Attached files

file filename
EX-32.2 - EX-32.2 - India Globalization Capital, Inc.ex32-2.htm
EX-32.1 - EX-32.1 - India Globalization Capital, Inc.ex32-1.htm
EX-31.2 - EX-31.2 - India Globalization Capital, Inc.ex31-2.htm
EX-31.1 - EX-31.1 - India Globalization Capital, Inc.ex31-1.htm
EX-23.1 - EX-23.1 - India Globalization Capital, Inc.ex23-1.htm
EX-21.1 - EX-21.1 - India Globalization Capital, Inc.ex21-1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
 FORM 10-K  
 

 
 
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
For the fiscal year ended March 31, 2017
 
 
Transition report pursuant to Section 13 or 15(d) of the Exchange Act of 1934
For the transition period from _____ to _____
 
Commission file number: 1-32830
 
INDIA GLOBALIZATION CAPITAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
Maryland
(State or Other Jurisdiction of Incorporation or Organization)
 
20-2760393
(I.R.S. Employer Identification No.)
 
4336 Montgomery Avenue, Bethesda, Maryland 20814
(Address of Principal Executive Offices)
 
Registrant’s telephone number, including area code: (301) 983-0998
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Name of each exchange on which registered
Common Stock
 
NYSE MKT LLC
 
Securities registered pursuant to Section 12(g) of the Act: Common Stock Purchase Warrants
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   
   Yes      No 
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
   Yes      No 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
   Yes     No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  
   Yes      No

Indicate by check mark disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  

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

Large accelerated filer  
 
Accelerated filer 
Non-accelerated filer  
(Do not check if a smaller reporting company) 
Smaller reporting company
Emerging growth company
 
 
 
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 

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of September 30, 2016 (the last business day of the registrant’s most recently completed second fiscal quarter was $8,785,960 based on the last reported sale price of the registrant’s common stock (its only outstanding equity security) of $0.46 per share on that date. All executive officers and directors of the registrant and all 10% or greater stockholders have been deemed, solely for the purpose of the foregoing calculation, to be “affiliates” of the registrant.

As of June 25, 2017, there were 30,571,948 shares of our common stock outstanding.
 
DOCUMENTS INCORPORATED BY REFERENCE
None




INDIA GLOBALIZATION CAPITAL, INC.
 
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31, 2017
 
TABLE OF CONTENTS
 
 
 
Page
PART I
 
 
 
 
 
Item 1.
2
Item 1A.
 10
Item 1B.
 16
Item 2.
 16
Item 3.
 17
Item 4
 17
     
PART II
 
 
 
 
 
Item 5.
 18
Item 6.
 19
Item 7.
 19
Item 7A.
 26
Item 8.
 27
Item 9.
 29
Item 9A.
 29
Item 9B.
 30
 
 
 
PART III
 
 
 
 
 
Item 10.
 31
Item 11.
 34
Item 12.
 39
Item 13.
 40
Item 14.
 41
 
 
 
PART IV
 
 
 
 
 
Item 15.
 43
 
 45


Unless the context requires otherwise, all references in this report to “IGC,” “we,” “our” and “us” refer to India Globalization Capital, Inc., together with the subsidiaries listed on the Company’s Annual Report on Form 10-K.  We exclude our investments and minority non-controlling interests, and any information provided by them is not incorporated by reference in this report, and you should not consider it a part of this report.

PART I
 

Item 1.                   Business
 
Company Background
 
IGC, a Maryland based corporation, develops cannabis-based combination therapies to treat Alzheimer’s, pain, nausea, eating disorders, several end points of Parkinson’s, and epilepsy in humans, dogs and cats.  In support of this effort, IGC has assembled a portfolio of patent filings and four lead product candidates addressing these conditions. In India, the Company is engaged in heavy equipment rental, and in Malaysia, real-estate management.
 
Business Strategy

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

We are a Maryland corporation formed in April 2005 for the purpose of acquiring one or more businesses with operations primarily in India through a merger, capital stock exchange, asset acquisition or other similar business combination. In March 2006, we completed an initial public offering of our common stock.  Our principal office in the U.S. is in Bethesda, Maryland, in addition we have a facility in Washington State. Our back office is located in Kochi, Kerala India. In addition, many of our staff and advisors work from their home offices. We maintain a website at http://www.igcinc.us and our telephone number is +1-301-983-0998. The information contained on our website is not incorporated by reference in this report, and you should not consider it a part of this report.  As at April 1, 2016 our operational subsidiaries were located in China, Hong Kong, India and Malaysia.  As at March 31, 2017 our operational subsidiaries are located in India and Malaysia. Our filings are available on www.sec.gov.

Products

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

The Company is focused on four products that it is preparing  for medical trials: Natrinol is a natural substitute for Marinol, or synthetic THC. This product is aimed at relieving nausea, vomiting and increasing appetite in patients with AIDS and Cancer.  Caesafin uses combination therapy to alleviate seizures in dogs and cats.  Serosapse addresses several end points in Parkinson’s disease including Rapid Eye Movement (REM) sleep disorder, anxiety, and dyskinesia. Hyalolex is aimed at reducing the buildup of beta-amyloid in Alzheimer’s patients.

Services

The Company provides construction management services for the construction of a 7-star hotel in Genting Malaysia.  In India the Company rents heavy equipment with operators to construction companies.

 
Industry Overview

We believe that there are three factors coalescing to create entrepreneurial opportunities in the cannaceutical industry. The first is deregulation of the industry. This is taking place in the U.S., Canada, Germany, and other parts of the world. We believe that during any major deregulation, it takes several years for market equilibrium to be achieved. Most large companies don’t react quickly and that creates entrepreneurial opportunities, including as a first mover. The second factor is that the plant has cannabinoids that work on several pathways, in humans and animals, and that these cannabinoids can potentially be used to treat many diseases and aliments. The third factor is a rising awareness and demand for natural products including natural complementary and alternative medicines.

Target Markets

 We are developing four products using phytocannabinoid-based combination and mono therapies, for the treatment of a) Alzheimer’s disease, b) several end points associated with Parkinson’s disease, c) seizures in cats and dogs, and d) cancer and AIDS induced nausea, vomiting, and eating disorders.  Our target market for one of these products is very large and for the other three relatively smaller. There are 5.3 million adults suffering from Alzheimer’s in the U.S., and Medicare and Medicate are projected to spend $175 billion in 2017 on treatment. Alzheimer’s is America’s most expensive disease. The pharmaceutical market for this product, if it is proven effective in medical trials, and approved by the FDA, and we are successful in registering with the USPTO, is significant and rapidly growing. There are over one million adults suffering from Parkinson’s disease in the U.S., it is the second most common neurodegenerative disorder worldwide with an estimated 1% of adults over 60 suffering from the disease.  The market for curing the disease is very large. We are testing products for end points (REM sleep disorder, anxiety, dyskinesia) associated with Parkinson’s disease and we believe the market for these products is projected to be around $500 million. There are 160 million domesticated dogs and cats in the U.S. and about 1% suffer from seizures. Our veterinarian product uses combination therapy for the treatment of seizures in dogs and cats.  We are also developing a product for cancer and AIDS induced nausea, vomiting, and eating disorders.

The target market for the heavy equipment rental business is cyclical and highly dependent on the fleet of equipment available at the time a need arises.  We have a limited fleet of heavy equipment in India and the target market is small and restricted to the city of Kochi in the state of Kerala, India. Similarly, the construction management business is limited to project development in Genting Malaysia. We have, organically and through our investments, developed expertise in building medical grade pesticide free indoor organic farms, and extraction and separation methodologies using a variety of techniques. While we believe the target market for these services will be large, we have not yet begun targeting these markets.
 
Patents, Development Pipeline, and Licenses

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

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

Indication
Provisional Filing
PCT Filing
Subsequent Activity
Pain (IGC-501)
9/16/14
9/16/15
US National Case Filed – 6/15/16
Seizures (IGC-502)
6/15/15
6/14/16
US National Case Filed – 6/15/16
Seizures (IGC-503)
4/1/15
4/1/16
PCT Application Published- 10/6/16
Eating Disorders (IGC-504)
8/12/15
8/11/16
US and National Filing Anticipated 2/12/18
Seizures (IGC-505)
6/15/16
6/15/16
US National Filing Anticipated 12/15/18
Eating Disorders (IGC-506)
2/28/17
Anticipated- 2/28/18
US and National Filing Anticipated 8/28/19
Alzheimer’s (IGC-AD1)
7/30/2015
Anticipated -2017
US and National Filing Anticipated in 2017



Alzheimer’s Disease
Alzheimer’s is known as America’s most expensive disease with an estimated cost in 2017 to Medicare and Medicaid of $175 billion. There are currently over 5.3 million Americans with Alzheimer’s disease (AD) and around 35 million worldwide. The cost of Alzheimer’s is skyrocketing as the baby-boomers age: the number of AD patients is expected to double over the next 20 years and the direct costs are expected to exceed $450 billion in the next 12 years.  Although the speed of progression can vary, the average life expectancy following diagnosis is believed to be between three and nine years.  It is the most common cause of dementia among older adults. Currently, no treatment can stop or reverse the progression of the disease and there is still no accepted cure for AD.  Alzheimer’s is characterized by loss of neurons and synapses in the cerebral cortex and certain subcortical regions – resulting in significant atrophy in the affected regions.  In brains of those affected by Alzheimer’s, both amyloid plaques and neurofibrillary tangles are visible by microscopy.  Amyloid plaques are dense deposits of beta-amyloid peptide and cellular material around neurons.  Neurofibrillary tangles are aggregates of the microtubule-associate protein tau, which accumulates inside the cells. The patent filing made by the University of South Florida Research Foundation claims discovery of a new pathway to disrupt and perhaps reverse the buildup of beta-amyloid plaques from aggregating on neurons.
Pain

The pain market represents a significant component of the healthcare system and The Journal of Pain in September 2012 reported that the annual estimated national cost of pain ranges from $560 billion to $635 billion.  This figure exceeds the entire cost of the nation’s priority health conditions.  Additionally, The American Pain Society recommends that pain be made more visible and be categorized as the fifth vital sign; recognizing that terminal illnesses are often accompanied by unbearable levels that are so severe and difficult to treat that death seems preferable. According to the Arthritis Foundation, arthritis has been particularly problematic for women; since 1999 there has been a 22 percent increase in the number of women who attribute their disability to arthritis.  Current treatment protocols such as the utilization of opioid-based drug therapies present several challenges and may result in debilitating consequences that affect patient day-to-day functioning and patients’ productivity. Commonly reported side effects include hallucinations, constipation, sedation, nausea, respiratory depression, and dysphoria. Our patent filing is based on a novel therapy that uses extracts from the cannabis plant for the treatment of psoriatic arthritis and scleroderma pain. The therapy uses a cream that is applied to the joints, using a variety of delivery mechanisms including a bio-adhesive patch.
Seizures

Approximately 50 million people worldwide are affected by epilepsy (Sanders, 2003).  Epilepsy is thought to be due to multiple factors that include sodium, potassium, GABA (gamma amino butyric acid) and NMDA (N-Methyl-d-aspartate).  It is believed, for example, that to maximally control epilepsy, modulation of one or more of these receptors is required and that mono therapy is adequate in up to 25% of patients.  The onset of epileptic seizures can be life threatening, including long-term implications (Lutz, 2004) such as mental health problems, cognitive deficits and morphological changes (Swann, 2004, Avoli et. al., 2005). The onset of epilepsy also greatly affects lifestyle as sufferers live in fear of consequential injury or the inability to perform daily tasks (Fisher et. al., 2000). The scientific community (1980 Cunha et. al., 1986 Ames, 1990 Trembly et. al. recent testing by GW Pharmaceuticals, among others) have shown that Cannabidiol (CBD) has anti-convulsive properties in humans.  Other studies, (Davis and Ramsey) have shown that tetrahydrocannabinol (THC) can also help reduce seizures.  Three of our patent filings involving novel therapies use phytocannabinoid extracts from cannabis, in combination with other generic drugs, to treat medical refractory epilepsy in humans and seizures in dogs and cats.

Eating Disorders

Cachexia is a condition that accompanies severe illness such as cancer and results in the weakness and wasting away of the body. Cachexia physically weakens patients to the extent that response to standard treatments is poor.  In the U.S., it is estimated that a population of approximately 1.3 million are experiencing cachexia associated with cancer, multiple sclerosis, Parkinson’s disease, HIV/AIDS and other progressive illnesses. Cachexia is secondary to an underlying disease such as cancer or AIDS and is a positive risk factor for death.  As an example, cancer induced anorexia cachexia is responsible for about 20% of all cancer deaths.  Our patent filing involves a novel therapy that uses phytocannabinoids to stimulate senses (smell and taste) with a combination of drugs to stimulate appetite.  Our approach addresses the veterinarian market as dogs and cats also suffer from pain, epilepsy and cachexia and getting a product to market for the veterinarian industry is significantly less time consuming than getting products approved for human healthcare.


Competition
 
The development of phytocannabinoid-based therapies is currently not very competitive. The largest amount of research in this area is done in Israel. The most significant research and FDA approved trials are done by one large pharmaceutical company, and to a lesser extent by two other large firms. In the United States, there is very little wide spread research while most of the research is concentrated in Israel. This is mostly because the United States Drug Enforcement Administrating (“DEA”) classifies phytocannabinoid extracts as a Schedule 1 drug. This means that phytocannabinoids are characterized as “high potential for abuse,” and “no currently accepted medical use”. Further, any study conducted in the US must be registered and approved by the DEA and raw materials purchased through the National Institute of Drug Abuse (NIDA).

We view competition in two ways, the first: we compete with 15 listed companies and 2 private companies that have articulated a business plan to develop phytocannabinoid based therapies, two large listed well-funded pharmaceutical companies, and three small listed companies. There are several microcap companies listed on the OTC and two private ones that also compete in this space.  We have limited competition in the areas of Alzheimer’s, Parkinson’s and seizures for dogs and cats, using phytocannabinoid- based therapies. In the field of epilepsy in humans there is significant competition and so we are focused on seizures in dogs and cats where there is limited competition.  The second way we view competition is non-phytocannabinoid based therapies: there is severe competition in all areas that we are working on including for example Alzheimer’s, with almost all the massive and well financed pharmaceutical companies and four pure play listed companies working on the disease, albeit all of them without the use of phytocannabinoids.

Core Business Competencies
 
Our core competencies include the following: 
 
·  
A network of doctors, PhDs, and intellectual property legal experts that have a sophisticated understanding of drug discovery, research, FDA filings, intellectual protection and product formulation.
 
·  
Knowledge of various cannabis strains, their phytocannabinoid profile, extraction methodology, and impact on various pathways.  

·  
Knowledge of the legal status of cannabis in various countries, access to medical writers, and clinical trial organizations in foreign countries, universities and research centers in Malaysia, India and Israel.

·  
Knowledge of the equipment rental business in Kerala, India and the construction business in Malaysia.
 
Competitive Advantage

Our competitive advantage is based on experience and deep knowledge of deregulating industries; access to foreign markets where testing has less regulatory hurdles; experienced management; access to intellectual property experts; access to a network of doctors and PhDs; knowledge of FDA trials, extraction techniques, plant strains; and a strategy that is well differentiated.

Our Other Businesses and Investments
In Malaysia, our subsidiary Cabaran Ultima is the project manager of an estimated $262 million five-star hotel planned to be built on approximately 6 plus acres in Genting highlands. Genting is a hill resort one hour from Kuala Lumpur that boasts many attractions including a casino and is home to the 20th Century Fox World theme park slated to open in 2017. The site is located within walking distance to the theme park and casino.  HBA Architecture, the hotel’s master planner and designer, have a prestigious design resume that includes numerous developments such as the Hilton Hanoi Opera Hotel Refurbishment in Vietnam, Marrisle Boutique Leisure Resort and Club Med Gongshan Island Resort, both located in China.  During the build-out phase we expect to receive revenue from project management.  Ultima’s market share of the real estate project planning, construction, and management industry in Malaysia is less than 1%.
According to Deloitte and KOTRA, the total market size of the construction industry in India is estimated at $126 billion.  However, various plans by the Indian government to build and modernize Indian infrastructure have been slow to materialize.  Through our subsidiary, TBL, we are engaged in renting heavy infrastructure construction equipment.  Our subsidiary has experience in the construction industry having in the past, constructed highways, rural roads, tunnels, dams, airport runways and housing complexes, mostly in southern Indian states.  Our current share of the overall market in India is less than 1% based on revenue.


In Hong Kong, through a majority owned subsidiary called Golden Gate that we renamed as IGC International, we operated an electronics business. Most of our revenue in fiscal 2016 come from that business. We had no revenue from Golden Gate since the quarter ended June 30, 2016.  We decided to exit this business because, we believe, there is a macroeconomic slow-down and consolidation in the electronic-components sector, and without scale, meaningfully competing is difficult.  IGC-INT’s share of the electronic trading market is less than 1% based on revenue.

In China, through a majority owned subsidiary called Ironman, we operated our iron ore business. As of March 31, 2016, we had three iron ore beneficiation plants in China, including the one under construction (under capital work-in progress), for about $6.1 million.  As of March 31, 2017, IGC has redeemed and subsequently retired as required by Maryland State law, part of the 3,150,000 shares of common stock issued in connection with its purchase of Ironman for all tangible operating assets of Ironman as a treasury stock transaction thus reducing IGC investment in Ironman to zero while still pursuing any and all legal avenues to recover as many of the originally issued shares. After December 31, 2016, Ironman is no longer consolidated. Ironman’s share of the iron ore trading market is less than 1% based on revenue.
In June 2014, we entered into a partnership agreement with TerraSphere Systems LLC to develop multiple facilities to produce organic leafy green vegetables utilizing TerraSphere’s advanced pesticide-free organic indoor farming technology. Under the agreement, we will own 51% of each venture once production is operational, and will have a right of first refusal to participate in all future build-outs. Additionally, in consideration for our issuance of 50,000 shares of common stock, we received a seven-year option to purchase TerraSphere Systems for cash or additional shares of our common stock. As of 2017, we are negotiating a conversion of the investment into shares of a Canadian public vehicle that TerraSphere has merged into.
In December 2014, we acquired 24.9% of the outstanding membership interests in Midtown Partners, a Florida limited liability company registered as a broker-dealer under the Securities Exchange Act of 1934, from Apogee Financial Investments, Inc.  The Purchase Agreement expired on June 30, 2015, and the Company is pursuing its rights under the terms of the Purchase Agreement to recover certain damages.  In the calendar year 2017, Midtown Partners had a profit.  The Company applied the equity method of accounting for investments and increased the value of its investment in Midtown Partners by 24.9% of the profit earned by Midtown Partner in the calendar year 2017.  Midtown’s share of the investment banking market is less than 1% based on revenue.

We acquired a 10% stake in a 1,000-room luxury hotel development project encompassing 6+ acres in Genting Highlands, Malaysia by subscribing to 10% stake in Brilliant Hallmark Sdn. Bhd. (“Brilliant”) free and clear of all encumbrances. On April 3, 2017, IGC sold back its ten percent holding in Brilliant Hallmark for a consideration of 4 million shares of IGC’s Common Stock that were returned and retired, thereby reducing the outstanding IGC shares in April 2017.  The Company does not expect to record a gain or loss from this transaction.

Revenue Contribution by Business Area
 
The following table sets out the revenue contribution for fiscal 2017 from our operating subsidiaries:
 
Operating Subsidiaries
 
Business Area
 
Fiscal Year Ended
March 31, 2017
 
Cabaran Ultima and TBL (1)
 
Construction project management and heavy equipment rental
 
$
367,279
 
             
IGC-INT (2)
 
Trading, electronic component
   
213,093
 
             
Total IGC
 
 
 
$
580,372
 

(1) Ultima’s and TBL’s current market share of the construction project management and heavy equipment rental businesses is less than 1% based on revenue.

(2) After March 31, 2017, will no longer be consolidated due to inactivity.


Customers
 
For the four Phytocannabinoid-based products that are in the development phase, we have no customers and no revenue.  For the electronic business we had 32 customers.  For the hotel development business located in Malaysia we have one customer. For our equipment leasing business located in India we have seven customers all of whom are construction companies.  One customer in Malaysia accounted for more than 42% of our revenue.
 
Growth and Expansion Strategy
 
Our growth and expansion strategy is to conduct medical trials on our four products, develop joint venture partners for marketing our products, and continue to develop new products for PTSD and depression.  We currently do not expect to expand the real estate management or rental businesses.
  
Sales and Marketing
 
For phytocannabinoid-based therapies we have no sales or marketing.  For the electronic business, that we have exited, our sales force was located in Hong Kong and China and the sales cycle lasted between one and two weeks.  For the hotel development business, our sales force is located in Malaysia where we have one customer, and for our equipment leasing business our sales force is located in Kochi, India where the sales cycle lasts around two months.
 
Technology and Intellectual Property
 
We have intellectual property attorneys that file patents or provisional patent applications, copyright, trademark and trade secret laws of general applicability, employee confidentiality, and invention assignment agreements, and other intellectual property protection methods to safeguard our technology, research and development. We have applied for preliminary patents on phytocannabinoid-based therapies in the areas of pain management, medical refractory epilepsy, eating disorders and cachexia. The Company holds all rights to the patents that have been filed by us with the USPTO.

Employees and Consultants
 
As of March 31, 2017, we employed a work force of approximately 31 employees and contract workers in the United States, India and Malaysia. We have a total of 16 full-time employees with the rest being part-time, seasonal, or advisors that are highly qualified in their specific areas of expertise.
 
Governmental Regulations and Approvals
 
In the United States, 26 states, Guam, Puerto Rico and The District of Columbia have allowed (subject to licensing) the cultivation, processing and sale of cannabis. However, cannabis including certain phytocannabinoids derived from the plant, specifically the psychoactive compound Tetrahydrocannabinol (THC) and the non-psychoactive, medically useful compound Cannabidiol (CBD) are both considered to be Schedule 1 drugs under the Control Substances Act (CSA). The implication for us is that testing to determine drug efficacy and toxicity screening of our formulations in the US will require procedural registration and approval from the DEA and sourcing from the NIDA.  For our products to be sold we would have to conduct FDA approved trials that will take between two and seven years. Regulatory approvals for applications in the veterinarian space are significantly shorter and this is an area that we are focused on.

Our business is impacted by government regulations surrounding the transfer of money to and from foreign countries.  India, Malaysia, and China have strict foreign exchange regulations that make it difficult to move money in and out of these countries.  Because we are a US based company we are subject to US laws that govern money laundering and this results in arduous amounts of paper work, delays, and extreme amounts of scrutiny, all of which are expensive.


Corporate History

In February 2007, we incorporated India Globalization Capital, Mauritius, Limited (“IGC-M”), a wholly-owned subsidiary, under the laws of Mauritius.  In March 2008, we completed acquisitions of interests in two companies in India, Sricon Infrastructure Private Limited (“Sricon”) and Techni Bharathi Limited (“TBL”).  Since March 31, 2013, we beneficially own 100% of TBL after completing the acquisition of the remaining 23.13% of TBL shares that were still owned by the founders of TBL. The 23.13% of TBL was acquired by IGC-MPL, which is a wholly-owned subsidiary of IGC-M. TBL shares are held by IGC-M. TBL is focused on the heavy equipment leasing business. In October 2014, pursuant to a Memorandum of Settlement with Sricon and related parties and in exchange for the 22% minority interest we had in Sricon, we received approximately five acres of prime land in Nagpur, India. The land is located a few miles from MIHAN, which is the largest development zone in terms of investment in India. The Company beneficially registered the land in its name on March 4, 2016.

In February 2009, IGC-M beneficially purchased 100% of IGC Mining and Trading Private Limited (“IGC-IMT”) based in Chennai, India.  In July 2009, IGC-M beneficially purchased 100% of IGC Materials, Private Limited (“IGC-MPL”) and 100% of IGC Logistics, Private Limited (“IGC-LPL”) both based in Nagpur, India.  Together, these companies conducted our iron ore, cement, aggregate, and other materials, trading, transport and delivery businesses.

In December 2011, we acquired a 95% equity interest in Linxi HeFei Economic and Trade Co., known as Linxi H&F Economic and Trade Co., a People’s Republic of China-based company (“PRC Ironman”), by acquiring 100% of the equity of H&F Ironman Limited, a Hong Kong company (“HK Ironman”). Together, PRC Ironman and HK Ironman are referred to as “Ironman.” In February 2015, IGC filed a lawsuit in the circuit court of Maryland, against 24 defendants related to the acquisition of Ironman, seeking to have the court order rescission of the underlying Acquisition Agreement and to void any past or future transfer of IGC shares.  Between December 30, 2016 and February 24, 2017, IGC redeemed and subsequently retired as required by Maryland State law, approximately 2.4 million shares of IGC’s common stock issued in connection with its purchase of Ironman as a treasury stock transaction thus reducing IGC investment in Ironman to zero while still pursuing any and all legal avenues to recover as many of the originally issued shares of 3,150,000.  The assets of Ironman are shown on the balance sheet of IGC for the fiscal year ended March 31, 2016 but not for fiscal year ended March 31, 2017.  Please see the risk factor on Ironman and the financial Note 3 on the accounting impact on IGC’s balance sheet.

In January 2013, we incorporated IGC HK Mining and Trading Limited (“IGC-HK”) in Hong Kong. IGC-HK is a wholly owned subsidiary of IGC-M. In September 2014, we changed the subsidiary’s name to IGC Cleantech Ltd (“IGC-CT”). See Note 25 Subsequent Events for an update.
 
In May 2014, we completed the acquisition of 51% of the outstanding share capital of Golden Gate Electronics Limited (“Golden Gate”), a corporation organized and existing under the laws of Hong Kong and now known as IGC International (“IGC-INT”). IGC-INT, headquartered in Hong Kong, operates an e-commerce platform for the trading of commodities and electronic components. The purchase price of the acquisition consisted of up to 1,209,765 shares of our common stock, valued at approximately $1.05 million on the closing date of the acquisition. The terms of the Acquisition Agreement called for the delivery of 205,661 shares of IGC common stock at the signing of the Agreement and the remaining 1,004,094 shares were contingent on the electronics business meeting annual thresholds for revenue and profit through fiscal year ending on March 31, 2017.  The contingent shares were not delivered because IGC International was unable to meet the targets. As of March 31, 2017, we exited the business. We retired 205,661 shares of common stock, and returned control of IGC International to the original owners.  We also impaired the goodwill associated with the acquisition. We have no disputes with the initial principals of Golden Gate.

In June 2014, we entered into a partnership agreement with TerraSphere Systems LLC to develop multiple facilities to produce organic leafy green vegetables utilizing TerraSphere’s advanced pesticide-free organic indoor farming technology. Under the agreement, we will own 51% of each venture once production is operational, and will have a right of first refusal to participate in all future build-outs. Additionally, in consideration for our issuance of 50,000 shares of common stock, we received a seven-year option to purchase TerraSphere Systems for cash or additional shares of our common stock. In fiscal 2018, we expect to convert this investment into shares of a public Canadian company where assets including this project is being merged.

In December 2014, we entered into a Purchase Agreement with Apogee Financial Investments, Inc. (“Apogee”), the previous majority and sole owner of the outstanding membership interests of Midtown Partners & Co., LLC, a Florida limited liability company registered as a broker-dealer under the Securities Exchange Act of 1934 (“Midtown Partners”), to acquire 24.9% of the outstanding membership interests in Midtown Partners, and pursuant to certain conditions, subsequently 100%.  In consideration of the initial membership interest of 24.9%, we issued 1,200,000 shares of our common stock, valued at approximately $888,000 in the name of Apogee.


In February 2016, we completed the acquisition of 100% of the outstanding share capital of Cabaran Ultima Sdn. Bhd., a corporation organized and existing under the laws of Malaysia (“Ultima”), from RGF Land Sdn. Bhd. (“Land”), the sole shareholder of Ultima, pursuant to the terms of a Share Purchase Agreement among the parties. Ultima holds 51% of RGF Cabaran Sdn. Bhd., which holds 75% of RGF Construction Sdn. Bhd. The purchase price of the acquisition consists of up to 998,571 shares of our common stock, valued at approximately $170 thousand on the closing date of the Share Purchase Agreement. Ultima is an international real estate project management company with expertise in (i) building agro-infrastructure for growing medicinal plants and botanical extraction, (ii) construction of high-end luxury complexes such as service apartments, luxury condominiums and hotels, and (iii) design management of other large-scale infrastructure.

In August 2016, we subscribed to 10% of Brilliant Hallmark, Sdn. Bhd. a corporation organized and existing under the laws of Malaysia (“Brilliant”).  We paid 4,000,000 shares of common stock with a Fair Market Value of $1.880 million for the 10% stake in Brilliant that holds the exclusive rights to build a hotel and develop the property in Genting Malaysia.  IGC had recourse to the land assets in the event of non-performance through a separate Tag Along Agreement dated August 1, 2016 between IGC on the one hand and RGF Land Sdn. Bhd., the shareholders of RGF Land Sdn. Bhd., and Brilliant on the other hand. Pursuant to the terms of the Share Subscription Agreement, Brilliant assigned, sold, and transferred to IGC 11 shares of Brilliant, which shares constituted 10% of the issued and outstanding shares of Brilliant. Likewise, as a consideration for the transaction, IGC issued to Brilliant the 4 million shares of its common stock. Please see Note 25 Subsequent Events for further information.

The following chart presents our Company’s direct and indirect consolidated operating subsidiaries. 


Available Information

The Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are filed with the Securities and Exchange Commission (the “SEC”). The Company is subject to the informational requirements of the Exchange Act and files or furnishes reports, proxy statements and other information with the SEC. Such reports and other information filed by the Company with the SEC are available free of charge on the Company’s website at www.igcinc.us when such reports are available on the SEC’s website. The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only.

Item 1A.                Risk Factors
 
You should carefully consider the following risk factors, together with all of the other information included in this report in evaluating our company and our common stock.  If any of the following risks and uncertainties develops into actual events, they could have a material adverse effect on our business, financial condition or results of operations.   In that case, the trading price of our common stock and other securities also could be adversely affected. We make various statements in this section, which constitute “forward-looking statements.”  See “Forward-Looking Statements.”
 
Risks Related to Our Business and Expansion Strategy
 
Our cannaceutical strategy and market capitalization makes it difficult to find accretive acquisitions and attract management.
 
Attracting management that understand the US regulatory environment, public company compliance, and is comfortable in the foreign countries we operate in is difficult.  Finding them in acquired companies is even more difficult. The acquisitions we make will depend on our ability to identify suitable companies to acquire, to complete those acquisitions on terms that are acceptable to us and in the timeframes and within the budgets we expect, and to thereafter improve the results of operations of the acquired companies and successfully integrate their operations on an accretive basis.  There can be no assurance that we will be successful in any or all of these steps.
 
We may be unable to continue to scale our operations, make acquisitions, or continue as a going concern if we do not successfully raise additional capital.
 
Building facilities, conducting research, and creating products from our formulations either in the pharmaceutical or CAM space require additional capital. If we are unable to successfully raise the capital we need we may need to reduce the scope of our businesses to fully satisfy our future short-term liquidity requirements.  If we cannot raise additional capital or reduce the scope of our business, we may be otherwise unable to achieve our goals or continue our operations.  We have incurred losses from operations in our prior years including the prior two fiscal years and have a lack of liquidity for expansion.  While we believe that we will be able to raise the capital we need to continue our operations, there can be no assurance that we will be successful in these efforts or will be able to raise enough capital for planned expansion.
 
We have a history of operating losses and there can be no assurance that we can again achieve or maintain profitability.
 
Our short-term focus is to become profitable.  However, there can be no guarantee that our efforts will be successful.  Even if we again achieve profitability, given our dependence on foreign country GDP growth and macroeconomic factors, we may not be able to sustain profitability and our failure to do so would adversely affect our businesses, including our ability to raise additional funds.
 
We expect to acquire companies and we are subject to evolving and often expensive corporate governance regulations and requirements.  Our failure to adequately adhere to these requirements, and comply with them with regard to acquired companies, some of which may be non-reporting entities, or the failure or circumvention of our controls and procedures could seriously harm our business and affect our status as a reporting company listed on a national securities exchange.
 
As a public reporting company whose shares are listed for trading on the NYSE MKT, we are subject to various regulations.  Compliance with these evolving regulations is costly and requires a significant diversion of management time and attention, particularly with regard to our disclosure on controls and procedures and our internal control over financial reporting.  As we have made and continue to make acquisitions in foreign countries, our internal controls and procedures may not be able to prevent errors or fraud in the future. We cannot guarantee that we can establish internal controls over financial reporting immediately on companies that we acquire.  Thus, faulty judgments, simple errors or mistakes, or the failure of our personnel to enforce controls over acquired companies or to adhere to established controls and procedures, may make it difficult for us to ensure that the objectives of our control systems are met.  A failure of our controls and procedures to detect other than inconsequential errors or fraud could seriously harm our ability to continue as a reporting company listed on a national securities exchange.
 

We have a limited senior management team size that may hamper our ability to effectively manage a publicly traded company and manage acquisitions and that may harm our business.
 
Since we operate in several foreign countries, we use consultants, including lawyers and accountants, to help us comply with regulatory requirements and public company compliance on a timely basis.  As we expand, we expect to increase the size of our senior management.  However, we cannot guarantee that in the interim period our senior management can adequately manage the requirements of a public company and the integration of acquisitions, and any failure to do so could lead to the imposition of fines, penalties, harm our business, status as a reporting company and our listing on the NYSE MKT.
 
We own 24.9% of Midtown Partners (MTP) and will be subject to risks associated with being a minority member of the LLC with limited control.
 
We own 24.9% of MTP and, therefore, the investment will subject us to risks associated with being a minority member of the LLC with limited control. In addition to the specific risks associated with the minority investment in Midtown Partners, we will be subject to general acquisition-related risks discussed more generally in these “Risk Factors.”
 
Our expansion is dependent on laws pertaining to the legal cannabis industry.
 
We expect to acquire companies and hire management in the areas that we have identified.  These include, among others, bio-pharmaceuticals with a focus on capitalizing on specific niches within these areas such as phytocannabinoid-based therapies.  Entry into any of these areas requires special knowledge of the industry and products.  In the event that we are perceived to be entering the legal cannabis sector, even indirectly or remotely, we could be subject to increased scrutiny by regulators because, among other things, marijuana is a Schedule-1 controlled substance and is illegal under federal law.  Our failure to adequately manage the risk associated with these businesses and adequately manage the requirements of the regulators can adversely affect our business, our status as a reporting company and our listing on the NYSE MKT.  Further, any adverse pronouncements from regulators about businesses related to the legal cannabis sector could adversely affect our stock price if we are perceived to be in a company in the cannabis sector.
 
Our company is in a very new and highly regulated industry. Significant and unforeseen changes in policy may have material impacts on our business.
 
Continued development in the phytocannabinoids industry is dependent upon continued state legislative authorization of cannabis as well as legislation and regulatory policy at the federal level. The federal Controlled Substances Act currently makes cannabis use and possession illegal on a national level. While there may be ample public support for legislative authorization, numerous factors impact the legislative process. Any one of these factors could slow or halt use and handling of cannabis in the United States or in other jurisdictions, which would negatively impact our development of phytocannabinoid-based therapies and our ability to test and productize these therapies.

Many U.S. state laws are in conflict with the federal Controlled Substances Act. While we do not intend to distribute or sell cannabis in the United States, it is unclear whether regulatory authorities in the United States would object to the registration or public offering of securities in the United States by our company, to the status of our company as a reporting company, or even to investors investing in our company if we engage in legal cannabis production and supply pursuant to the laws and authorization of the jurisdiction where the activity takes place. In addition, the status of cannabis under the Controlled Substances Act may have an adverse effect on federal agency approval of pharmaceutical use of phytocannabinoid products. Any such objection or interference could delay indefinitely or increase substantially the costs to access the equity capital markets, test our therapies, or create products from these phytocannabinoid based therapies.

Banks and clearing houses may make it difficult for us to trade and clear our stock because they believe we are in the cannabis industry.

Continued development of the cannabis industry is dependent upon continued legislative authorization of cannabis. While there may be ample public support for legislative authorization, numerous factors impact the legislative process. Additionally, many U.S. state laws are in conflict with the federal Controlled Substances Act, which makes cannabis use and possession illegal on a national level. While we do not intend to harvest, distribute or sell cannabis in the United States, our presence in the pharmaceutical space can be misunderstood as being in the sale and distribution part of the cannabis industry. This could lead banks, regulators and others to mislabel our company. As such our stock could suffer if investors are unable to deposit their shares with a broker dealer and have those share clear.

Our business is dependent on continuing relationships with clients and strategic partners.
 
Our business requires developing and maintaining strategic alliances with contractors that undertake turnkey contracts for infrastructure development projects and with government organizations.  The business and our results could be adversely affected if we are unable to maintain continuing relationships and pre-qualified status with key clients and strategic partners.
 
Currency fluctuations may reduce our assets and profitability.
 
We have assets located in foreign countries that are valued in foreign currencies.  Fluctuation of the U.S. Dollar relative to the foreign currency may adversely affect our assets and profit.
  
Our business relies heavily on our management team and any unexpected loss of key officers may adversely affect our operations.
 
The continued success of our business is largely dependent on the continued services of our key employees.  The loss of the services of certain key personnel, without adequate replacement, could have an adverse effect on our performance.  Our senior management, as well as the senior management of our subsidiaries, plays a significant role in developing and executing the overall business plan, maintaining client relationships, proprietary processes and technology.  While no one is irreplaceable, the loss of the services of any would be disruptive to our business.
 
 Our quarterly revenue, operating results and profitability will vary.
 
Factors that may contribute to the variability of quarterly revenue, operating results or profitability include:
 
·
Fluctuations in revenue due to seasonality of the market place, which results in uneven revenue and operating results over the year;

·
Additions and departures of key personnel; and

·
Strategic decisions made by us and our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments and changes in business strategy.

We may not successfully register the provisional patents with the United States Patent and Trademark Office
 
We have filed six provisional patents with the United States Patent and Trademark Office (“USPTO”), in the combination therapy space, for the indications of pain, medical refractory epilepsy, eating disorders, and cachexia as part of our intellectual property strategy focused on the phytocannabinoid-based health care industry. There is no guarantee that our applications will result in a successful registration with the USPTO. If we are unsuccessful in registering patents, our ability to create a valuable line of products can be adversely affected. This in turn may have a material and adverse impact on the trading price of our common stock.
 
Risks Related to Ownership of Our Common Stock
 
Future sales of common stock by us could cause our stock price to decline and dilute your ownership in our company.
 
There are currently 11,656,668 outstanding public warrants to purchase 1,165, 667 shares of our common stock at an exercise price of $50.00 a share. In addition, we have outstanding 831,768 private warrants to buy 83,176 shares of common stock at an exercise price of $9.0, expiring on December 8, 2017.  We also have outstanding 160,000 private options, expiring on October 31, 2023, with an exercise price of $0.10 per share.  We are not restricted from issuing additional shares of our common stock or preferred stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock or preferred stock or any substantially similar securities.  The market price of our common stock could decline as a result of sales of a large number of shares of our common stock by us in the market or the perception that such sales could occur.  If we raise funds by issuing additional securities in the future or the outstanding warrants or stock options to purchase our common stock are exercised, the newly-issued shares will also dilute your percentage ownership in our company.
 

The market price for our common stock may be volatile.
 
The trading volume in our common stock may fluctuate and cause significant price variations to occur.  Fluctuations in our stock price may not be correlated in a predictable way to our performance or operating results.  Our stock price may fluctuate as a result of a number of events and factors such as those described elsewhere in this “Risk Factors” section, events described in this report, and other factors that are beyond our control.  In addition, the stock market, in general, has historically experienced significant price and volume fluctuations.  Our common stock has also been volatile, with our 52-week price range being at a low of $0.19 and a high of $0.80 per share. These fluctuations are often unrelated to the operating performance of particular companies. These broad market fluctuations may cause declines in the market price of our common stock. In addition, it is possible, given our current trading price, that we may fail to comply with the minimum trading price required to trade our shares on the NYSE Market.
 
Our publicly-filed reports are subject to review by the SEC, and any significant changes or amendments required as a result of any such review may result in material liability to us and may have a material adverse impact on the trading price of our common stock.
 
The reports of publicly-traded companies are subject to review by the SEC from time to time for the purpose of assisting companies in complying with applicable disclosure requirements, and the SEC is required to undertake a comprehensive review of a company’s reports at least once every three years under the Sarbanes-Oxley Act of 2002.  SEC reviews may be initiated at any time.  We could be required to modify, amend or reformulate information contained in prior filings as a result of an SEC review, as well as state in filings that we have inadequate control or expertise over financial reporting.  Any modification, amendment or reformulation of information contained in such reports could be significant and result in material liability to us and have a material and adverse impact on the trading price of our common stock.
 
We do not anticipate declaring any cash dividends on our common stock.
 
We have never declared or paid cash dividends on our common stock and do not plan to pay any cash dividends in the near future.  Our current policy is to retain all funds and earnings for use in the operation and expansion of our business.  In addition, the terms of our debt agreement prohibit the payment of cash dividends or other distributions on any of our capital stock except dividends payable in additional shares of capital stock.

Maryland anti-takeover provisions and certain anti-takeover effects of our Charter and Bylaws may inhibit a takeover at a premium price that may be beneficial to our stockholders.

Maryland anti-takeover provisions and certain anti-takeover effects of our charter and bylaws may be utilized, under some circumstances, as a method of discouraging, delaying or preventing a change of control of our company at a premium price that would be beneficial to our stockholders.  For more detailed information about these provisions, please see “Anti-takeover Law, Limitations of Liability and Indemnification” as following.

Business Combinations.  Under the Maryland General Corporation Law, some business combinations, including a merger, consolidation, share exchange or, in some circumstances, an asset transfer or issuance or reclassification of equity securities, are prohibited for a period of time and require an extraordinary vote. These transactions include those between a Maryland corporation and the following persons (a “Specified Person”):
 
·  
an interested stockholder, which is defined as any person (other than a subsidiary) who beneficially owns 10% or more of the corporation’s voting stock, or who is an affiliate or an associate of the corporation who, at any time within a two-year period prior to the transaction, was the beneficial owner of 10% or more of the voting power of the corporation’s voting stock; or
 
·  
an affiliate of an interested stockholder. 
A person is not an interested stockholder if the board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder.  The board of directors of a Maryland corporation also may exempt a person from these business combination restrictions prior to the time the person becomes a Specified Person and may provide that its exemption be subject to compliance with any terms and conditions determined by the board of directors. Transactions between a corporation and a Specified Person are prohibited for five years after the most recent date on which such stockholder becomes a Specified Person. After five years, any business combination must be recommended by the board of directors of the corporation and approved by at least 80% of the votes entitled to be cast by holders of voting stock of the corporation and two-thirds of the votes entitled to be cast by holders of shares other than voting stock held by the Specified Person with whom the business combination is to be effected, unless the corporation’s stockholders receive a minimum price as defined by Maryland law and other conditions under Maryland law are satisfied. 

A Maryland corporation may elect not to be governed by these provisions by having its board of directors exempt various Specified Persons, by including a provision in its charter expressly electing not to be governed by the applicable provision of Maryland law or by amending its existing charter with the approval of at least 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and two-thirds of the votes entitled to be cast by holders of shares other than those held by any Specified Person. Our Charter does not include any provision opting out of these business combination provisions.
 
Control Share Acquisitions.  The Maryland General Corporation Law also prevents, subject to exceptions, an acquirer who acquires sufficient shares to exercise specified percentages of voting power of a corporation from having any voting rights except to the extent approved by two-thirds of the votes entitled to be cast on the matter not including shares of stock owned by the acquiring person, any directors who are employees of the corporation and any officers of the corporation. These provisions are referred to as the control share acquisition statute.
 
The control share acquisition statute does not apply to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction, or to acquisitions approved or exempted prior to the acquisition by a provision contained in the corporation’s charter or bylaws. Our Bylaws include a provision exempting us from the restrictions of the control share acquisition statute, but this provision could be amended or rescinded either before or after a person acquired control shares. As a result, the control share acquisition statute could discourage offers to acquire our common stock and could increase the difficulty of completing an offer.
 
Board of Directors. The Maryland General Corporation Law provides that a Maryland corporation which is subject to the Exchange Act and has at least three outside directors (who are not affiliated with an acquirer of the company) under certain circumstances may elect by resolution of the board of directors or by amendment of its charter or bylaws to be subject to statutory corporate governance provisions that may be inconsistent with the corporation’s charter and bylaws. Under these provisions, a board of directors may divide itself into three separate classes without the vote of stockholders such that only one-third of the directors are elected each year. A board of directors classified in this manner cannot be altered by amendment to the charter of the corporation. Further, the board of directors may, by electing to be covered by the applicable statutory provisions and notwithstanding the corporation’s charter or bylaws: 
 
·  
provide that a special meeting of stockholders will be called only at the request of stockholders entitled to cast at least a majority of the votes entitled to be cast at the meeting, 
·  
reserve for itself the right to fix the number of directors,
 
·  
provide that a director may be removed only by the vote of at least two-thirds of the votes entitled to be cast generally in the election of directors, and

·  
retain for itself sole authority to fill vacancies created by an increase in the size of the board or the death, removal or resignation of a director.
 
In addition, a director elected to fill a vacancy under these provisions serves for the balance of the unexpired term instead of until the next annual meeting of stockholders.  A board of directors may implement all or any of these provisions without amending the charter or bylaws and without stockholder approval.  Although a corporation may be prohibited by its charter or by resolution of its board of directors from electing any of the provisions of the statute, we have not adopted such a prohibition.  We have adopted a staggered board of directors with three separate classes in our charter and given the board the right to fix the number of directors, but we have not prohibited the amendment of these provisions.  The adoption of the staggered board may discourage offers to acquire our common stock and may increase the difficulty of completing an offer to acquire our stock.  If our Board chose to implement the statutory provisions, it could further discourage offers to acquire our common stock and could further increase the difficulty of completing an offer to acquire our common stock.
 
Effect of Certain Provisions of our Charter and Bylaws.  In addition to the Charter and Bylaws provisions discussed above, certain other provisions of our Bylaws may have the effect of impeding the acquisition of control of our company by means of a tender offer, proxy fight, open market purchases or otherwise in a transaction not approved by our Board of Directors. These provisions of Bylaws are intended to reduce our vulnerability to an unsolicited proposal for the restructuring or sale of all or substantially all of our assets or an unsolicited takeover attempt, which our Board believes is otherwise unfair to our stockholders. These provisions, however, also could have the effect of delaying, deterring or preventing a change in control of our company.
 

Our Bylaws provide that with respect to annual meetings of stockholders, (i) nominations of individuals for election to our Board of Directors and (ii) the proposal of business to be considered by stockholders may be made only pursuant to our notice of the meeting, by or at the direction of our Board of Directors, or by a stockholder who is entitled to vote at the meeting and has complied with the advance notice procedures set forth in our Bylaws.
 
Special meetings of stockholders may be called only by the chief executive officer, the board of directors or the secretary of our company (upon the written request of the holders of a majority of the shares entitled to vote).  At a special meeting of stockholders, the only business that may be conducted is the business specified in our notice of meeting.  With respect to nominations of persons for election to our Board of Directors, nominations may be made at a special meeting of stockholders only pursuant to our notice of meeting, by or at the direction of our Board of Directors, or if our Board of Directors has determined that directors will be elected at the special meeting, by a stockholder who is entitled to vote at the meeting and has complied with the advance notice procedures set forth in our Bylaws.
 
These procedures may limit the ability of stockholders to bring business before a stockholders meeting, including the nomination of directors and the consideration of any transaction that could result in a change in control and that may result in a premium to our stockholders.
 
Risk Related to Our Securities
 
Our accounting personnel may make unintentional errors.
 
For most of the fiscal year ended March 31, 2017, our accounting personnel were located in China, Hong Kong, India, Malaysia and the United States, primarily near our businesses.   As at March 31, 2017, our accounting personnel are in India, Malaysia, and the U.S.  Even a small mistake, given our small size, in the preparation of financial statements and the maintenance of our books and records in accordance with U.S. GAAP, and SEC rules and regulations, could constitute a material weakness in our internal controls over financial reporting unless rectified. For more information, please see Item 9A, “Controls and Procedures.”

We incur costs as a result of operating as a public company.  Our management is required to devote substantial time to compliance initiatives.  Because we report in U.S. GAAP, we may experience delays in closing our books and records, and delays in the preparation of financial statements and related disclosures.
 
As part of a public company with operations in foreign countries, we experience increased legal, accounting and other expenses.  Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. We do not foresee a problem other than delays in the preparations of financial statements and related disclosures and our liberal use of the routine extensions for filing deadlines automatically granted by the SEC.
 
FORWARD-LOOKING STATEMENTS AND IMPORTANT FACTORS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements.  This report and the documents incorporated in this report by reference contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Additionally, we or our representatives may, from time to time, make other written or verbal forward-looking statements.  In this report and the documents incorporated by reference, we 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.  We caution you not to place undue reliance on forward-looking statements, which are based upon assumptions, expectations, plans and projections.  Forward-looking statements are subject to risks and uncertainties, including those identified in the “Risk Factors” included in this report and in the documents incorporated by reference that may cause actual results to differ materially from those expressed or implied in the forward-looking statements.  Forward-looking statements speak only as of the date when they are made.  Except as required by federal securities law, we do not undertake any obligation to update forward-looking statements to reflect events, circumstances, changes in expectations or the occurrence of unanticipated events after the date of those statements.  We intend that all forward-looking statements made will be subject to safe harbor protection of the federal securities laws pursuant to Section 27A of the Securities Act and Section 21E of the Exchange Act.

Forward-looking statements are based upon, among other things, our assumptions with respect to:
 
·
our ability to successfully register patents, create and market new products and services, including but not limited to real estate in Malaysia, leasing products in India, and achieve customer acceptance in the industries we serve;
·
our ability to accurately predict the future demand for our products and services;
·
competition in using phytocannabinoids for pharmaceutical and nutraceutical therapies;
·
federal and state legislation and administrative policy regulating phytocannabinoids;
·
our ability (based in part on regulatory concerns) to build and or lease facilities for vertical farming that can eventually be used by us to produce pharmaceutical grade phytocannabinoids;
·
our ability to obtain and protect patents for the use of phytocannabinoids;
·
our ability to enter into new licenses and contracts, and perform them successfully;
·
current and future economic and political conditions, in specifically but not limited to North America, Malaysia, and India; and
·
other assumptions described in this prospectus supplement underlying or relating to any forward-looking statements.
 
You should consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of predictions contained in such forward-looking statements.  As noted above, these forward-looking statements speak only as of the date when they are made.  Moreover, in the future, we may make forward-looking statements through our senior management that involve the risk factors and other matters described in this report, as well as other risk factors subsequently identified, including, among others, those identified in our filings with the SEC in our quarterly reports on Form 10-Q and our current reports on Form 8-K.
 
Item 1B.                Unresolved Staff Comments
 
None.
 
Item 2.                   Properties
 
Our offices are located in Maryland and Washington State. Our back office is located at TBL’s headquarters in Kochi, India. In addition, we have an office in Nagpur, India.  IGC International was located in Hong Kong. PRC Ironman was in Linxi, Inner Mongolia, PRC.  Cabaran Ultima is located in Kuala Lumpur, Malaysia.
 
We pay an affiliate of our CEO $4,500 per month for office space and certain general and administrative services rendered in Maryland.  In addition, we pay another affiliate of our CEO $6,100 per month for office and facilities in Washington State.  We believe, based on rents and fees for similar services in the Washington, D.C. metropolitan area, and Washington State that the fee charged by the affiliates are at least as favorable as we could have obtained from an unaffiliated third party and these payments are not considered or meant to be compensation.  The rental agreement for the Maryland location is on a month-to-month basis and may be terminated by our Board of Directors of the Company at any time without notice. The rental agreement for Washington State facilities expires on December 31, 2017, unless renewed by mutual consent.  During fiscal year ended March 31, 2017, the total rent paid to the affiliates were $54,000 for the office space (and services) in Maryland, and $73,200 for the facilities in Washington State. We expect that these expenses will remain at approximately this level during the fiscal year ending March 31, 2018.
 
In India we have real estate that we may develop. However, we are not involved in real estate mortgages, or securities of or interests in persons primarily engaged in real estate activities. In fiscal 2017, our company operated through its subsidiaries in India, Hong Kong and Malaysia. In India and in the U.S. we lease housing (apartments, and homes) to host staff members for an aggregate annual rental of $17,000.
 
In fiscal 2017, in India we were involved in renting heavy machinery. Our subsidiary IGC-MPL owns an office space of about 1,500 sq. feet. The office space was acquired in 2010 is located in Nagpur, India, and has an approximate gross value of $53,971.  Our subsidiary TBL has an apartment located in Cochin, India with an approximate gross value of $64,765.
 
PRC Ironman owned three beneficiation plants in Linxi, Inner Mongolia. The beneficiation plants consisted of buildings with a gross value of $1,003,000, plant and equipment with gross value of $4,993,000 and construction in progress with a gross value of $4,027,000 along with other assets such as office equipment, furniture, fixtures, computer equipment and vehicles. These plants have the capacity to beneficiate low-grade iron ore. These plants were not operational in the FYE 2016 or in FYE 2017.


The table below summarizes the nature of activity, type of license required and held and encumbrances in obtaining permit for each location where the company operated through its subsidiaries in the FYE 2017:
 
Location
 
Nature of Activity
 
Type of License Required
 
Type of License held
 
Encumbrances in Obtaining Permit
USA
 
Phytocannabinoid
development and facilities
 
General business, (DEA clearance, FDA approvals eventually required in the future)
 
General business licenses
 
In fiscal 2017, we did not apply for DEA permits or FDA approvals.
India
 
Rental of heavy equipment
 
General business license required
 
All appropriate business registrations with tax authorities in various states in India
 
There were no encumbrances in maintaining the license in fiscal 2017.
China
 
1. Beneficiation plant
2. Trading in iron ore
 
Permit to beneficiate
 
Business license to beneficiate iron ore and trade iron ore
 
 There were no encumbrances in maintaining the license.
Hong Kong
 
Trading of electronic components
 
General business license
 
General business license
 
There were no encumbrances in maintaining the business license.
Malaysia
 
Real estate management
 
General business license to construct and manage real estate
 
General business license to construct and manage real estate
 
There were no encumbrances in maintaining the business license in fiscal 2017.
 
Item 3.                   Legal Proceedings
 
There are no material pending or threatened legal proceedings against IGC.

Item 4.                   Mine Safety Disclosures

Not Applicable

PART II
 
Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
The common stock trades on the NYSE MKT under the symbol “IGC” with CUSIP number 45408X308. The Common stock of the Company is also available for trading on the Borse Frankfurt, Borse Berlin, and Borse Stuttgart (XETRA2) exchanges in Germany. The warrants and units now trade on the OTC Markets.
 
The following table sets forth, for the calendar quarter indicated, the quarterly high and low bid information of our common stock and warrants, as reported on the U.S. exchanges.  The quotations listed below reflect inter dealer prices, without retail markup, markdown or commission, and may not necessarily represent actual transactions. The exercise of a warrant allows the holder to purchase one tenth of a share of common stock. Therefore, 10 warrants are needed to purchase one share of common stock.
 
 
 
Common Stock
 
Warrants
 
Quarter Ended
 
High
 
Low
 
High
 
 
Low
 
June 30, 2015
 
 
0.69
 
 
0.21
 
 
0.01
 
 
 
0.01
 
September 30, 2015
 
 
0.43
 
 
0.15
 
 
0.01
 
 
 
0.00
 
December 31, 2015
 
 
0.29
 
 
0.14
 
 
0.02
 
 
 
0.00
 
March 31, 2016
 
 
0.83
 
 
0.16
 
 
0.04
 
 
 
0.00
 
June 30, 2016
 
 
0.56
   
0.30
   
0.00
 
 
 
0.00
 
September 30, 2016
 
 
0.61
   
0.35
   
0.00
 
 
 
0.00
 
December 31, 2016
 
 
0.49
   
0.19
   
0.00
 
 
 
0.00
 
March 31, 2017
 
 
0.52
   
0.24
   
0.00
 
 
 
0.00
 
June 30, 2017
 
 
0.70
   
0.33
 
 
0.00
 
 
 
0.00
 
 
 
 
       
 
 
           
On June 30, 2017, the last reported sale price of our common stock, as reported on the NYSE MKT, was $0.41 per share. The trading history for the warrants are not available. No warrants were issued in fiscal 2017.
 
Securities Authorized for Issuance Under Equity Compensation Plans
 
The following table shows, as of March 31, 2017, information regarding outstanding awards available under our compensation plans (including individual compensation arrangements) under which our equity securities may be delivered.
 
Plan category
 
(a)
Number of securities to be issued upon exercise of outstanding options, warrants and rights (1)
 
 
(b)
Weighted- average exercise price of outstanding options, warrants and rights
 
 
(c)
Number of securities available for future issuance (excluding shares in column (a)(1)
 
Equity compensation plans approved by security holders:
 
 
 
 
 
 
 
 
 
2008 Omnibus Incentive Plan (1)
 
 
-
 
 
 
-
 
 
 
-
 
_______________
 
(1)
There are no exercisable options outstanding under the Equity Compensation Plans.
 
Holders
 
As of February 2017, we had approximately 3,411 holders of record of our common stock, and approximately 100 holders of record of our warrants.  The number of record holders does not include persons who held our common stock in nominee or “street name” accounts through brokers.
 
Continental Stock Transfer & Trust Company is the transfer agent and registrar for our common stock and warrants.
 

Dividends
 
We have not paid any dividends on our common stock to date and do not intend to pay dividends prior to the completion of a business combination.  The payment of dividends in the future will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination.  The payment of any dividends subsequent to a business combination will be within the discretion of our then Board of Directors.  It is the present intention of our Board of Directors to retain all earnings, if any, for use in our business operations and, accordingly, our Board does not anticipate declaring any dividends in the foreseeable future.
 
Unregistered Sales of Equity Securities
 
There were no unregistered sales of equity securities during the fiscal year ended March 31, 2017, which were not previously reported on a quarterly report on Form 10-Q or a current report on Form 8-K.
 
Issuer Purchases of Equity Securities
 
During the FYE March 31, 2017, we purchased and cancelled 2,633,841 of common stock.
 
Item 6.                   Selected Financial Data
 
Item 6 does not apply to us because we are a smaller reporting company.
 
Item 7.                   Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion should be read in conjunction with the financial statements and notes thereto included in this report.  Except for the historical information contained in this report, the discussion in this section contains certain forward-looking statements that involve risk and uncertainties, such as statements of the Company’s plans, objectives, expectations and intentions as of the date of this filing.  The cautionary statements made in this report should be read as being applicable to all related forward-looking statements wherever they appear in this report.  The Company’s actual results could differ materially from those discussed here.  Factors that could cause differences include those discussed in the “Risk Factors” section, as well as discussed elsewhere in this report.
 
Critical Accounting Policies and Estimates
 
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  These items are regularly monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates could occur in the future.  These estimates include, among others, our revenue recognition policies related to the proportional performance and percentage of completion methodologies of revenue recognition of contracts and assessing our goodwill for impairment annually.  Changes in estimates are recorded in the period in which they become known.  We base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances.  Actual results will differ and may differ materially from the estimates if past experience or other assumptions do not turn out to be substantially accurate.
 
Our significant accounting policies are presented in Note 2 to our consolidated financial statements and the following summaries should be read in conjunction with the audited consolidated financial statements and the related notes included in this report.  While all accounting policies impact the financial statements, certain policies may be viewed as critical.  Critical accounting policies are those that are both most important to the portrayal of financial condition and results of operations and that require management’s most subjective or complex judgments and estimates.  Our management believes the policies that fall within this category are the policies on revenue recognition, accounting for stock-based compensation, goodwill, and income taxes.
 

Revenue Recognition
 
The majority of the revenue recognized for the years ended March 31, 2017 and 2016 was derived from the Company’s subsidiaries, when all of the following criteria have been satisfied:
 
Revenue is recognized when persuasive evidence of an arrangement exists, the sales price is fixed or determinable and collectability is reasonably assured. 
 
Revenue from sale of goods is recognized when substantial risks and rewards of ownership are transferred to the buyer under the terms of the contract.
 
For the sale of goods, the timing of the transfer of substantial risks and rewards of ownership is based on the contract terms negotiated with the buyer, e.g., FOB or CIF.  We consider the guidance provided under Staff Accounting Bulletin (“SAB”) 104 in determining revenue from sales of goods.  Considerations have been given to all four conditions for revenue recognition under that guidance.  The four conditions are:
 
·
Contract – Persuasive evidence of our arrangement with the customers;
·
Delivery – Based on the terms of the contracts, the Company assesses whether the underlying goods have been delivered and therefore the risks and rewards of ownership are completely transferred;
·
Fixed or determinable price – The Company enters into contracts where the price for the goods being sold is fixed and not contingent upon other factors.
·
Collection is deemed probable – At the time of recognition of revenue, the Company makes an assessment of its ability to collect the receivable arising on the sale of the goods and determines that collection is probable.

Revenue for any sale is recognized only if all of the four conditions set forth above are met.  The Company assesses these criteria at the time of each sale.  In the absence of meeting any of the criteria set out above, the Company defers revenue recognition until all of the four conditions are met.
  
Revenue from construction/project related activity and contracts for supply/commissioning of complex plant and equipment is recognized as follows:
 
(a)           Cost plus contracts: Contract revenue is determined by adding the aggregate cost plus proportionate margin as agreed with the customer and expected to be realized.
 
(b)           Fixed price contracts: Contract revenue is recognized using the percentage completion method and the percentage of completion is determined as a proportion of cost incurred-to-date to the total estimated contract cost.  Changes in estimates for revenues, costs to complete, and profit margins are recognized in the period in which they are reasonably determinable.

·  
In many of the fixed price contracts entered into by the Company, significant expenses are incurred in the mobilization stage in the early stages of the contract.  The expenses include those that are incurred in the transportation of machinery, erection of heavy machinery, clearing of the campsite, workshop ground cost, overheads, etc.  All such costs are booked to deferred expenses and written off over the period in proportion to revenues earned.
·  
Where the modifications of the original contract are such that they effectively add to the existing scope of the contract, the same are treated as a change orders.  On the other hand, where the modifications are such that they change or add an altogether new scope, these are accounted for as a separate new contract.  The Company adjusts contract revenue and costs in connection with change orders only when both, the customer and the Company with respect to both the scope and invoicing and payment terms, approve them. 
·  
In the event of claims in our percentage of completion contracts, the additional contract revenue relating to claims is only accounted after the proper award of the claim by the competent authority.  The contract claims are considered in the percentage of completion only after the proper award of the claim by the competent authority. 
 
Full provision is made for any loss in the period in which it is foreseen.
 
Revenue from service related activities and miscellaneous other contracts are recognized when the service is rendered using the proportionate completion method or completed service contract method.

Goodwill
 
Goodwill represents the excess cost of an acquisition over the fair value of our share of net identifiable assets of the acquired subsidiary at the date of acquisition.  Goodwill on acquisition of subsidiaries is disclosed separately.  Goodwill is stated at cost less impairment losses incurred, if any.
 
The Company adopted the provisions of Accounting Standards Codification (“ASC”) 350, “Intangibles – Goodwill and Others” (previously referred to as SFAS No. 142, “Goodwill and Other Intangible Assets”), which sets forth the accounting for goodwill and intangible assets subsequent to their acquisition.  ASC 350 requires that goodwill and indefinite-lived intangible assets be allocated to the reporting unit level, which the Company defines as each subsidiary.  ASC 350 also prohibits the amortization of goodwill and indefinite-lived intangible assets upon adoption, but requires that they be tested for impairment at least annually, or more frequently as warranted, at the reporting unit level.
 
Pursuant to ASC 350-20-35-4 through 35-19, the impairment testing of goodwill is a two-step process.  The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of a reporting unit with its carrying amount, including goodwill.  If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired, thus the second step of the impairment test is unnecessary.  If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test shall be performed to measure the amount of impairment loss, if any.  The second step of the goodwill impairment test, used to measure the amount of impairment loss, compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill.  If the carrying amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess.  The loss recognized cannot exceed the carrying amount of goodwill.  After a goodwill impairment loss is recognized, the adjusted carrying amount of goodwill shall be its new accounting basis.  Subsequent reversal of a previously recognized goodwill impairment loss is prohibited once the measurement of that loss is completed.
 
In ASC 350.20.20, a reporting unit is defined as an operating segment or one level below the operating segment.  A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component.  The Company has determined that it operates in a single operating segment.  While the CEO reviews the consolidated financial information for the purposes of decisions relating to resource allocation, the CFO, on a need basis, looks at the financial statements of the individual legal entities in India for the limited purpose of consolidation.  Given the existence of discrete financial statements at an individual entity level in India, the Company believes that each of these entities constitute a separate reporting unit under a single operating segment.
 
Therefore, the first step in the impairment testing for goodwill is the identification of reporting units and the allocation of goodwill to these reporting units.  Accordingly, Cabaran Ultima, which is a legal entity in Malaysia, is considered separate reporting unit and therefore the Company believes that the assessment of goodwill impairment at the subsidiaries level, which is also a reporting unit each, is appropriate.
 
 The analysis of fair value is based on the estimate of the recoverable value of the underlying assets.  For long-lived assets such as land, the Company obtains appraisals from independent professional appraisers to determine the recoverable value.  For other assets such as receivables, the recoverable value is determined based on an assessment of the collectability and any potential losses due to default by the counter parties.  Unlike goodwill, long-lived assets are assessed for impairment only where there are any specific indicators for impairment.

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

In evaluating a tax position for recognition, management evaluates whether it is more-likely-than-not that a position will be sustained upon examination, including resolution of related appeals or litigation processes, based on technical merits of the position.  If the tax position meets the more-likely-than-not recognition threshold, the tax position is measured and recognized in the Company’s financial statements as the largest amount of tax benefit that, in management’s judgment, is greater than 50% likely of being realized upon settlement.  As of March 31, 2017 and 2016, it is more likely that the company will not recognize tax benefits related to accumulating net operating losses.
 
The issuance by IGC of its common stock to (1) Ironman stockholders in exchange for Ironman stock; to (2) Golden Gate Electronics Ltd (“GG”) in exchange for GG stock; to (3) Apogee Financial in exchange for Midtown Partners stock; to Cabaran Ultima (“Ultima”) in exchange for Ultima’s stock; and to Brilliant Hallmark Sdn. Bhd. (“Brilliant”) in exchange for 10% of the stake in a luxury hotel development project in Genting Highlands, Malaysia, as contemplated by the respective stock purchase agreements between the Company and Ironman and their stockholders; between the Company and Golden Gate Electronics Ltd and its stockholders; between the Company and Apogee Financial and their stockholders; between the Company and Cabaran Ultima and its stockholders; and between the Company and Brilliant and its stockholders, generally will not be taxable transactions to U.S. holders for U.S. federal income tax purposes.  It is expected that IGC and its stockholders will not recognize any gain or loss because of the approval of the shares for U.S. federal income tax purposes.
 
Inventories
 
We provide for inventory obsolescence, excess inventory and inventories with carrying values in excess of market values based on our assessment of the future demands, market conditions and our specific inventory management procedures.  If market conditions and actual demands are less favorable than our estimates, additional inventory write-downs may be required.  In all cases inventory is carried at the lower of historical cost or market value.

Accounts receivable
 
We make estimates of the collectability of our accounts receivable by analyzing historical payment patterns, customer concentrations, customer credit-worthiness, and current economic trends.  If the financial condition of a customer deteriorates, additional allowances may be required.
 
Regarding our collection policy on electronics trading receivables, there were three types of trades: (1) payment guaranteed through letters of credit, (2) deposit or spot payment on delivery or (3) delivery on credit. With the first type of trade: our policy for collection was to ask the customer to open a letter of credit with a bank. The typical terms of the letter of credit were that 100% of the payment was made when the material was shipped. With the second type of trade, customers paid on delivery.  On the third type of trade, our policy was to allow the customer to have a payment credit term of 90 days.

Impairment of investment
 
The impairment analysis test is done based on a similar recoverable approach as used in the impairment test for goodwill described above.  The fair value of real estate is determined based on an independent appraisal. The estimated amount of liability is based on the information available with us with respect of bank debt and other borrowings.  In 1995, IGC’s subsidiary TBL made an investment of $50,000 (INR 3,000,000) in Bhagheeratha Developers Limited. Based on the latest review of the balance sheet of this entity, we impaired this investment by $410 in FYE 2017, for a cumulative impairment of $20,347.
 
Impairment of long-lived assets
 
The Company reviews its long-lived assets, with finite lives, for impairment whenever events or changes in business circumstances indicate that the carrying amount of assets may not be fully recoverable.  Such circumstances include, though are not limited to, significant or sustained declines in revenues or earnings, future anticipated cash flows, business plans and material adverse changes in the economic climate, such as changes in operating environment, competitive information, impact of change in government policies, etc.  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.


Recently issued and adopted accounting pronouncements
 
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification.  The Company considers the applicability and impact of all ASUs.  Newly issued ASUs not listed below are expected to have no impact on the Company’s consolidated financial position and results of operations, because either the ASU is not applicable or the impact is expected to be immaterial.
 
Recognition and Measurement of Financial Assets and Financial Liabilities: In January 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This ASU requires entities to present separately in OCI the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (DVA) when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. It will also require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, thus eliminating eligibility for the current available-for-sale category. The company is evaluating the effect that ASU 2015-03 will have on its Consolidated Financial Statements.

Revenue from Contracts with Customers: In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in GAAP and is effective on January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its financial statements.
 
Results of Operations 
Fiscal Year ended March 31, 2017 compared to Fiscal Year ended March 31, 2016
 
The following table presents an overview of our results of operations for the fiscal years ended March 31, 2017 and 2016:
 
 
 
Year ended
March 31
   
Year ended
March 31
             
 
 
2017
   
2016
   
Change
   
Percent Change
 
Revenue
 
$
580,372
   
$
6,366,550
     
(5,786,178
)
   
(90.9
)
Cost of revenues
   
(362,135
)
   
(5,523,256
)
   
5,161,121
     
(93.4
)
Selling, General and Administrative expenses
   
(1,875,344
)
   
(2,702,753
)
   
827,409
     
(30.6
)
Depreciation
   
(396,346
)
   
(728,741
)
   
332,395
     
(45.6
)
Loss from Investment /Associates/ Joint Ventures
   
(932
)
   
(317,510
)
   
316,578
     
(99.7
)
Operating income (loss)
 
$
(2,054,385
)
 
$
(2,905,710
)
   
851,325
     
(29.3
)
Interest and other financial expenses
   
(223,464
)
   
(213,928
)
   
(9,536
)
   
4.5
 
Interest Income
   
1,744
     
2,085
     
(341
)
   
(16.3
)
Profit from Investment/Associates/Joint venture
   
317,742
     
-
     
317,742
     
100.0
 
Other Income, Net
   
119,933
     
284,186
     
(164,253
)
   
57.8
 
Income before income taxes and minority interest attributable to non-controlling interest
 
$
(1,838,430
)
 
$
(2,833,367
)
   
994,937
     
(35.1
)
Tax benefit/(expense)
   
(14,431
)
   
(579
)
   
(13,852
)
   
2,392
 
Income/Loss after income taxes
 
$
(1,852,861
)
 
$
(2,833,946
)
   
981,085
     
(34.6
)
 
Revenue– Total revenue was about $580,372 ($367,279 without IGC-INT) for the FYE 2017, as compared to about $6,366,550 for the FYE 2016, a decrease of about 91%. In Fiscal year 2016 our main revenue driver was electronic component trading.  In fiscal 2017, IGC-INT was effectively transferred back to the managing director in return for all of the 205,661 IGC common shares that were initially awarded as part of the acquisition.  For most of FYE 2017 the source of revenue is from the real estate business in Cabaran Ultima and the renting of heavy equipment in TBL. This is part of our overall strategy of focusing on developing and bringing to market phytocannabinoid based therapies.
  
Cost of Revenue– Cost of revenue was $362,135 in FYE 2017 as compared to $5,523,256 in FYE 2016. The cost of revenue as a percentage of the revenue was approximately 62% in fiscal 2017 as compared to 87% during fiscal 2016.  In Fiscal 2016 our main cost driver was electronic component trading and as previously disclosed this business was curtailed on July 1, 2016 reducing the cost of revenue in FYE 2017.
 
Selling, General and Administrative expenses – These consist primarily of employee related expenses, professional fees, other corporate expenses, allocated overhead and provisions, and write offs relating to doubtful and bad debts and advances. Selling, general and administrative expenses were about $1,875,344 for fiscal 2017 as compared to about $2,702,753 for fiscal 2016.  The overall SG&A for fiscal 2017 also includes (i) non-cash charges associated with ESOP and other share issuances; (ii) one-time expenses associated with raising capital, and expenses associated with the acquisition of 10% stake in Brilliant Hallmark; and (iii) some non-cash R&D expenses associated with the development of phytocannabinoid therapies. Adjusted for these events, the SG&A for fiscal 2017 reflects a steep cut in expenses associated with a further alignment of resources to focus on phytocannabinoid therapies.

Depreciation and amortization– The depreciation and amortization expense was about $396,346 in 2017 as compared to about $728,741 in fiscal year 2016.  The steep fall in depreciation expenses for fiscal 2017 is due to our exit from the Ironman business in China, which represented most of the depreciation and amortization expense in fiscal 2016.

Operating income (loss)– Loss from operations was about ($2,054,385) in fiscal year 2017, as compared to a loss of about ($2,905,710) in fiscal year 2016.
 
Interest and other financial expense – The interest expense for fiscal 2017 is about $223,464 as compared to about $213,928 for fiscal 2016.  The payment of monthly interest is made through the issuance of a fixed number of shares of our common stock, regardless of the price of the stock.  Most of the interest expense is non-cash. 

Interest income – The interest income for fiscal 2017 was about $1,744 as compared to about $2,085 for fiscal 2016.
 
Other income – In fiscal year 2017, we reported $119,933 in other income, and about $284,186 in other income in fiscal year 2016.
Profit from Investment/Associates/Joint Ventures- In fiscal year 2017, we had a one-time gain of $227,472 from exiting Ironman, and a one-time loss of ($109,430) from exiting IGC International, and a gain of $199,700 from our 24.9% investment in Midtown Partners LLC. 

Deferred Income tax credit – We had an income tax credit of zero dollars for the year ended March 31, 2017 as compared to the credit of about $356,684 for the year ended March 31, 2016. The income tax credit in fiscal 2017 is not shown on the financial statements, but remains with the Company for a potential offset against future earnings.  Deferred income tax assets, net of valuation allowances, are expected to be realized through future taxable income.  The valuation allowance increased in 2017 by about $700,000.  The company intends to maintain valuation allowances for deferred tax assets until there is sufficient evidence to support the reversal of the valuation allowance. 

Net loss – The Company had a loss of about ($1,867,260) for fiscal year 2017 as compared to a loss of about ($2,808,244) for fiscal year 2016.  The lower loss in fiscal 2017 is from lower SG&A expenses, other income, and lower depreciation.

Balance sheet
Accounts receivable – Our accounts receivable for fiscal 2017 are about $752,926 and for fiscal 2016 was about $962,658. The accounts receivable in fiscal 2017 decreased as our revenue decreased. The primary component of the accounts receivable in fiscal 2017 are receivables from the real estate business in Malaysia, and from a construction claim in the amount of about $470 thousand that has been awarded to our subsidiary in India. In FYE 2017 we collected $59,693 (INR 4 million) from a construction delay claim that we had filed against Kerala Public Works. We expect to collect the award in the next 12 months.
 
Inventory –  In FYE 2017, our inventory was zero and in FYE 2016 was about $162,091.  IGC International is the only business with inventory and as disclosed we no longer operate this business.

Property, plant and equipment, net - As of FYE 2017, our PP&E net of depreciation is about $953,936 and, at FYE 2016 was about $7,074,437.  Our exit of the Ironman business contributed to a decrease of about $6.1 million in PP&E.
 

Investment others – In fiscal year 2017, our investment was about $5,238,003 and at FYE 2016 it was about $5,175,392.
 
Investment in affiliates –  In fiscal year 2017, our investment in affiliates was about $773,111 and at FYE 2016 it was about $609,148.  Part of the increase in investment in affiliates, $199,700 comes from our investment in Midtown Partners, LLC.
 
Intangible assets and goodwill – The value of intangible assets as of FYE 2017 amounted to about $198,169 as compared to about $1,294,272 as of FYE 2016.  The removal of IGC International and H&F ironman contributed to the decrease in Intangible assets and goodwill.

Liabilities – The total liability as of FYE 2017 is about $3,934,017 as compared to $4,911,111 as of the FYE 2016, a decrease of about $977,094.  In Fiscal year 2017, the Company decreased the amount of loans outstanding.

Working Capital – Our working capital as of FYE 2017 is about $2,291,652.
 
Non-controlling interest – The non-controlling interest of - $8,836 in fiscal 2017 is attributed to our ownership of Cabaran Ultima, which holds subsidiaries.
 
Liquidity and Capital Resources
 
This liquidity and capital resources discussion compares the consolidated company results for the FYE 2017 and FYE 2016.  At the end of fiscal year 2017, the Company has about $538,029 in cash and cash equivalents. In fiscal 2017, the non-GAAP total cash burn after adjusting for non-cash items that include ESOPs, interest payments paid in stock, foreign exchange losses, and one-time acquisition related expenses and other miscellaneous non-cash items is about $1,374,129.  The cash burn is primarily associated with public company expenses, with our operating subsidiaries at breakeven, or near breakeven. It does not include cash spent on investments or construction in progress.

The Company has adequate cash on hand to meet its obligations, however in order to expand the business into some of the areas that have been discussed, the Company will raise capital. We have put in place an At-the-Market (ATM) and a Form S-3 that allows us to raise capital opportunistically and at our discretion based on liquidity and stock price. To the extent that we believe that raising capital for general corporate purposes is prudent, we have the option of using the ATM and the bank lines. 

The balance of cash and cash equivalents held by of our foreign subsidiaries as of fiscal 2017 and 2016 are shown below.
 
  
Fiscal Year Ended
 
Total Cash held by
foreign subsidiaries
 
March 31, 2017
 
$
465,978
 
March 31, 2016
 
$
611,831
 
 
We intend to repatriate cash from our subsidiaries. Repatriation of funds from India requires obtaining clearances from the Reserve Bank of India (RBI).  This process can take several months to complete.  We have compiled all the necessary information for the application, including obtaining the Foreign Inward Remittance Certificates (FIRC) from all our banks, for all our Indian subsidiaries, and initiated the process of applying to the RBI for permission.  We are seeking advice from Indian Foreign Exchange Experts to help with the process.  Once we obtain the clearances from the RBI, repatriating funds from India will become significantly easier. There are no taxes or legal charges to be paid in connection with the repatriation of cash balances. In the future, we may have to accrue and pay taxes in the United States, if foreign profits are repatriated.
 
The Company currently has notes payable of $1.8 million. There is no cash interest payable on the loan. The loan was due on July 31, 2016, and the parties have agreed that the Company will pay 30,000 shares of common stock per month as interest, beginning August 1, 2016, and ask the shareholders as soon as practical to allow the Company to pay the note using common stock.

Off-balance Sheet Arrangements 
We do not have any investments in special purpose entities or undisclosed borrowings or debt.
 

Item 7A.                Quantitative and Qualitative Disclosures about Market Risk 
The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risks.  Market risk is the sensitivity of income to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market-driven rates or prices.  The disclosures are not meant to be precise indicators of expected future losses, but rather, indicators of reasonably possible losses.  This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures.
 
Customer Risk
 
In fiscal 2017, we received over 42% of our revenue from one customer located in Malaysia. The loss of this significant client may have a short-term adverse effect on the Company. In India, the Company’s customers are construction and agricultural companies.  In fiscal 2016 in China the Company’s customers were the steel mills and iron ore traders and in Hong Kong, the Company’s customers were companies that build electronic products.   

Commodity Prices and Vendor Risk
 
In fiscal 2016, the Company was affected by the availability, cost and quality of electronic components.  These prices and supply depended on factors beyond the control of the Company, including general economic conditions and competition.  The Company typically kept inventory of high demand components. We did not hedge pricing and did not have forward contracts, which may expose the Company to risks related to falling prices. However, as a precaution, we kept inventory turnover fairly fast and diversified to mitigate this risk. 
 
Labor Risk
 
We see limited labor risk in India, Malaysia or the United States.  None of our work force is unionized.
 
Compliance, Legal and Operational Risks
 
We operate under regulatory and legal obligations imposed by the Hong Kong, Indian, Chinese and Malaysian governments and U.S. securities regulators.  Those obligations relate to, among other things, our financial reporting, trading activities, capital requirements and the supervision of its employees. Failure to fulfill legal or regulatory obligations can lead to fines, censure or disqualification of management and/or staff and other measures that could have negative consequences for our activities and financial performance.  We mitigate this risk by hiring local consultants and staff who manage compliance in the various jurisdictions in which we operate.  However, the cost of compliance in various jurisdictions could have a negative impact on our future earnings.
 
Interest Rate Risk
 
We depend on leverage for most of our business.  As interest rates rise, our cost of capital is expected to increase and that may impact our profitability.
 
Exchange Rate Sensitivity
 
Our subsidiary in Hong Kong, IGC International Ltd., conducted all business in Hong Kong dollars (HKD).  Our Indian subsidiaries conduct all business in Indian rupees (INR) with the exception of foreign equipment that is purchased from the United States or Europe. Our Chinese subsidiary, PRC Ironman, conducted all business in renminbi (RMB). Our Malay subsidiary, Cabaran Ultima, conducts all business in ringgit (RM). Exchange rates have an insignificant impact on our financial results. However, as we convert from Hong Kong dollars, Indian rupees, renminbi, and ringgit to U.S. dollars and subsequently report in U.S. dollars, we may see an impact on translated revenue and earnings. Essentially, a stronger U.S. dollar decreases our reported earnings and a weakening U.S. dollar increases our reported earnings. We have loans in U.S. dollars and in foreign currencies.
 

In the analysis below, we compared the reported revenue and expense for fiscal year 2017 based on the average exchange rate used for fiscal year 2016 to highlight the impact of exchange rate changes on IGC’s revenue and expenses.
 
   
As of March 31, 2017
               
 
 
Current Exchange
   
Previous Exchange
     
Percentage
 
 
 
Rate
   
Rate
 
Change
 
change
 
 
                   
Total Income
 
$
1,019,791
   
$
1,032,285
     
(12,494
)
   
-1.23
%
Total expenses before Taxes
 
$
(2,858,221
)
 
$
(2,890,453
)
   
32,232
     
-1.13
%
Net
 
$
(1,838,430
)
 
$
(1,858,168
)
   
19,738
         
 
Foreign Currency Translation
 
IGC operates in India, Hong Kong, China and Malaysia and a substantial portion of the Company’s sales are denominated in INR, HKD, RMB and RM, as of those respective operations. As a result, changes in the relative values of the U.S. dollar and INR, HKD, RMB or the RM affect revenues and profits as the results are translated into U.S. dollars in the consolidated and pro forma financial statements.

The accompanying financial statements are reported in U.S. dollars. The INR, HKD, RMB and the RM are the functional currencies for the Company. The translation of the functional currencies into U.S. dollars is performed for assets and liabilities using the exchange rates in effect at the balance sheet date and for revenues, costs and expenses using average exchange rates prevailing during the reporting periods. Adjustments resulting from the translation of functional currency financial statements to reporting currency are accumulated and reported as other comprehensive income/(loss), a separate component of shareholders’ equity.

The exchange rates used for translation purposes are as follows:
 
Year
 
Month end Average Rate (P&L rate)
 
Year-end rate (Balance sheet rate)
2012-13
 
INR 54.357/RMB 6.28/HKD 7.77 per USD
 
INR 54.52/RMB 6.21/HKD 7.76 per USD
2013-14
 
INR 60.35/RMB 6.21/HKD 7.76 per USD
 
INR 60.00/RMB 6.22 /HKD 7.76 per USD
2014-15
 
INR 61.11/RMB 6.21/HKD 7.80 per USD
 
INR 62.31 /RMB 6.20/HKD 7.80 per USD
2015-16
 
INR 65.39/RMB 6.32/HKD 7.76/RM 4.11 per USD
 
INR 66.25/RMB 6.44/HKD 7.76/ RM 3.90 per USD
2016-17
 
INR 67.01/RMB 6.69 /HKD 7.76/RM 4.20 per USD
 
INR 64.85 /RMB 6.95 /HKD 7.77 / RM 4.42 per USD
 
Item 8.                   Financial Statements and Supplementary Data
 
Our Consolidated Financial Statements and supplementary financial data are included in this Annual Report on Form 10-K beginning on page F-1.
 


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 
Page
 
 
  F-1
    F-2
 F-3
    F-4
    F-5
    F-6
    F-7
 
 
 
 
 
 



To the Board of Directors and Stockholders of India Globalization Capital, Inc. and Subsidiaries:

We have audited the accompanying consolidated balance sheets of India Globalization Capital, Inc. and its subsidiaries (the “Company”) as of March 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income, cash flows, and stockholders’ equity for each of the years in the two-year period ended March 31, 2017.  These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to in the first paragraph above present fairly, in all material respects, the financial position of the Company as of March 31, 2017 and 2016, and the results of their operations and their cash flows for each of the years in two-year period ended March 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

AJSH & Co LLP
Delhi, India,
Independent Auditors registered with
Public Company Accounting Oversight Board
Date: July 13, 2017
 
 
INDIA GLOBALIZATION CAPITAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Audited)
(All amounts in USD, except number of shares and per share amounts)
 
 
 
31-March - 17
   
31-March - 16
 
 
 
(audited)
   
(audited)
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
538,029
   
$
1,490,693
 
Accounts receivable, net of allowances
   
752,926
     
962,658
 
Inventories
   
-
     
162,091
 
Prepaid expenses and other current assets
   
410,408
     
1,226,507
 
Short-term investments
   
1,880,000
     
-
 
Total current assets
 
$
3,581,363
   
$
3,841,949
 
Goodwill
   
198,169
     
1,180,951
 
Intangible Assets
   
-
     
113,321
 
Property, plant and equipment, net
   
953,936
     
7,074,437
 
Investments in affiliates
   
773,111
     
609,148
 
Investments-others
   
5,238,003
     
5,175,392
 
Deferred Income taxes
   
-
     
356,684
 
Other non-current assets
   
539,720
     
507,300
 
              Total long-term assets
 
$
7,702,939
   
$
15,017,233
 
Total assets
 
$
11,284,302
   
$
18,859,182
 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities:
               
Short -term borrowings
   
-
     
27,762
 
Trade payables
   
416,532
     
330,631
 
Accrued expenses
   
181,465
     
300,111
 
Loans - others
   
-
     
189,680
 
Notes payable
   
-
     
1,800,000
 
Other current liabilities
   
691,714
     
550,877
 
Total current liabilities
 
$
1,289,711
   
$
3,199,061
 
Long -term borrowings
   
452,080
     
801,467
 
Loans - others
   
392,226
     
-
 
Notes payable
   
1,800,000
     
-
 
Other non-current liabilities
   
-
     
910,583
 
                Total long-term liabilities
 
$
2,644,306
   
$
1,712,050
 
                     Total liabilities
 
$
3,934,017
   
$
4,911,111
 
     Stockholders' equity:
               
        Common stock — $.0001 par value; 150,000,000 shares authorized; 23,265,531 issued and outstanding as of March 31, 2016 and 28,272,667 issued and outstanding as of March 31, 2017.
 
$
2,827
   
$
2,327
 
 Additional paid-in capital
   
61,413,533
     
65,885,243
 
 Accumulated other comprehensive income
   
(2,047,780
)
   
(2,269,357
)
 Retained earnings (Deficit)
   
(52,009,459
)
   
(50,142,199
)
Total equity attributable to Parent
 
$
7,359,121
   
$
13,476,014
 
  Non-controlling interest
 
$
(8,836
)
 
$
472,057
 
Total stockholders' equity
 
$
7,350,285
   
$
13,948,071
 
Total liabilities and stockholders' equity
 
$
11,284,302
   
$
18,859,182
 

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

INDIA GLOBALIZATION CAPITAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Audited)
(All amounts in USD, except number of shares and per share amounts)
 
   
Year ended March 31,
 
 
 
2017
   
2016
 
 
           
 Revenues
 
$
580,372
   
$
6,366,550
 
     Cost of revenues (excluding depreciation)
   
(362,135
)
   
(5,523,256
)
     Selling, general and administrative expenses
   
(1,875,344
)
   
(2,702,753
)
     Depreciation
   
(396,346
)
   
(728,741
)
Loss on investments / associates /joint ventures
   
(932
)
   
(317,510
)
    Operating income (loss)
 
$
(2,054,385
)
 
$
(2,905,710
)
      Interest expense
   
(223,464
)
   
(213,928
)
      Interest income
   
1,744
     
2,085
 
       Profit on investments/associates and Joint Ventures
   
317,742
      -  
     Other income, net
   
119,933
     
284,186
 
Income before income taxes and minority interest attributable to non-controlling interest
 
$
(1,838,430
)
 
$
(2,833,367
)
      Income taxes benefit/ (expense)
   
(14,431
)
   
(579
)
      Net income/(loss)
 
$
(1,852,861
)
 
$
(2,833,946
)
  Non-controlling interests in earnings of subsidiaries
   
14,399
     
(25,702
)
Net income / (loss) attributable to common stockholders
 
$
(1,867,260
)
 
$
(2,808,244
)
Earnings/(loss) per share attributable to common stockholders:
               
      Basic
 
$
(0.07
)
 
$
(0.17
)
      Diluted
 
$
(0.07
)
 
$
(0.17
)
Weighted-average number of shares used in computing earnings per share amounts:
               
      Basic
   
25,658,544
     
16,387,290
 
      Diluted
   
25,658,544
     
16,387,290
 
 

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



 
INDIA GLOBALIZATION CAPITAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Audited)
(All amounts in USD , except number of shares and per share amounts)
 
 
 
Year ended March 31
 
 
 
2017
   
2016
 
 
 
IGC
   
Non-controlling interest
   
Total
   
IGC
   
Non-controlling interest
   
Total
 
Net income / (loss)
 
$
(1,867,260
)
 
$
14,399
   
$
(1,852,861
)
 
$
(2,808,244
)
 
$
(25,702
)
 
$
(2,833,946
)
Foreign currency translation adjustments
   
221,577
     
-
     
221,577
     
(355,772
)
   
-
     
(355,772
)
Comprehensive income (loss)
 
$
(1,645,683
)
 
$
14,399
   
$
(1,631,284
)
 
$
(3,164,016
)
 
$
(25,702
)
 
$
(3,189,718
)
 
 
The accompanying notes should be read in connection with the financial statements.


INDIA GLOBALIZATION CAPITAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(Audited)
(All amounts in USD, except number of shares and per share amounts)
 
 
 
No. of Shares
   
Amount
   
Additional Paid
in Capital
   
Accumulated
Earnings (Deficit)
   
Accumulated Other Comprehensive
Income/(loss)
   
Non-Controlling
Interest
   
Total Stockholders’ Equity
 
 
                                         
Balance at March    31, 2015
   
14,766,333
   
$
1,477
   
$
63,479,918
   
$
(47,333,955
)
 
$
(1,913,585
)
 
$
515,927
   
$
14,749,782
 
Bricoleur loan interest payments
   
305,357
     
30
     
94,213
                             
94,243
 
ESOP, IR, Consultancy, Private placement of   Shares
   
5,836,501
     
583
     
1,809,537
                             
1,810,120
 
ATM Sale
   
1,358,769
     
137
     
331,917
                             
332,054
 
Acquisition of Cabaran Ultima SDN BHD
   
998,571
     
100
     
169,658
                     
(18,168
)
   
151,590
 
Loss on Translation
                                   
(355,772
)
           
(355,772
)
Net income for non-controlling interest
                                           
(25,702
)
   
(25,702
)
Net income / (loss)
                           
(2,808,244
)
                   
(2,808,244
)
Balance at March 31, 2016
   
23,265,531
   
$
2,327
   
$
65,885,243
   
$
(50,142,199
)
 
$
(2,269,357
)
 
$
472,057
   
$
13,948,071
 
 
                                                       
Bricoleur loan interest payments
   
333,956
     
33
     
129,783
                             
129,816
 
ATM Sale
   
1,697,021
     
169
     
641,995
                             
642,164
 
ESOP Shares
   
1,270,000
     
127
     
203,073
                             
203,200
 
Acquisition of Brilliant Hallmark
   
4,000,000
     
400
     
1,832,923
                             
1,833,323
 
ESOP, IR, Consultancy
   
340,000
     
34
     
63,366
                             
63,400
 
Loss on Translation
                                   
221,577
     
1,345
     
222,922
 
Net income for non-controlling interest
                                           
14,399
     
14,399
 
Net income / (loss)
                           
(1,867,260
)
                   
(1,867,260
)
H&F Ironman & IGC International
   
(2,633841
)
   
(263
)
   
(7,342,850
)
   
 
             
(496,637
)
   
(7,839,750
)
Balance at March 31, 2017
   
28,272,667
   
$
2,827
   
$
61,413,533
   
$
(52,009,459
)
 
$
(2,047,780
)
 
$
(8,836
)
 
$
7,350,285
 
 

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


 
INDIA GLOBALIZATION CAPITAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Audited)
(All amounts in USD , except number of shares and per share amounts)
 
 
 
Year ended March 31
 
 
 
2017
   
2016
 
Cash flows from operating activities:
           
Net income (loss)
 
$
(1,852,861
)
 
$
(2,833,946
)
Adjustment to reconcile net income (loss) to net cash:
               
     Deferred taxes
   
18,968
     
579
 
     Depreciation
   
396,346
     
728,741
 
     Write back of liability (non-cash)
   
(34,367
)
   
(13,495
)
     Bad debts written off /Creditors restated
   
6,980
     
80,434
 
     Loss from Investments /Joint Venture /associates
   
932
     
317,510
 
     Profit from Investments /Associates /Joint Venture
   
(317,742
)
   
-
 
     Non-cash interest expenses
   
129,816
     
94,243
 
     ESOP and other stock related expenses
   
203,200
     
214,254
 
    Other stock related expenses
   
47,400
     
184,004
 
Changes in:
               
    Accounts receivable
   
(144,711
)
   
80,461
 
    Inventories
   
-
     
545,293
 
    Prepaid expenses and other assets
   
(62,513
)
   
504,005
 
    Trade payables
   
191,044
     
(28,531
)
    Other current liabilities
   
140,813
     
90,888
 
    Other non – current liabilities
   
(746
)
   
-
 
    Non-current assets
   
(20,775
)
   
-
 
    Accrued Expenses
   
(92,861
)
   
(122,142
)
Net cash provided/(used) in operating activities
 
$
(1,391,077
)
 
$
(157,702
)
 
               
Cash flow from investing activities:
               
   Proceeds from short term investment
   
(95,677
)
    -  
   Proceeds from non-current investment
   
-
     
(76,290
)
   Purchase of property and equipment
   
(145,677
)
   
(122,185
)
   Deposits towards acquisition (net of cash acquired)
    -      
16,405
 
   Non-current assets
    -      
(1,352
)
Net cash provided/(used) by investing activities
 
$
(241,354
)
 
$
(183,422
)
                 
Cash flows from financing activities:
               
   Issuance of equity stock
   
642,164
     
1,743,967
 
   Net movement in  short-term borrowings
   
-
     
(1,252,594
)
  Proceeds /(repayment) from long-term borrowing
   
(476,190
)
   
398,660
 
   Exit from Subsidiaries
   
(137,292
)
    -  
   Proceeds from loans
   
678,882
     
121,194
 
Net cash provided/(used) by financing activities
 
$
707,564
   
$
1,011,227
 
 
               
Effects of exchange rate changes on cash and cash equivalents
   
(27,797
)
   
(3,902
)
   Net increase/(decrease) in cash and cash equivalents
   
(952,664
)
   
666,201
 
Cash and cash equivalent at the beginning of the period
   
1,490,693
     
824,492
 
Cash and cash equivalent at the end of the period
 
$
538,029
   
$
1,490,693
 
 
               
Supplementary information:
               
    Cash paid for interest
 
$
93,648
   
$
119,687
 
    Cash paid for taxes
 
$
14,431
   
$
-
 
Non-cash items:
           
 
 
   Common stock issued for interest payment on notes payable
 
$
129,816
   
$
94,243
 
   Common stock issued  including ESOP, Consultancy &  IR
 
$
266,600
   
$
398,258
 
Supplementary information for non-cash financing activities
               
   Investment in Cabaran Ultima SDN BHD
         
$
169,758
 
   Investment in Brilliant Hallmark
 
$
1,833,323
      -  
 
The accompanying notes should be read in connection with the financial statements.

INDIA GLOBALIZATION CAPITAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unless the context requires otherwise, all references in this report to “IGC,” “we,” “our” and “us” refer to India Globalization Capital, Inc., together with our subsidiaries.  Our filings are available on www.sec.gov. The information contained on our website, www.igcinc.us, is not incorporated by reference in this report, and you should not consider it a part of this report.

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

IGC develops cannabis-based combination therapies to treat Alzheimer’s, pain, nausea, eating disorders, several end points of Parkinson’s, and epilepsy in humans, dogs and cats.  In support of this effort, IGC has assembled a portfolio of patent filings and four lead product candidates addressing these conditions. In India, the Company is engaged in heavy equipment rental, and in Malaysia, real-estate management.  The Company is a Maryland Corporation formed in April 2005.

 a) Business Organization and Corporate Update
 
IGC is a Maryland corporation formed in April 2005 for the purpose of acquiring one or more businesses with operations primarily in India through a merger, capital stock exchange, asset acquisition or other similar business combination.  In March 2006, IGC completed an initial public offering of its common stock.  Our principal office in the U.S. is located in Bethesda, Maryland, in addition we have a facility in Washington State.  Our back office is in Kochi, Kerala India. In addition, many of our staff and advisors work from their home offices.

The table below lists our subsidiaries.
 
Subsidiaries
 
Immediate
holding company
 
Country of
Incorporation
 
Percentage of holding
as of March 31, 2017
 
 
Percentage of holding
as of March 31, 2016
 
H&F Ironman Limited
(“HK Ironman”)
 
IGC
 
Hong Kong
 
 
0
 
 
 
100
 
Linxi H&F Economic and Trade Co.
(“PRC Ironman”)   
 
HK Ironman
 
Peoples’ Republic of China
 
 
0
 
 
 
95
 
IGC – Mauritius
(“IGC-M”)
 
IGC
 
Mauritius
 
 
100
 
 
 
100
 
Techni Bharathi Private Limited
(“TBL”)
 
IGC-M
 
India
 
 
100
 
 
 
100
 
India Mining and Trading Private Limited
(“IGC-IMT”)
 
IGC-M
 
India
 
 
100
 
 
 
100
 
IGC Materials Private Limited
(“IGC-MPL”)
 
IGC-M
 
India
 
 
100
 
 
 
100
 
IGC Logistic Private Limited
(“IGC-LPL”)
 
IGC-M
 
India
 
 
100
 
 
 
100
 
IGC Cleantech Limited
(“IGC-CT”) (1)
 
IGC-M
 
Hong Kong
 
 
100
 
 
 
100
 
IGC International Limited
(“IGC-INT”) (2)
 
IGC
 
Hong Kong
 
 
0
 
 
 
51
 
Cabaran Ultima Sdn. Bhd.,
(“Ultima”)
 
IGC
 
Malaysia
 
 
100
 
 
 
100
 
RGF Cabaran Sdn. Bhd. (“RGF”)
 
Ultima
 
Malaysia
   
51
     
51
 
RGF Construction Sdn. Bhd.
 
RGF
 
Malaysia
   
75
     
75
 

(1) Formerly known as IGC HK Mining and Trading Limited.
(2) Formerly known as Golden Gate Electronics Limited. 

As at April 1, 2016 our operational subsidiaries were in China, Hong Kong, India and Malaysia.  As at March 31, 2017 our operational subsidiaries are in India and Malaysia.

In October 2014, pursuant to a Memorandum of Settlement with Sricon, one of our Indian subsidiaries, and related parties and in exchange for the 22% minority interest we had in Sricon, we received approximately five acres of prime land in Nagpur, India. The land is located a few miles from MIHAN, which is the largest development zone in terms of investment in India. The Company beneficially registered the land in its name on March 4, 2016.

On December 30, 2011, IGC acquired a 95% equity interest in Linxi HeFei Economic and Trade Co., aka Linxi H&F Economic and Trade Co., a People’s Republic of China-based company (“PRC Ironman”) by acquiring 100% of the equity of H&F Ironman Limited, a Hong Kong company (“HK Ironman”).  Collectively, PRC Ironman and HK Ironman are referred to as “Ironman.”  PRC Ironman is engaged in the processing of iron ore at its beneficiation plant on 2.2 square kilometers of hills in southwest Linxi in the autonomous region of eastern Inner Mongolia, under the administration of Chifeng City, Inner Mongolia, which is located 250 miles from Beijing, 185 miles from Tianjin Port and 125 miles from Jinzhou Port and well connected by roads, planes and railroad.

On February 2, 2015, IGC filed a lawsuit in the circuit court of Maryland, against 24 defendants related to the acquisition of Ironman, seeking to have the court order rescission of the underlying Acquisition Agreement and to void any past or future transfer of IGC shares to the defendants.  As of March 31, 2017, IGC has redeemed and subsequently retired, as required by Maryland State law, part of the 3,150,000 shares of common stock issued in connection with its purchase of Ironman, as a treasury stock transaction, thus reducing IGC’s investment in Ironman to zero while still pursuing any and all legal avenues to recover as many of the originally issued shares as possible.

In January 2013, we incorporated IGC HK Mining and Trading Limited (“IGC-HK”), whose name we later changed to IGC Cleantech Ltd (“IGC-CT”).  Please see Note 25 Subsequent Events for an update.

On May 31, 2014, we completed the acquisition of 51% of the issued and outstanding share capital of Golden Gate Electronics Limited, a corporation organized and existing under the laws of Hong Kong and now known as IGC International (“IGC-INT”).  IGC-INT, headquartered in Hong Kong, operates an e-commerce platform for trading of commodities and electronic components.  The purchase price of the acquisition consisted of up to 1,209,765 shares of our common stock, valued at approximately $1,052,496 on the closing date of the acquisition. As previously announced we curtailed activity in IGC-INT and since the quarter ended June 30, 2016 we have no revenue. We also impaired the goodwill associated with the acquisition.  As of March 31, 2017, we exited the business. We retired 205,661 shares of common stock, and returned control of IGC International to the original owners.  We also impaired the goodwill associated with the acquisition. We have no disputes with the initial principals of Golden Gate.

On June 27, 2014, we entered into an agreement with TerraSphere Systems, LLC to develop multiple facilities to produce organic leafy green vegetables utilizing TerraSphere’s advanced pesticide-free organic indoor farming technology.  Under the agreement, we will own 51% of each venture once production is operational, and will have a right of first refusal to participate in all future build-outs.  In fiscal 2018, we expect to convert this investment into shares of a public Canadian company where assets including this project is being merged.

On December 18, 2014, we acquired 24.9% of the outstanding membership interests in Midtown Partners, a Florida limited liability company registered as a broker-dealer under the Securities Exchange Act of 1934, from Apogee Financial Investments, Inc.  The Purchase Agreement expired on June 30, 2015, and the Company is pursuing its rights under the terms of the Purchase Agreement to recover certain damages.

In February 2016, we completed the acquisition of 100% of the outstanding share capital of Cabaran Ultima Sdn. Bhd., a corporation organized and existing under the laws of Malaysia (“Ultima”), from RGF Land Sdn. Bhd. (“Land”), the sole shareholder of Ultima, pursuant to the terms of a Share Purchase Agreement among the parties. Ultima holds 51% of RGF Cabaran Sdn. Bhd., which holds 75% of RGF Construction Sdn. Bhd. The purchase price of the acquisition consists of up to 998,571 shares of our common stock, valued at $169,757 on the closing date of the Share Purchase Agreement. Ultima and its management’s expertise include the following: (i) building agro-infrastructure for growing medicinal plants and botanical extraction, and (ii) construction of high-end luxury complexes such as service apartments, luxury condominiums and hotels.


In August 2016, we subscribed to 10% of Brilliant Hallmark, Sdn. Bhd. a corporation organized and existing under the laws of Malaysia (“Brilliant”).  We paid 4,000,000 shares of common stock with a Fair Market Value of $1.88 million for the 10% stake in Brilliant that holds the exclusive rights to build a hotel and develop the property in Genting Malaysia.  IGC had recourse to the land assets in the event of non-performance through a separate Tag Along Agreement dated August 1, 2016 between IGC on the one hand and RGF Land Sdn. Bhd., the shareholders of RGF Land Sdn. Bhd., and Brilliant on the other hand. Pursuant to the terms of the Share Subscription Agreement, Brilliant assigned, sold, and transferred to IGC 11 shares of Brilliant, which shares constituted 10% of the issued and outstanding shares of Brilliant.  Likewise, as a consideration for the transaction, IGC issued to Brilliant the 4 million shares of its common stock.  Please see Note 25 Subsequent Events for further information.

 b)  Merger and Accounting Treatment
 
Most of the shares of Sricon and TBL when acquired were purchased directly from the companies.  The shares of Ironman, Golden Gate, and Cabaran Ultima were acquired from the shareholders of each company.
 
Unless the context requires otherwise, all references in this report to the “Company”, “IGC”, “IGC Inc.”, “we”, “our”, and “us” refer to India Globalization Capital, Inc., together with its wholly owned subsidiaries as described in Note 1 Business Organization and Corporate History.  As of March 31, 2017, IGC and its subsidiaries derived all of its revenue from one segment, its construction management and heavy equipment rental business and we exited the electronics business. The corporate structure of our company’s direct and indirect consolidated operating subsidiaries is as follows: 


 

c) Our Securities

We have one security listed on the NYSE MKT: Common Stock, $.0001 par value (ticker symbol: IGC) (“Common Stock”). This security is also available for trading on the Borse Frankfurt, Stuttgart, and Berlin Exchanges (ticker symbol: IGS1).  We have redeemable warrants (CUSIP number 45408X118 expiring on March 6, 2019) to purchase Common Stock (ticker symbol: IGC.WT) listed on the OTC markets.

We have Units consisting of one share of Common Stock and two redeemable warrants to purchase Common Stock that are not listed.  The Unit holders are requested to contact the Company to get their existing Units separated into Common Stock and Warrants.
 
On April 19, 2013, the Company implemented a 10:1 reverse split of the common stock and all disclosures in this report reflects the reverse split.
  

The registration statement for the initial public offering was declared effective on March 2, 2006.  The Company’s outstanding warrants are exercisable and may be exercised by contacting IGC or the transfer agent, Continental Stock Transfer & Trust Company.  The Company has a right to call the warrants, provided the Common Stock has traded at a closing price of at least $8.50 per share for any 20 trading days within a 30-trading day period ending on the third business day prior to the date on which notice of redemption is given.  If the Company calls the warrants, either the holder will have to exercise the warrants by purchasing the Common Stock from the Company for $5.00 or the warrants will expire. In accordance with the terms of the outstanding warrant agreements between the Company and its warrant holders, the Company in its sole discretion may lower the price of its warrants at any time prior to their expiration date.

For a description of the Bricoleur Partners, L.P. loan and no-tax deductible interest payments made using our common stock please see Note 7 Notes Payable and Loans-Others.

On December 30, 2011, the Company finalized the purchase of Ironman pursuant to a stock purchase agreement (the “Stock Purchase Agreement”) that was approved by the shareholders of the Company on that date.  Related to the acquisition of Ironman, the Company’s shareholders approved the issuance of 3,150,000 equity shares to the owners of Ironman in exchange for 100% of the equity of Ironman (refer to Note 3).  The acquisition of Ironman and the offering of the Common Stock pursuant there to was exempt from registration under the Securities Act pursuant to Regulation S of the Securities Act, which exempts private issuances of securities in which the securities are not offered or advertised to the general public and such offering occurs outside of the United States to non-U.S. persons.    These securities were subsequently registered in a Form S-1. As of March 31, 2017, IGC has redeemed and subsequently retired, as required by Maryland State law, part of the 3,150,000 shares of common stock issued in connection with its purchase of Ironman, as a treasury stock transaction, thus reducing IGC’s investment in Ironman to zero, while still pursuing any and all legal avenues to recover as many of the originally issued shares as possible.
 
In fiscal 2016, we issued 20,000 shares valued at $8,000 to Marketing Group (MMGI) and others, in January 2017 we agreed to deliver 90,000 shares, valued at $23,400, to MMGI for investor communications related services rendered during calendar year 2017.

In fiscal 2016, the Company issued 40,000 shares of Common Stock to Axiom Financial Inc. valued at $16,000 for financial and marketing consulting services. In fiscal 2016, we issued 250,000 shares to International Pharma Trials valued at $100,000, for research and development services related to drug development.  In fiscal 2016, we issued 100,000 shares valued at $40,000 to Acorn Management Partners for investor relations services.

On August 22, 2013, IGC entered into an At The Market (“ATM”) Agency Agreement with Enclave Capital LLC. Under the ATM Agency Agreement, IGC may offer and sell shares of our common stock having an aggregate offering price of up to $4 million from time to time. Sales of the shares, if any, will be made by means of ordinary brokers’ transactions on the NYSE MKT at market prices, or as otherwise agreed with Enclave. The Company estimated that the net proceeds from the sale of the shares of common stock that were being offered were going to be approximately $3.6 million. On June 8, 2014, IGC entered into a new At The Market (“the June ATM”) Agency Agreement with Enclave Capital LLC. Under the June ATM Agency Agreement, IGC may offer and sell shares of our common stock having an aggregate offering price of up to $1.5 million, for a total of $5.5 million of gross proceeds from the combined ATM agreements. During the year fiscal year ended March 31, 2014, 2015 and 2016, the Company issued a total of 1,256,005 shares of common stock valued at $1,251,896; 2,001,815 shares valued at $2,961,022; and a total of 1,358,769 shares valued at $332,054, under this agreement, respectively. On May 20, 2016, IGC entered into an At The Market (“ATM”) Agency Agreement with IFS Securities, Inc. (dba Brinson Patrick, a division of IFS Securities, Inc.). Under the ATM Agency Agreement, IGC may offer and sell shares of our common stock having an aggregate offering price of up to $10 million from time to time through Brinson Patrick.   During fiscal year 2017, the Company issued a total of 1,697,021 shares of common stock valued at $642,164.
 
On September 12, 2014, IGC shareholders approved 1,500,000 shares of common stock as a special grant valued at $615,000 to IGC’s CEO and the directors of the board subject to vesting. Through fiscal year end 2017 all shares have been granted and vested.
 
Under the December 18, 2014 Purchase Agreement with Apogee, we issued 1,200,000 common shares of IGC in the name of Apogee, valued at $888,000 for the purchase of 24.9% ownership interest in Midtown Partners & Co., LLC. The Purchase Agreement expired on June 30, 2015, and the Company is pursuing its rights under the terms of the Purchase Agreement to recover certain damages.

Under the February 11, 2016 Purchase Agreement with Cabaran Ultima, we issued 998,571 common shares of IGC valued at $169,757 for the purchase of 100% ownership interest in Ultima.  Between February 24, 2016 and March 23, 2016, we issued a total of 4,253,246 unregistered shares of common stock, to foreign investors, for an aggregate amount of $1.5 million.  


In August 2016, we subscribed to 10% of Brilliant Hallmark, Sdn. Bhd. a corporation organized and existing under the laws of Malaysia (“Brilliant”) by issuing 4,000,000 shares of common stock with a Fair Market Value of $1.880 million. Please see Note 25, Subsequent Events for further information.

In fiscal 2016 we issued 50,000 shares of our common stock to Cherin Group, LLC., for consulting services, and in fiscal 2017, we issued a total of 250,000 shares, vesting over two years, for services as our Chief Financial Officer.

In fiscal 2017, we issued 160,000 options to some of our Advisors, at an exercise price of $0.10, expiring on October 31, 2023. The fair value of options was valued at $22,300 using a Black-Scholes Pricing Model with the following assumptions:

 
Granted in Fiscal 2017
 
Expected life of options
7 years
 
Vested options
   
100
%
Risk free interest rate
   
0.70
%
Expected volatility
   
119.5
%
Expected dividend yield
Nil
 

Pursuant to IGC’s employee stock option plan, as of March 31, 2017 there are no stock options outstanding and exercisable. The Company as of March 31, 2017 has issued a total of 3,491,278 shares to its directors and some of its employees.

As of March 31, 2017, the Company has 99,227 UNITS and 28,272,667 shares of Common Stock issued and outstanding.  In addition, the Company has 11,656,668 outstanding public warrants, that trade on the OTC, expiring on March 6, 2019, to purchase 1,165,667 shares of common stock at $50.00 a share and we have 831,768 private warrants to buy 83,176 shares of common stock at an exercise price of $9.0, expiring on December 8, 2017.
   
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

a)             Principles of Consolidation
 
The consolidated financial statements include the accounts of the Company and all of its subsidiaries that are more than 50% owned and controlled. The financial statements of the parent company and its majority owned or controlled subsidiaries have been combined on a line by line basis by adding together the book values of all items of assets, liabilities, incomes and expenses after eliminating all inter-company balances and transactions and resulting unrealized gain or loss. Operating results of companies acquired are included from the dates of acquisition. 
 
b)             Non-controlling interests
 
Non-controlling interests in the Company’s consolidated financial statements result from the accounting for non-controlling interests in its subsidiaries.  Non-controlling interests represent the subsidiaries’ earnings and components of other comprehensive income that are attributed to the non-controlling parties’ equity interests.  The Company consolidates the subsidiaries into its consolidated financial statements.  Transactions between the Company and its subsidiaries have been eliminated in the consolidated financial statements.
 
The non-controlling interest disclosed in the accompanying financial statements for fiscal year 2017 represent the non-controlling interest in Cabaran Ultima’s subsidiaries and the profits or losses associated with the non-controlling interest in those operations.
  
The adoption of Accounting Standards Codification (ASC) 810-10-65 “Consolidation — Transition and Open Effective Date Information” (previously referred to as SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51”), has resulted in the reclassification of amounts previously attributable to minority interest (now referred to as non-controlling interest) to a separate component of shareholders’ equity on the accompanying consolidated balance sheets and consolidated statements of shareholders’ equity and comprehensive income (loss).  Additionally, net income attributable to non-controlling interest is shown separately from net income in the consolidated statements of income.  This reclassification had no effect on our previously reported financial position or results of operations.

c)             Reclassifications 
We are reclassifying $2,192,226 loans from current liability to non-current liability, as management does not expect to pay these loans back within 12 months.
 
d)             Use of estimates 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Management believes that the estimates and assumptions used in the preparation of the consolidated financial statements are prudent and reasonable.  Significant estimates and assumptions are used for, but not limited to: allowance for uncollectible accounts receivable; future obligations under employee benefit plans; the useful lives of property, plant, equipment; intangible assets; the valuation of assets and liabilities acquired in a business combination; impairment of goodwill and investments; recoverability of advances; the valuation of options granted and warrants issued; and income tax and deferred tax valuation allowances.  Actual results could differ from those estimates.  Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates.  Critical accounting estimates could change from period to period and could have a material impact on IGC’s results, operations, financial position and cash flows. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the consolidated financial statements.

e)             Revenue Recognition 
The majority of the revenue recognized for the years ended March 31, 2017 and 2016 was derived from the Company’s subsidiaries, when all of the following criteria have been satisfied:
 
Revenue is recognized when persuasive evidence of an arrangement exists, the sales price is fixed or determinable and collectability is reasonably assured.
 
Revenue from sale of goods is recognized when substantial risks and rewards of ownership are transferred to the buyer under the terms of the contract. 
For the sale of goods, the timing of the transfer of substantial risks and rewards of ownership is based on the contract terms negotiated with the buyer, e.g., FOB or CIF.  We consider the guidance provided under Staff Accounting Bulletin (“SAB”) 104 in determining revenue from sales of goods.  Considerations have been given to all four conditions for revenue recognition under that guidance.  The four conditions are:
 
-
Contract – Persuasive evidence of our arrangement with the customers;
-
Delivery – Based on the terms of the contracts, the Company assesses whether the underlying goods have been delivered and therefore the risks and rewards of ownership are completely transferred;
-
Fixed or determinable price – The Company enters into contracts where the price for the goods being sold is fixed and not contingent upon other factors.
-
Collection is deemed probable – At the time of recognition of revenue, the Company makes an assessment of its ability to collect the receivable arising on the sale of the goods and determines that collection is probable.

Revenue for any sale is recognized only if all of the four conditions set forth above are met.  The Company assesses these criteria at the time of each sale.  In the absence of meeting any of the criteria set out above, the Company defers revenue recognition until all of the four conditions are met.
 
Revenue from construction/project related activity and contracts for supply/commissioning of complex plant and equipment is recognized as follows:
 
(a)           Cost plus contracts: Contract revenue is determined by adding the aggregate cost plus proportionate margin as agreed with the customer and expected to be realized.
 
(b)           Fixed price contracts: Contract revenue is recognized using the percentage completion method and the percentage of completion is determined as a proportion of cost incurred-to-date to the total estimated contract cost.  Changes in estimates for revenues, costs to complete, and profit margins are recognized in the period in which they are reasonably determinable.

-
In many of the fixed price contracts entered into by the Company, significant expenses are incurred in the mobilization stage in the early stages of the contract.  The expenses include those that are incurred in the transportation of machinery, erection of heavy machinery, clearing of the campsite, workshop ground cost, overheads, etc.  All such costs are booked to deferred expenses and written off over the period in proportion to revenues earned.

-
Where the modifications of the original contract are such that they effectively add to the existing scope of the contract, the same are treated as a change orders.  On the other hand, where the modifications are such that they change or add an altogether new scope, these are accounted for as a separate new contract.  The Company adjusts contract revenue and costs in connection with change orders only when both, the customer and the Company with respect to both the scope and invoicing and payment terms, approve them.

-
In the event of claims in our percentage of completion contracts, the additional contract revenue relating to claims is only accounted after the proper award of the claim by the competent authority.  The contract claims are considered in the percentage of completion only after the proper award of the claim by the competent authority. 

Full provision is made for any loss in the period in which it is foreseen.
 
Revenue from service related activities and miscellaneous other contracts are recognized when the service is rendered using the proportionate completion method or completed service contract method.
 
f)              Earnings per common share
 
Basic earnings per share is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the additional dilution from all potentially dilutive securities such as stock warrants and options.
 
g)             Income taxes
 
The Company accounts for income taxes under the asset and liability method, in accordance with ASC 740, Income Taxes, which requires an entity to recognize deferred tax liabilities and assets.  Deferred tax assets and liabilities are recognized for the future tax consequence attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases and operating loss and tax credit carry forwards.  Deferred tax assets and liabilities are measured using the enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date.  A valuation allowance is established and recorded when management determines that some or all of the deferred tax assets are not likely to be realized and therefore, it is necessary to reduce deferred tax assets to the amount expected to be realized.
 
In evaluating a tax position for recognition, management evaluates whether it is more-likely-than-not that a position will be sustained upon examination, including resolution of related appeals or litigation processes, based on technical merits of the position.  If the tax position meets the more-likely-than-not recognition threshold, the tax position is measured and recognized in the Company’s financial statements as the largest amount of tax benefit that, in management’s judgment, is greater than 50% likely of being realized upon settlement.  As of March 31, 2017 and 2016, there was no significant liability for income tax associated with unrecognized tax benefits.
 
The issuance by IGC of its common stock to (1) Ironman stockholders in exchange for Ironman stock; to (2) Golden Gate Electronics Ltd (“GG”) in exchange for GG stock; to (3) Apogee Financial in exchange for a membership interest in Midtown Partners, LLC; to (4) Cabaran Ultima (“Ultima”) in exchange for Ultima’s stock, and to (5) Brilliant Hallmark, as contemplated by the respective stock purchase agreements between the Company and Ironman and their stockholders; between the Company and Golden Gate Electronics Ltd and its stockholders; between the Company and Apogee Financial and their stockholders; and between the Company and Cabaran Ultima and its stockholders, generally will not be taxable transactions to U.S. holders for U.S. federal income tax purposes.  It is expected that IGC and its stockholders will not recognize any gain or loss from these transactions for U.S. federal income tax purposes.


h)             Cash and Cash Equivalents
 
For financial statement purposes, the Company considers all highly liquid debt instruments with maturity of three months or less, to be cash equivalents.  The Company maintains its cash in bank accounts in the United States of America, Mauritius, India, and Malaysia, which at times may exceed applicable insurance limits.  
 
i)             Left intentionally blank
 
j)             Foreign currency transactions
 
IGC operates in India and Malaysia and a substantial portion of the Company’s sales are denominated in INR, and RM, as of those respective operations. As a result, changes in the relative values of the U.S. dollar and INR or the RM affect revenues and profits as the results are translated into U.S. dollars in the consolidated and pro forma financial statements.

The accompanying financial statements are reported in U.S. dollars. The INR, HKD, RMB and the RM are the functional currencies for the Company. The translation of the functional currencies into U.S. dollars is performed for assets and liabilities using the exchange rates in effect at the balance sheet date and for revenues, costs and expenses using average exchange rates prevailing during the reporting periods. Adjustments resulting from the translation of functional currency financial statements to reporting currency are accumulated and reported as other comprehensive income/(loss), a separate component of shareholders’ equity. The exchange rates used for translation purposes are as follows:
 
   
    
 
Period End Average Rate
 
 
 
Period End Rate
 
Period
 
  
 
(P&L rate)
 
 
 
(Balance sheet rate)
 
Year ended March 31, 2017
 
INR
 
67.01
 
per
 
USD
 
INR
 
64.85
 
per
 
USD
 
   
RMB
 
6.69
 
per
 
USD
 
RMB
 
6.95
 
per
 
USD
 
   
HKD
 
7.76
 
per
 
USD
 
HKD
 
7.77
 
per
 
USD
 
   
RM 
 
4.20
 
per
 
USD
 
RM
 
4.42
 
per
 
USD
 
   
 
     
 
 
 
 
 
     
 
 
                          
 
Year ended March 31, 2016
 
INR
 
65.39
 
per
 
USD
 
INR
 
66.25
 
per
 
USD
 
   
RMB
 
6.32
 
per
 
USD
 
RMB
 
6.44
 
per
 
USD
 
   
HKD
 
7.76
 
per
 
USD
 
HKD
 
7.76
 
per
 
USD
 
   
RM
 
4.11
 
per
 
USD
 
RM
 
3.90
 
per
 
USD
 


k)             Accounts receivable
 
Accounts receivable from customers in the electronics business were recorded at the invoiced amount, taking into consideration any adjustments made for returns.  Also, the Company evaluates the collectability of selected accounts receivable on a case-by-case basis and makes adjustments to the bad debt reserve for expected losses.  For all other accounts, the Company estimates reserves for bad debts based on general aging, experience and past-due status of the accounts. When applicable, the Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of clients to make required payments.  The allowance for doubtful accounts is determined by evaluating the relative credit worthiness of each client, historical collections experience and other information, including the aging of the receivables.  If circumstances related to customers change, estimates of recoverability would be further adjusted.
 
Regarding our collection policy on electronics trading receivables, there were three types of trades: (1) payment guaranteed through letters of credit, (2) deposit or spot payment on delivery or (3) delivery on credit. With the first type of trade: our policy for collection is to ask the customer to open a letter of credit with a bank. The typical terms of the letter of credit are that 100% of the payment is made when the material is shipped.  With the second type of trade, customers pay on delivery.  On the third type of trade, our policy is to allow the customer to have a payment credit term of 90 days.

l)              Left intentionally blank
 
m)            Left intentionally blank
 

n)             Investments
 
Investments are initially measured at cost, which is the fair value of the consideration given for them, including transaction costs.  The Company’s equity in the earnings/(losses) of affiliates is included in the statement of income and the Company’s share of net assets of affiliates is included in the balance sheet.  Where the Company’s ownership interest is in excess of 20% the Company has accounted for the investment based on the equity method, as in the case of Midtown Partners & Co., LLC (“MTP”). 

o)             Property, Plant and Equipment (PP&E)
 
Property and equipment are recorded at cost net of accumulated depreciation and depreciated over their estimated useful lives using the straight-line method. The estimated useful lives of assets are as follows:
 
Buildings
5-25 years
Plant and machinery
10-20 years
Computer equipment
3-5 years
Office equipment
3-5 years
Furniture and fixtures
5-10 years
Vehicles
5-10 years
 
Upon retirement or disposition, cost and related accumulated depreciation of the property and equipment are de-recognized from the books of accounts and the gain or loss is reflected in the results of operation.  Cost of additions and substantial improvements to property and equipment are capitalized in the books of accounts.  The cost of maintenance and repairs of the property and equipment are charged to operating expenses as incurred.
 
p)             Fair Value of Financial Instruments
 
As of March 31, 2017 and 2016, the carrying amounts of the Company’s financial instruments, which included cash and cash equivalents, accounts receivable, unbilled accounts receivable, restricted cash, accounts payable, accrued employee compensation and benefits and other accrued expenses, approximate their fair values due to the nature of the items.
  
q)             Concentration of Credit Risk and Significant Customers
 
Financial instruments, which potentially expose the Company to concentrations of credit risk, are primarily comprised of cash and cash equivalents, investments, derivatives, accounts receivable and unbilled accounts receivable.  The Company places its cash, investments and derivatives in highly rated financial institutions.  The Company adheres to a formal investment policy with the primary objective of preservation of principal, which contains credit rating minimums and diversification requirements.  Management believes its credit policies reflect normal industry terms and business risk.  The Company does not anticipate non-performance by the counterparties and, accordingly, does not require collateral.
 
During this fiscal year, sales were spread across many customers in Hong Kong, China, India and Malaysia, and the credit concentration risk is low.

r)             Left intentionally blank
 
s)             Left intentionally blank

 t)            Employee Benefits Plan
 
In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Plan) covering certain categories of employees.  The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and the years of employment with the Company.  In addition, all 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 Government’s provident fund.
 

At this time, the Company does not participate in a multi-employer defined contribution plan in China to provide employees with certain retirement, medical and other fringe benefits because the Company has exited the business in China.   In the United States, we provide health insurance, life insurance, and 401-K benefits.

u)             Commitments and contingencies

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

v)    Accounting for goodwill and related impairment
 
Goodwill represents the excess cost of an acquisition over the fair value of our share of net identifiable assets of the acquired subsidiary at the date of acquisition.  Goodwill on acquisition of subsidiaries is disclosed separately.  Goodwill is stated at cost less impairment losses incurred, if any.
 
The Company adopted the provisions of ASC 350, “Intangibles – Goodwill and Others” (previously referred to as SFAS No. 142, “Goodwill and Other Intangible Assets,” which sets forth the accounting for goodwill and intangible assets subsequent to their acquisition.  ASC 350 requires that goodwill and indefinite-lived intangible assets be allocated to the reporting unit level, which the Company defines as each subsidiary.  ASC 350 also prohibits the amortization of goodwill and indefinite-lived intangible assets upon adoption, but requires that they be tested for impairment at least annually, or more frequently as warranted, at the reporting unit level.
 
Pursuant to ASC 350-20-35-4 through 35-19, the impairment testing of goodwill is a two-step process.  The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of a reporting unit with its carrying amount, including goodwill.  If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired, thus the second step of the impairment test is unnecessary.  If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test shall be performed to measure the amount of impairment loss, if any.  The second step of the goodwill impairment test, used to measure the amount of impairment loss, compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill.  If the carrying amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess.  The loss recognized cannot exceed the carrying amount of goodwill.  After a goodwill impairment loss is recognized, the adjusted carrying amount of goodwill shall be its new accounting basis.  Subsequent reversal of a previously recognized goodwill impairment loss is prohibited once the measurement of that loss is completed.

In ASC 350.20.20, a reporting unit is defined as an operating segment or one level below the operating segment.  A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component.  The Company has determined that it operates in a single operating segment.  While the Company’s Chief Executive Officer reviews the consolidated financial information for the purposes of decisions relating to resource allocation, the Company’s Chief Financial Officer, on an as-need basis, looks at the financial statements of the individual legal entities in India for the limited purpose of consolidation.  Given the existence of discrete financial statements at an individual entity level in India, the Company believes that each of these entities constitute a separate reporting unit under a single operating segment.
 
Therefore, the first step in the impairment testing for goodwill is the identification of reporting units and the allocation of goodwill to these reporting units.  Accordingly, Cabaran Ultima, which is the legal entities in Malaysia, is also considered separate reporting units and therefore the Company believes that the assessment of goodwill impairment at the subsidiaries level, which are also a reporting unit each, is appropriate.
 
The analysis of fair value is based on the estimate of the recoverable value of the underlying assets.  For long-lived assets such as land, the Company obtains appraisals from independent professional appraisers to determine the recoverable value.  For other assets such as receivables, the recoverable value is determined based on an assessment of the collectability and any potential losses due to default by the counter parties.  Unlike goodwill, long-lived assets are assessed for impairment only where there are any specific indicators for impairment.
 

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

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification.  The Company considers the applicability and impact of all ASUs.  Newly issued ASUs not listed below are expected to have no impact on the Company’s consolidated financial position and results of operations, because either the ASU is not applicable or the impact is expected to be immaterial.
 
Recognition and Measurement of Financial Assets and Financial Liabilities: In January 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This ASU requires entities to present separately in OCI the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (DVA) when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. It will also require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, thus eliminating eligibility for the current available-for-sale category. The company is evaluating the effect that ASU 2015-03 will have on its Consolidated Financial Statements.

Revenue from Contracts with Customers: In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in GAAP and is effective on January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its financial statements.
 
NOTE 3 – ACQUISITIONS

Cabaran Ultima Sdn. Bhd.

On February 11, 2016, we completed the acquisition of 100% of the outstanding share capital of Cabaran Ultima Sdn. Bhd., a corporation organized and existing under the laws of Malaysia (“Ultima”), from RGF Land Sdn. Bhd (“Land”), the sole shareholder of Ultima, pursuant to the terms of a Share Purchase Agreement among the parties. Ultima is a real estate development and international project management company incorporated in Kuala Lumpur, Malaysia. The purchase price of the acquisition consists of up to 998,571 shares of our common stock, valued at approximately $169,757 on the closing date of the Share Purchase Agreement. Ultima is an international real estate project management company with expertise in (i) building agro-infrastructure for growing medicinal plants and botanical extraction, (ii) construction of high-end luxury complexes such as service apartments, luxury condominiums and hotels, and (iii) design management of other large-scale infrastructure.


Purchase price of the acquisition consisted of up to 998,571 shares of our common stock, valued at approximately $169,757on the closing date of the acquisition and the same will be discharged as follows:
 
 
 
All amounts in USD
 
Particulars
 
Fair Value
 
 
     
IGC Stock Consideration
 
$
169,757
 
Total Purchase Consideration
 
$
169,757
 
 
The purchase has been preliminarily allocated to the acquired assets and liabilities, as follows:
 
 
 
All amounts in USD
 
Particulars
 
Fair Value
 
 
     
Property, Plant and Equipment
 
$
1,421
 
Trade and other receivables
   
12,385
 
Reimbursement Account
   
63,564
 
Cash and bank balances
   
16,438
 
Deposit & Prepayment
   
6,205
 
Trade and other payables
   
(133,804
)
Other payables
   
(12,789
)
Non-Controlling interest
   
18,168
 
Goodwill
   
198,169
 
Total Purchase Consideration
  $
169,757
 

The above purchase price allocation includes provisional amounts for certain assets and liabilities. The purchase price allocation will continue to be refined primarily in the areas of goodwill and other identifiable intangibles, if any. During the measurement period, the Company expects to receive additional detailed information to refine the provisional allocation above. Non-controlling interests are valued based on the proportional interest in the fair value of the net assets of the acquired entity.
 
Ultima is subject to legal and regulatory requirements, including but not limited to those related to taxation matters, in the jurisdiction in which it operates. The Company has conducted a preliminary assessment of liabilities arising out of these matters and has recognized provisional amounts in its initial accounting for the Acquisition for all identified liabilities in accordance with the requirements of ASC Topic 805. However, the Company is continuing its review of these matters during the measurement period, and if new information obtained about facts and circumstances that existed at the Acquisition date identifies adjustments to the liabilities initially recognized, as well as any additional liabilities that existed at the Acquisition date, the acquisition accounting will be revised to reflect the resulting adjustments to the provisional amounts initially recognized.

The following unaudited pro-forma results of the operations of the Company for the fiscal year ended March 31, 2017 and 2016 assume that the Ultima acquisition occurred during the beginning of the comparable period.
 
Particulars
 
2017
   
2016
 
Pro forma revenue
 
$
580,372
   
$
6,727,396
 
Pro forma other income
 
$
547,105
   
$
284,186
 
Pro forma net income attributable to IGC Stockholders
  $
(1,867,260
)
  $
(2,525,174
)
Pro forma Earnings per share
               
Basic
   
(0.07
)
   
(0.15
)
Diluted
   
(0.07
)
   
(0.15
)
 

 
Golden Gate Electronics Ltd. and Ironman for FYE 2017

The following unaudited pro-forma results of the operations of the Company for the fiscal year ended March 31, 2017 assume that the IGC-INT and Ironman acquisitions occurred during the beginning of the comparable period.


 
 
Year ended March 31, 2017
 
Particulars
 
With IGC-INT and Ironman
   
Without IGC-INT and Ironman
 
Pro forma revenue
 
$
580,372
   
$
367,279
 
Pro forma other income
   
547,105
     
283,886
 
Pro forma net income attributable to IGC Stockholders
 
$
(1,867,260
)
 
$
(1,801,139
)
Pro forma Earnings per share
               
Basic
   
(0.07
)
   
(0.07
)
Diluted
   
(0.07
)
   
(0.07
)


Golden Gate Electronics Ltd. and Ironman for FYE 2016

The following unaudited pro-forma results of the operations of the Company for the fiscal year ended March 31, 2016 assume that the IGC-INT and Ironman acquisitions occurred during the beginning of the comparable period.
 
 
 
Year ended March 31, 2016
 
Particulars
 
With IGC-INT and Ironman
   
Without IGC-INT and Ironman
 
Pro forma net revenue
 
$
6,366,550
   
$
114,748
 
Pro forma other income net
   
284,186
     
274,537
 
Pro forma net income attributable to IGC Stockholders
 
$
(2,808,244
)
 
$
(2,137,352
)
Pro forma Earnings per share
               
Basic
   
(0.17
)
   
(0.13
)
Diluted
   
(0.17
)
   
(0.13
)

 
NOTE 4 –Left intentionally blank


NOTE 5 – OTHER CURRENT AND NON-CURRENT ASSETS
 
Prepaid expenses and other current assets consist of the following:
 
 
As of
March 31, 2017
   
As of
March 31, 2016
 
 
Prepaid /preliminary expenses
 
$
6,750
   
$
-
 
Advance to suppliers & services
   
240,968
     
315,659
 
Security/statutory  advances
   
14,216
     
14,399
 
Advances to employees
   
111,882
     
878,042
 
Prepaid and  accrued interest
   
1,436
     
1,239
 
Deposit and other current assets
   
35,156
     
17,168
 
Total
 
$
410,408
   
$
1,226,507
 
 
* Advances to Employees shown in fiscal 2016 represent advances made to employees of Ironman by Ironman, prior to its acquisition by IGC.  In fiscal 2017 no advances to Ironman employees are shown.
 


Other Non-current assets consist of the following:
 
 
As of
March 31, 2017
   
As of
March 31, 2016
 
 
Statutory/Other advances
 
$
539,720
   
$
507,300
 
Total
 
$
539,720
   
$
507,300
 
 
On May 21, 2012, TBL entered into an agreement with Weave & Weave for the purchase of land value $616,806. TBL gave Weave and Wave and advance of $377,795. As of the date of this filing, the parties are in the process of negotiating a settlement that includes the purchase and sale of land as well as the refund of the advance given by TBL.

NOTE 6 – SHORT-TERM BORROWINGS
 
For fiscal year 2017 and fiscal year 2016, the Company had a total of zero and $27,762, respectively, in short-term borrowings.

NOTE 7 – NOTES PAYABLE AND LOANS - OTHERS
 
 On October 16, 2009, the Company consummated the sale of a promissory note in the principal amount of $2,000,000 (the “Bricoleur Note”) to Bricoleur Partners, L.P. (‘Bricoleur’). There was no cash interest payable on the Note and the Note had an initial maturity date of October 16, 2010 (the “Maturity Date”).  Prior to the Maturity Date, the Company could pre-pay the Bricoleur Note at any time without penalty or premium and the Note was unsecured. The Note was not convertible into the Company’s Common Stock or other securities of the Company. However, under the Note and Share Purchase Agreement (the “Bricoleur Note and Share Purchase Agreement”), effective as of October 16, 2009, by and among the Company and Bricoleur, as additional consideration for the investment in the Bricoleur Note, IGC issued 53,000 shares of Common Stock to Bricoleur. In February-March 2011, the Company finalized an agreement with Bricoleur to exchange the loan promissory note issued to Bricoleur on October 16, 2009 (the “Bricoleur Note”) for new a new loan with later maturity dates. The Bricoleur Note was extended to June 30, 2011 with no prior payments due and with no cash interest.  The Company issued additional 68,850 shares of its common stock to Bricoleur in connection with the extension of the term regarding the Bricoleur note.  As reported on a Current Report on Form 8-K filed by the Company on October 9, 2012, the Company and Bricoleur agreed to exchange the 2011 Note for a new note (the “2012 Note”), which bore no cash interest with a new maturity of December 31, 2012.  In consideration for the exchange, the Company issued 30,000 shares of IGC to Bricoleur and issued additional 34,200 shares for February and March 2013 as non-tax-deductible payments that were booked as interest.  Effective March 31, 2013, the Company and Bricoleur Partners, L.P. agreed to amend the outstanding $1,800,000 loan (“2012 Security”), subject to the same terms of the 2012 Agreement, to extend the maturity date of the 2012 Security from July 31, 2014 to July 31, 2016.  Contractually, there is no cash interest paid to Bricoleur on the Note. Instead, the parties have agreed that the Company will make a payment (booked under interest payment) of 30,000 shares of common stock for each month the loan remains unpaid, regardless of the trading price of the stock. The arrangement allows the Company and Bricoleur to pursue permanent conversion of the principal to common stock, or repayment of the principal using common stock.  During the years ended March 31, 2014, 2015, 2016 and 2017 the Company issued a total of 205,200, 232,823 305,357 and 333,956 shares each year valued at $270,522, $204,031, $114,678 and $129,816, respectively, to this debt holder, which constitutes non-tax-deductible interest payments for the Company.
 
The Company’s total interest expense was $223,464 for the year ended March 31, 2017 and $213,928 for the year ended March 31, 2016, respectively.  No interest was capitalized for the years ended March 31, 2017 and March 31, 2016.

As on March 31, 2017 the Company has five loans categorized as Loans Others totaling $392,226 at an average annual interest rate of 10%:

Loan 1: We have a loan for $59,726, due on April 25, 2018 bearing 10% annual interest rate. This loan is from one of our Advisors and former director.

Loan 2: We have a loan from an individual for $100,000, at an annual interest rate of 24%, due February 23, 2022.  There is no prepayment penalty.  The assets of the Company secure the loan.

Loan 3: We have a loan from an individual for $50,000, at an annual interest rate of 15%, due February 23, 2022.  There is no prepayment penalty.  The assets of the Company secure the loan.

Loan 4:  We have a loan of $85,000 from an affiliate of our CEO, at an annual interest rate of 15%, due February 23, 2022.  There is no prepayment penalty.  The assets of the Company secure the loan.

Loan 5:  We have a working capital loan that has a loan balance as of March 31, 2017 of $97,500 from an affiliate of our CEO, at an annual interest rate of zero percent, due February 23, 2022.  There is no prepayment penalty.  The assets of the Company secure the loan.

Please see Note 12 Related Party Transactions for more details on Other Loans.

NOTE 8 – OTHER CURRENT AND NON-CURRENT LIABILITIES
 
Other current liabilities consist of the following:
 
   
As of
March 31, 2017
   
As of
March 31, 2016
 
 
Statutory payables
 
$
15,203
   
$
31,756
 
Employee related liabilities
   
676,511
     
518,587
 
Other liabilities /expenses payable
   
-
     
534
 
Total
 
$
691,714
   
$
550,877
 
 
 Other non-current liabilities consist of the following:
 
 
As of
March 31, 2017
   
As of
March 31, 2016
 
 
Creditors
 
$
-
   
$
37,012
 
Acquisition related liabilities
   
-
     
873,571
 
Total
 
$
-
   
$
910,583
 
 
Sundry creditors consist primarily of creditors to whom amounts are due for supplies and materials received in the normal course of business.
 
NOTE 9 – OTHER INCOME & INVESTMENTS / ASSOCIATES / JOINT VENTURES
 
The total other income for the fiscal year 2017 is $119,933, which includes $78,886 from our Indian subsidiaries.

In fiscal year 2017, IGC, under the heading Investments / Associates / Joint Ventures, booked $227,472 from its disposition of Ironman and $199,700 from its 24.9% ownership of Midtown Partner LLC.
 
NOTE 10 – FAIR VALUE OF FINANCIAL INSTRUMENTS
 
The fair value of the Company’s current assets and current liabilities approximate their carrying value because of their short-term maturity. Such financial instruments are classified as current and are expected to be liquidated within the next twelve months.
 

NOTE 11 – INTANGIBLE ASSETS & GOODWILL
 
The movement in goodwill and intangible assets is given below:
 
    As of     As of  
   
March 31, 2017
   
March 31, 2016
 
Intangible assets at the beginning of the period
 
$
113,321
   
$
306,131
 
Amortization
   
(113,321
)
   
(158,780
)
Effect of foreign exchange translation
   
-
     
(34,030
)
Total Intangible assets
 
$
-
   
$
113,321
 
Goodwill of IGC International Ltd
   
-
     
982,782
 
Goodwill of Cabaran Ultima SDN BHD
   
198,169
     
198,169
 
Total  Goodwill
 
$
198,169
   
$
1,180,951
 

The value of intangible assets as of March 31, 2017 amounted to zero as compared to $113,321 as of March 31, 2016.  Decrease in goodwill is due to impairment of IGC International goodwill in books of IGC
 
NOTE 12 – RELATED PARTY TRANSACTIONS
 
We pay an affiliate of our CEO $4,500 per month for office space and certain general and administrative services rendered in Maryland.  In addition, we pay another affiliate of our CEO $6,100 per month for office and facilities in Washington State.  We believe, based on rents and fees for similar services in the Washington, D.C. metropolitan area, and Washington State that the fee charged by the affiliates are at least as favorable as we could have obtained from an unaffiliated third party and these payments are not considered, or meant to be compensation to our CEO.  The rental agreement for the Maryland location is on a month-to-month basis and may be terminated by our Board of Directors of the Company at any time without notice. The rental agreement for Washington State facilities expires on December 31, 2017, unless renewed by mutual consent.  During fiscal year ended March 31, 2017, the total rent paid to the affiliates were $54,000 for the office space (and services) in Maryland, and $73,200 for the facilities in Washington State. We expect that these expenses will remain at approximately this level during the fiscal year ending March 31, 2018.

All compensation paid to our CFO, including the 300,000 stock grants, and monthly compensation, are paid to an affiliate of our CFO, specifically a limited liability company (LLC) wholly owned by our CFO.   There are no payments, other than what is mentioned in this filing, that have been made to the CFO directly or to his LLC.  The Company treats payments and issuances of stock made to the LLC as if they are made directly to our CFO.

Loans by Related Parties:

During fiscal 2015 and part of fiscal 2016, the Company had working capital loans with a U.S. commercial bank for $250,000 at a variable interest rate ranging from 3.25% to 3.75%.  These loans are interest only loans that are personally guaranteed and securitized by our CEO.   As of March 31, 2017, these loans have been repaid.

During fiscal 2016, the Company had Hong Kong based banking facilities for $1,038,961 whose principal, interest, and other charges were guaranteed by our CEO and Sunny Tsang, the Managing Director and Founder of IGC International.  As of fiscal year end 2017, IGC and our CEO no longer guarantee these loans because IGC no longer owns IGC International.

 As of March 31, 2017, the Company has a net unpaid balance of $97,105 in compensation to our CEO.

We have a loan of $97,500 from an affiliate of our CEO, at an annual interest rate of zero percent, due February 23, 2022. There is no prepayment penalty.  This loan is shown Loan 5 in Note 7.


Loans to Related Parties

On April 30, 2015, FYE 2016, we loaned Apogee Financial Services $70,000 as working capital for Midtown partners.  The loan is outstanding as on March 31, 2017.

In FYE 2016 and FYE 2017 we funded our subsidiary TBL for $42,162 and $43,000 respectively for working capital.

 NOTE 13 – COMMITMENTS AND CONTINGENCIES
 
No significant comments and contingencies were made or existed during fiscal year 2016 and fiscal year 2017. 

NOTE 14 – PROPERTY, PLANT AND EQUIPMENT
 
Property, plant and equipment consist of the following:
 
 
 Category
 
Useful Life (years)
   
As of March 31, 2017
   
As of March 31, 2016
 
Building (flat)
   
25
   
$
241,181
   
$
1,238,569
 
Plant and machinery
   
20
     
1,710,055
     
6,666,402
 
Computer equipment
   
3
     
157,349
     
218,124
 
Office equipment
   
5
     
119,528
     
114,508
 
Furniture and fixtures
   
5
     
70,368
     
118,753
 
Vehicles
   
5
     
292,764
     
345,830
 
Assets under construction
   
N/A
     
957,880
     
4,885,844
 
Total
         
$
3,549,125
   
$
13,588,030
 
Less: Accumulated depreciation
         
$
(2,595,189
)
 
$
(6,513,593
)
Net Assets
         
$
953,936
   
$
7,074,437
 

Depreciation and amortization expense for the fiscal years ended March 31, 2017 and March 31, 2016 was $396,346 and $728,741, respectively. Capital work-in-progress represents advances paid towards the acqu