UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Commission file number: 001-32830

INDIA GLOBALIZATION CAPITAL,IGC PHARMA, INC.

(Exact name of registrant as specified in its charter)

(301) 983-0998

(Registrant’s telephone number, including area code)

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

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.

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

53,077,43653,916,604 shares of our common stock were outstanding as of February 1,July 24, 2023.

 | December 31, 2022,June 30, 2023, Form 10-Q

INDIA GLOBALIZATION CAPITAL,IGC PHARMA, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2022JUNE 30, 2023

Table of Contents

 | December 31, 2022,June 30, 2023, 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.

For the next several years, we believe our success is highly correlated with the outcome of our clinical trials and secondarily with the sale of our products and services. The Company may not be able to complete human trials on our investigational drug candidate, or, once conducted, the results of human trials may not be favorable or as anticipated or may reflect a 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, 2022,2023, filed with the Securities and Exchange Commission (“SEC”) on June 23, 2022,July 7, 2023, which 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, 2022,June 30, 2023, Form 10-Q

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

India Globalization Capital,IGC Pharma, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(Unaudited)

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

 | December 31, 2022,June 30, 2023, Form 10-Q

India Globalization Capital,IGC Pharma, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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

(Unaudited)

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

 | December 31, 2022,June 30, 2023, Form 10-Q

India Globalization Capital,IGC Pharma, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)

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

 | June 30, 2023, Form 10-Q

IGC Pharma, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

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

 | December 31, 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.

 | December 31, 2022,June 30, 2023, Form 10-Q

India Globalization Capital,IGC Pharma, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND NINE MONTHS ENDED DECEMBER 31, 2022JUNE 30, 2023

(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., dba IGC Pharma, 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

Corporate HistoryOverview

India Globalization Capital, Inc. (dba IGC Pharma, Inc., IGC) is a clinical-stage pharmaceutical company with a diversified revenue model that develops prescription drugs and over-the-counter (OTC) products. We are a Maryland corporation established in 2005. Our2005 with a fiscal year that is thea 52- or 53-week period endingthat ends on March 31.

Business Overview

IGC develops advancedOur focus is on developing innovative therapies for neurological disorders such as Alzheimer’s disease, epilepsy, Tourette syndrome, and sleep disorders. We also focus on formulations for treating diseases and conditions, including Alzheimer’s disease (AD), menstrual cramps (dysmenorrhea),eating disorders, chronic pain, premenstrual syndrome (PMS), and chronic pain.dysmenorrhea, in addition to health and wellness OTC formulations. The Company’s leading drugCompany is developing its proprietary lead candidate, IGC-AD1, has demonstrated inan investigational oral therapy for the treatment of agitation associated with Alzheimer’s cell lines the potential to be effective in suppressing or ameliorating two key hallmarks of AD: plaques and tangles.disease. IGC-AD1 is currently in Phase 2 (Phase 2B) clinical trials after completing nearly a decade of research and realizing positive results from pre-clinical and a Phase 2B safety1 trial. This previous research into IGC-AD1 has demonstrated efficacy in reducing plaques and efficacy clinical trial for agitationtangles, which are two important hallmarks of Alzheimer’s, as well as reducing neuropsychiatric symptoms associated with dementia in dementia from Alzheimer’s (clinicaltrials.gov, NCT05543681). The Company markets two wellness brands Holief and Sunday Seltzer. Holief includes pain relief creams and gels for women experiencing PMS and menstrual cramps, and Sunday Seltzer, a lifestyle energy beverage brand.disease, such as agitation.

IGC has two segments: Life Sciences and Infrastructure.

Life Sciences Segment

Pharmaceutical: Since 2014, the Company has focused primarily on the potential uses of phytocannabinoids, in combination with other compounds, to treat multiple diseases, such as Alzheimer’s disease. As a company engaged in the clinical-stage pharmaceutical industry, we focus our research and development 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.

The Company currently has two main investigational small molecules in various stages of development:

The Company controls nine patents and seven patent applications, including two each for IGC-AD1 and TGR-63 and their uses related to Alzheimer’s.

2) TGR-63, non-cannabinoid small molecule that has shown promise in pre-clinical trials for reducing amyloid burden in an Alzheimer’s disease model. In Alzheimer’s, the accumulation of beta-amyloid protein in the brain leads to the formation of Aβ plaques, which are associated with neurotoxicity and cell dysfunction, ultimately leading to cell death and cognitive decline. The Company’s various personal care CBD-based overpotential efficacy of TGR-63 lies in its ability to inhibit the counter (“OTC”) consumer products are sold through onlineaggregation of beta-amyloid. If shown to be safe and wholesale channels underefficacious in human trials in reducing the following two brands:

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

The Company operates two segments:formation of Aβ plaques, this molecule could halt the Life Sciences segment described above and a legacy Infrastructure segment to execute construction contracts and the rental of heavy construction equipment in India. The Company is currently actively executing a project in this segment.neurotoxic process caused by beta-amyloid, thereby preventing or treating Alzheimer’s.

 | December 31, 2022,June 30, 2023, Form 10-Q

Other Recent DevelopmentsOver-the-Counter Products: We have created a women’s wellness brand, Holief™ available through online channels that are compliant with relevant federal, state, and local laws, and regulations. Holief™ is an all-natural, non-GMO, vegan, line of over the counter (OTC) products aimed at treating menstrual cramps (dysmenorrhea) and premenstrual syndrome (PMS). The products are available online and through Amazon and other online channels. In addition, we sell our product formulations to other companies that market them under their brand. This is the white label part of the OTC business.

Phase 2 Clinical Trial

Typically, a Phase 2 trial is divided into a Phase 2A and a Phase 2B trial with the former designed to assess dosing requirements and the latter to establish efficacy. In this document, we refer to the trial as Phase 2 and Phase 2B interchangeably. The Company commenced itshas initiated a Phase 2B protocol titled “A Phase 2, clinicalMulti-Center, Double-Blind, Randomized, Placebo-controlled, trial of the safety and efficacy of IGC-AD1 on IGC-AD1 foragitation 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.

The primary end point is agitation in dementia fromdue 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 two U. S. sites. The Company also received a no-objection letter from Health Canada to begin trialseleven exploratory objectives, including changes in Canadaanxiety, changes in cognitive processes such as attention, orientation, language, and has commenced trials at a sitevisual spatial skills as well as memory, changes in Montreal. Thedepression, delusions, hallucinations, euphoria/elation, apathy, disinhibition, irritability, aberrant motor behavior, sleep disorder, appetite, quality of life, and caregiver burden. In addition, the trial is intended to enroll 146 patients with one half,will evaluate the treated group, receiving IGC-AD1,impact of CYP450 polymorphisms and the other half, the control group, receiving a placebo. The goalspecifically CYP2C9 on each of the trial isNPS and assess any reductions in psychotropic drugs, among others. CYP2C9 ranks amongst the most important drug metabolizing enzymes in humans, as it breaks down over 100 drugs, including nonsteroidal anti-inflammatory all drugs. We seek to evaluate and establishunderstand how various versions of the efficacyenzyme act on IGC-AD1. Each participant will receive two doses of IGC-AD1 in treating patients with Alzheimer’s dementia to reduce neuropsychiatric symptoms (“NPS”(b.i.d.) such as agitation, which affects 76%or two doses of individuals with Alzheimer’s (Mussele et al., 2015). The Company hopes to be the first natural tetrahydrocannabinol (“THC”) based medicationplacebo per day for treating agitation in dementia from Alzheimer’s. The trial is registered on clinicaltrials.gov with NCT05543681.six weeks.

Business Organization

As of December 31, 2022,June 30, 2023, the Company had the following operating subsidiaries: Techni Bharathi Private Limited (“TBL”)(TBL), IGCare LLC, Holi Hemp LLC, IGC Pharma LLC, SAN Holdings LLC, Sunday Seltzer, LLC, Hamsa Biopharma India Pvt. Ltd., and And Colombia-based beneficially ownedbeneficially-owned subsidiary IGC Pharma SAS (formerly Hamsa Biopharma Colombia SAS (formerly Hamsa Biochem SAS) (Hamsa). The Company’s fiscal year is the 52- or 53-week period endingthat ends on March 31. The CompanyCompany’s principal office is ain Maryland corporation, established in 2005. Additionally, the Company has offices in Washington state, Colombia, and India. 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 sheetBalance Sheet as of December 31, 2022,June 30, 2023, and March 31, 2022,2023, condensed consolidated statements of operations for the three months ended June 30, 2023, and nine months ended December 31, 2022, and 2021, and condensed consolidated statements of changes in stockholders’ deficit for the three months and nine months ended December 31, 2022, and 2021, and condensed consolidated statements of cash flows for the ninethree months ended December 31,June 30, 2023, and 2022, and 2021, are unaudited. The consolidated balance sheet as of March 31, 2022,2023, has been derived from audited financial statements, and the accompanying as of June 30, 2023 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 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, 20222023 (“Fiscal 2022”2023”) contained in the Company’s Form 10-K for Fiscal 2022,2023, filed with the SEC on June 23, 2022,July 7, 2023, specifically in Note 2 to the consolidated financial statements.

 | June 30, 2023, Form 10-Q

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 management,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 Transactions between the Company and its subsidiaries are eliminated 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, 2022, 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, and equipment; intangible assets; valuations; impairment of goodwill and investments; recoverability of advances; the valuation of options granted, and warrants issued; and income tax and deferred tax valuation allowances, if any. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Critical accounting estimates could change from period to period and could have a material impact on IGC’s results, operations, financial position, and cash flows. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the condensed consolidated financial statements.

Presentation and functional currencies

IGCThe Company operates in India, the U.S., India, 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 USD 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 assetsGoing Concern

The Company reviewsassesses and determines its long-lived assets,ability to continue as a going concern in accordance with finite lives, for impairment wheneverthe provisions of ASC Subtopic 205-40, “Presentation of Financial Statements—Going Concern”, which requires the Company to evaluate whether there are conditions or events or changesthat raise substantial doubt about its ability to continue as a going concern.

The Company is currently in business circumstances indicate that the carrying amount of assets maya clinical trial stage and, thus, has not be fully recoverable. Such circumstances include, though are not limitedyet achieved profitability. The Company expects to continue to incur significant or sustained declines in revenues or earnings, future anticipatedoperating and net losses and negative cash flows business plans, and material adverse changesfrom operations in the economic climate, such as changes innear future.

The Company estimates that its current cash and cash equivalents balance with working capital credit facility and equity investment is sufficient to support operations beyond the operating environment, competitive information,twelve months following the date these consolidated financial statements and the 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 or profit 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 determinedfootnotes were issued. These estimates are 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 nine months ended December 31, 2022, and 2021.

Short-term and long-term investments

Our policy for short-term and long-term investments isassumptions that may prove 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 equity investment, mutual funds, corporate, various government securities, and municipal debt securities, as well as certificates of deposit. Certificates of deposit and commercial paper are carried at cost which approximates fair value. Available-for-sale securities: Investments in debt securities that are classified as available for sale shall be measured subsequently at fair value in the statement of financial position.

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

 | December 31, 2022, Form 10-Q

We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations.

Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. Changes in fair value, excluding credit losses and impairments, are recorded in other comprehensive income. Fair value is calculated based on publicly available market information or other estimates determined by management. If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than the cost. To determine credit losses, we employ a systematic methodology that considers available quantitative and qualitative evidence. In addition, we consider specific adverse conditions related to the financial health of, and business outlook for, the investee. If we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in other income (expense), net and a new cost basis in the investment is established. If market, industry, and/or investee conditions deteriorate, we may incur future impairments.

Equity investments with readily determinable fair values are measured at fair value. Equity investments without readily determinable fair values are measured using the equity method or measured at cost with adjustments for observable changes in price or impairments (referred to as the measurement alternative). We perform a qualitative assessment on a periodic basis and recognize an impairment if there are sufficient indicators that the fair value of the investment is less than the carrying value. Changes in value are recorded in other income (expense), net.

As of December 31, 2022, the Company has approximately $88 thousand in short-term investments.

Stock–based compensation

The Company accounts for stock-based compensation to employees and non-employees in conformity ASC Topic 718, “Stock-Based Compensation.” The Company expenses stock-based compensation to employees over the requisite vesting period based on the award’s estimated grant-date fair value. 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 with a vesting schedule based entirely on the attainment of performance conditions, stock-based compensation expense associated with each tranche is recognized over the expected achievement period for the operational milestone, beginning at the point in time when the relevant operational milestone is considered probable to be achieved.

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

The Company estimates the fair value of stock option grants using the Black-Scholes option-pricing model. The assumptions 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 a customer’sthe financial condition of a customer deteriorates, additional allowances may be required. We had $251$17 thousand of accounts receivable, net of provision for the doubtful debt of $35$225 thousand as of December 31, 2022,June 30, 2023, as compared to $125$107 thousand of accounts receivable net of provision for the doubtful debt of $93 thousand as of March 31, 2022.2023.

 | December 31, 2022, Form 10-Q

Inventory

Inventory is valued at the lower of cost or 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 hemp-based products and 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, and 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.

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

Fair value of financial instruments

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

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

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

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

Earnings/(Loss)Loss per share

The computation of basic loss per share for the ninethree months ended December 31, 2022,June 30, 2023, excludes potentially dilutive securities of approximately 6.110 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. In addition, the Company entered into a private placement agreement on June 30, 2023. As per the terms of the agreement, the Company will issue 10 million shares of unregistered common stock.

The weighted average number of shares outstanding for the ninethree months ended December 31,June 30, 2023, and 2022, and 2021, used for the computation of basic earnings per share (“EPS”), is 52,412,83053,077,436 and 49,643,942,51,616,598, respectively. Due to the loss incurred by the Company during the ninethree months ended December 31,June 30, 2023, and 2022, and 2021, all the potential equity shares are anti-dilutive, and accordingly, the fully diluted EPS is equal to the basic EPS.

Cybersecurity

 | June 30, 2023, Form 10-Q

Cybersecurity

We have a cybersecurity policy in place and have taken cybersecurity measures that, whileto safeguard against hackers, however, there can be no assurance we expect are likely to safeguardthereof. During the Company against breaches. In the ninethree months ended December 31, 2022,June 30, 2023, there were no impactful breaches in cybersecurity.

 | December 31, 2022, Form 10-Q

Intangible assets

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

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

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

Revenue Recognition

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

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

I. Identify the contract with the customer.

II. Identify the contractual performance obligations.

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

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

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

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

Revenue in the Infrastructure segment is recognized for the renting business when the equipment is rented, and the terms of the agreement have been fulfilled during the period. Revenue from the execution of infrastructure contracts is recognized on the basis of the output method as and when part of the performance obligation has been completed and approval from the contracting agency has been obtained after 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 tollingwhite label 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.

 | December 31, 2022, Form 10-Q

Net sales disaggregated by significant products and services for the ninethree months ended December 31,June 30, 2023, and 2022 and 2021 are as follows:

(1) Rental incomeInfrastructure segment consists of income from the rental of heavy construction equipment.equipment and construction contracts.

(2) Construction contracts consistRevenue from wellness and lifestyle consists of the execution of contracts directly or through subcontractors.

(3) Relates to revenue from the Life Sciences segment, including the sale of wellness and lifestyle products such as gummies, hand sanitizers, bath bombs, lotions, gummies, beverages, hemp crude extract, hemp isolate, and hemp distillate.

(4) Relates to revenue from the Life Sciences segment, including income(3) Revenue from white label services which refers to a fully supported productconsists of rebranding our formulations or service made by us but sold by another company.the customer’s products as per the customer’s requirement.

Leases

Lessor Accounting

Under the current ASU guidance, contract consideration will be allocated to its lease 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 not to 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 a lessor, the Company expects that post-adoption substantially all existing leases will have no change in the timing of revenue recognition until their expiration or termination. The Company expects to elect the lessor practical expedient to not separate non-lease components such as maintenance from the associated lease for all existing and new leases and to account for the combined component as a single lease component. The timing of revenue recognition is expected to be the same for most 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 non-accrual, 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.

 | December 31, 2022, 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 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, 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, that defer the commencement date of required payments. Please refer to “Note 9 - Leases”, for further information.

Recently issued accounting pronouncements

Changes to U.S. GAAP are established by the FASBFinancial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”)(ASUs) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. Accounting standards that have beenNewly issued or proposed by FASB that doASUs not require adoption until a future datelisted are not expected to have a materialno impact on the condensedCompany’s consolidated financial statements upon adoption. The Company doesposition and results of operations, because either the ASU is not discuss recent pronouncements that are not anticipatedapplicable, or the impact is expected to have an impact on or are unrelated to its condensed financial statements.be immaterial.

NOTE 3 – INVENTORY

Inventory in the form of work-in-progress is moved into raw materials as we process the hemp extracts into different hemp derivatives used in the production of finished goods. Finished goods comprise, but is not limited to, hand sanitizers, gummies, lotions, and beverages, among others.

 | December 31, 2022,June 30, 2023, Form 10-Q

NOTE 3 – INVENTORY

During the ninethree months ended December 31, 2022,June 30, 2023, the Company wrote off approximately $110$20 thousand of inventory due to abnormal amounts ofloss due to idle facility expense, freight, handling costs, scrap, and wasted material (spoilage). This charge was recorded in Selling, general, and administrative expenses.

We capitalize inventory costs related to our investigational drug, provided that management determines there is a potential alternative use for the inventory in future research and development projects or other purposes. As of June 30, 2023, and March 31, 2023, our consolidated balance sheet reported approximately $397 thousand and $407 clinical trial-related inventory, respectively.

NOTE 4 – DEPOSITS AND ADVANCES

The Advances to suppliers and consultants primarily relate to advances to suppliers in our Life Sciences and Infrastructure segments. Prepaid expenses and other current assets include approximately $21 thousand of statutory advances as of June 30, 2023, as compared to $25 thousand as of March 31, 2023.

NOTE 5 – INTANGIBLE ASSETS

 | June 30, 2023, Form 10-Q

The value of intangible assets includes the cost of acquiring patent rights, supporting data, and the expense associated with filing 16 patents.of patent applications. It also includes acquisition costs related to domains and licenses.

The amortization of patent and patent rightsintangible with finite life is up to 20 years are amortized on straight-line basis, commencing from the date of grant or acquisition. Accordingly, theThe amortization expense in the three months ended December 31,June 30, 2023, and 2022, and 2021 amounted to approximately $14$18 thousand and $7 thousand, respectively, whereas the amortization expense in the nine months ended December 31, 2022, and 2021 amounted to approximately $38 thousand and $18$10 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, 2022,June 30, 2023, there was no impairment.

 | December 31, 2022, Form 10-Q

NOTE 6 – PROPERTY, PLANT, AND EQUIPMENT

The depreciation expense in the three months ended December 31,June 30, 2023, and 2022 and 2021 amounted to approximately $158$137 thousand and $117 thousand, respectively. The depreciation expense in the nine months ended December 31, 2022, and 2021 amounted to approximately $466 thousand and $427$152 thousand, respectively. The net decrease in total Property, Plant,Total property, plant, and Equipmentequipment is primarily due to depreciation and foreign exchange translations of an increase in the value of foreign currencies. As of December 31, 2022, the Company disposed of fully depreciated assets in the amount of approximately $1.6 million from its subsidiaries. This resulted in a reduction in the value of total gross assets but did not affect the net value of assets as the disposed assets had previously been fully depreciated. In addition, thedepreciation. The Company sold a fully depreciated property in Puerto RicoIndia for net proceeds of approximately $485$43 thousand (acquired for approximately $480 thousand) and accounted for a profit of approximately $5$43 thousand in other income. For more information, please refer to Note 16 – “Segment Information” for the non-current assets other than financial instruments held in the country of domicile and foreign countries.

NOTE 7 –LEFT BLANK INTENTIONALLY

 | June 30, 2023, Form 10-Q

NOTE 8 – CLAIMS AND ADVANCES

 | December 31, 2022, 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 nine months ended December 31, 2022, and 2021 are approximately $134 thousand and $131 thousand, respectively. The Company also has four operating leases as of December 31, 2022.

America: The Company has entered into a lease agreement for approximately five years, expiring in 2025. The annual lease expense is approximately $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 2.9 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 has three lease agreements for three to four years, expiring between 2023 and 2024. The total annual lease expense is approximately $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 2-1.4 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.

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

 | December 31, 2022, Form 10-Q

NOTE 9 – LEFT BLANK INTENTIONALLY

NOTE 10 – ACCRUED AND OTHER LIABILITIES

Compensation and other contribution-related liabilities consist of accrued salaries to employees. In addition, the provision for expenses includes provision for legal, professional, and marketing expenses. Other current liability also includes statutory payables of approximately $48 thousand and $55$31 thousand as of December 31, 2022June 30, 2023, and March 31, 2022,2023, respectively, and approximately $3 thousand of short-term loans as of December 31, 2022,June 30, 2023, and March 31, 2022,2023, respectively.

NOTE 11 – LOANS AND OTHER LIABILITIES

Loan as of December 31, 2022:June 30, 2023:

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. ForThe SBA will apply each installment payment, the U.S. Small Business Administration (“SBA”) will apply the payment first to pay interest accrued to the day SBA receives the payment and will then toapply any remaining balance to reduce principal. All remaining principal and accrued interest areis due and payable 30 years from the loan date.date of the loan. For the ninethree months ended December 31,June 30, 2023, and June 30, 2022, the interest expense and principal payment for the EIDL werewas approximately $4.1$1 thousand and $2 thousand, respectively. For the nine months ended December 31, 2021, the interest expense and principal payment for the EIDL were approximately $3.2 thousand and $2$1 thousand, respectively. As of December 31, 2022,June 30, 2023, approximately $141$140 thousand of the loan is classified as long-termLong-term loans and approximately $3 thousand as short-termShort-term loans.

On June 30, 2023, the Company successfully entered into a Master Loan and Security Agreement (the “Credit Agreement”) with O-Bank, CO., LTD., pursuant to which the Company may borrow up to $12 million. The Credit Agreement serves to satisfy ongoing liquidity requirements and ensure the Company’s ability to sustain its operations. The Credit Agreement matures on June 30, 2024, with an option to renew. Borrowings under the Credit Agreement will bear interest, calculated according to the interest rate mentioned in the Certificate of Deposit (as defined in the Credit Agreement), as the case may be, plus an applicable margin of 1%, and the Company shall bear the tax. Interest is due and payable in full by the Company on the last business day of each interest period. As of June 30, 2023, the entire amount of $12 million remains unused.

 | December 31, 2022,June 30, 2023, Form 10-Q

Other Liability:

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. Accordingly,There are no such matters that are deemed material to the condensed consolidated financial statements as of December 31, 2022,June 30, 2023, except as disclosed in the legal proceedings section below.

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 addition, underaccordance 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 December 31, 2022,June 30, 2023, the Company was authorized to issue up to 150,000,000 shares of common stock, a par value of $0.0001 per share, and 53,077,436 shares of common stock were issued and outstanding. The Company is also authorized to issue up to 1,000,000 shares of preferred stock, a par value of $0.0001 per share, and no preferred shares were issued and outstanding as of December 31, 2022.June 30, 2023.

Our common stock is listed on the NYSE American (ticker symbol: IGC). This security also trades on the Frankfurt, Stuttgart, and Berlin stock exchanges (ticker symbol: IGS1). The Company also has 91,472 units outstanding that can be separated into common stock. Ten units may be separated into one share of common stock. The unit holders are requested to contact the Company or our transfer agent, Continental Stock Transfer and Trust, to separate their units into common stock.

On January 13, 2021, the Company entered into a Sales Agreement (the “Agreement”) with The Benchmark Company, LLC (the “Sales Agent”), under pursuant to which the Sales Agent is acting as the Company’s sales agent with respect to the issuance and sale of up to $75,000,000 of the Company’s shares of common stock, par value $0.0001 per share (the “Shares”), from time to time in an “at the market” (“ATM”) offering as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended.amended (the “Securities Act”).

On June 30, 2023, the Company entered into a SPA with Bradbury Asset Management and three unrelated investors resulting in approximately $3 million in gross proceeds. The completion of the private placement is subject to customary closing conditions, including approval by the NYSE. Under the terms of the private placement, IGC will issue 10 million shares of unregistered common stock at a price of $0.30 per share. Shares are intended to be exempt from registration under the Securities Act, by virtue of the provisions of Section 4(a)(2) of the Securities Act and Regulation D and/or Regulation S adopted thereunder.

NOTE 14 – STOCK-BASED COMPENSATION

As of December 31, 2022, under the Company’s previous 2008 and current 2018 Omnibus Incentive Plans, a total of 8,412,627 shares of common stock have been issued to employees, non-employees, and advisors. In addition, 5.8June 30, 2023, 10 million restricted share units (“RSUs”)(RSUs), fair valued at $5.7$7 million with a weighted average value of $0.98$0.70 per share, have been granted but not yet issued from different Incentive Plans and Grants. This includes 35 million RSUs granted to employees and directors, which consists of a vesting schedule based entirely on the attainment of eitherboth operational milestones (performance conditions) orand market conditions, assuming continued employment either as an employee or director with the Company. The performance basedperformance-based RSUs are accounted for upon certification by management,Management, confirming the probability of achievement of milestones. As of December 31, 2022, managementJune 30, 2023, Management confirmed twothree of the milestones had been achieved, and the rest were considered probable to be achieved by March 31, 2027.

 | December 31, 2022,June 30, 2023, Form 10-Q

Additionally, options held by advisors and directors to purchase 300150 thousand shares of common stock fair valued at $278$69 thousand with a weighted average of $0.93$0.46 per share have been granted but are to be exercised over a service period ending in Fiscal 2031. Options exercised before the service period are expensed when exercised.

The options are valued using a Black-Scholes Pricing Model and Market-based RSU isMarket based RSUs are valued based on a lattice model, with the following assumptions:

The expense associated with share-based payments to employees, directors, advisors, and contractors is allocated over the vesting or service period and recognized in the selling,Selling, general and administrative (“SG&A”) expenses (including research and development). For the ninethree months ended December 31, 2022,June 30, 2023, the Company’s share-based expense and option-based expensesexpense shown in SG&ASelling, general and administrative expenses (including research and development) were $2.2$354 thousand and $4 thousand, respectively and for the three months ended June 30, 2022, the Company’s share-based expense and option-based expense was $1.14 million and $23$8 thousand, respectively.

For the nine months ended December 31, 2021, the Company’s share-based and option-based expenses were $1.0 million thousand and $24 thousand, respectively.