UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2017June 30, 2020

Transition report underpursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number number: 1-32830001-32830

INDIA GLOBALIZATION CAPITAL, INC.

(Exact name of registrant as specified in its charter)

Maryland

(State or other jurisdiction of incorporation or organization)

20-2760393

(I.R.S. Employer Identification No.)

4336 Montgomery Ave. Bethesda,10224 Falls Road, Potomac, Maryland

(Address of principal executive offices)

20814 20854 

(Zip Code)

(301) 983-0998

(Registrant’s telephone number, including area code)

 Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Tradingsymbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

IGC

NYSE American LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

   Yes    No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

   Yes      No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

(Do not check if a smaller reporting company) 

Smaller reporting company

Emerging growth company

company☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No


There were approximately 30,282,053

41,196,130 shares of our common stock par value $0.0001, issued andwere outstanding as of January 31, 2018.

July 23, 2020.

 | June 30, 2020 Form 10-Q

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain “forward-looking statements.” Additionally, we, or our representatives may, from time to time, make other written or verbal forward-looking statements and discuss plans, expectations, and objectives regarding our business, financial condition, and results of operations. Without limiting the foregoing, statements that are in the future tense, and all statements accompanied by terms such as “believe,” “project,” “expect,” “trend,” “estimate,” “forecast,” “assume,” “intend,” “plan,” “target,” “anticipate,” “outlook,” “preliminary,” “will likely result,” “will continue” and variations of them and similar terms are intended to be “forward-looking statements” as defined by federal securities laws. Such statements are based on currently available information, which management has assessed but which is dynamic and subject to rapid change due to risks and uncertainties that affect our business. Our success is highly correlated with the success of our product candidates. We may not be able to protect our intellectual property adequately or receive patents. We may not receive regulatory approval for our products, or trials. An additional risk factor worth highlighting specifically related to the patent licensing described herein is that the patent applications we have licensed may not be granted by the United States Patent and Trademark Office (“USPTO”), even if the Company is in full compliance with USPTO requirements. We may not have adequate resources including financial resources, to successfully conduct all requisite clinical trials, to bring a product based on the above-referenced patented formulations to market, or to pay applicable maintenance fees over time. We may not be able to successfully commercialize our products even if they are successful and receive regulatory approval. The Company may not be able to complete human trials, or, once conducted, human trial testing results may not be favorable or as anticipated.  Our projections anticipate stable pricing, which may not hold out over the next several years. Failure or delay with respect to any of the factors above could have a material adverse effect on our business, future results of operations, our stock price, and our financial condition. Precautions including social distancing, travel restrictions, among others, surrounding the COVID-19 pandemic could lead to delays and a more expensive trial.  This document also contains statements and claims that are not approved by the Food & Drug Administration (“FDA”), including statements on hemp and hemp extracts including cannabidiol and other cannabinoids. These statements and claims are intended to be in compliance with state laws, specifically in states where medical cannabis has been legalized, and the diseases which we anticipate our products will target are approved conditions for treatment or usage with cannabis/cannabinoids. We caution you not to place undue reliance on forward-looking statements, which are based upon assumptions, expectations, plans and projections subject to risks and uncertainties, including those identified in the “Risk Factors” set forth in this report and in our annual report on Form 10-K for the fiscal year ended March 31, 2020, filed with the Securities and Exchange Commission (“SEC”) on July 13, 2020, and in the documents incorporated by reference that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements speak only as of the date when they are made. Except as required by federal securities law, we do not undertake any obligation to update forward-looking statements to reflect events, circumstances, changes in expectations, or the occurrence of unanticipated events after the date of those statements.

| June 30, 2020 Form 10-Q

PART I – FINANCIAL INFORMATION


Item 1.    Financial Statements

INDIA GLOBALIZATION CAPITAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts

India Globalization Capital, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(Unaudited)

  

June 30, 2020

($)

  

March 31, 2020

($)

 

ASSETS

        

Current assets:

        

Cash and cash equivalents 

  2,703   7,258 

Marketable securities

  5,098   5,081 

Accounts receivable, net

  264   133 

Inventories 

  6,523   4,245 

Deposits and advances 

  1,414   1,040 

Total current assets

  16,002   17,757 
         

Intangible assets, net

  275   252 

Property, plant and equipment, net

  10,603   9,780 

Non-Marketable securities

  260   11 

Claims and advances

  606   610 

Operating lease asset

  553   574 

Total long-term assets

  12,297   11,227 

Total assets

  28,299   28,984 

LIABILITIES AND STOCKHOLDERS' EQUITY

        

Current liabilities:

        

Accounts payable

  1,099   762 

Accrued liabilities and others

  1,220   1,134 

Short-term loans

  -   50 

Total current liabilities

  2,319   1,946 
         

Long-term loans

  630   - 

Other liabilities

  16   16 

Operating lease liability

  471   485 

Total non-current liabilities

  1,117   501 

Total liabilities

  3,436   2,447 
         

Commitments and Contingencies – See Note 12

        
         

Stockholders' equity:

        

Preferred stock, $0.0001 per value:  authorized 1,000,000 shares, no share issued or outstanding as on June 30, 2020 and March 31, 2020

  -   - 

Common stock and additional paid-in capital, $0.0001 par value: 150,000,000 shares authorized; 41,196,130 and 39,320,116 shares issued and outstanding as on June 30, 2020 and March 31, 2020, respectively.

  95,020   94,754 

Accumulated other comprehensive loss

  (2,908

)

  (2,850

)

Accumulated deficit

  (67,249

)

  (65,367

)

Total stockholders' equity

  24,863   26,537 

Total liabilities and stockholders' equity

  28,299   28,984 

The accompanying notes should be read in USD, except number of shares)

  As of 
  31-December- 17  31-March - 17 
  (unaudited)  (audited) 
ASSETS      
Current assets:      
Cash and cash equivalents $1,690,792  $538,029 
Accounts receivable, net of allowances  1,155,229   752,926 
Prepaid expenses and other current assets  379,785   410,408 
Short-term investments  -   1,880,000 
Total current assets $3,225,806  $3,581,363 
Goodwill  198,169   198,169 
Intangible assets  124,272   - 
Property, plant and equipment, net  951,351   953,936 
Investment  6,015,634   6,011,114 
Other non-current assets  820,913   539,720 
Total long-term assets $8,110,339  $7,702,939 
Total assets $11,336,145  $11,284,302 
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Trade payables  674,882   416,532 
Accrued expenses  175,200   181,465 
Other current liabilities  474,101   691,714 
Total current liabilities $1,324,183  $1,289,711 
Long-term borrowings  -   452,080 
Loans- others  737,097   392,226 
Notes payable  1,800,000   1,800,000 
Total non-current liabilities $2,537,097  $2,644,306 
Total liabilities $3,861,280  $3,934,017 
Stockholders’ equity:        
Common stock — $.0001 par value; 150,000,000 shares authorized; 28,272,667 issued and outstanding as of March 31, 2017 and 29,499,790 issued and outstanding as of December 31, 2017. $2,950  $2,827 
Additional paid-in capital  62,737,631   61,413,533 
Accumulated other comprehensive income  (2,037,529)  (2,047,780)
Retained earnings/(deficit)  (53,219,180)  (52,009,459)
Total equity attributable to Parent $7,483,872  $7,359,121 
Non-controlling interest $(9,007) $(8,836)
Total stockholders’ equity $7,474,865  $7,350,285 
Total liabilities and stockholders’ equity $11,336,145  $11,284,302 
See accompanying Notes toconnection with these Condensed Consolidated Financial Statements belowStatements.

 | June 30, 2020 Form 10-Q

India Globalization Capital, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except loss per share)

(Unaudited)

  

Three months ended June 30,

 
  

2020

($)

  

2019

($)

 

Revenues

  584   1,649 

Cost of revenues 

  (538

)

  (1,608

)

Gross profit

  46   41 

Selling, general and administrative expenses

  (1,755

)

  (1,249

)

Research and development expenses

  (222

)

  (247

)

Operating loss

  (1,931

)

  (1,455

)

Other income – net

  49   76 

Loss before income taxes

  (1,882

)

  (1,379

)

Income taxes expense

  -   - 

Net loss attributable to common stockholders

  (1,882

)

  (1,379

)

Foreign currency translation adjustments

  (58

)

  19 

Comprehensive loss

  (1,940

)

  (1,360

)

         

Loss per share attributable to common stockholders:

        

Basic & diluted

 $(0.05

)

  (0.03

)

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

  40,189   39,508 

The accompanying notes should be read in connection with these Condensed Consolidated Financial Statements.

 | June 30, 2020 Form 10-Q

India Globalization Capital, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited) 

Three Months Ended June 30, 2019

 

Number of

Common Shares

  

Common Stock and

Additional Paid in

Capital

($)

  

Accumulated

Deficit

($)

  

Accumulated Other

Comprehensive Loss

($)

  

Total Stockholders'

Equity

($)

 

Balances as of March 31, 2019

  39,502   94,043   (58,052

)

  (2,419

)

  33,572 

Common stock-based compensation & expenses, net

  10   208           208 

Net loss

  -   -   (1,379

)

  -   (1,379

)

Loss on foreign currency translation

  -   -   -   19   19 

Balances as of June 30, 2019

  39,512   94,251   (59,431

)

  (2,400

)

  32,420 
                     

Three Months Ended June 30, 2020

                    

Balances as of March 31, 2020

  39,320   94,754   (65,367

)

  (2,850

)

  26,537 

Common stock-based compensation & expenses, net

  1,776   166   -   -   166 

Common stock issued for investment

  100   100   -   -   100 

Net loss

  -   -   (1,882

)

  -   (1,882

)

Loss on foreign currency translation

  -   -   -   (58

)

  (58

)

Balances as of June 30, 2020

  41,196   95,020   (67,249

)

  (2,908

)

  24,863 

The accompanying notes should be read in connection with these Condensed Consolidated Financial Statements.

 | June 30, 2020 Form 10-Q

India Globalization Capital, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

  

Three months ended

June 30,

 
  

2020

($)

  

2019

($)

 

Operating activities:

        

Net loss

  (1,882

)

  (1,379

)

Adjustment to reconcile net loss to net cash:

        

Depreciation and amortization

  77   17 

Common stock-based compensation and expenses, net

  166   208 
         

Changes in:

        

Accounts receivables

  (157

)

  (105

)

Inventory

  (2,277

)

  (1,717

)

Deposits and advances

  (479

)

  (71

)

Claims and advances

  24   (17

)

Accounts payable

  377   192 

Accrued and other liabilities

  163   - 

Net cash used in operating activities

  (3,988

)

  (2,872

)

         
         

Investing activities:

        

Purchase of property, plant and equipment

  (944

)

  (1,173

)

Investment in marketable securities

  (17

)

  (5,009

)

Investment in non-marketable securities

  (149

)

  - 

Acquisition and filing cost of patents and rights

  (26

)

  (4

)

Net cash used in investing activities

  (1,136

)

  (6,186

)

         

Financing activities:

        

Proceeds from long- term loan

  580   - 

Net cash provided by financing activities

  580   - 
         

Effects of exchange rate changes on cash and cash equivalents

  (11)  2 

Net increase/(decrease) in cash and cash equivalents

  (4,555

)

  (9,056

)

Cash and cash equivalents at the beginning of the period

  7,258   25,610 

Cash and cash equivalents at the end of the period

  2,703   16,554 
         

Supplementary information:

        

Cash paid for interest

  -   2 

Non-cash items:

        

Common stock issued/granted including ESOP, consultancy and patent acquisition

  166   15 

The accompanying notes should be read in connection with these Condensed Consolidated Financial Statements.

 | June 30, 2020 Form 10-Q

India Globalization Capital, Inc. 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS ENDED JUNE 30, 2020

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

Unless the context requires otherwise, all references in this report to “IGC,” “the Company”, “we,” “our” and/or “us” refer to India Globalization Capital, Inc., together with our subsidiaries and beneficially owned subsidiary. Our filings are available on www.sec.gov. The information contained on our websites, including www.igcinc.us, is not incorporated by reference in this report, and you should not consider such information to be a part of this report. We exclude our investments and minority non-controlling interests, and any information provided by them is not incorporated by reference in this report, and you should not consider such information to be a part of this report.

NOTE 1 – BUSINESS DESCRIPTION

Business

IGC has two segments: Infrastructure and Life Sciences. The Company’s Infrastructure Business, managed from India, involves: (a) the Notesexecution of construction contracts, (b) the purchase and resale of physical commodities used in infrastructure and (c) the rental of heavy construction equipment. Information about our infrastructure products and service offerings is available at www.igcinc.us. Our revenue for the three months ended June 30, 2019 was primarily derived from this segment.

The Company’s Life Sciences segment, formerly known as the Plant and Cannabinoid business, managed from the United States (“U.S.”), involves: (a) the development of potential new drugs, subject to applicable regulatory approvals, (b) several CBD-based and non-CBD-based products and brands in various stages of development, for sale online and through stores, including non-CBD-based hand sanitizers, among others, (c) wholesale of hemp extracts including hemp crude extract and hemp isolate, among others, (d) hemp growing and processing facilities, (e) white labeling of hemp-based products and (f) the Audited Consolidated Financial Statements containedoffering of tolling services like extraction and distillation to hemp farmers. Our revenue for the three months ended June 30, 2020, was primarily derived from this segment.

The current COVID-19 pandemic and the associated social distancing and reduced foot traffic to stores continues to adversely impact our ability to distribute products and provide services.

The Company’s principal office in the U.S. is in Maryland, and the Company has a facility in Washington State and offices in Colombia, Hong Kong, and India.

Business updates

On July 30, 2020, IGC received notice from the FDA to proceed with a 12-subject Phase 1 human clinical trial (“removal of full clinical hold”) on its Investigational New Drug Application (“INDA”), submitted under Section 505(i) of the Federal Food, Drug, and Cosmetic Act, for IGC-AD1. The Phase 1 trial will involve a randomized placebo controlled Multiple Ascending Dose (“MAD”) study to evaluate safety and tolerability of IGC-AD1 in subjects with mild to severe dementia due to Alzheimer’s disease. In addition, the study will evaluate pharmacokinetics (“PK”) and collect data on other factors. The Company’s IGC-AD1 formulation is based on a patent filed by the University of South Florida (“USF”) that uses a cannabinoid as one of the active ingredients. The Company has exclusive rights to the patent filing.

The Company has suffered losses and setbacks due to the COVID-19 pandemic, including being delayed in executing an ongoing construction contract, being unable to commission equipment, and having to slow down operations because of COVID-19.

In response to the COVID-19 pandemic, the Company manufactured and distributed alcohol-based hand sanitizers. The majority of our revenue for the three months ended June 30, 2020, is from the sale of hand sanitizers. In an effort to help some of the hardest hit communities, we donated hand sanitizers to the Federal Emergency Management Agency (“FEMA”), the Navajo Indians in Arizona, the Crow Indian reservation in Montana, and the Sioux reservation in South Dakota.

The Company is executing a road building contract in Kerala, India valued at approximately $1.1 million. The Company estimates that it will take between 12 and 15 months to complete the work. Work on this project has been temporarily delayed due to COVID-19. We expect to re-start the project as soon as COVID-19 restrictions are lifted, and we are able to deploy our work force.   

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

On July 6, 2020, the United States District Court for the District of Maryland entered an order formally and finally approving the January 2020 formal settlement agreement between the derivative plaintiffs, the Company, and the named defendant directors and officers, thereby resolving all pending derivative suits. All derivative actions have now been formally terminated. Please refer Part II, Item 1, Legal Proceedings.

On May 12, 2020, the Company completed an investment under the terms of a Share Subscription Agreement (“SSA”) with Evolve I, Inc., a Washington corporation (“Evolve”), by transferring part of the consideration to Evolve. As of June 30, 2020, the Company owns an approximately 19.8% interest in Evolve.

 | June 30, 2020 Form 10-Q

Business Organization

As of June 30, 2020, the Company had the following direct operating subsidiaries: Techni Bharathi Private Limited (“TBL”), IGCare, LLC (“IGCare"), Holi Hemp, LLC (“Holi Hemp”), IGC Pharma, LLC (“IGC Pharma”), SAN Holdings, LLC (“SAN Holdings”), Sunday Seltzer, LLC (“Sunday Seltzer”) and Colombia-based beneficially owned subsidiary Hamsa Biochem SAS (“Hamsa”). The Company’s Annual Reportfiscal year is the 52- or 53-week period that ends on Form 10-KMarch 31. The Company is a Maryland corporation established in 2005. The Company’s filings are available on www.sec.gov.

We have employees, contract workers and advisors in the U.S., India, Colombia, and Hong Kong.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying unaudited condensed consolidated financial statements (“interim statements”) of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) as determined by the Financial Accounting Standards Board (the “FASB”) within its Accounting Standards Codification (“ASC”) and under the rules and regulations of the Securities Exchange Commission (“SEC”). Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of Management, all adjustments and disclosures necessary for a fair presentation of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year. These interim statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended March 31, 20172020 (“Fiscal 2020”) contained in the Company’s Form 10-K for Fiscal 2020, filed with the SEC on July 14, 2017.

3


INDIA GLOBALIZATION CAPITAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(All amounts13, 2020, specifically in USD, except number of shares)
  
Three months ended
December 31,
  
Nine months ended
December 31,
 
 2017  2016  2017  2016 
             
Revenues $762,009  $249,801  $1,050,582  $487,364 
Cost of revenues (excluding depreciation)  (723,062)  (121,829)  (893,113)  (276,418)
Selling, general and administrative expenses  (507,332)  (322,891)  (1,217,293)  (959,693)
Depreciation  (4,989)  (196,103)  (15,297)  (391,617)
Loss on investments/associates /joint ventures  -   4,910   -   (178,925)
Operating income /(loss) $(473,374) $(386,112) $(1,075,121) $(1,319,289)
Interest expense  (60,527)  (46,465)  (145,905)  (136,421)
Interest income & other income (net)  1,090   359,104   9,401   372,957 
Income before income taxes and minority interest attributable to non-controlling interest $(532,811) $(73,473) $(1,211,625) $(1,082,753)
Net income/(loss) $(532,811) $(73,473) $(1,211,625) $(1,082,753)
Non-controlling interests in earnings of subsidiaries  (230)  38,088   (634)  26,848 
Net income/(loss) attributable to common stockholders $(532,581) $(111,561) $(1,210,991) $(1,109,601)
Earnings/(loss) per share attributable to common stockholders:                
Basic $(0.02) $(0.00) $(0.04) $(0.04)
Diluted $(0.02) $(0.00) $(0.04) $(0.04)
Weighted-average number of common shares used in computing earnings per share amounts:                
Basic  28,169,292   27,446,095   27,126,208   27,446,095 
Diluted  28,169,292   27,446,095   27,126,208   27,446,095 

See accompanying Notes to Condensed Consolidated Financial Statements below in this report and NotesNote 2 to the Audited Consolidated Financial Statements contained inconsolidated financial statements.

Principles of consolidation

The interim statements include the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017 filed with the SEC on July 14, 2017.

4


INDIA GLOBALIZATION CAPITAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(Unaudited)

(All amounts in USD, except number of shares and per share amounts)
  Three months ended December 31, 
  2017  2016 
  IGC  
Non-controlling
interest
  Total  IGC  
Non-controlling
interest
  Total 
Net income/(loss) $(532,581) $(230) $(532,811) $(111,561) $38,088  $(73,473)
Foreign currency translation adjustments  21,174   -   21,174   180,000   -   180,000 
Comprehensive income/(loss) $(511,407) $(230) $(511,637) $68,439  $38,088  $106,527 

  Nine months ended December 31, 
  2017  2016 
  IGC  
Non-controlling
interest
  Total  IGC  
Non-controlling
interest
  Total 
Net income/(loss) $(1,210,991) $(634) $(1,211,625) $(1,109,601) $26,848  $(1,082,753)
Foreign currency translation adjustments  10,252   -   10,252   128,150   -   128,150 
Comprehensive income/(loss) $(1,200,739) $(634) $(1,201,373) $(981,451) $26,848  $(954,603)

See accompanying Notes to Condensed Consolidated Financial Statements below in this report and the Notes to the Audited Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017 filed with the SEC on July 14, 2017.

5


INDIA GLOBALIZATION CAPITAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(All amounts in USD, except number of shares and per share amounts)
  Nine months ended December 31, 
  2017  2016 
Cash flows from operating activities:      
Net income (loss) $(1,211,625) $(1,082,753)
Adjustment to reconcile net income/(loss) to net cash:        
     Depreciation  15,297   391,617 
     Bad debts written off/creditors restated  24   - 
     Loss from Investments /joint venture /associates      178,925 
     Non-cash interest expenses  115,500   104,015 
     Stock base compensation and expense  426,111   - 
Changes in:        
    Accounts receivable $(401,811) $299,848 
    Other current assets  48,695   78,348 
    Trade payables  258,350   48,719 
    Other current liabilities  (223,877)  (501,787)
Net cash provided/(used) in operating activities $(973,336) $(483,068)
         
Cash flow from investing activities:        
         
   Purchase/addition of property, plant and equipment  (11,224)  (128,765)
   Proceeds from short term investment  (4,106)  (27,502)
   Deposit towards acquisition (net of cash acquired)  -   (114,427)
   Non-current assets  (286,167)  - 
Net cash provided/(used) by investing activities $(301,497) $(270,694)
         
Cash flows from financing activities:        
   Proceeds from share issue $2,636,478  $438,165 
   Net movement in short-term borrowing  -   (27,762)
   Proceeds /(repayment) from long-term borrowing  (452,080)  (910,583)
   Proceeds from loans  344,871   379,170 
   Expense for raising funds & issuance of stock  (111,253)  - 
Net cash provided/(used) by financing activities $2,418,016  $(121,010)
         
Effects of exchange rate changes on cash and cash equivalents  9,580   128,134 
Net increase/(decrease) in cash and cash equivalents  1,152,763   (746,638)
Cash and cash equivalent at the beginning of the period  538,029   1,490,693 
Cash and cash equivalent at the end of the period $1,690,792  $744,055 
         
Supplementary information:        
    Cash paid for interest $30,405  $32,406 
Non-cash items:        
   Common stock issued for interest payment on notes payable $115,500  $104,015 
   Common stock issued including ESOP, consultancy and other $465,158  $- 

See accompanying Notes to Consolidated Financial Statements below in this report and Notes to the Audited Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017 filed with the SEC on July 14, 2017.

6


INDIA GLOBALIZATION CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Overview of India Globalization Capital, Inc. (“IGC”)
India Globalization Capital, Inc. (“IGC” or the “Company”), was incorporated in April 2005 under the lawsconsolidated accounts of the state of Maryland,Company and through its subsidiaries insubsidiaries. Intercompany accounts and transactions have been eliminated. In the USA, India, Hong Kong and Malaysia, is engaged in two major business segments - The first is a legacy infrastructure business consisting of heavy equipment rental, trading infrastructure related commodities, and real estate management. The second is development of cannabis-based combination therapies with a pipeline of products, including lead candidate, Hyalolex, designed to improve the lives of patients battling Alzheimer’s disease, Parkinson’s disease, chronic pain, post-traumatic stress disorder, and eating disorders and a long-term focus on developing blockchain technologies to solve critical issues facing the Cannabis industry.  
b) Changes in subsidiaries

IGC closed its Hong Kong based direct subsidiary IGC Clean Tech, and our India based subsidiary Techni Bharathi Private Limited (“TBL”), in the quarter ended December 31, 2017, beneficially incorporated as its Hong Kong based subsidiary IGC Enterprise that is involved in trading. TBL paid a premium of $745 for the 100% beneficial ownership.

c) Basis of presentation and use of estimates
The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) in accordance with the rules and regulationsopinion of the U.S. SecuritiesManagement, the interim statements reflect all adjustments, which are normal and Exchange Commission (“SEC”)recurring in nature, necessary for interimfair financial information.  Accordingly, they do not include allstatement presentation.

Use of the information and footnotes required by United States generally accepted accounting principles (“GAAP”) for complete financial statements.  In preparing theestimates

The preparation of financial statements management is requiredin conformity with U.S. GAAP requires Management to make estimates and assumptions that could affect the reported amounts reported in these condensed consolidatedof assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and accompanying notes.the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.  The results for interim periods do not necessarily indicate

Management believes that the results that may be expected for any other interim period or forestimates and assumptions used in the full year. The significant accounting policies adopted bypreparation of the Company, in respect of these consolidated financial statements are set outprudent 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, 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 Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017. Therefore, the Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and respective notes containedfinancial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017 filed with the SEC on July 14, 2017.  In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been includedperiod in which changes are made and, if material, their effects are disclosed in the Financial Statements. Thenotes to the condensed consolidated financial statements include the accounts of the Companystatements.

Presentation and all its subsidiaries that are more than 50% owned and controlled. The Company consolidates the subsidiaries into its consolidated financial statements. Transactions between the Company and its subsidiaries have been eliminated in the consolidated financial statements.

d) Presentation offunctional currencies

In the quarter ended December 31, 2017, in addition to the US,

IGC operates in India, U.S., Colombia and Hong Kong and Malaysia and a substantial portion of the Company’s salesfinancials are denominated in USD, INR, and RM.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 andDollar (USD), the INR, the HKD or the RMCOP affect revenues and profits as the results are translated into U.S. dollars in the consolidated and pro forma financial statements.

 | June 30, 2020 Form 10-Q

The accompanying financial statements are reported in U.S. dollars.USD. The INR, HKD and the RMCOP 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 costs 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.

e) Consolidation

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.

Reclassifications

Certain prior period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation. A short-term loan in the amount of approximately $50 thousand has been reclassified to non-current liability from current liability.

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 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.

No impairment has been recorded for the three months ended June 30, 2020, and 2019. 

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 current fiscal year endsownership interest is in excess of 20% and the Company has a significant influence, the Company has accounted for the investment based on March 31, 2018. Unless the context requires otherwise, all referencesequity method in this report to “IGC,” “we,” “our”accordance with ASC Topic 323, “Investments – Equity method and “us” refer to India Globalization Capital, Inc., togetherJoint 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 its subsidiaries,ASC Topic 321, “Investments-Equity Securities”.

As of June 30, 2020, 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 listed and described in its Annual Report onper ASC Topic 321, “Investments-Equity Securities”.

 | June 30, 2020 Form 10-K filed with the SEC on July 14, 2017.  We exclude our investments and minority non-controlling interests, and any information provided by them is not incorporated by reference in this report, and you should not consider it a part of this report. Our filings are available on www.sec.gov. The information contained on our website, www.igcinc.us, is not incorporated by reference in this report, and you should not consider it a part of this report.

10-Q

10


NOTE 2

StockINTENTIONALLY LEFT BLANK

NOTE 3 – ACCOUNTS RECEIVABLE

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. 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. 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. Equity awards issued to non-employees are recorded at their fair value on the grant date as they are immediately exercisable and not forfeitable on the date of grant.

Accounts receivable net

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 amounted to $1,155,229 and $752,926 asmay be required. We had $264 thousand of December 31, 2017 and March 31, 2017, respectively.  The accounts receivable, net of reservesprovision for doubtful debt of $9 thousand as of June 30, 2020, as compared to $133 thousand of accounts receivable, net of provision for doubtful debt of $9 thousand as of March 31, 2020.

Inventory

Inventory is valued at the lower of cost or net realizable value, net realizable value 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 CBD products, among others as well as work-in-progress such as extracted crude oil, CBD 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, the Company values its harvested crops at cost. Please refer note – “Note 3 - Inventory”, for further information.

Fair value of financial instruments

ASC Topic 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 quarter ended December 31, 2017 come primarily from construction management, rentalasset 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.

 | June 30, 2020 Form 10-Q

The carrying amounts of the Company’s financial instrument includes cash and trading in commodities.cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate their fair values due to the nature of the items. Please refer to Note 16 - “Fair Value of Financial Instruments”, for further information.
 

Earnings/(Loss) per Share

The computation of basic loss per share for the three months ended June 30, 2020, excludes potentially dilutive securities of approximately 3.2 million shares which includes share options, unvested shares such as restricted shares and restricted share units, granted to employees and advisors, warrants, 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 the three months ended June 30, 2020 and 2019, used for the computation of basic earnings per share (“EPS”) is 40,189,222 and 39,508,110, respectively. Due to the loss incurred during the three months ended June 30, 2020 and 2019, all the potential equity shares are anti-dilutive and accordingly, the fully diluted EPS is equal to the basic EPS.

Cybersecurity

We have a cybersecurity policy in place and tighter cybersecurity measures to safeguard against hackers. In three months ended June 30, 2020, there were no impactful breaches in cybersecurity.

Leases

Lessor Accounting

Under the 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.

 | June 30, 2020 Form 10-Q

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 June 30, 2020.

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  “Note 9 - Leases”, for further information.

Changes to U.S. GAAP are established by the 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 below are expected to have no impact on the Company’s consolidated financial position and results of operations, because either the ASU is not applicable, or the impact is expected to be immaterial.

Not yet adopted

Investments, Derivatives and Hedging: In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topics 321, 323 and 815. The new standard addresses accounting for the transition into and out of the equity method and measurement of certain purchased options and forward contracts to acquire investments. The amendment is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is evaluating the impact of this update.

Recently adopted

Disclosures: In August 2018, the FASB issued ASU 2018-13. Fair Value Measurement (Topic 820) Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in the standard apply to all entities that are required, under existing GAAP, to make disclosures about recurring or nonrecurring fair value measurements. ASU 2018-13 removes, modifies, and adds certain disclosure requirements in ASC 820, Fair Value Measurement. The standard is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this guidance did not have a material impact on our consolidated financial statements. 

Collaborative Arrangement: Clarifying the Interaction Between Topic 808 and Topic 606, which clarifies when transactions between participants in a collaborative arrangement are within the scope of the FASB’s revenue standard, Topic 606. The standard is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, with early adoption permitted. The adoption of this guidance did not have a material impact on our consolidated financial statements. 

 | June 30, 2020 Form 10-Q

Intangibles-Goodwill and Other-Internal-Use Software: In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. ASU 2018-15 (Subtopic 350-40)aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. The adoption of this guidance did not have a material impact on our consolidated financial statements. 

NOTE 3 – INVENTORY

  

(in thousands)

 
  

As of

June 30, 2020

($)

  

As of

March 31, 2020

($)

 

Raw Materials

  1,803   227 

Work-in-Progress

  3,911   3,713 

Finished Goods

  809   305 

Total

  6,523   4,245 

Inventory in the form of work-in-progress as of June 30, 2020, is comprised of, but not limited to, various hemp-based extracts such as crude oil, hemp distillate, and hemp isolate. The Company accounts all hemp extracts as work-in-progress until they are in the processing facility. 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, personal protection equipment, among others.

NOTE 4 – OTHER CURRENTDEPOSITS AND NON-CURRENT ASSETS


Prepaid expensesADVANCES

  

(in thousands)

 
  

As of

June 30, 2020

($)

  

As of

March 31, 2020

($)

 

Advances to suppliers and consultants

  1,110   558 

Other advances

  68   16 

Advances for Property, Plant and Equipment

  72   259 

Statutory advances

  29   27 

Prepaid expense and other current assets

  135   180 

Total

  1,414   1,040 

The Advances to suppliers and other current assets consist of the following:

  
As of
December 31, 2017
  
As of
March 31, 2017
 
Prepaid /preliminary expenses $-  $6,750 
Advance to suppliers, others & services  355,490   352,850 
Security/statutory advances  17,320   14,216 
Prepaid and accrued interest  1,459   1,436 
Deposit and other current assets  5,516   35,156 
Total $379,785  $410,408 
Other non-current assets consist of the following:
  
As of
December 31, 2017
  
As of
March 31, 2017
 
Statutory/Other advances $521,631  $539,720 
Product formulation  299,282   - 
Total $820,913  $539,720 

On May 21, 2012, TBL entered into an agreement with Weave & Weaveconsultants primarily relate to advance to suppliers in our Life Sciences and Infrastructure segment. Advances for the purchase of land. TBL gave WeaveProperty, Plant and WaveEquipment include an advance of $383,832. As of the date of this filing, the parties arepaid for equipment for our processing facility in the processState of negotiating a settlement that includes the purchase and saleWashington.

 | June 30, 2020 Form 10-Q

14

The movement in intangible assets and goodwill is given below.
  
As of
December 31, 2017
  
As of
March 31, 2017
 
Intangible assets at the beginning of the period $-  $113,321 
Amortization  -   (113,321)
Patent filings and rights  124,272   - 
Total Intangible assets $124,272  $- 
Goodwill of Cabaran Ultima Sdn Bhd  198,169   198,169 
Total Goodwill $198,169   198,169 

 Amortized intangible assets

 

(in thousands)

 
  

As of

June 30, 2020

($)

  

As of

March 31, 2020

($)

 

Patents

  125   125 

Other intangibles

  20   20 

Accumulated amortization

  (13)  (10

)

Total amortized intangible assets

  132   135 
         

Unamortized intangible assets

        

Patents

  118   107 

Trademarks

  13   10 

Other intangibles

  12     

Total unamortized intangible assets

  143   117 

Total Intangible assets

  275   252 

The value of goodwill forintangible assets includes the two periods shown is $198,169cost of acquiring patent rights, supporting data, and is associated with the acquisition of Cabaran Ultima. The capitalized patent expenses are direct expenses, legal, filing fees etc.,expense associated with filing 10 patents and 32 trademarks. It also includes acquisition costs related to brands and domains.

The amortization of patent and patent rights is up to 20 years, commencing from the date of grant. The amortization of website and domains is up to 10 years. Trademarks and other patents that have not been granted have not been amortized. The Company uses the straight-line method to determine the amortization expense for its definite lived intangible assets. The amortization expense in North America, Europethree months ended June 30, 2020 and Canada.

June 30, 2020, there was no impairment.

Estimated amortization expense

(in thousands)

($)

For the year ended 2021

11

For the year ended 2022

13

For the year ended 2023

16

For the year ended 2024

19

For the year ended 2025

22

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT, NET

 

 

(in thousands, except useful life)

 

 

 

Useful Life (years)

 

 

As of

June 30, 2020

($)

 

 

As of

March 31, 2020

($)

 

Land

 

 

N/A

 

 

 

4,461

 

 

 

4,508

 

Buildings & facilities

 

 

25

 

 

 

3,038

 

 

 

2,540

 

Plant and machinery

 

 

5-20

 

 

 

4,332

 

 

 

3,867

 

Computer equipment

 

 

3

 

 

 

200

 

 

 

194

 

Office equipment

 

 

5

 

 

 

105

 

 

 

106

 

Furniture and fixtures

 

 

5

 

 

 

120

 

 

 

104

 

Vehicles

 

 

5

 

 

 

120

 

 

 

120

 

Construction in progress

 

 

N/A

 

 

 

652

 

 

 

768

 

Total Gross Value

 

 

 

 

 

 

13,028

 

 

 

12,207

 

Less: Accumulated depreciation

 

 

 

 

 

 

(2,425

)

 

 

(2,427

)

Total Property, plant and equipment, net

 

 

 

 

 

 

10,603

 

 

 

9,780

 

 | June 30, 2020 Form 10-Q

15


Property, plant and equipment consist

 Category Useful Life (years)  
As of
December 31, 2017
  
As of
March 31, 2017
 
Building (flat)  25  $245,035  $241,181 
Plant and machinery  20   1,737,381   1,710,055 
Computer equipment  3   160,643   157,349 
Office equipment  5   121,372   119,528 
Furniture and fixtures  5   72,167   70,368 
Vehicles  5   296,288   292,764 
Assets under construction  N/A   969,573   957,880 
Total     $3,602,459  $3,549,125 
Less: Accumulated depreciation     $(2,651,108) $(2,595,189)
Net Assets     $951,351  $953,936 

Depreciation expense in the three months ended June 30, 2020 and 2019, amounted to approximately $74 thousand and $17 thousand, respectively. The net increase in total Property, Plant & Equipment is primarily due to the set-up of product manufacturing, processing, and packaging facilities, in the U.S. subsidiaries. The net decrease in land and accumulated depreciation is primarily due to foreign exchange translations because of a decline in value of foreign currencies. The construction is progress relates to the Washington facility under construction. For more information, please refer to Note 18 – Segment Information for the nine months ended December 31, 2017non-current assets other than financial instruments held in the country of domicile and 2016 was $15,297 and $391,617 respectively.  Capital work-in-progress represents the cost of property and equipment not put to use before the balance sheet date.


foreign countries.

NOTE 7 – INVESTMENTS – OTHERS

Investments - others for each of the periods ended December 30, 2017 and March 31, 2017, consisted of the following:
  
As of
December 31, 2017
  
As of
March 31, 2017
 
Investment in equity shares of unlisted company & associates $67,912  $63,392 
Investment in affiliate  773,111   773,111 
Investment in land  5,174,611   5,174,611 
Total $6,015,634  $6,011,114 
PursuantIN NON-MARKETABLE SECURITIES

  

(in thousands)

 
  

As of

June 30, 2020

($)

  

As of

March 31, 2020

($)

 

Investment in equity shares of unlisted company

  11   11 

Investment in Evolve I (i)

  249   - 

Total

 ��260   11 

(i)

On May 12, 2020, the Company completed an investment under the terms of the Share Subscription Agreement (“SSA”) with Evolve I, Inc., a Washington corporation (“Evolve”), by transferring part of the consideration to Evolve. As of June 30, 2020, the Company owns approximately 19.8% interest in Evolve.

The Company regularly reviews its investment portfolio to the December 18, 2014 Purchase Agreement with Apogee, we issued 1,200,000 common shares of IGC valued at $888,000 for the purchase of 24.9% ownership interest in Midtown Partners & Co., LLC.  The Purchase Agreement expired on June 30, 2015, anddetermine if any security is other-than-temporarily impaired, which would require the Company is pursuing its rights underto record an impairment charge in the terms of the Purchase Agreement to recover certain damages. Value of investment in our books is $773,111 as on December 31, 2017.


period.

NOTE 8 – Intentionally left blank.


CLAIMS AND ADVANCES

  

(in thousands)

 
  

As of

June 30, 2020

($)

  

As of

March 31, 2020

($)

 

Claims receivable (1)

  370   374 

Non-current deposits

  24   24 

Non-current advances (2)

  212   212 

Total

  606   610 

(1)

The claims receivable is due from the Cochin International Airport (“CIA”) that is partially owned by the State Government of Kerala. As of March 31, 2020, the receivable is due for over one year. The Company continues to carry the full value of the receivables without interest and without any impairment, because it believes that there is minimal risk that CIA will become insolvent and unable to make the payment. While the Company has initiated collection proceedings, it believes it will be difficult to receive the amount in the next 12 months because of the time required for legal collection proceedings. The decrease in claims receivable was mainly due to foreign exchange translation as a result of a decline in value of Indian Rupee. 

(2)

Includes a loan of $200 thousand to one of our manufacturers for the purchase of equipment, at an annual interest rate of three percent (3%), due on April 1, 2021.

NOTE 9 – OTHER CURRENT AND NON-CURRENT LIABILITIES

Other current liabilities consistLEASES

The Company has short-term leases primarily consisting of spaces with the following:

   
As of
December 31, 2017
  
As
of March 31, 2017
 
Statutory payables $16,344  $15,203 
Employee related liabilities  457,757   676,511 
Total $474,101  $691,714 
Forremaining lease term being less than or equal to 12 months. The total short-term lease expense and cash paid for the quarterthree months ended December 31, 2017, there were no other non-current liabilities.

June 30, 2020 and 2019 are approximately $63 thousand and $39 thousand, respectively. The Company also has an operating lease as of June 30, 2020.

 | June 30, 2020 Form 10-Q

In November 2019, the Company entered into an office 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 $127 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 5.4 year and discount rate of 7%. The lease does not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate.

(in thousands)

Three months ended

June 30, 2020

($)

Operating lease costs

31

Short term lease costs

63

Variable lease costs

-

Total lease costs

94

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

(in thousands)

As of

June 30, 2020

($)

Assets

Operating lease asset

553

Total lease assets

553

Liabilities

Current liabilities:

Accrued liabilities and others (current portion – operating lease liability) 

84

Noncurrent liabilities:

Operating lease liability (non-current portion – operating lease liability) 

471

Total lease liability

555

(in thousands)

As of

June 30, 2020

($)

Supplemental cash flow and non-cash information related to leases is as follows:

Cash paid for amounts included in the measurement of lease liabilities

 – Operating cash flows from operating leases

19

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

571

As of June 30, 2020, the following table summarizes the maturity of our lease liabilities:

Mar-21

117

Mar-22

119

Mar-23

122

Mar-24

126

Mar-25

129

Mar-26

54

Less: Present value discount

(112

)

Total Lease liabilities

555

 | June 30, 2020 Form 10-Q

NOTE 10 – ACCRUED AND OTHER LIABILITIES

  

(in thousands)

 
  

As of

June 30, 2020

($)

  

As of

March 31, 2020

($)

 

Salaries and other contribution

  537   424 

Provision for expenses 

  462   412 

Other current liability

  221   298 

Total

  1,220   1,134 

Salaries and other contribution related liabilities consist of accrued salaries to employees. Provision for expenses include provision for legal, professional, and marketing expenses, including a provision of $200 thousand for the lawsuit as discussed in Note 12, “Commitments and Contingencies”. Other current liability also includes $84 thousand and $89 thousand of current operating lease liability and statutory payables of approximately $35 thousand and $27 thousand as of June 30, 2020 and March 31, 2020, respectively.

NOTE 11 – LOANS AND OTHER LIABILITIES

Long -term loans:

As of June 30, 2020, the Company has the following loans:

a)

The Company had one secured loan of $50 thousand, at an annual interest rate of 15%.

b)

On May 3, 2020, the Company signed the Paycheck Protection Program Promissory Note and Agreement for a loan of approximately $430,000. The Loan is established under the terms and conditions of the SBA program of the United States Small Business Administration (“SBA”) and the USA CARES Act (2020)(H.R. 748)(15 U.S.C 636 et seq.) (the “Act”) and matures after 2 years on May 3, 2022, with monthly repayments of approximately $18,000 commencing November, 2020. Interest will accrue on the outstanding principal balance at an annual fixed rate of 1.00%.

c)

On June 11, 2020, the Company also received an Economic Injury Disaster Loan for approximately $150 thousand at an annual interest rate of 3.75%. The Company must pay principal and interest payments of $731 every month beginning June 2021. 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. 

Other Liability:

  

(in thousands) 

 
  

As of June 30,

  

As of March 30,

 
  

2020

($)

  

2020

($)

 

Statutory reserve

  16   16 

Total

  16   16 

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

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 condensed consolidated financial statements as of June 30, 2020, except as disclosed below.

 | June 30, 2020 Form 10-Q

As of June 30, 2020, several law firms have filed shareholder lawsuits, including three derivative suits (two of which have been consolidated), citing, among other things, the NYSE American delisting proceedings initiated in October 2018 (and overturned in February 2019) and subsequent fall in share price. Those derivative suits have now been settled. Pursuant to the settlement agreement, which was filed with the Court as an exhibit to an Amended Consent Motion for Preliminary Approval of Derivative Settlement on April 30, 2020, the Company will adopt certain corporate governance modifications, and the derivative plaintiffs will receive $200,000.00 from the Company’s insurer to cover their attorneys’ fees and a nominal service award. The Company has recorded a provision for $200,000 as of June 30, 2020. On June 30, 2020, the Court held a hearing to evaluate the fairness and reasonableness of the settlement and to determine whether the settlement will be approved. On July 6, 2020, the Court entered an order formally and finally approving the settlement and resolving all pending derivative suits.

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 June 30, 2020, the Company was authorized to issue up to 150,000,000 shares of common stock, par value $0.0001 per share, and 41,196,130 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 June 30, 2020. The Company has 11,672,178 outstanding public warrants (IGC: IW) to purchase 1,167,217 shares of common stock by surrendering 10 warrants and a payment of $5.00 in exchange for each share of common stock. We have 91,472 units outstanding that can be separated into common stock and warrants.

We have one security listed on the NYSE American: common stock, $.0001 par value (ticker symbol: IGC). This security also trades on the Frankfurt, Stuttgart, and Berlin stock exchanges (ticker symbol: IGS1). We have redeemable warrants quoted on the OTC Markets (ticker symbol: IGC.IW, CUSIP number 45408X118 expiring on March 8, 2021) to purchase common stock. The units are not listed on an exchange or market. Ten units may be separated into one share of common stock and 20 warrants (IGC: IW) which effectively allows the holder to exercise the warrants into two shares of common stock.

NOTE 14 – RELATED PARTY TRANSACTIONS

As of December 31, 2017, the Company has (i) a balance of $98,185 due and payable to our CEO inclusive of certain unpaid salaries from previous years and (ii) a secured loan at zero interest from spouse of our CEO in the amount of $244,412.

We pay an affiliate of our CEO $4,500 per month for office space and certain general and administrative services, renderedprovided in Maryland.  In addition, we pay another affiliate

NOTE 15 – STOCK-BASED COMPENSATION

As of our CEO $6,100 per month for officeJune 30, 2020, under both the Company’s previous 2008 and facilities in Washington State.  We believe, based on rents and fees for similar services in the Washington, D.C. metropolitan area, and Washington State that the fee charged by the affiliates are at least as favorable as we could have obtained from an unaffiliated third party and these payments are not considered, or meant to be compensation to our CEO.  The rental agreement for the Maryland location is on a month-to-month basis and may be terminated by our Board of Directors of the Company at any time without notice. The rental agreement for Washington State facilities expired on December 31, 2017, and it was renewed in Januarycurrent 2018 by mutual consent for 1 more year.  During the quarter ended December 31, 2017, the total rent paid to one of the affiliates for the office space (and services) in Maryland was $13,500. $36,600 is payable to one of the affiliates for the rental of the facilities in Washington State. As on December 31, 2017, an amount of $82,147 is due to RGF Cabaran’s director.  For December 31, 2017 there was no loan balance due to the Director of Cabaran.

Loans by Related Parties:
We have a secured working capital loan that has a loan balance of $195,061 as of December 31, 2017 and $97,500 as of March 31, 2017 from affiliates of our CEO, at an annual interest rate of zero percent, due February 23, 2022.  There is no prepayment penalty.  The assets of the Company secure the loan.

Loans to Related Parties:
On April 30, 2015, FYE 2016, we loaned Apogee Financial Services, the majority owner of Midtown Partners, $70,000 as working capital for Midtown partners.  The loan is outstanding as of December 31, 2017.
NOTE 11 – NOTES PAYABLE AND LOANS – OTHERS
The Company has an unsecured Note Payable to Bricoleur Partners, L.P. in the amount of $1,800,000 (“2012 Security”).  Up to July 2014, the Company was making monthly payments of 17,100 shares of common stock.  Starting on August 2014, the Company started making a monthly payment of 23,489 shares of common stock.  Starting August 1, 2016, the Company started making a monthly payment of 30,000 shares.  The Company has never made a cash interest payment to Bricoleur on the Note.  The parties have agreed that the Company will make a payment (shown on our P&L under interest payment and not tax deductible to the Company) of 30,000 shares of common stock for each month the loan remains unpaid, regardless of the trading price of the stock.  The arrangement allows the Company and Bricoleur to pursue permanent conversion of the principal to common stock, or repayment of the principal using common stock. At the 2017 annual meeting of the shareholders the Company asked the shareholders to vote on allowing the Company to deliver up to an additional 2 million shares of our common stock as repayment of principal.  The vote on the amendment remains outstanding.  During the quarter ended December 31, 2017, the Company issuedOmnibus Incentive Plans, a total of 90,000 shares valued at $48,000 to this debt holder, which constitutes non-tax-deductible payments for the Company.
As of December 31, 2017, the Company has seven loans categorized as Loans Others totaling $737,097 at an average annual interest rate of 10%, as follows: Loan 1: We have a loan for $62,726, due on April 25, 2018 bearing 10% annual interest rate. This loan is from one of our Advisors and former director. There is no prepayment penalty.  Loan 2: We have a secured loan from an individual for $100,000, at an annual interest rate of 24%, due February 23, 2022. There is no prepayment penalty. The assets of the Company secure the loan. Loan 3: We have a secured loan from an individual for $50,000, at an annual interest rate of 15%, due February 23, 2022. There is no prepayment penalty.  The assets of the Company secure the loan. Loan 4: We have a secured loan of $75,000 from an affiliate of our CEO, at an annual interest rate of 15%, due February 23, 2022.  There is no prepayment penalty.  The assets of the Company secure the loan. Loan 5: We have a secured loan that has a balance as of December 31, 2017 of $195,061 from an affiliate of our CEO, at an annual interest rate of zero percent, due February 23, 2022. There is no prepayment penalty. The assets of the Company secure the loan. Loan 6: Secured loan from the spouse of our CEO, in the amount of $244,411. There is no prepayment penalty. The assets of the Company secure the loan. Loan 7: We have a working capital loan that has a loan balance as of December 31, 2017 of $9,899 from a relative of our CEO, at an annual interest rate of zero percent.
NOTE 12 – COMMITMENTS AND CONTINGENCY

No significant contingencies or commitments were made or existed during the three months ended December 31, 2017.


NOTE 13 – COMMON STOCK
Our common stock trades on the NYSE AMERICAN under the symbol “IGC” with CUSIP number 45408X308, $0.0001 par value (“Common Stock”). This security is also available for trading on the Borse Frankfurt, Stuttgart, and Berlin Exchanges (ticker symbol: IGS1).  The Common stock of the Company is also available for trading on the Borse Frankfurt, Borse Berlin, and Borse Stuttgart (XETRA2) exchanges in Germany. The Warrants and Units now trade on the OTC Markets. We have redeemable Warrants (CUSIP number 45408X118 expiring on March 6, 2019) to purchase Common Stock (ticker symbol: IGC.WT) and Units consisting of one share of Common Stock and two redeemable warrants to purchase Common Stock that are not listed.  The Unit holders are requested to contact the Company to get their existing Units separated into Common Stock and Warrants.
As on December 31, 2017, there are 11,656,668 outstanding public warrants to purchase 1,165, 667 shares of our common stock at an exercise price of $50.00 a share, expiring on March 6, 2019 and 831,768 private warrants to buy 83,176 shares of common stock at an exercise price of $9.0 that expired on December 8, 2017.
During the quarter ended December 31, 2017, the Company issued 90,000 penalty shares valued at $48,000 to Bricoleur Partners, L.P. for the outstanding $1,800,000 promissory note (“2012 Security”).
On May 20, 2016, IGC entered into an At-The-Market Agency Agreement (“ATM Agreement”) with IFS Securities, Inc. (dba Brinson Patrick, a division of IFS Securities, Inc.), as sales agent (“Brinson Patrick” or the “Agent”). Under this ATM agreement in the December quarter, 23,201 shares of IGC Common Stock, valued at $8,018, settled. This ATM agreement was terminated on September 30, 2017.

The Company entered into a new ATM agreement with The Benchmark Company and Joseph Gunnar as sales agents.  During the quarter ended December 31, 2017, the Company sold 1,381,317 shares of Common Stock valuated at $1,610,190 under this ATM agreement.

Under the December 18, 2014 Purchase Agreement with Apogee, we issued 1,200,000 common shares of IGC valued at $888,000 for the purchase of 24.9% ownership interest in Midtown Partners & Co., LLC.  Pending downward adjustments, subject to certain balance sheet items of MTP, a total of 500,000 shares of IGC common stock have been held back.  Pending the resolution of these balance sheet items, the shares that have been held back may be cancelled. The agreement had a deadline of June 30, 2015, for Apogee and Midtown Partners to obtain the requisite approvals from FINRA. Apogee did not file for approval on time, and consequently pursuant to the terms of the Agreement, there are several penalties that will apply, including the cancellation of 700,000 shares of IGC stock and a penalty of $125,000 owed by Apogee to us.  We are not seeking to consummate the acquisition of the remaining interest in Midtown Partners at this time.
The Company has granted (1) to its advisors and employees options to purchase a total of 650,000 shares of common stock at exercise prices ranging from $0.10 to $0.60 are calculated with volatility 119%, interest rate 0.77% and expiration of 5 years, all of which are outstanding and exercisable as of December 31, 2017; and (2) 100,000 shares to acquire the exclusive right to the license of the U.S. patent filing entitled “THC as a Potential Therapeutic Agent for Alzheimer’s Disease” by the University of South Florida. Further, pursuant to IGC’s employee stock option plan and during the quarter ended December 31, 2017, IGC granted 1,455,000 shares to its directors and its employees with minimum vesting period of one year.  As of December 31, 2017, IGC has 29,499,790 shares of Common Stock issued and outstanding.
NOTE 14 – STOCK-BASED COMPENSATION

On April 1, 2009, the Company adopted ASC 718, “Compensation-Stock Compensation” (previously referred to as SFAS No. 123 (revised 2004), Share Based Payment).  ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. As of December 31, 2017, under the 2008 Omnibus Plan, 4,374,8998,207,627 shares of common stock have been awarded. Asissued to employees and advisors. 1.9 million restricted share units fair valued at $798 thousand with a weighted average value of December 31, 2017, there are 650,000 stock$0.43 per share, have been granted but not yet issued from different Incentive Plans and Grants. Additionally, options availableheld by advisors to IGC’s advisors and employees. Nopurchase 160 thousand shares of common stock underfair valued at $65 thousand with a weighted average of $0.4 per share, that have been granted but are to be issued over a vesting period, between Fiscal 2020 and Fiscal 2024.

The options are fair valued using a Black-Scholes Pricing Model with the 2008 ESOP plan are available for future grantsfollowing assumptions:

  

Granted in Fiscal 2021

  

Granted in Fiscal 2020

 

Expected life of options

 

5 years

  

5 years

 

Vested options

  100

%

  100

%

Risk free interest rate

  2.57

%

  2.57

%

Expected volatility

  249

%

  249

%

Expected dividend yield

 

Nil

  

Nil

 

 | June 30, 2020 Form 10-Q

The expense associated with share-based payments to employees, directors, advisors, and consultants. IGC granted 1,455,000 shares, out ofcontractors is allocated over the total approved byvesting or service period and recognized in the shareholders, to its directors and its employees with minimum vesting period of one year.


NOTE 15 – SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling,selling, general and administrative expenses were $507,332 for(including research and development). For the three months ended December 31, 2017 as comparedJune 30, 2020, the Company’s share-based expense and option-based expense shown in selling, general and administrative expenses (including research and development) are $160 thousand and $6 thousand, respectively.

The expense associated with share-based payments to $322,891 foremployees, 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 the three months ended December 31, 2016. Selling,June 30, 2019, the Company’s share-based expense and option-based expense shown in selling, general and administrative expenses include compensation expenses(including research and development) are $202 thousand and $6 thousand, respectively.

Non-vested shares

 

Shares

(in thousands)

(#)
  

Weighted average

grant date fair value

($)

 

Non-vested shares as on March 31, 2020

  1,851   0.40 

Granted

  -   - 

Vested

  (70

)

  0.45 

Cancelled/Forfeited

  -   - 

Non-vested shares as on June 30, 2020

  1,781   0.40 

Options

 

Shares

(in thousands)

(#)

  

Weighted average

grant date fair value

($)

  

Weighted average

exercise price

($)

 

Options outstanding as on March 31, 2020

  160   0.40   0.39 

Granted

  -   -   - 

Exercised

  -   -   - 

Cancelled/Forfeited

  -   -   - 

Options outstanding as on June 30, 2020

  160   0.40   0.39 

There was a combined unrecognized expense of $505 thousand related to management, legalnon-vested shares and professional expenses, investor-relations expenses, acquisition related expenses and travel expenses.


NOTE 16 – IMPAIRMENT

None during fiscal quarter ended December 31, 2017. 

NOTE 17 – INTEREST AND OTHER INCOME

Interest and other income forshare options that the three-month periods ended December 31, 2017 and 2016 amountedCompany expects to $1,090 and $359,104, respectively, and included income received from the supply of skilled operators for the heavy equipment rental business and from the rent of the apartment belonging to TBL, which is in Kochi, India.

NOTE 18 – RECONCILIATION OF EPS
In accordance with ASC Topic 280 – "Earnings Per Share", the basic loss per common share is computed by dividing net loss available to common stockholders by thebe recognized over weighted average numberlife of common stock outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential common stock had been issued and if the additional shares of common stock were dilutive.  Potential common stock consists of the incremental common stock issuable upon the exercise of common stock options and warrants (using the if-converted method). The computation of basic loss per share for the period ended December 31, 2017 excludes potentially dilutive securities of 1,815,667 shares underlying share purchase options and warrants, and 29,768 shares from the conversion of outstanding units because their inclusion would be antidilutive.
The historical weighted average per share for our shares through December 31, 2017, was applied using the treasury method of calculating the fully diluted shares.  The weighted average number of shares outstanding as of December 31, 2017 and 2016 used for the computation of basic earnings per share (“EPS”) is 28,169,292 and 27,446,095, respectively. Due to the loss incurred during the three-month period ended December 31, 2017, all the potential equity shares are anti-dilutive and accordingly, the fully diluted EPS is equal to the basic EPS.
NOTE 19 – INCOME TAXES

The Company adopted ASC 740, Accounting for Uncertainty in Income Taxes. In assessing the recoverability of its deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. The management considers historical and projected future taxable income, and tax planning strategies in making this assessment.
The Company’s effective tax rate was 0% for both the quarters ended December 31, 2017 and 2016. The Company has US deferred tax assets, which have been offset by valuation allowance because of historical and expected losses.  As the Company reverses its losses and becomes profitable, we will reassess the likelihood of recovering a portion or all of the deferred tax assets.  
The Company recorded an income tax gain/expense of $0 resulting from operational results of its foreign entities for both three-month periods ended December 31, 2017 and 2016. As of December 31, 2017, and 2016, there was no significant liability for income tax associated with unrecognized tax benefits.  As of December 31, 2017, IGC could not use its net operating losses.
NOTE 20 – SEGMENT INFORMATION
Accounting pronouncements establish standards for the manner in which public companies report information about operating segments in annual and interim financial statements. Operating segments are components of an enterprise that have distinct financial information available and evaluated regularly by the chief operating decision-maker (“CODM”) to decide how to allocate resources and evaluate performance. The Company’s CODM is considered to be the Company’s chief executive officer (“CEO”). The CEO reviews financial information presented on an entity level basis for purposes of making operating decisions and assessing financial performance. The Company has determined that it operates as two operating and reportable segments: Pharmaceutical, and Legacy. Therefore, the Company has commenced reporting two segments.
Our legacy infrastructure business (“Legacy”, “Legacy Business””) that consists of trading, real-estate management, and heavy equipment leasing is one operating and reportable segment.  The other is the pharmaceutical segment that did not have revenue for the quarter ended December 31, 2017.

The following provides information required by ASC 280-10-50-38. Entity-Wide Information.

1) The table below shows revenue reported by product and service: 
  
Three months ended
December 31,
  
Nine months ended
December 31,
 
 2017  2016  2017  2016 
 Pharmaceutical Business
            
Revenue $-  $-  $-  $- 
Operating income/(Loss)  (422,706)  (243,917)  (957,870)  (711,950)
Net Profit/(Loss)  (483,054)  (285,592)  (1,103,372)  (838,774)
                 
Legacy Business                
Revenue $762,009  $249,801  $1,050,582  $487,364 
Operating income/(Loss)  (50,668)  (142,195)  (117,251)  (607,339)
Net profit/(Loss)  (49,527)  174,031   (107,619)  (270,827)

2(a) The following table presents revenue by geographic area as determined by where the customer is serviced:
  
Three months ended
December 31,
  
Nine months ended
December 31,
 
 2017  2016  2017  2016 
India $149,310  $(15,886) $382,580  $103,132 
Hong Kong  585,884   213,117   585,884   213,117 
Malaysia  26,815   52,570   82,118   171,115 
Total $762,009  $249,801  $1,050,582  $487,364 

In 2016 December Quarter, revenue of Techni Bharti Private Limited (IGC’s India- based subsidiary) is re-classified as other income.
2(b) The following table presents long-lived assets by geographic area:

 As of December, 30 
  2017  2016 
India $5,771,338  $5,790,817 
USA  2,090,978   3,334,509 
Malaysia  248,023   207,427 
Total $8,110,339  $9,332,753 
2(c) The table below shows nine-month revenue reported by product and service for the period ended December 31, 2017:
Product & Service Amount  % on total revenues 
       
Trading $874,099   83%
Real Estate $82,118   8%
Rental $94,365   9%
TOTAL $1,050,582   100%
NOTE 21 – CERTAIN AGED RECEIVABLES

The receivable and other assets as of December 31, 2017 and March 31, 2017, include certain aged receivables in the amount of $437,571. The aged receivables are due from the Cochin International Airport. Cochin International Airport is partially owned by the State Government of Kerala. The receivables have been due for periods in excess of one year as of December 31, 2017. These receivables are included in accounts receivable and have been classified as current because the arbitration process has concluded, and ruling was given in our favor. The Company continues to carry the full value of the receivables without interest and without any impairment, because the Company believes that there is minimal risk that this organization will become insolvent and unable to make payment.

1.03 years.

NOTE 2216 – FAIR VALUE OF FINANCIAL INSTRUMENTS


The

As of June 30, 2020, 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 increase in value of marketable securities is comprised of re-invested income of approximately $10 thousand and approximately $7 thousand unrealized gain during the three months ended June 30, 2020. The Company’s current assetscash and current liabilities approximate their carrying value because of their short-term nature.  Such financialcash equivalents have also been classified as Level 1 on the same principle. Financial instruments are classified as current andif 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.

 | June 30, 2020 Form 10-Q

The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of June 30, 2020 and March 31, 2020, 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

($)

 

June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents:

 

 

2,703

 

 

 

-

 

 

 

-

 

 

 

2,703

 

Total cash and cash equivalents

 

 

2,703

 

 

 

-

 

 

 

-

 

 

 

2,703

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Marketable securities

 

 

5,098

 

 

 

-

 

 

 

-

 

 

 

5,098

 

-Non-marketable securities  

 

 

-

 

 

 

-

 

 

 

260

 

 

 

260

 

Total Investments

 

 

5,098

 

 

 

-

 

 

 

260

 

 

 

5,358

 

 

 

Level 1

($)

 

 

Level 2

($)

 

 

Level 3

($)

 

 

Total

($)

 

March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents:

 

 

7,258

 

 

 

-

 

 

 

-

 

 

 

7,258

 

Total cash and cash equivalents

 

 

7,258

 

 

 

-

 

 

 

-

 

 

 

7,258

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-Marketable securities

 

 

5,081

 

 

 

-

 

 

 

-

 

 

 

5,081

 

-Non-marketable securities

 

 

-

 

 

 

-

 

 

 

11

 

 

 

11

 

Total Investment

 

 

5,081

 

 

 

-

 

 

 

11

 

 

 

5,092

 

NOTE 17 – REVENUE RECOGNITION

Revenue in the Infrastructure Business 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 and physical 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. We license our products to processors. The royalty income from licensing is recognized once goods have been sold by the processor to its customers. 

 | June 30, 2020 Form 10-Q

Net sales disaggregated by significant products and services for the three months ended June 30, 2020 and 2019 were as follows:

  

(in thousands)

Three months ended June 30,

 
  

2020

($)

  

2019

($)

 

Infrastructure segment

        

Rental income (1)

  -   3 

Construction contracts (2)

  -   - 

Purchase and resale of physical commodities (3)

  -   1,542 
         

Life Sciences segment

        

Wellness and Lifestyle (4)

  584   104 

Tolling/White labeling service (5)

  -   - 

Total

  584   1,649 

(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. The Company expects to complete the project within 12 to15 months, depending on the status of the COVID-19 pandemic.

(3) Relates to the income from purchase and resale of physical commodities used in infrastructure, like steel, wooden doors, marble, and tiles.

(4) Relates to revenue from Life Sciences segment such as sale of hand sanitizer, hemp crude extract, hemp isolate, and hemp distillate and royalty income from the sale of Hyalolex™, now named Hyalolex™ Drops of Clarity™.

(5) Relates to income from tolling and white label services.

NOTE 18 – SEGMENT INFORMATION

FASB ASC No. 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 Business and (b) Life Sciences segment. The Company does not include intercompany transfers between segments for Management reporting purposes.

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

 

Three months ended

June 30, 2020

($)

  

Percentage of

Total Revenue

(%)

 
         

Infrastructure segment

  -   -

%

Life Sciences segment

  584   100

%

Total

  584   100

%

 | June 30, 2020 Form 10-Q

  

(in thousands)

 

Segments

 

Three months ended

June 30, 2019

($)

  

Percentage of

Total Revenue

(%)

 
         

Infrastructure segment

  1,545   94

%

Life Sciences segment

  104   6

%

Total

  1,649   100

%

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

2)     The table below shows the revenue attributed to the country of domicile (U.S.) and foreign countries. Revenue is generally attributed to the geographic location of customers: 

 

 

 

 

(in thousands)

 

Segments

 

Country

 

Three months ended

June 30, 2020

($)

 

 

Percentage of

Total Revenue

(%)

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

(1) India

 

 

-

   

-

%

 

 

(2) Hong Kong

 

 

-

   

-

%

North America

 

 U.S.

 

 

584

   

100

%

Total

 

 

584

 

 

 

100

%

 

 

 

 

(in thousands)

 

Segments

 

Country

 

Three months ended

June 30, 2019

($)

 

 

Percentage of

Total Revenue

(%)

 

 

 

 

 

 

 

 

 

 

 

 

Asia 

 

(1) India

 

 

3

   

-

%

 

 

(2) Hong Kong

 

 

1,542

   

94

%

North America

 

 U.S.

 

 

104

   

6

%

Total

 

 

1,649

 

 

 

100

%

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

 

 

(in thousands)

 

Nature of Assets

 

USA

(Country of Domicile)

($)

 

 

Foreign Countries

(India, Hong Kong, and Colombia)

($)

 

 

Total as of

June 30, 2020

($)

 

Intangible assets, net

 

 

275

   

-

   

275

 

Property, plant and equipment, net

 

 

6,087

   

4,516

   

10,603

 

Investments in unlisted securities

 

 

249

   

11

   

260

 

Claims and advances

 

 

200

   

406

   

606

 

Operating lease asset

 

 

553

   

-

   

553

 

Total non-current assets

 

 

7,364

   

4,933

   

12,297

 

 | June 30, 2020 Form 10-Q

 

 

(in thousands) 

 

Nature of Assets

 

USA (Country of Domicile)

($)

 

 

Foreign Countries

(India Hong Kong and Colombia)

($)

 

 

Total as of March 31, 2020

($)

 

Intangible assets, net

 

 

252

 

 

 

-

 

 

 

252

 

Property, plant and equipment, net

 

 

5,216

 

 

 

4,564

 

 

 

9,780

 

Investments in unlisted securities

 

 

-

 

 

 

11

 

 

 

11

 

Claims and advances

 

 

200

 

 

 

410

 

 

 

610

 

Operating lease asset

 

 

574

 

 

 

-

 

 

 

574

 

Total non-current assets

 

 

6,242

 

 

 

4,985

 

 

 

11,227

 

NOTE 19 – SUBSEQUENT EVENTS

On August 18, 2020, the Company received an official USPTO Notice of Allowance for its U.S. Trademark NO3A™, U.S. Serial Number: 88694194.

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

On July 30, 2020, IGC received approval from the FDA to proceed with Phase 1 human clinical trials (“removal of full clinical hold”) on its Investigational New Drug Application (“INDA”) for IGC-AD1 submitted under Section 505(i) of the Federal Food, Drug, and Cosmetic Act. The Phase 1 trial will involve a randomized placebo controlled Multiple Ascending Dose (“MAD”) study to evaluate safety and tolerability of IGC-AD1 in subjects with dementia due to Alzheimer’s disease. In addition, the study will evaluate pharmacokinetics (“PK”) and collect data on other factors. The drug IGC-AD1 is based on a patent filed by the University of South Florida (“USF”) that uses a cannabinoid as one of the active ingredients. The Company has exclusive rights to the patent filing.

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

In January 2020, the Company entered into a binding agreement for the settlement of three  previously disclosed derivative lawsuits: Erny v. Mukunda, et al., Civil Action No. 1:18-cv-03698-DKC, filed in the United States District Court for the District of Maryland on November 30, 2018; Hamdan v. Mukunda, et al., Civil Action No. 8:19-cv-00493-DKC, filed in the United States District Court for the District of Maryland on February 20, 2019; and Patel v. Mukunda, et al., Civil Action No. 8:19-cv-01673-PWG, filed in the United States District Court for the District of Maryland on June 6, 2019. Pursuant to the settlement agreement, which was filed with the Court as an exhibit to an Amended Consent Motion for Preliminary Approval of Derivative Settlement on April 30, 2020, the Company will adopt certain corporate governance modifications, and the derivative plaintiffs will receive $200,000 from the Company’s insurer to cover their attorneys’ fees and a nominal service award. Shareholders were given notice of the proposed settlement through the Company’s filing of an SEC Form 8-K report, the issuance of a press release, publication in Investor’s Business Daily, and posting in the “Investors” section of the Company’s website, all of which were deemed by the court to constitute sufficient notice to shareholders of the settlement. Shareholders were given the opportunity to assert objections to the final settlement, and no objections were received by the parties to the derivative suit or filed with the court. On June 30, 2020, the Court held a hearing to evaluate the fairness and reasonableness of the settlement and to determine whether the settlement will be approved. On July 6, 2020, the Court entered an order formally and finally approving the settlement and resolving all pending derivative suits.

On May 26, 2020, the Company received an official USPTO Notice of Allowance for its U.S. Trademark Holief™, U.S. Serial Number: 88690835.

 | June 30, 2020 Form 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussionpurpose of this Management’s Discussion and analysisAnalysis (“MD&A”) is to provide an understanding of ourthe Company's consolidated financial condition, and results of operations and cash flows, and should be read in conjunction with our unaudited condensed financial statements and related notes that appear elsewhere in this Quarterly Report on Form 10-Q for the three months ended June 30, 2020, and the Annual Report on Form 10-K for the fiscal year ended March 31, 2020, filed with the SEC on July 14, 2017.  In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.  Our13, 2020. The Company’s actual results could differ materially from those discussed in the forward-looking statements.here. Factors that could cause or contribute to these differences include those discussed in the “Forward-Looking Statements” and “Risk Factors” sections, as well as discussed elsewhere in this report. The risks and uncertainties can cause actual results to differ significantly from those in our Annual Reportforward-looking statements or implied in historical results and trends. We caution readers not to place undue reliance on Form 10-K filed withany 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 July 14, 2017, includingwhich any such statements may be based, or that may affect the risk factorslikelihood that actual results will differ from those set out in Item 1A therein.  Therefore, the financial statements included in this Report should be read in conjunction with the audited Consolidated Financial Statements containedforth in the Company’s Annual Reportforward-looking statements.

COVID-19 Update

We continue to monitor the impact from restrictions imposed by the COVID-19 pandemic on Form 10-K filed withour financial condition, liquidity, operations, suppliers, industry, and workforce. Revenue from the SEC on July 14, 2017.


Company Background

IGC has two lines of business.  The firstinfrastructure segment continues to be adversely affected as we are unable to fully deploy our workforce. In response to the evolving circumstances, we supplemented our facilities to manufacture, label, and distribute FDA-registered alcohol-based hand sanitizers and hand rubs. While there is a legacy infrastructure business, which consistsgeneral lack of heavy equipment rental, trading infrastructure related commodities,visibility, we anticipate drastically reduced revenue from Infrastructure, and real estate management.  The second is a cannabis pharmaceutical business that has developed a lead product, Hyalolex, for treating patients diagnosed with Alzheimer’s disease. The Company recently announced that it is working on using blockchain to address issues specific toalso unpredictable revenue from the cannabis industry including transactional difficulties, product labeling, product identification assurance (PIA), and product origin assurance (POA).
Business Strategy

Our long-term goal is to establish IGC as a specialty-pharmaceutical provider of phytocannabinoid-based pharmaceutical and Complimentary Alternative Medicine (“CAM”, “nutraceutical”) products and grow our trading in business in South Asia.  Our short-term goal is to conduct human and veterinarian medical trials on our four product candidates.  Our medium-term goal is to market CAM based therapies through joint ventures and partnerships.
Business Organization

We are a Maryland corporation formed in April 2005.  In March 2006, we completed an initial public offering of our common stock.  Our principal office in the U.S. is in Bethesda Maryland, in addition we have a facility in Washington State. Our back office is located in Kochi, Kerala India. In addition, many of our staff and advisors work from their home offices. We maintain a website at http://www.igcinc.us, www.igcpharma.com and www.hyalolex.com and our telephone number is +1-301-983-0998. The information contained on our website is not incorporated by reference in this report, and you should not consider it a part of this report.  As of December 31, 2017, our operational subsidiaries are located in India, Hong Kong and Malaysia.  Our filings are available on www.sec.gov.

Products

Cannabinoids are chemical compounds that exert a range of effects on the body, including impacting the immune response, gastrointestinal maintenance and motility, muscle functioning, and nervous system response and functioning. Phytocannabinoids are cannabinoids that occur naturally in the cannabis plant, they are abundant in the viscous resin produced by glandular structures called trichomes. There are over 480 different compounds in the cannabis plant.  Many of them have been identified as cannabinoids. Of these THC (delta-9-tetrahydrocannabinol) is the main psychoactive component (“high”) in the plant with many therapeutic uses.  The other broadly pursued non-psychoactive phytocannabinoid, CBD (Cannabidiol), is pleiotropic influencing many pathways in humans, dogs, and cats and may be used to provide relief to a variety of symptoms including pain, seizures, and eating disorders.

The Company is focused on four products that it is preparing for pre-clinical trials: Natrinol is a natural substitute for Marinol, or synthetic THC. This product is aimed at relieving nausea, vomiting and increasing appetite in patients with AIDS and Cancer.  Caesafin uses combination therapy to alleviate seizures in dogs and cats.  Serosapse addresses several end points in Parkinson’s disease including Rapid Eye Movement (REM) sleep disorder, anxiety, and dyskinesia. Hyalolex is aimed at reducing the buildup of plaques, tangles and relieve several other end symptoms such as anxiety, sleep disorder and agitation in patients diagnosed with Alzheimer’s disease.  We expect to launch Hyalolex in select medical dispensaries in medical cannabis states in the U.S. in early 2018.

Services

The Company trades commodities, provides real estate management, and rents heavy equipment.  The heavy equipment rental business is based in India.  The commodity trading business is based in India and Hong Kong.  The real estate management business is based in Malaysia.  This business is our main sources of revenue.  In each case we have less than 1% of the market.


Patents, Development Pipeline, and Licenses

Although, the Company believes the registration of patents is an important part of its business strategy and its success depends in part on such registration, the Company cannot guarantee that such patent filings will result in a successful registration with the USPTO.  Please see risk factors.

We have filed six provisional patents with the United States Patent and Trademark Office (“USPTO”), in the phytocannabinoid-based combination therapy space, for the indications of pain, medical refractory epilepsy, and cachexia. In addition, in May 2017, we acquired an exclusive license to a patent filed by the University of South Florida Research Foundation entitled “THC as a Potential Therapeutic Agent for Alzheimer’s Disease”.  The table below provides a status of the patent filings:

IndicationProvisional FilingPCT FilingSubsequent Activity
Pain (IGC-501)9/16/149/16/15US National Case Filed – 6/15/16
Seizures (IGC-502)6/15/156/14/16US National Case Filed – 6/15/16
Seizures (IGC-503)4/1/154/1/16PCT Application Published- 10/6/16
Eating Disorders (IGC-504)8/12/158/11/16US and National Filing Anticipated 2/12/18
Seizures (IGC-505)6/15/166/15/16US National Filing Anticipated 12/15/18
Eating Disorders (IGC-506)2/28/17Anticipated- 2/28/18US and National Filing Anticipated 8/28/19
Alzheimer’s (IGC-AD1)7/30/2015Anticipated -2018US and National Filing Anticipated in 2018

For more in-depth information regarding our industry, products, services and corporate history, please refer to the Company’s Annual Report on Form 10-K filed with the SEC on July 14, 2017.

Results of Operations
Three Months ended December 31, 2017 Compared to Three Months ended December 31, 2016
Revenue - Total revenue was $762,009 forLife Sciences segment. During the three months ended December 31, 2017 as compared to $249,801 for the three months ended December 31, 2016.  In the three-month period ended December 31, 2016, the revenue consisted of trading, real estate management, and rental of heavy equipment. The increase in revenue during the same period in 2017 is from an increase in the volume and underlining commodity involved in the trading.  In December 2016 most of the revenue came from trading electronics and in 2017 from trading commodities related to infrastructure.
Cost of Revenue (excluding depreciation) – CostJune 30, 2020:

1.

Our revenue from the infrastructure business remains adversely affected with increased expenses. However, as soon as we can safely do so, and in compliance with applicable laws and regulations, we expect to engage in the infrastructure business including completing the road building contract that we have been awarded.

2.

A majority of our hemp processing and distillation equipment is sourced from China. While we took delivery of the equipment, the commissioning and certification of the equipment is delayed as it requires Chinese technicians to commission the equipment. The commissioning of our large-scale processing and distillation equipment is delayed. Delivery of some of our equipment, such as the bottling machine is delayed indefinitely as the factory is impacted by an outbreak of COVID-19.  

Overview

While our primary source of revenue for the three months ended December 31, 2017 was $723,062 as compared to $121,829June 30, 2019, is from our Infrastructure segment, our primary source of revenue for the three months ended December 31, 2016.  June 30, 2020, is from our Life Sciences segment, which produced wellness products, including alcohol-based hand sanitizers, among others.

The increaseCompany operates both segments in compliance with applicable state, national, and local laws, and regulations and only in locations and regions where it is legal to do so. Further information on the Company highlights in the three months ended June 30, 2020, can be found in Part I, Item 1, Note 1 - Business Description, “Business updates”.

 | June 30, 2020 Form 10-Q

Results of Operations for the three months ended

June 30, 2020 and June 30, 2019

The historical results presented below are not necessarily indicative of the results that may be expected for any future period. The following table presents an overview of our results of operations for the three months ended June 30, 2020 and June 30, 2019:

Statement of Operations (in thousands, unaudited)

  

Three months ended June 30,

         
  

2020

($)

  

2019

($)

  

Change

($)

  

Percent

Change

 

Revenue

  584   1,649   (1,065)  (65

%)

Cost of revenue

  (538

)

  (1,608)  1,070   (67

%)

Gross Profit

  46   41   5   12

%

Selling, general and administrative expenses

  (1,755

)

  (1,249)  (506)  41

%

Research and development expenses

  (222

)

  (247)  25   (10

%)

Operating loss

  (1,931

)

  (1,455)  (476)  33

%

Other income, net

  49   76   (27)  (36

%)

Loss before income taxes

  (1,882

)

  (1,379)  (503)  36

%

Tax expense

  -   -   -   -

%

Net Loss

  (1,882

)

  (1,379)  (503)  36

%

Revenue – Revenue in the quarter ended June 30, 2020, was primarily derived from our Life Sciences segment, which involved sales of products such as alcohol-based hand sanitizers, among others. In the quarter ended June 30, 2019, our revenue was primarily derived from the infrastructure segment. Revenue was approximately $584 thousand and $1,649 thousand for the three months ended June 30, 2020 and 2019, respectively.

Revenue in the Life Sciences segment in the quarter ended June 30, 2019, was $104 thousand as compared to $584 thousand in the quarter ended June 30, 2020, albeit with a change in product mix. At the same time, revenue in our Infrastructure segment for the quarter ended June 30, 2019, was $1,545 thousand and zero in the quarter ended June 30, 2020. Primarily due to COVID-19, we have limited visibility on when either of our segments will stabilize and become predictable. We expect volatility in both segments in the foreseeable future. We expect to be opportunistic in providing personal protection equipment, including hand sanitizers, as the country reopens from the pandemic. 

Cost of revenue – Cost of revenue amounted to approximately $538 thousand for three months ended June 30, 2020, compared to $1,608 thousand in three months ended June 30, 2019. The cost of revenue stems from an increase in the volume of business as reflected in the revenuequarter ended June 30, 2020, is primarily attributable to raw materials that are required to produce our products.

Selling, general and is related to trading and real estate and rental business.


Selling, General and Administrative -administrative expenses Selling, general and administrative expenses were $507,332consist 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 $506 thousand or 41% to $1,755 thousand for the three months ended December 31, 2017 as compared to $322,891June 30, 2020, from $1,249 thousand for the three months ended December 31, 2016.  MostJune 30, 2019. The year over year increase of the$0.5 million is attributed to a one-time settlement of all derivative lawsuits at $200 thousand, a payroll accrual of $200 thousand and increased legal expenses of around $100 thousand. We expect general and administrative expenses to decrease as one-time legal and other one-time expenses are public-company relatedexpected to abate over the rest of this year.

Research and Development expenses including legal fees.

Depreciation R&D expenses were attributed to our Life Sciences segment. The depreciation expense was approximately $4,989 in the three months ended December 31, 2017 as compared to $196,103 in the three months ended December 31, 2016.  The decrease in depreciation is from the curtailment of the iron-ore mining business in China.

Interest and other financial expenses – The interest expense and other financialR&D expenses for the three months ended December 31, 2017 wereJune 30, 2020, is about $222 thousand and about $247 thousand for three months ended June 30, 2019. The cost associated with this work is mostly research comprising of plant extracts that could be productized and data to support the efficacy of the extracts, including preparing for potential FDA trials, product research, designing, formulating and market analysis. We expect R&D expenses to increase as we begin Phase 1 trials on IGC-AD1. All research and development costs are expensed in the quarter in which they are incurred. 

Other Income, net – Other net income decreased by approximately $60,527 as compared to$27 thousand or 36% during three months ended June 30, 2020. The total other income for three months ended June 30, 2020 and 2019 is approximately $46,465 for$49 thousand and $76 thousand, respectively. During the three months ended December 31, 2016.  Most of theJune 30, 2020, such amount includes interest is paid with common shares of the Company and is therefore non-cash.

Interest Income and Other income/(loss) – Interestincome, rental income and otherapproximately $10 thousand dividend income was $1,090 for the three-month period ended December 31, 2017 as compared to $359,104 in December 31, 2016. Other income includes the rent of apartment owned by one of the subsidiaries and the income by supply of skilled operators for the heavy equipment rental business.

Consolidated Net Income/(loss) – In the three months ended December 31, 2017, the Company reported a GAAP net loss of $532,581 and a GAAP EPS loss of $0.02 compared to a GAAP net loss of $111,561 and a GAAP EPS loss of $0.00 for the three months ended December 31, 2016.   

approximately $7 thousand unrealized gain from marketable securities, net.

 | June 30, 2020 Form 10-Q


Nine Months ended December 31, 2017 Compared

Liquidity and Capital Resources  

Our sources of liquidity are cash and cash equivalents, cash flows from operations, short-term borrowings, and short-term liquidity arrangements. The Company continues to Nine Months ended December 31, 2016

Revenue - Total revenue was $1,050,582 for the nine months ended December 31, 2017 as comparedevaluate various financing sources and options to $487,364 for the nine months ended December 31, 2016.  In the nine-month period ended December 31, 2016, the revenue consisted of trading, real estate managementraise working capital to help fund current research and rental of heavy equipment.development programs and operations. The increase in 2017 is from an increase in the volume of business.

Cost of Revenue (excluding depreciation) – Cost of revenue for the nine months ended December 31, 2017 was $893,113 as compared to $276,418 for the nine months ended December 31, 2016.  The increase in cost of revenue stems from an increase in the volume of business as reflected in the increase in revenue and is related to the trading, real estate and rental business.

Selling, General and Administrative - Selling, general and administrative expenses were $1,217,293 for the nine months ended December 31, 2017 as compared to $959,693 for the nine months ended December 31, 2016.  Most of the expenses are public-company related expenses, including legal fees.
Depreciation – The depreciation expense was approximately $15,297 in the nine months ended December 31, 2017 as compared to $391,617 in the nine months ended December 31, 2016.  The decrease in depreciation is from the curtailment of the iron-ore mining business in China.

Interest and other financial expenses – The interest expense and other financial expenses for the nine months ended December 31, 2017 were approximately $145,905 as compared to approximately $136,421 for the nine months ended December 31, 2016.  Most of the interest is paid with common shares of the Company and is therefore non-cash.
Interest Income and Other income/(loss) – Interest income and other income was $9,401 for the nine-month period ended December 31, 2017 as compared to $372,957 in December 31, 2016. Other income includes the rent of apartment owned by one of the subsidiaries and the income by supply of skilled operators for the heavy equipment rental business.

Consolidated Net Income/(loss) – In the nine months ended December 31, 2017, the Company reported a GAAP net income loss of $1,210,991 and a GAAP EPS loss of $0.04 compared to a GAAP net income loss of $1,109,601 and a GAAP EPS loss of $0.04 for the nine months ended December 31, 2016.   
Off-Balance Sheet Arrangements

We dodoes not have any undisclosedmaterial 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” and Note 9, “Leases” in Item I 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 in special purpose entities or undisclosed borrowings or debt.

Liquidity and Capital Resources
other liquidity requirements, if any, associated with its existing operations over the next 12 months, it expects to raise money when it is able to do so.

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

This liquidity and capital resources discussion compares the unaudited consolidated company financial position forCompany financials.

  

(in thousands, unaudited)

         
                 
  

As of

June 30, 2020

($)

  

As of

March 31, 2020

($)

  

Change

  

Percent Change

 

Cash, cash equivalents and marketable securities

  2,703   7,258   (4,555)  (63

)%

Working capital

  13,683   15,811   (2,128)  (13

)%

Cash and cash equivalents

Cash and cash equivalents decreased by approximately $4,555 thousand to $2,703 thousand in the nine-month periods ended December 31, 2017 and 2016.

During the ninethree months ended DecemberJune 30, 2020, from $7,258 thousand as of March 31, 2017,2020, a decrease of approximately 63%.

The major decrease in three months ended June 30, 2020, was due to $944 thousand in purchase of property, plant, and equipment and $2,277 thousand investment in inventory.

Summary of Cash flows

  

(in thousands, unaudited)

         
                 
  

Three months ended June 30,

         
  

2020

  

2019

  

Change

  

Percent Change

 

Cash (used in) operating activities

  (3,988

)

  (2,872

)

  (1,116

)

  39

%

Cash (used in) investing activities

  (1,136

)

  (6,186

)

  5,050   (82

)%

Cash provided by financing activities

  580   -   580   100

%

Effects of exchange rate changes on cash and cash equivalents

  (11)  2   (13)  (650

)%

Net increase/(decrease) in cash and cash equivalents

  (4,555

)

  (9,056

)

  4,501   (50

)%

Cash and Cash Equivalents at the beginning of period

  7,258   25,610   (18,352

)

  (72

)%

Cash and cash equivalents at the end of the period

  2,703   16,554   (13,851

)

  (84

)%

 | June 30, 2020 Form 10-Q

Operating Activities

Net cash used in operating activities was $973,336 compared to $483,068 used duringfor the ninethree months ended December 31, 2016.

DuringJune 30, 2020, was approximately $4 million. This consists of a net loss of approximately $1.9 million and non-cash items totaling approximately $243 thousand, which in turn consist of an amortization/depreciation charge of approximately $77 thousand and stock-based expenses totaling approximately $166 thousand. Changes in operating assets and liabilities had a negative impact of approximately $2.35 million on cash, of which approximately $2.28 million was due to increase in inventory.

Net cash used in operating activities for the ninethree months ended December 31, 2017, $301,497June 30, 2019, was approximately $2.9 million. Cash was consumed from continuing operations, with the net loss of approximately $1.4 million, non-cash items totaling approximately $225 thousand, consisting of a depreciation charge of approximately $17 thousand and stock-based expenses totaling approximately $208 thousand and changes in working capital accounts had a negative impact of approximately $1,718 thousand on cash. 

Investing Activities

Net cash was used in investing activities from continuing operations as comparedfor the three months ended June 30, 2020, was $1.1 million, which is comprised of approximately $26 thousand for the acquisition and filing expenses related to $270,694patents and trademarks, purchase of property, plant and equipment of $944 thousand and investments of approximately $149 thousand in non-marketable securities and $17 thousand in marketable securities.

Net cash used in investing activities during the same periodthree months ended June 30, 2019, was $6.2 million, which is comprised of approximately $1,173 thousand for purchase of office space, plant and equipment among others, $5,009 thousand for investment in 2016.

Fora money market mutual fund and $4 thousand of acquisition and filing of patents.

Financing Activities

Net cash provided by financing activities was $580 thousand for the quarterthree months ended December 31, 2017, our non-GAAP cash burn was approximately $360,279 after adjustingJune 30, 2020, consisting of proceeds from loans. Please refer Note 11 - “Loans and Other Liabilities” for $4,989 of depreciation, $48,000 of non-cashfurther information.

There were no financing activities during the three months ended June 30, 2019.

Off-Balance Sheet Arrangements

We do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest expensesrate 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 $119,313 for ESOP expenses.


 At the end of December 31, 2017, our cash and cash equivalents alongdevelopment services with restricted cash was $1,690,792 and working capital of $1,901,623. We currently have sufficient cash to further our patent portfolio, testing and commence marketing and licensing our Alzheimer’s product, one of the Company’s four cannabis-related medical products.
us. 

Critical Accounting Policies


While all accounting policies impact the financial statements, certain policies may be viewed as critical. Critical accounting policies are those that are both most important to the portrayal of financial condition and results of operations and that require management’sManagement’s most subjective or complex judgments and estimates. Our managementManagement believes the policies that fall within this category are the policies on revenue recognition, accounting forinventory, accounts receivable, foreign currency translation, impairment of long-lived assets and investments, stock-based compensation, goodwill, and income taxes.



cybersecurity. We have a cybersecurity policy in place and tighter cybersecurity measures to safeguard against hackers. There were no impactful breaches in cybersecurity during the three months ended June 30, 2020.

Please see our disclosures onin Note 2 - Summary of Significant Accounting Policies ofto the Notes to the unauditedUnaudited Condensed Consolidated Financial Statements in this report, and Note 2 - Significant Accounting Policies ofin the Notes to the auditedAudited Consolidated Financial Statements in Part II of our Annual Report on Form 10-K for the fiscal year ended March 31, 2020, filed with the SEC on July 14, 201713, 2020, as well as Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in the same annual report, for a discussion of all our critical and significant accounting policies.

 | June 30, 2020 Form 10-Q

28


Forward-Looking Statements and Important Factors

Recent Accounting Pronouncements

The Private Securities Litigation Reform Actrecent accounting pronouncements are discussed in Note 2 – Summary of 1995 provides a safe harbor for forward-looking statements.  This report andSignificant Accounting Policies to the documents incorporatedNotes to the Unaudited Condensed Consolidated Financial Statements in this report by reference contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Additionally, we, or our representatives may, from time to time, make other written or verbal forward-looking statements and discuss plans, expectations and objectives regarding our business, financial condition and results of operations.  Without limiting the foregoing, statements that are in the future tense, and all statements accompanied by terms such as “believe,” “project,” “expect,” “trend,” “estimate,” “forecast,” “assume,” “intend,” “plan,” “target,” “anticipate,” “outlook,” “preliminary,” “will likely result,” “will continue” and variationsNotes to the Audited Consolidated Financial Statements in Part II of them and similar terms are intended to be “forward-looking statements” as defined by federal securities laws. We caution you not to place undue reliance on forward-looking statements, which are based upon assumptions, expectations, plans and projections. Forward-looking statements are based upon certain assumptions and subject to risks and uncertainties, including those identified in the “Risk Factors” included in our annual reportAnnual Report on Form 10-K for the fiscal year endingended March 31, 2017,2020, filed with the SEC on July 14, 2017, and in the documents incorporated by reference that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements speak only as of the date when they are made.  Except as required by federal securities law, we do not undertake any obligation to update forward-looking statements to reflect events, circumstances, changes in expectations, or the occurrence of unanticipated events after the date of those statements.


13, 2020.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Pursuant

Item 3 does not apply to Item 305(e) of Regulation S-K, the Company is not required to provide the information required by this Item as it isus because we are a “smallersmaller reporting company.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures


As

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, carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, management conducted anreport. Based on this evaluation, under the supervision and with the participation of itsour Chief Executive Officer (CEO) and its principal financial and accounting officer (PFAO), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934.  Based upon that evaluation, our CEO and PFAOPrincipal Financial Officer concluded that our disclosure controls and procedures arewere effective to ensure that the information required to be disclosed in the reports filed or submitted by the Company in reportsus under the Exchange Act iswas recorded, processed, summarized and reported within the requisite time periods specified in the SEC rules and forms; andthat such information was accumulated and communicated to the Company’s management,our Management, including its principal executive officerour Chief Executive Officer and principal financial officer,Principal Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.


Changes in Internal Control over Financial Reporting


There were no

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 controlscontrol over financial reporting occurred during our fiscal quarterthe three months ended December 31, 2017 which were identified in conjunction with Management’s evaluation required by paragraph (d) of Rule 13a-15 and 15d-15 under the Exchange ActJune 30, 2020, that have materially affected, or are reasonably likely to materially affect, our internal controlscontrol over financial reporting.

Limitations on the Effectiveness of Disclosure Controls and Procedures
Our management, including our CEO and PFAO, do not expect that our internal control over financial reporting will prevent all errors and all fraud.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.


 | June 30, 2020 Form 10-Q


PART II – OTHER INFORMATION

Item 1. Legal Proceedings


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 legal proceedingsto the consolidated financial statements as of June 30, 2020.

During the quarter ended September 30, 2019, the Company reached a preliminary agreement to resolve all derivative suits then- and currently-pending against the Company.Company and various directors and officers. In January 2020, the Company and the named defendant directors and officers executed a formal settlement agreement with the plaintiffs in all pending derivative lawsuits on specific final terms of settlement. Pursuant to the settlement agreement, which was filed with the Court as an exhibit to an Amended Consent Motion for Preliminary Approval of Derivative Settlement on April 30, 2020, the Company will adopt certain corporate governance modifications, and the derivative plaintiffs will receive $200,000 from the Company’s insurer to cover their attorneys’ fees and a nominal service award. The Company has created a provision for $200,000 as of June 30, 2020. Shareholders were given notice of the proposed settlement through the Company’s filing of an SEC Form 8-K report, the issuance of a press release, publication in Investor’s Business Daily, and posting in the “Investors” section of the Company’s website, all of which were deemed by the court to constitute sufficient notice to shareholders of the settlement. Shareholders were given the opportunity to assert objections to the final settlement, and no objections were received by the parties to the derivative suit or filed with the court. On June 30, 2020, the Court held a hearing to evaluate the fairness and reasonableness of the settlement and to determine whether the settlement will be approved. On July 6, 2020, the Court entered an order formally and finally approving the settlement and resolving all pending derivative suits.

As of June 30, 2020, the Company was a party to three shareholder lawsuits, as described below.

Shareholder Class Action Litigation

Tchatchou v. India Globalization Capital, Inc., et al., Civil Action No. 8:18-cv-03396 (U.S. District Court for the District of Maryland). On November 2, 2018, IGC shareholder Alde-Binet Tchatchou instituted a shareholder class action complaint on behalf of himself and all others similarly situated in the United States District Court for the District of Maryland. IGC, Ram Mukunda, Richard Prins, and Sudhakar Shenoy were named as defendants. On May 13, 2019, the plaintiff in the Tchatchou litigation filed an amended complaint against IGC, Mukunda, and Claudia Grimaldi, (collectively, the “Class Action Defendants”), thereby removing Prins and Shenoy as defendants. The plaintiff in Tchatchou alleges that the Class Action Defendants violated Section 10(b) of the Exchange Act, SEC Rule 10b-5, and Section 20(a) of the Exchange Act and made false and misleading statements to the public by issuing a September 25, 2018, press release entitled “IGC to Enter the Hemp/CBD-Infused Energy Drink Space” and related disclosures, in which IGC announced it had “executed a distribution and partnership agreement” for the sugar-free energy drink named Nitro G, as well as through related public statements. The plaintiff in Tchatchou has not publicly disclosed the amount of damages they seek. On February 28, 2019, all pending shareholder class actions were consolidated, and the Tchatchou litigation was designated as the lead case.

On October 11, 2019, Company and the other the Class Action Defendants filed a motion to dismiss the consolidated shareholder class action litigation on a number of grounds, including that the Class Action Defendants did not make any false or misleading statements or any materially false or misleading statements to the public; the Class Action Defendants did not act with any intent to deceive the public, nor did they recklessly do so; and that the Class Action Defendants’ alleged conduct did not cause any loss allegedly suffered by the class action plaintiffs. The motion to dismiss remains pending before the United States District Court for the District of Maryland, and the Company anticipates that a decision is likely to be issued during calendar 2020, although it can provide no assurances of the same.

Harris-Carr v. India Globalization Capital, Inc., et al., Civil Action No. 8:18-cv-03408 (U.S. District Court for the District of Maryland). On November 2, 2018, IGC shareholder Gabe Harris-Carr instituted a shareholder class action complaint on behalf of himself and all others similarly situated in the United States District Court for the District of Maryland. IGC, Ram Mukunda, and Claudia Grimaldi were named as defendants. On February 28, 2019, all pending shareholder class actions, including the Harris-Carr litigation, were consolidated, and the Tchatchou litigation, described above, was designated as the lead case. On May 13, 2019, the plaintiff in the Tchatchou litigation filed an amended complaint, which becomes the operative complaint for the consolidated matter and supersedes the Harris-Carr complaint.

 | June 30, 2020 Form 10-Q

Shareholder Derivative Action Litigation

Erny v. Mukunda, et al., Civil Action No. 1:18-cv-03698 (U.S. District Court for the District of Maryland). On November 30, 2018, IGC shareholder Gene Erny instituted a shareholder derivative complaint on behalf of IGC in the United States District Court for the District of Maryland. Ram Mukunda, Claudia Grimaldi, Rohit Goel, Richard Prins, and Sudhakar Shenoy were named as defendants, and IGC was named as a nominal defendant. The Erny litigation represents a claim made by a shareholder on behalf of the Company (as opposed to against the Company). The complaint in the Erny litigation alleges that the Company should have filed suit against the individual defendants – Mukunda, Grimaldi, Goel, Prins, and Shenoy (collectively referred to as the “Individual Defendants”) – for securities fraud and breach of fiduciary duty. Because the claims made in Erny are asserted against the individual defendants, as opposed to the Company, the Company is merely a nominal defendant.

On May 9, 2019, Erny and Hamdan, described below, were consolidated, and the Erny litigation was designated as the lead derivative case.

On July 31, 2019, the Company and the Individual Defendants reached a preliminary agreement with the plaintiffs in the derivative suits identified herein to resolve all derivative suits, including the Erny litigation and the Hamdan and Patel matters, described below. In January 2020, the Company and the named defendant directors and officers reached agreement with the plaintiffs in all pending derivative lawsuits on specific final terms of settlement, and all parties executed a mutually acceptable settlement agreement. Shareholders were given notice of the proposed settlement through the Company’s filing of an SEC Form 8-K report, the issuance of a press release, publication in Investor’s Business Daily, and posting in the “Investors” section of the Company’s website, all of which were deemed by the court to constitute sufficient notice to shareholders of the settlement. Shareholders were given the opportunity to assert objections to the final settlement, and no objections were received by the parties to the derivative suit or filed with the court. On June 30, 2020, the Court held a hearing to evaluate the fairness and reasonableness of the settlement and to determine whether the settlement will be approved. On July 6, 2020, the Court entered an order formally and finally approving the settlement and resolving all pending derivative suits. The Erny litigation matter was terminated that day.

Hamdan v. Mukunda, et al., Civil Action No. 8:19-cv-00493 (U.S. District Court for the District of Maryland). On February 20, 2019, IGC shareholder Waseem Hamdan instituted a shareholder derivative complaint on behalf of IGC in the United States District Court for the District of Maryland. Ram Mukunda, Claudia Grimaldi, Rohit Goel, Richard Prins, and Sudhakar Shenoy were named as defendants, and IGC was named as a nominal defendant. The allegations made by the plaintiff in the Hamdan litigation are substantially similar to the allegations made in Erny, and the claims against the individual director defendants are based on the same alleged transactions and/or occurrences as are the claims made in the Erny litigation. Because the claims made in Hamdan are asserted against the individual defendants, as opposed to the Company, the Company is merely a nominal defendant. On May 9, 2019, Erny and Hamdan were consolidated, with the Erny litigation, described above, designated as the lead case.

The Hamdan litigation is subject to the same negotiated settlement described in Erny, above, and is resolved effective July 6, 2020.   The case was formally closed by the United States District Court for the District of Maryland on or about that July 14, 2020.

Patel v. Mukunda, et al., Civil Action No. 8:19-cv-01673 (U.S. District Court for the District of Maryland). On June 6, 2019, IGC shareholder Dimple Patel instituted a shareholder derivative complaint on behalf of IGC in the United States District Court for the District of Maryland. Ram Mukunda, Claudia Grimaldi, Rohit Goel, Richard Prins, Shajy Mathilakathu, and Sudhakar Shenoy (collectively, with reference to the Patel litigation, “Individual Defendants”) were named as defendants, and IGC was named as a nominal defendant. The Patel litigation represents a claim made by a shareholder on behalf of the Company (as opposed to against the Company). The allegations made by the plaintiff in the Patel litigation are substantially similar to the allegations made in Erny, and the claims against the individual director defendants are based largely on the same alleged transactions and/or occurrences as are the claims made in the Erny litigation. Because the claims made in the Patel litigation are asserted against the individual Defendants, as opposed to the Company, the Company is merely a nominal defendant. The Patel litigation has not been consolidated with Erny and Hamdan to date.

The Patel litigation is subject to the same negotiated settlement described in Erny above, and is resolved effective July 6, 2020. On July 8, 2020, the Court dismissed the Patel litigation with prejudice pursuant to the approved settlement.

 | June 30, 2020 Form 10-Q

Item 1A. Risk Factors


There have not been any material changes with regard to

You should carefully consider the risk factors previously disclosedidentified in the Company’s 2020 annual report on Form 10-K, forfiled with the fiscal year ended March 31, 2017.

SEC on July 13, 2020, together with all other information included in this report in evaluating our company and our common stock. If any of the following risks and uncertainties develops into actual events, they could have a material adverse effect on our business, financial condition or results of operations. In that case, the trading price of our common stock and other securities also could be adversely affected. We make various statements in this section, which constitute “forward-looking statements.” See “Forward-Looking Statements.”

The Company incorporates by reference as if fully set forth and restated herein all Risk Factors identified in our 2020 annual report on Form 10-K, filed with the SEC on July 13, 2020. Additionally, risks and uncertainty of which we are unaware or which currently we deem immaterial also may become important factor that affects us. The additional risk factor has been mentioned below:

Revenue from the infrastructure segment continues to be adversely affected and revenue from Life Sciences segment is also unpredictable.

We continue to monitor the impact from restrictions imposed by the COVID-19 pandemic on our financial condition, liquidity, operations, suppliers, industry, and workforce. Revenue from the infrastructure segment continues to be adversely affected as we are unable to fully deploy our workforce. However, as soon as we can safely, we expect to engage in the infrastructure segment including completing the road building contract that we have been awarded. In response to the evolving circumstances, we supplemented our facilities to manufacture, label, and distribute FDA-registered alcohol-based hand sanitizers and hand rubs. As there is a general lack of visibility regarding the ongoing impact of the COVID-19 pandemic, revenue from our Life Sciences segment is also unpredictable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.


Item 3Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures


Not applicable.

Item 5. Other Information

On February 15, 2020, the Company signed a Share Subscription Agreement (“SSA”) with Evolve I, Inc., a Washington corporation (“Evolve”), to acquire approximately 20% of Evolve. The Company entered into a Share Purchase Agreement (the “SPA”) on May 11, 2020 to acquire the remaining approximately 80% of Evolve that the Company did not own. On May 12, 2020, the Company completed the SSA with Evolve by transferring partial consideration to Evolve. As of June 30, 2020, the Company owns approximately 19.8% of Evolve.

As of June 30, 2020, the Company has not completed the acquisition of remaining ownership in Evolve as due diligence, such as audited financial statements for the last fiscal year, internal restructuring, among others, are pending. While the Form 8-K was filed under both Item 1.01- Entry into a Material Definitive Agreement and Item 2.01- Completion of Acquisition or Disposition of Assets, as indicated in the Form 8-K, the closing of the Agreement is subject to certain closing conditions and accordingly the reference to Item 2.01- Completion of Acquisition or Disposition of Assets was inadvertently included. There can be no assurance when or if the Company will be able to close the acquisition. The delay in closing the acquisition is expected to have minimal impact on the Company’s revenue.

 | June 30, 2020 Form 10-Q

32

Item 6Exhibits

3.1
3.2
31.1
31.2
32.1
32.2
101.INSXBRL Instance Document*
101.SCHXBRL Taxonomy Extension Schema Document*
101.CALXBRL Taxonomy Extension Calculation Linkbase Document*
101.LABXBRL Taxonomy Extension Label Linkbase Document*
101.PREXBRL Taxonomy Extension Presentation Linkbase Document*
101.DEFXBRL Taxonomy Extension Definition Linkbase Document*

Exhibit

 

Incorporated by Reference

Number

Exhibit Description

Form

Exhibit

Filing Date

 

 

 

 

 

2.1

Share Purchase Agreement, by and Among India Globalization Capital, Inc., Evolve I, Inc., Jay Bohannon, individually and as Sellers’ Representative, and The individual Sellers Listed on Exhibit A to the Company’s Current Report on Form 8-K filed on May 13, 2020.

8-K

2.1

May 13, 2020

3.1

Amended and Restated Articles of Incorporation.

8-K

3.1

Aug 6, 2012

3.2

By-laws.

S-1

3.2

Feb 14, 2006

31.1*

Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.

 

 

 

31.2*

Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer.

 

 

 

32.1**

Certifications pursuant to 18 U.S.C. §1350. 

 

 

 

101.INS*

XBRL Instance Document.

 

 

 

101.SCH*

XBRL Taxonomy Extension Schema Document.

 

 

 

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document.

 

 

 

101.LAB*

XBRL Taxonomy Extension Label Linkbase Document.

 

 

 

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document.

 

 

 

101.DEF*

XBRL Taxonomy Extension Definition Linkbase Document.

 

 

 

*Filed herewith.



** Furnished herewith.

 | June 30, 2020 Form 10-Q


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

INDIA GLOBALIZATION CAPITAL, INC.

Date: February 20, 2018August 19, 2020

By:

/s/ Ram Mukunda

Ram Mukunda

President and Chief Executive Officer and President

(Principal Executive Officer)

Date: February 20, 2018

By:

/s/ Rohit Goel

Date: August 19, 2020

By:

Rohit Goel
Co-Principal Accounting Officer

/s/ Claudia Grimaldi

Claudia Grimaldi

Vice President

(Principal Financial Officer)

 | June 30, 2020 Form 10-Q

34
19