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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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FORM 10-Q

 

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☑	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended December 31, 2021June 30, 2022
☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Commission file number: 001-32830

 

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.)
10224 Falls Road, Potomac, Maryland (Address of principal executive offices)	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		Trading symbol(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 every Interactive Data File required to be submitted 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 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 ☑		Smaller reporting company ☑
		Emerging growth 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

 

51,054,01752,534,353 shares of our common stock were outstanding as of January 31,August 1, 2022.

 

 | December 31, 2021,June 30, 2022, Form 10-Q

 

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INDIA GLOBALIZATION CAPITAL, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2021JUNE 30, 2022

 

Table of Contents

 

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss	5
	Condensed Consolidated Statements of Changes in Shareholder’s Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2625
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3331
Item 4.	Controls and Procedures	3331
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	3432
Item 1A.	Risk Factors	3532
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3532
Item 3.	Defaults Upon Senior Securities	3532
Item 4.	Mine Safety Disclosures	3532
Item 5.	Other Information	3532
Item 6.	Exhibits	3533
SIGNATURES		3634

 

 

 | December 31, 2021,June 30, 2022, Form 10-Q

 

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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.

 

For the next several years, we believe our success is highly correlated with improvement in the Hong Kong and Indian economies, particularly their recovery from the ongoing SARS-CoV-2 (“COVID-19”) pandemic and with the outcome of our clinical trials and secondarily on the sale of our products and services. The Company may not be able to complete human trials on our investigational drug candidates,candidate, or, once conducted, the results of human trials may not be favorable or as anticipated or may reflect lack of efficacy in humans or animals. Precautions including social distancing and travel restrictions, among others, surrounding the ongoing SARS CoV 2 (“COVID-19”) pandemic could lead to delays or expenses greater than anticipated or projected. Failure or delay with respect to any of the above factors could have a material adverse effect on our business, future results of operations, stock price, and financial condition.

 

Our projections and investments anticipate certain regulatory changes and stable pricing, which may not hold out over the next several years. 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. 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, including, but not limited to, based on the Food &and Drug Administration’s (“FDA”) current position on hemp and hemp-based products. Failure or delay with respect to any of the factors above could have a material adverse effect on our business, future results of operations, stock price, and financial condition.

 

This document also contains statements that are not approved by the FDA, including statements on hemp and hemp extracts and their potential efficacy on humans and animals. While these statements and claims are intended to be in compliance with federal and state laws, we cannot guarantee such compliance.

 

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, if any, identified in the “Risk Factors” set forth in this report or in our annual report on Form 10-K for the fiscal year ended March 31, 2021,2022, filed with the Securities and Exchange Commission (“SEC”) on June 14, 2021, or in our quarterly reports on Form 10-Q for the three months ended June 30, 2021, and September 30, 2021, respectively, and in the documents incorporated by reference23, 2022, 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.

 

 

 | December 31, 2021,June 30, 2022, Form 10-Q

 

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Table of Contents

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

India Globalization Capital, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(Unaudited)

 

		December 31, 2021 ($)				March 31, 2021 ($)				June 30, 2022 ($)				March 31, 2022 ($)
ASSETS
Current assets:
Cash and cash equivalents			11,941				14,548				8,053				10,460
Accounts receivable, net			164				175				147				125
Inventory			5,428				5,478				3,622				3,548
Investment in Non-marketable securities			-				80
Deposits and advances			1,704				3,236				905				978
Total current assets			19,237				23,517				12,727				15,111
Non-current assets:
Intangible assets, net			426				407				937				917
Property, plant and equipment, net			10,520				10,840
Non-marketable securities			11				12
Property, plant, and equipment, net											9,161				9,419
Claims and advances			612				603				922				937
Operating lease asset			482				488				419				450
Total non-current assets			12,051				12,350
Total long-term assets											11,439				11,723
Total assets			31,288				35,867				24,166				26,834
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable			357				476				456				981
Accrued and other liabilities			919				1,588
Accrued liabilities and others											1,200				1,457
Short-term loans			3				304				3				3
Total current liabilities			1,279				2,368				1,659				2,441
Non-current liabilities:
Long-term loans			145				276				143				144
Other liabilities			15				15				16				16
Operating lease liability			374				405				308				341
Total non-current liabilities			534				696				467				501
Total liabilities			1,813				3,064				2,126				2,942
Commitments and Contingencies – See Note 12
Stockholders’ equity:
Preferred stock, $0.0001 par value: authorized 1,000,000 shares, 0 shares issued or outstanding as of December 31, 2021, and March 31, 2021.			-				-
Common stock and additional paid-in capital, $0.0001 par value: 150,000,000 shares authorized; 51,054,017 and 47,827,273 shares issued and outstanding as of December 31, 2021, and March 31, 2021, respectively.			114,894				109,720
Preferred stock, $0.0001 par value: authorized 1,000,000 shares, 0 shares issued or outstanding as of June 30, 2022, and March 31, 2022.
Common stock and additional paid-in capital, $0.0001 par value: 150,000,000 shares authorized; 51,840,603 and 51,054,017 shares issued and outstanding as of June 30, 2022 and March 31, 2022, respectively.											117,171				116,019
Accumulated other comprehensive loss			(2,763	)			(2,774	)			(3,187	)			(2,968	)
Accumulated deficit			(82,656	)			(74,143	)			(91,944	)			(89,159	)
Total stockholders’ equity			29,475				32,803				22,040				23,892
Total liabilities and stockholders’ equity			31,288				35,867				24,166				26,834

 

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

 

 | December 31, 2021,June 30, 2022, Form 10-Q

4

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Table of Contents

 

India Globalization Capital, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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

(Unaudited)

 

		Three months ended December 31,								Nine months ended December 31,
		2021				2020				2021				2020
		($)				($)				($)				($)				Three months ended June 30,
																		2022 ($)				2021 ($)
Revenue			142				108				275				817				212				77
Cost of revenue			(80	)			(94	)			(149	)			(731	)			(70	)			(51	)
Gross Profit			62				14				126				86
Selling, General and administrative expenses			(2,070	)			(2,186	)			(7,956	)			(5,424	)
Gross profit																			142				26
Selling, general and administrative expenses																			(1,550	)			(1,776	)
Research and development expenses			(377	)			(154	)			(1,097	)			(595	)			(1,394	)			(444	)
Operating loss			(2,385	)			(2,326	)			(8,927	)			(5,933	)			(2,802	)			(2,194	)
Impairment of investment			-				-				(37	)			-				-				(37	)
Other income, net			4				3				451				71				17				443
Loss before income taxes			(2,381	)			(2,323	)			(8,513	)			(5,862	)			(2,785	)			(1,788	)
Income tax expense/benefit			-				-				-				-				-				-
Net loss attributable to common stockholders			(2,381	)			(2,323	)			(8,513	)			(5,862	)			(2,785	)			(1,788	)
Foreign currency translation adjustments			77				40				11				124				(219	)			(86	)
Comprehensive loss			(2,304	)			(2,283	)			(8,502	)			(5,738	)			(3,004	)			(1,874	)
Net Loss per share attributable to common stockholders:
Basic and Diluted		$	(0.05	)			(0.06	)			(0.18	)			(0.14	)
Weighted-average number of shares used in computing net loss per share amounts:			51,053,191				41,304,365				49,643,942				40,915,196
Loss per share attributable to common stockholders:
Basic and diluted																		$	(0.05	)		$	(0.04	)
Weighted-average number of shares used in computing loss per share amounts:																			51,616,598				47,910,866

 

 

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

 | December 31, 2021,June 30, 2022, Form 10-Q5

India Globalization Capital, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)

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

 | December 31, 2021,June 30, 2022, Form 10-Q

India Globalization Capital, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

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

India Globalization Capital, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND NINE MONTHS ENDED DECEMBER 31, 2021JUNE 30, 2022

(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 public filings with the Securities and Exchange Commission, the “SEC,” are available on www.sec.gov. The information contained on our various 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

BusinessOverview

IGC has 2 business segments: Infrastructure and Life Sciences.

Infrastructure Segment

The Infrastructure segment involves the execution of construction contracts and the rental of heavy construction equipment. Since our inception, the Company has operated its Infrastructure segment from India.

Life Sciences Segment

The Life Sciences segment involves our over the counter products (“OTC”) and our biopharmaceutical products.

Over the Counter Products: We have created a cannabinoid-based women’s wellness brand, Holief™ available through online channels and a CBD-caffeine-infused energy drink, Sunday Seltzer™, available through wholesale channels.

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

Biopharmaceutical:

Since 2014, we have focused a portionthis part of our business has focused primarily on the applicationpotential uses of phytocannabinoids, such asincluding Tetrahydrocannabinol (“THC”) and Cannabidiol (“CBD”), among others, in combination with other compounds to address efficacy for various ailmentstreat multiple diseases, including Alzheimer’s. As a company engaged in the clinical-stage biopharmaceutical industry, we focus our research and diseasesdevelopment efforts, subject to results of future clinical trials, on seeking pharmaceutical solutions that may a) alleviate neuropsychiatric symptoms such as agitation, anxiety, and depression associated with dementia in Alzheimer’s disease; and b) halt the onset, progression, or cure Alzheimer’s disease. As previously disclosed, IGC submitted IGC-AD1, ourWe currently have one investigational new drug candidate, “IGC-AD1,” in a Phase 2 clinical trial for agitation in dementia from Alzheimer’s. IGC-AD1 is a cannabis-based compound, which is made up of ultra-low doses of THC along with another compound as active ingredients. The second molecule, TGR-63, is an enzyme inhibitor that has been shown, in pre-clinical trials, to reduce neurotoxicity in Alzheimer’s cell lines. Neurotoxicity causes cell dysfunction and death in Alzheimer’s disease. If shown to be efficacious in halting this process, this inhibitor has the U.S. Food and Drug Administration (“FDA”) under Section 505(i) of the Federal Food, Drug, and Cosmetic Act and received approval on July 30, 2020,potential to proceed with the Phase 1 trial ontreat Alzheimer’s patients.disease by ameliorating Aβ plaques.

The Company completed all dose escalation studies, and as announced by the Company on December 2, 2021, the results of the clinical trial have been submitted in the Clinical/Statistical Report (“CSR”) filed with the FDA.U.S. Food and Drug Administration (the “FDA”). The Company is motivated by the potential that, with future successful results from appropriate further trials, IGC-AD1 could contribute to relief for some of the 5055 million people around the world expected to be impacted by Alzheimer’s disease by 2030 (WHO, 2020)2021).

Primary Endpoint: Safety & Tolerability (S&T):

S&T was assessed by recording both solicited and non-solicited Adverse Events (AEs). The solicited AEs, assessed daily, were somnolence, falls, dizziness, asthenia, suicidal ideation, hypertension, psychiatric symptoms, and paradoxical nausea. All AEs were graded as mild, moderate, severe, life threatening, and serious (SAE).

 | December 31, 2021,June 30, 2022, Form 10-Q

Secondary Endpoints: Neuropsychiatric Inventory (NPI):Phase 2 Clinical Trial Update

Neuropsychiatric Symptoms (NPS)The Company has initiated a protocol titled “A Phase 2, Multi-Center, Double-Blind, Randomized, Placebo-controlled, trial of the safety and efficacy of IGC-AD1 on agitation in participants with dementia due to Alzheimer’s disease.” The protocol is powered at 146 Alzheimer’s patients with half receiving placebo and is a superiority, parallel group study. While subject to changes, we expect to conduct the trial at three sites, one in Canada and two in the U.S. The primary end point is agitation in dementia due to Alzheimer’s disease as rated by the Cohen-Mansfield Agitation Inventory (CMAI) over a six-week period. The Phase 2 trial will also look at eleven exploratory objectives, including, changes in anxiety, changes in cognitive processes such as attention, orientation, language, and visual spatial skills as well as memory, changes in depression, delusions, hallucinations, agitation/aggression, depression, anxiety, elation/euphoria,euphoria/elation, apathy, disinhibition, irritability, aberrant motor behavior, sleep disorders,disorder, appetite, quality of life, and appetite/eating disorders are prevalent in patients who have Alzheimer’s disease (Phan et al., 2019). NPS in Alzheimer’s is a significant burden on patients and caregivers, and at some point, in the progression of Alzheimer’s disease, more than 97% of patients suffer from at least one symptom. The Neuropsychiatric Inventory (NPI) (Cummings et al., 1994) measures the severity of each symptom and establishes both individual symptom scores as well as an overall NPI score. Separately, the NPI also scores caregiver distress (NPI-D). The NPI is used by about 50% of neurologists to assess and treat Alzheimer’s patients (Fernandez et al., 2010).

According to the NPI Test, a reduction of 4 points or 30% in the score is considered clinically meaningful.burden. In addition, we also used a paired 2-tailed t-test with 9 degrees of freedom towill assess the statistical significanceimpact of an important gene (CYP2C9) that encodes an enzyme that is involved in metabolizing the decrease both in the overall NPIactive ingredients of IGC-AD1 and individual NPI domains.many other drugs. Each participant will receive two doses of IGC-AD1 (b.i.d.) or two doses of placebo per day for six-weeks.

To the best of our knowledge, this is the first human clinical trial using ultra low doses of THC, in combination with another molecule, to treat symptoms of dementia in Alzheimer’s patients. THC is a naturally occurring cannabinoid produced by the cannabis plant. It is known for being a psychoactive substance that can impact mental processes in a positive or negative way depending on the dosage. THC is biphasic, meaning that low and high doses of the substance may affect mental and physiological processes in substantially different ways. For example, in some patients, low doses may relieve a symptom, whereas high doses may amplify a symptom. Ultimately, the goal of IGC’s research is to discover and analyze whether, and at what level of dosing, IGC-AD1 provides relief of a given symptom. IGC’s trial is based on micro dosing on patients suffering from Alzheimer’s disease. With further trials, subject to FDA approvals, the Company intends to pursue the efficacy of IGC-AD1 for indications of Agitation in patients with dementia from Alzheimer’s.

Other Developments

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

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

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

The Company has filed thirteen (13)fifteen (15) patent applications to address various diseases such as Alzheimer’s, Central Nervous System (“CNS”) disorders, pain, stammering, seizures in cats and dogs, eating disorders, stress-relief, and calm-restoring beverage, and fatigue. As of December 31, 2021,June 30, 2022, we have threefour patents.

In addition, we license atwo patent filingfilings, from the University of South Florida titled “Ultra-Low dose THC as a potential therapeutic and prophylactic agent for Alzheimer’s Disease.” The U.S. Patent and Trademark Office (“USPTO”) issued a patent (#11,065,225) for this filing on July 20, 2021. The granted patent relates to IGC’s proprietary formulation, IGC-AD1, intended to assist in the treatment of individuals living with Alzheimer’s disease.the:

 | June 30, 2022, Form 10-Q

The Company is developing three brands, including Holief™, among others. Holief™ is a non-GMO, vegan, natural, women’s line of over-the-counter (“OTC”)OTC products aimed at addressing dysmenorrhea and premenstrual symptoms (“PMS”)PMS in women. Holief™, in development, seeks to connect, via a cloud-based platform, women with health care professionals who can help address dysmenorrhea, or period cramps, and PMS. Approximately 31.3 million (Statista, 2021) women in America suffer from dysmenorrhea and PMS.

 | December 31, 2021, Form 10-Q

Since our inception, the Company has operated its Infrastructure business segment from India. The infrastructure business segment involves: (a) the execution of construction contracts, (b) the rental of heavy construction equipment, and (c) the purchase and resale of physical commodities used in infrastructure. Information about our infrastructure products and service offerings is available at www.igcinc.us. Unfortunately, the infrastructure sector has been severely hampered by the COVID-19 pandemic, especially in India and Hong Kong where the business is based.

COVID-19 update

Our infrastructure business is based in the state of Kerala, India, which is among the Indian states most affected by COVID-19, and Hong Kong with strict quarantine and travel restrictions. The restrictions continue to adversely impact our infrastructure business, financial condition, liquidity, and operations. While IGC remains committed to its Infrastructure business line and intends to continue pursuing the execution of construction contracts, the purchase and resale of physical commodities used in infrastructure, and the rental of heavy construction equipment as the pandemic allows, we have limited visibility into when economic conditions will recover in India and Hong Kong.

In response, we have oriented our current focus on a) the human trials on IGC-AD1 and getting an Alzheimer’s drug through trials and eventually to market, subject to FDA approval, and b) launching a cannabinoid-based women’s wellness line of products designed to assist in managing PMS and Dysmenorrhea.

Business Organization

As of December 31, 2021,June 30, 2022, the Company had the following direct operating subsidiaries: Techni Bharathi Private Limited (“TBL”)(TBL), IGCare LLC, (“IGCare”), Holi Hemp, LLC, (“Holi Hemp”), IGC Pharma LLC, (“IGC Pharma”), SAN Holdings LLC, (“SAN Holdings”), Sunday Seltzer, LLC, (“Sunday Seltzer”)Hamsa Biopharma India Pvt. Ltd., and Colombia-based beneficially ownedbeneficially-owned subsidiary Hamsa Biopharma Colombia SAS (formerly Hamsa Biochem SAS (“Hamsa”)SAS) (Hamsa). The Company’s fiscal year is the 52-week52- or 53-week period that ends on March 31. The Company is a Maryland corporation established in 2005. The Company’s public filings with the SEC are available on www.sec.gov.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying condensed consolidated Balance Sheet as of December 31, 2021June 30, 2022, and March 31, 2021,2022, condensed consolidated statements of operations for the three and nine months ended December 31,June 30, 2022, and 2021, and 2020, condensed consolidated statements of changes in stockholders’ deficit for the three and nine months ended December 31,June 30, 2022, and 2021, and 2020, and condensed consolidated statements of cash flows for the ninethree months ended December 31,June 30, 2022, and 2021, and 2020, are unaudited. The consolidated balance sheet as of March 31, 2021, which2022, has been derived from audited financial statements, and thesethe 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”). SEC.

Accordingly, they do not include all the information and footnotes required by U.S. 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, 20212022 (“Fiscal 2021”2022”) contained in the Company’s Form 10-K for Fiscal 2021,2022, filed with the SEC on June 23, 2022, specifically in Note 2 to the consolidated financial statements.

Principles of consolidation

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

Use of estimates

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

 | December 31, 2021, Form 10-Q

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

 | June 30, 2022, Form 10-Q

Presentation and functional currencies

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

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

Impairment of long – lived assets

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

No impairment has been recorded for the ninethree months ended December 31, 2021,June 30, 2022, and 2020.2021.

Short-term and long-term investments

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

Investments are initially measured at cost, which is the fair value of the consideration given for them, including transaction costs. Where the Company’s ownership interest is more thanin excess of 20% and the Company has a significant influence, the Company has accounted for the investment based on the equity method in accordance with ASC Topic 323, “Investments “Investments – Equity Methodmethod and Joint VenturesVentures.”. 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 accountshas accounted for the investment in accordance with ASC Topic 321, “Investments-Equity Securities“Investments-Equity Securities.”.

As of December 31, 2021,June 30, 2022, the Company does not have any investment in marketable securities.

 | December 31, 2021,June 30, 2022, Form 10-Q

Stock–based compensation

The Company accounts for stock-based compensation to employees and non-employees in conformity with the provisions of ASC Topic 718, “Stock-Based Compensation“Stock-Based Compensation.”. The Company expenses stock-based compensation to employees over the requisite vesting period based on the estimated grant-date fair value of the awards. The Company accounts for forfeitures as they occur. Stock-based awards are recognized on a straight-line basis over the requisite vesting period. For stock-based employee compensation cost recognized at any date will be at least equal to the amount attributable to the share-based compensation that is vested at that date. For performance-based awards, stock-based compensation expense is recognized over the expected performance achievement period of individual performance milestones when the achievement of each individual performance milestone becomes probable by best of management estimate. For performance-based awards with a vesting schedule based entirely on the attainment of performance conditions, stock-based compensation expense associated with each tranche is recognized over the expected achievement period for the operational milestone, beginning at the point in time when the relevant operational milestone is considered probable to be achieved.

CompensationFor market-based awards, stock-based compensation expense for the portion of the restricted stock units that contains a performance and market vesting condition is recognized over the derived service period based on theexpected achievement period. The fair value of thesuch awards is estimated on the grant date. Compensation expense for the portion of the restricted stock that contains performance and service vesting conditions is recognized over the requisite service period based on fair value of the awards on the grant date.date using binomial lattice model.

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

Accounts receivable

We make estimates of the collectability of our accounts receivable by analyzing historical payment patterns, customer concentrations, customer creditworthiness, and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required. We had $164$147 thousand of accounts receivable, net of provision for the doubtful debt of $72$92 thousand as of December 31, 2021,June 30, 2022, as compared to $175$124 thousand of accounts receivable, net of provision for the doubtful debt of $63$93 thousand as of March 31, 2021.2022.

Inventory

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

Inventory consists of raw materials, finished goods related to wellness products, hand sanitizers, finished hemp-based products, beverages, among others as well as work-in-progress such as extracted hemp crude oil, hemp-based isolate, growing crops, harvested 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 to Note 3 – “Inventory”, for further information.

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

 | December 31, 2021, Form 10-Q

Fair value of financial instruments

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

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

Level 2: Inputs, other than the quoted prices in active markets, whichthat 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, 2022, Form 10-Q

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

LossEarnings/(Loss) per share

The computation of basic loss per share for the ninethree months ended December 31, 2021,June 30, 2022, excludes potentially dilutive securities of approximately 6.27.1 million shares which includes share options, unvested shares such as restricted shares and restricted share units, granted to employees, non-employees, and advisors, and shares from the conversion of outstanding units, if any because their inclusion would be anti-dilutive.

The weighted average number of shares outstanding for the ninethree months ended December 31,June 30, 2022, and 2021, and 2020, used for the computation of basic earnings per share (“EPS”) is 49,643,94251,616,598 and 40,915,196,47,910,866, respectively. Due to the loss incurred by the Company during the ninethree months ended December 31,June 30, 2022, and 2021, and 2020, 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 have taken cybersecurity measures that, while there can be no assurance, we expect are likely to safeguard the Company against breaches. In the ninethree months ended December 31, 2021,June 30, 2022, there were no impactful breaches in cybersecurity.

Intangible assets

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

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

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

 | December 31, 2021, Form 10-Q

Revenue Recognition

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

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

I. Identify the contract with the customer.

II. Identify the contractual performance obligations.

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

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

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

 | June 30, 2022, Form 10-Q

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

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

Net sales disaggregated by significant products and services for the ninethree months ended December 31,June 30, 2022, and 2021 and 2020 are as follows:

(1) Rental income consists of income from rental of heavy construction equipment.

(2) Construction income consistscontracts consist of the execution of contracts directly or through subcontractors.

(3) Relates to revenue from the income from purchaseLife Sciences segment including the sale of wellness and resale of physical commodities used in infrastructure, like steel, wooden doors, marble,lifestyle products such as hand sanitizers, bath bombs, lotions, gummies, beverages, hemp crude extract, hemp isolate, and tiles.hemp distillate.

(4) Relates to revenue from wellness and lifestylethe Life Sciences segment, such as sale of hand sanitizer, bath bombs, lotion, gummies, beverages, textiles, hemp crude extract, hemp isolate, and hemp distillate and royaltyincluding income from the sale of Hyalolex™, now named Hyalolex™ Drops of Clarity™.

(5) Relates to income from tolling and white label services.services, which refers to a fully supported product or service that is made by us but sold by another company.

 | December 31, 2021, Form 10-Q

Leases

Lessor Accounting

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

 | June 30, 2022, Form 10-Q

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 most the Company’s new leases as compared to similar existing leases; however, certain categories of new leases could have different revenue recognition patterns as compared to similar existing leases.

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

Lessee Accounting

The Company adopted ASU 2016-02 effective April 1, 2019, using the modified retrospective approach. The standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize an ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as a 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 December 31, 2021.June 30, 2022.

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, whichthat defer the commencement date of required payments. Please refer to “Note 9 - Leases”, for further information.

 | December 31, 2021, Form 10-Q

Recently issued accounting pronouncements

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. Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidatedcondensed financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidatedcondensed financial condition, resultsstatements.

 | June 30, 2022, Form 10-Q

NOTE 3 – INVENTORY

Inventory in the form of work-in-progress as of December 31, 2021,June 30, 2022, comprises, but it is comprised of, but not limited to, harvested hemp cropvarious hemp-based extracts among others. Inventory also includes cost relatedsuch as hemp crude oil, hemp distillate, and hemp isolate. Finished goods comprises, but it’s not limited to, growing crops like seeds, fertilizer, other raw materials, labor, farm-related overheads, and the depreciation of farming equipment, hand sanitizers, gummies, lotions, beverages, and personal protection equipment,beverages, among others.

During the ninethree months ended December 31, 2021,June 30, 2022, the Company wrote off approximately $73 thousand of inventory write down was approximately $22 thousand. Write downs are due to abnormal amounts of idle facility expense, freight, handling costs, scrap, and wasted material (spoilage). This charge was recorded in Selling, General, and Administrative Expenses.

NOTE 4 – DEPOSITS AND ADVANCES

The Advances to suppliers and consultants primarily relate to advances to suppliers in our Life Sciences and Infrastructure segments. Advances for Property, Plant, and, Equipment include an advance paid for the equipment. Prepaid expense and other current assets include approximately $62$125 thousand of statutory advances as of December 31, 2021,June 30, 2022, as compared to $36$170 thousand as of March 31, 2021. Other receivables and deposits as of March 31, 2021, comprised an inventory of $1.7 million that was on deposit with a vendor. The vendor reported the inventory as stolen and filed an insurance claim. The Company created a provision for the $1.7 million inventory during the nine months ended December 31, 2021. We are simultaneously pursuing the vendor for compensation.2022.

 | December 31, 2021, Form 10-Q

NOTE 5 – INTANGIBLE ASSETS

 | June 30, 2022, Form 10-Q

The value of intangible assets includes the cost of acquiring patent rights, supporting data, and the expense associated with filing 1315 patents. It also includes acquisition costs related to domains and licenses.

The amortization of patent and patent rights with finite life is up to 20 years, commencing from the date of grant or acquisition. The amortization expense in the three months ended December 31,June 30, 2022, and 2021, and 2020, amounted to approximately $7$10 thousand and $4 thousand, respectively, whereas the amortization expense in the nine months ended December 31, 2021, and 2020, amounted to approximately $18 thousand and $10$5 thousand, respectively.

The Company regularly reviews its intangible assets to determine if any intangible asset is other-than-temporarily impaired, which would require the Company to record an impairment charge in the period and concluded that, as of December 31, 2021,June 30, 2022, there was no impairment.

NOTE 6 – PROPERTY, PLANT, AND EQUIPMENT

 | December 31, 2021, Form 10-Q

The depreciation expense in the three months ended December 31,June 30, 2022, and 2021, and 2020, amounted to approximately $117$152 thousand and $124 thousand, respectively. The depreciation expense infor each of the nine months ended December 31, 2021, and 2020, amounted to approximately $427 thousand and $302 thousand, respectively.periods. The net decrease in total Property, Plant &and Equipment is primarily due to depreciation and foreign exchange translations. The nettranslations of a decrease in land is primarily due to foreign exchange translations because of a decline in the value of foreign currencies. TheAs of June 30, 2022, the construction in progress relatesrelated to the Maryland office extension.extension is completed and moved to Building and facilities. For more information, please refer to Note 16 – Segment Information“Segment Information” for the non-current assets other than financial instruments held in the country of domicile and foreign countries.

NOTE 7 – INVESTMENTS IN NON-MARKETABLE SECURITIESLEFT BLANK INTENTIONALLY

Short-term investment

Long-term investment

The Company regularly reviews its investment portfolio to determine if any security is permanently impaired, which would require the Company to record an impairment charge in the period.

 | June 30, 2022, Form 10-Q

NOTE 8 – CLAIMS AND ADVANCES

 | December 31, 2021, Form 10-Q

NOTE 9 – LEASES

The Company has short-term leases primarily consisting of spaces with the remaining lease term being less than or equal to 12 months. The total short-term lease expense and cash paid for the ninethree months ended December 31,June 30, 2022, and 2021 and 2020 are approximately $131$45 thousand and $197$31 thousand, respectively. The Company also has four operating leases as of December 31, 2021.June 30, 2022.

America: In November 2019, the Company entered into a lease agreement with a lease term of less than 12 months. This lease was amended in March 2020, with a new lease term from March 1, 2020, to November 30, 2025. The annual lease expense is approximately $121$122 thousand. The lease contract does not contain any material residual value guarantees or material restrictive covenants. The remaining lease term for the operating lease is 3.93.4 years with a discount rate of 7%. The lease does not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate.

Asia: The Company renewed three lease agreements for terms between three to four years expiring between 2023 and 2024. The total annual lease expense is approximately $27$6 thousand. The lease contracts do not contain any material residual value guarantees or material restrictive covenants. The remaining lease term for the operating leases is between 2.25-3.001.75-2.5 years with a discount rate of 7%. The lease does not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate.

 | June 30, 2022, Form 10-Q

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

 | December 31, 2021, Form 10-Q

NOTE 10 – ACCRUED AND OTHER LIABILITIES

 | June 30, 2022, Form 10-Q

Compensation and other contribution related liabilities consist of accrued salaries to employees. Provision for expenses includes provision for legal, professional, and marketing expenses. Other current liability also includes $120$126 thousand and $90$123 thousand of the current operating lease liability and statutory payables of approximately $30$29 thousand and $24$55 thousand as of December 31, 2021,June 30, 2022, and March 31, 2021,2022, respectively.

NOTE 11 – LOANS AND OTHER LIABILITIES

Forgiveness of Paycheck Protection Program Promissory Note:

On May 3, 2020, the Company signed the Paycheck Protection Program Promissory Note (the “PPP Note”) for a loan of approximately $430 thousand. The PPP Note was to mature after 2 years on May 3, 2022, with monthly repayments of approximately $18 thousand commencing November 1, 2020, and interest accrued on the outstanding principal balance at an annual fixed rate of 1.00%. On June 10, 2021, the Company received forgiveness for the full amount borrowed of approximately $430 thousand. This is accounted in the company’s condensed consolidated statements of operations and comprehensive loss for the nine months ended December 31, 2021, as other income, net.

Loan as of December 31, 2021:June 30, 2022:

On June 11, 2020, the Company received an Economic Injury Disaster Loan (“EIDL”) for approximately $150 thousand at an annual interest rate of 3.75%. The Company must pay principal and interest payments of $731 every month beginning June 5, 2021. The SBA will apply each installment payment first to pay interest accrued to the day SBA receives the payment and will then apply any remaining balance to reduce principal. All remaining principal and accrued interest is due and payable in 30 years from the date of the loan. For the ninethree months ended December 31, 2021,June 30, 2022, the interest expense and principal payment for the EIDL was approximately $3.2$1 thousand and $2$1 thousand respectively.respectively and for the three months ended June 30, 2021, the interest expense was approximately $469. As of December 31, 2021,June 30, 2022, approximately $145$143 thousand of the loan is classified as Long-term loans and approximately $3 thousand as Short-term loans.

 | December 31, 2021, Form 10-Q