 478

Provision against debtors and advances 1,718 -

Permanent impairment of PPE 833 -

Impairment of non-marketable securities 49 169

Common stock-based compensation and expenses, net 2,197 658

Forgiveness of PPP Loan (430 ) -

Changes in:

Accounts receivables, net 50 (42 )

Claims and advances (334 ) 93

Accrued and other liabilities (129 ) 373

Operating lease asset 38 -

Operating lease liability (64 ) -

Net cash used in operating activities (7,462 ) (10,800 )

Cash flow from investing activities:

Purchase of property, plant, and equipment (207 ) (1,470 )

Proceed from marketable securities - 47

Investment in marketable securities - 5,081

Investment in non-marketable securities - (149 )

Acquisition and filing cost of patents and rights (535 ) (122 )

Net cash used in investing activities (742 ) 3,387

Cash flows from financing activities:

Issuance of equity stock through offering (net of expenses) 4,145 14,158

Proceeds from/repayment of long-term loan (3 ) 530

Net cash provided by financing activities 4,142 14,688

Effects of exchange rate changes on cash and cash equivalents (26 ) 15

Net increase/(decrease) in cash and cash equivalents (4,088 ) 7,290

Cash and cash equivalents at the beginning of the period 14,548 7,258

Cash and cash equivalents at the end of the period 10,460 14,548

Supplementary information:

Cash paid for interest - -

Non-cash items:

Forgiveness of PPP Loan (430 ) -

Amortization of operating lease 115 22

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

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India Globalization Capital, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For Fiscal Years Ended March 31, 2022, and 2021

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

NOTE 1 – NATURE OF OPERATIONS AND MANAGEMENT’S PLANS

Since 2014, our team has been committed to researching the application of cannabinoids such as 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. 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: Infrastructure and Life Sciences.

Infrastructure Segment

The India and Hong Kong based infrastructure business includes:

(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.

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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, HoliefTM available through online channels and a CBD-caffeine-infused energy drink, Sunday SeltzerTM, for distribution in wholesale channels.

Both HoliefTM, and Sunday SeltzerTM 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. Ltd. 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.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

a) Principles of consolidation

The consolidated financial statements include the accounts of the Company and all its subsidiaries. Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. Transactions between the Company and its subsidiaries are eliminated in the consolidated financial statements.

b) Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Management believes that the estimates and assumptions used in the preparation of the consolidated financial statements are prudent and reasonable. Significant estimates and assumptions are generally used for, but not limited to allowance for uncollectible accounts receivable; sales returns; normal loss during production; future obligations under employee benefit plans; the useful lives of property, plant, and equipment; intangible assets; valuations; impairment of goodwill and investments; recoverability of advances; the valuation of options granted, and warrants issued; and income tax and deferred tax valuation allowances, if any. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Critical accounting estimates could change from period to period and could have a material impact on IGC’s results, operations, financial position, and cash flows. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the consolidated financial statements.

c) Revenue recognition

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of this standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

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ASC 606 prescribes a 5-step process to achieve its core principle. The Company recognizes revenue from trading, rental, or product sales as follows:

I. Identify the contract with the customer.

II. Identify the contractual performance obligations.

III. Determine the amount of consideration/price for the transaction.

IV. Allocate the determined amount of consideration/price to the contractual obligations.

V. Recognize revenue when or as the performing party satisfies performance obligations.

d) Cost of Revenue

Our cost of revenue includes costs associated with in-house and outsourced distribution, labor expense, components, manufacturing overhead, and outbound freight for our products division. In our products division, cost of revenue also includes the cost of refurbishing or repackaging, if required, on products returned by customers that will be offered for resale.

(e) Earnings/(Loss) per Share

The computation of basic loss per share for Fiscal 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. Due to the loss incurred during Fiscal 2022 and 2021, all the potential equity shares are anti-dilutive, and accordingly, the fully diluted EPS is equal to the basic EPS.

f) Income taxes

The Company accounts for income taxes under the asset and liability method, in accordance with ASC 740, Income Taxes, which requires an entity to recognize deferred tax liabilities and assets. Deferred tax assets and liabilities are recognized for the future tax consequence attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. A valuation allowance is established and recorded when management determines that some or all of the deferred tax assets are not likely to be realized and therefore, it is necessary to reduce deferred tax assets to the amount expected to be realized.

In evaluating a tax position for recognition, management evaluates whether it is more-likely-than-not that a position will be sustained upon examination, including resolution of related appeals or litigation processes, based on technical merits of the position. If the tax position meets the more-likely-than-not recognition threshold, the tax position is measured and recognized in the Company’s financial statements as the largest amount of tax benefit that, in management’s judgment, is greater than 50% likely of being realized upon settlement. As of March 31, 2022, and 2021, there was no significant liability for income tax associated with unrecognized tax benefits.

g) Accounts receivable

We make estimates of the collectability of our accounts receivable by analyzing historical payment patterns, customer concentrations, customer creditworthiness, and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required. We had $124 thousand of accounts receivable, net of provision for doubtful debt of $93 thousand as of March 31, 2022, as compared to $175 thousand of accounts receivable, net of provision for doubtful debt of $63 thousand as of March 31, 2021.

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h) 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

As of March 31, 2022, 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. Cost of additions and substantial improvements to property and equipment are capitalized. The cost of maintenance and repairs of the property and equipment are charged to operating expenses as incurred.

k) Fair value of financial instruments

ASC 820, “Fair Value Measurement” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The carrying amounts of the Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate their fair values due to the nature of the items. Please refer to Note 15, “Fair value of financial instruments,” for further information.

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l) Concentration of credit risk and significant customers

Financial instruments, which potentially expose the Company to concentrations of credit risk, are primarily comprised of cash and cash equivalents, investments, accounts receivable and unbilled accounts receivable, if any. The Company places its cash, investments in highly rated financial institutions. The Company adheres to a formal investment policy with the primary objective of preservation of principal, which contains credit rating minimums and diversification requirements. Management believes its credit policies reflect normal industry terms and business risk. The Company does not anticipate non-performance by the counterparties and, accordingly, does not require collateral. During Fiscal 2021, sales were spread across customers in Asia and U.S. and the credit concentration risk is low.

m) Stock – Based Compensation

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.

n) Commitments and contingencies

Liabilities for loss contingencies arising from claims, assessments, litigations, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. We record associated legal fees as incurred. Information regarding our commitments and contingencies is incorporated by reference in Note 12, “Commitments and contingencies” of this Annual Report on Form 10-K.

o) Impairment of long – lived assets

The Company reviews its long-lived assets, with finite lives, for impairment whenever events or changes in business circumstances indicate that the carrying amount of assets may not be fully recoverable. Such circumstances include, though are not limited to, significant or sustained declines in revenues or earnings, future anticipated cash flows, business plans, and material adverse changes in the economic climate, such as changes in 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. For assets, the Company intends to dispose of by sale, a loss is recognized for the amount by which the estimated fair value less cost to sell is less than the carrying value of the assets. Fair value is determined based on quoted market prices, if available, or other valuation techniques including discounted future net cash flows. Unlike goodwill, long-lived assets are assessed for impairment only where there are any specific indicators for impairment.

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p) Intangible assets

The Company's intangible assets are accounted for in accordance with ASC Topic 350, Intangibles – Goodwill and Other. Intangible assets having indefinite lives are not amortized, but instead are reviewed annually or more frequently if events or changes in circumstances indicate that the assets might be impaired, to assess whether their fair value exceeds their carrying value. We perform an impairment analysis on March 1 annually on the indefinite-lived intangible assets following the steps laid out in ASC 350-30-35-18. Our annual impairment analysis includes a qualitative assessment to determine if it is necessary to perform the quantitative impairment test. In performing a qualitative assessment, we review events and circumstances that could affect the significant inputs used to determine if the fair value is less than the carrying value of the intangible assets. If quantitative analysis is necessary, we would analyze various aspects including revenues from the business, associated with the intangible assets. In addition, intangible assets will be tested on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. The Company has analyzed a variety of factors in light of the known impact to date of the COVID-19 pandemic on its business to determine if a circumstance could trigger an impairment loss, and, at this time and based on the information presently known, does not believe it is more likely than not that an impairment loss has been incurred.

Intangible assets with finite useful lives are amortized using the straight-line method over their estimated period of benefit. In accordance with ASC 360-10-35-21, definite lived intangibles are reviewed annually or more frequently if events or changes in circumstances indicate that the assets might be impaired, to assess whether their fair value exceeds their carrying value.

The Company intends to capitalize trademarks and related expenses exceeding $2,500 per trademark. Management may also capitalize trademarks and related expenses up to $2,500 per trademark based on its potential and benefit in coming years.

q) Inventory

Inventory consists of raw materials, finished goods related to wellness products, hand sanitizers, finished hemp-based products, beverages, among others as well as work-in-progress such as extracted crude oil, hemp-based isolate, growing crops, and herbal oils, among others. Work-in-progress also includes product manufacturing in process, costs of growing hemp, in accordance with applicable laws and regulations including but not limited to labor, utilities, fertilizers and irrigation. Inventory is primarily accounted for using the weighted average cost method. Primary costs include raw materials, packaging, direct labor, overhead, shipping and the depreciation of manufacturing equipment. Manufacturing overhead and related expenses include salaries, wages, employee benefits, utilities, maintenance, and property taxes.

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

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

- has relatively insignificant and predictable costs of disposal; and

- is available for immediate delivery.

The Company believes its harvested crops do not have a readily available market. Hence in Fiscal 2021, the Company values its harvested crops at cost. Please refer to Note 3, “Inventory,” for further information.

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

r) Cybersecurity

We have a cybersecurity policy in place and tighter cybersecurity measures to safeguard against hackers. In Fiscal 2022, there were no impactful breaches in cybersecurity.

s) Research and Development Expenses

During Fiscal 2022 and 2021, the Company recorded research and development expenses of approximately $2.3 million and $0.9 million, respectively. All research and development costs are expensed in the period in which they are incurred.

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t) Leases

Lessor Accounting

Under the current ASU guidance, contract consideration will be allocated to its lease components and non-lease components (such as maintenance). For the Company as a lessor, any non-lease components will be accounted for under ASC Topic 606, “Revenue from Contracts with Customers,” unless the Company elects a lessor practical expedient to not separate the non-lease components from the associated lease component. The amendments in ASU 2018-11 also provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (“Topic 606”). To elect the practical expedient, the timing and pattern of transfer of the lease and non-lease components must be the same and the lease component must meet the criteria to be classified as an operating lease if accounted for separately. If these criteria are met, the single component will be accounted for under either Topic 842 or Topic 606 depending on which component(s) are predominant. The lessor practical expedient to not separate non-lease components from the associated component must be elected for all existing and new leases.

As lessor, the Company expects that post-adoption substantially all existing leases will have no change in the timing of revenue recognition until their expiration or termination. The Company expects to elect the lessor practical expedient to not separate non-lease components such as maintenance from the associated lease for all existing and new leases and to account for the combined component as a single lease component. The timing of revenue recognition is expected to be the same for the majority of the Company’s new leases as compared to similar existing leases; however, certain categories of new leases could have different revenue recognition patterns as compared to similar existing leases.

For leases that are accounted for as operating leases, income is recognized on a straight-line basis over the term of the lease contract. Generally, when a lease is more than 180 days delinquent (where more than three monthly payments are owed), the lease is classified as being on nonaccrual and the Company stops recognizing leasing income on that date. Payments received on leases in nonaccrual status generally reduce the lease receivable. Leases on nonaccrual status remain classified as such until there is sustained payment performance that, in the Company’s judgment, would indicate that all contractual amounts will be collected in full.

Lessee Accounting

The Company adopted ASU 2016-02 effective April 1, 2019, using the modified retrospective approach. The standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. In connection with the adoption, the Company will elect to utilize the modified retrospective presentation whereby the Company will continue to present prior period financial statements and disclosures under ASC Topic 840. In addition, the Company will elect the transition package of three practical expedients permitted within the standard, which eliminates the requirements to reassess prior conclusions about lease identification, lease classification and initial direct costs. Further, the Company will adopt a short-term lease exception policy, permitting us to not apply the recognition requirements of this standard to short-term leases (i.e., leases with terms of 12 months or less), and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets.

Under ASU 2016-02 (Topic 842), lessees are required to recognize the following for all leases (with the exception of short-term leases) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. There was no impairment for right-of-use lease assets as of March 31, 2021.

The Company categorizes leases at their inception as either operating or finance leases. On certain lease agreements, the Company may receive rent holidays and other incentives. The Company recognizes lease costs on a straight-line basis without regard to deferred payment terms, such as rent holidays, that defer the commencement date of required payments. Please refer to Note 9, “Leases,” for further information.

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u) Recently issued and adopted accounting pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. 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

(in thousands)

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

(in thousands)

Advances to suppliers and consultants 170 1,295

Other receivables and deposits 472 1,745

Prepaid expense and other current assets 336 196

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.

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NOTE 5 – INTANGIBLE ASSETS

Amortized intangible assets (in thousands)

Other intangibles 32 32

Accumulated amortization (51 ) (26 )

Total amortized intangible assets 271 226

Other intangible assets

Other intangibles - -

Total unamortized intangible assets 646 181

Total intangible assets 917 407

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 domains, and licenses.

The amortization of patent and patent rights with finite life is up to 20 years, commencing from the date of grant or acquisition. The amortization expense in Fiscal 2022 and 2021, amounted to approximately $24 thousand and $16 thousand, respectively.

The Company regularly reviews its intangible assets to determine if any intangible asset is other-than-temporarily impaired, which would require the Company to record an impairment charge in the period and concluded that, as of March 31, 2022, there was no impairment.

Estimated amortization expense (in thousands) ($)

NOTE 6 – PROPERTY, PLANT, AND EQUIPMENT

(in thousands, except useful life)

Useful Life (years) As of March 31, 2022 ($) As of March 31, 2021 ($)

Construction in progress N/A 108 50

Less: accumulated depreciation (3,220 ) (2,834 )

Total property, plant and equipment, net 9,419 10,840

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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.

NOTE 7 – INVESTMENTS IN NON-MARKETABLE SECURITIES

Short-term investment

(in thousands)

Investment in Evolve I (i) - 80

Long-term investment

(in thousands)

Investment in equity shares of unlisted company - 12

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

(in thousands)

Non-current deposits - 18

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

America: 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. The annual lease expense is approximately $123 thousand. The lease contract does not contain any material residual value guarantees or material restrictive covenants. 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.

Asia: 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.

Right of use assets and lease liabilities for our operating leases were recorded in the consolidated balance sheet as follows:

(in thousands) (in thousands)

Assets

Liabilities

Current liabilities:

Noncurrent liabilities:

Cash paid for amounts included in the measurement of lease liabilities

–Operating cash flows from operating leases 109 79

Right-of-use assets obtained in exchange for operating lease obligations 450 488

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Less: Present value discount (57 )

Total Lease liabilities 464

NOTE 10 – ACCRUED LIABILITIES AND OTHERS

(in thousands)

Compensation and other contributions 1,054 849

Other current liability 300 430

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.

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, 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. 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. 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.

Other Liability:

(in thousands)

As of March 31,

Statutory reserve 16 15

The statutory reserve is a gratuity reserve for employees in our subsidiaries in India.

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NOTE 12 – COMMITMENTS AND CONTINGENCIES

The Company may be involved in legal proceedings, claims, and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such matters that are deemed material to the consolidated financial statements as of March 31, 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. In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (“Gratuity Plan”) covering certain categories of employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and the years of employment with the Company. In addition, employees receive benefits from a provident fund, a defined contribution plan. The employee and employer each make monthly contributions to the plan equal to 12% of the covered employee’s salary. The contribution is made to the Indian Government’s provident fund.

NOTE 13 – SECURITIES

As of March 31, 2022, the Company was authorized to issue up to 150,000,000 shares of common stock, par value $0.0001 per share, and 51,054,017 shares of common stock were issued and outstanding. The Company is also authorized to issue up to 1,000,000 shares of preferred stock, par value $0.0001 per share, and no preferred shares were issued and outstanding as of March 31, 2022. We have one security listed on the NYSE American: common stock, $0.0001 par value (ticker symbol: IGC). This security also trades on the Frankfurt, Stuttgart, and Berlin stock exchanges (ticker symbol: IGS1).

The Company also has 91,472 units outstanding that can be separated into common stock. Ten units may be separated into one share of common stock. The unit holders are requested to contact the Company or our transfer agent, Continental Stock Transfer & Trust, to separate their units into common stock.

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

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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:

Granted in Fiscal 2022 Granted in Fiscal 2021

Expected life of options 5 years 5 years

Risk free interest rate 2.42 % 0.68 %

Expected volatility 282 % 249 %

Expected dividend yield Nil Nil

The expense associated with share-based payments to employees, directors, advisors, and contractors is allocated over the vesting or service period and recognized in the Selling, general and administrative expenses (including research and development). For Fiscal 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.

Cancelled/Forfeited (27 ) (1.35 )

Exercised - - -

Cancelled/forfeited (60 ) (0.45 ) (0.30 )

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

As of March 31, 2022, the Company’s marketable securities consist of liquid funds, which have been classified as Level 1 of the fair value hierarchy because they have been valued using quoted prices in active markets. The Company’s cash and cash equivalents have also been classified as Level 1 on the same principle. Financial instruments are classified as current if they are expected to be liquidated within the next twelve months. The Company’s remaining investments have been classified as Level 3 instruments as there is little or no market data. Level 3 investments are valued using cost-method. For further information refer Note 7, “Investments in Non-Marketable Securities.”

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The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of March 31, 2022, and 2021, and indicates the fair value hierarchy of the valuation techniques the Company used to determine such fair value:

(in thousands)

Level 1 ($) Level 2 ($) Level 3 ($) Total ($)

Investments:

-Marketable securities - - - -

-Non-marketable securities - - - -

Total investments - - - -

Level 1 ($) Level 2 ($) Level 3 ($) Total ($)

Investments:

-Marketable securities - - - -

-Non-marketable securities - - 92 92

Total investment - - 92 92

NOTE 16 – INCOME TAXES

The Company calculates its provision for foreign and U.S. federal income taxes based on the current tax law. As the Company maintains a full valuation allowance against its deferred tax assets, there is no income tax expense recorded related to this change other than the Federal AMT credit which are refundable due to the passage of tax reform.

Due to the Company’s history of losses and uncertainty of future taxable income, a valuation allowance sufficient to fully offset net operating losses and other deferred tax assets has been established. The valuation allowance will be maintained until sufficient positive evidence exists to support a conclusion that a valuation allowance is not necessary.

Income tax expense/(benefit) for each of the years ended March 31 consists of the following:

Year Ended March 31, (in thousands)

Income Tax Expense

Expected income tax recovery (3,153 ) (1,850 )

Impact of tax rate differences in foreign jurisdictions - (33 )

Tax rate changes and other adjustments (385 ) (78 )

Permanent differences 50 19

Change in valuation allowance 3,488 1,942

- -

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The significant components of deferred income tax expense/(benefit) from operations before non-controlling interest for each of the years ended March 31 are approximated as following:

Year Ended March 31, (in thousands)

Deferred income taxes

Net operating loss carry-forwards foreign 149 536

Non-capital loss carry-forwards – U.S. 10,487 7,373

Temporary differences (66 ) (827 )

- -

The table below sets forth the details of expiration of the non-financial carried forward losses of the Company as of March 31, 2022, as under:

Year Amount (in thousands) ($)

Realization of deferred tax assets, including those related to net operating loss carryforwards, are dependent upon future earnings, if any, of which the timing and amount are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. Based upon the Company’s current operating results management cannot conclude that it is more likely than not that such assets will be realized. The Company files income tax returns in India, Hong Kong, Colombia, and the U.S.

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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 from the execution of infrastructure contracts is recognized on the basis of the output method as and when part of the performance obligation has been completed and approval from the contracting agency has been obtained after survey of the performance completion as of that date. In the Life Sciences segment, the revenue from the wellness and lifestyle business is recognized once goods have been sold to the customer and the performance obligation has been completed. In retail sales, we offer consumer products through our online stores. Revenue is recognized when control of the goods is transferred to the customer. This generally occurs upon our delivery to a third-party carrier or, to the customer directly. Revenue from tolling services is recognized when the performance obligation, such as processing of the material, has been completed and output material has been transferred to the customer. We license our products to processors. The royalty income from licensing is recognized once goods have been sold by the processor to its customers.

Net sales disaggregated by significant products and services for Fiscal 2022 and 2021 are as follows:

(in thousands) Year ended March 31,

Infrastructure segment

Rental income (1) 23 1

Construction contracts (2) 15 174

Life Sciences segment

White label services (4) 43 35

(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.

(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

FASB ASC 280, “Segment Reporting” establishes standards for reporting information about reportable segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group (“CODM”), in deciding how to allocate resources and in assessing performance. The CODM evaluates revenues and gross profits based on product lines and routes to market. Based on our integration and Management strategies, we operate in two reportable segments: (i) Infrastructure segment and (ii) Life Sciences segment.

The Company’s CODM is the Company’s chief executive officer (“CEO”). The CEO reviews financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance. Therefore, and before our Life Sciences segment started, the Company had determined that it operated in a single operating and reportable segment. As of the date of this report and in preparation for the new and different source of revenue, the Company has determined that it operates in two operating and reportable segments: (a) Infrastructure segment and (b) Life Sciences segment. The Company does not include intercompany transfers between segments for Management reporting purposes.

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The following provides information required by ASC 280-10-50-38 “Entity-wide Information”:

1) The table below shows revenue reported by segment:

Product & Service

(in thousands)

Segments Fiscal 2022 ($) Percentage of Total Revenue (%)

Infrastructure segment 37 9 %

Life Sciences segment 359 91 %

(in thousands)

Segments Fiscal 2021 ($) Percentage of Total Revenue (%)

Infrastructure segment 175 20 %

Life Sciences segment 723 80 %

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

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:

(in thousands)

Segments Country Fiscal 2022 ($) Percentage of Total Revenue (%)

(in thousands)

Segments Country Fiscal 2021 ($) Percentage of Total Revenue (%)

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

(in thousands)

Investments in unlisted securities - - -

(in thousands)

Intangible assets, net 407 - 407

Investments in unlisted securities - 12 12

Operating lease asset 488 - 488

NOTE 19 – SUBSEQUENT EVENTS

On November 11, 2021, Hamsa Biopharma India Pvt. Ltd. (“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.

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

None.

Item 9A. Controls and Procedures

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

(a) Evaluation of disclosure controls and procedures

Our Management maintains disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to Management, including our Chief Executive Officer and Principal Financial Officer (our principal executive officer and principal financial officer, respectively), as appropriate, to allow for timely decisions regarding required disclosure.

Our Management, including the Chief Executive Officer and Principal Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed in the reports filed or submitted by us under the Exchange Act was recorded, processed, summarized and reported within the requisite time periods and that such information was accumulated and communicated to our Management, including our Chief Executive Officer and Principal Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

(b) Management’s annual report on internal control over financial reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness, as of March 31, 2022, of our internal control over financial reporting based on the framework in 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under this framework, our management concluded that our internal control over financial reporting was effective as of March 31, 2022.

Our Management, including our Chief Executive Officer and Principal Financial Officer, evaluated our “internal control over financial reporting” as defined in Exchange Act Rule 13a-15(f) to determine whether any changes in our internal control over financial reporting occurred during Fiscal 2022, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there were no changes in our internal control over financial reporting during Fiscal 2022, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

IGC US Equity

IGC · 10-K · period ended 2022-03-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

Item 9A. Controls and Procedures

Item 9B. Other Information

IGC US Equity☆

IGC · 10-K · period ended 2022-03-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

Item 9A. Controls and Procedures

Item 9B. Other Information

IGC US Equity