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, 2016
 
 
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, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer  
 
Accelerated filer 
Non-accelerated filer  
 
Smaller reporting company
(Do not check if a smaller reporting company)
 
 
 
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, 2015 (the last business day of the registrant's most recently completed second fiscal quarter) was $2,417,437 based on the last reported sale price of the registrant's common stock (its only outstanding equity security) of $0.19 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, 2016, there were 23,336,198 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, 2016
 
TABLE OF CONTENTS
 
 
 
Page
PART I
 
 
 
 
 
Item 1.
2
Item 1A.
9
Item 1B.
16
Item 2.
16
Item 3.
17
 
 
 
PART II
 
 
 
 
 
Item 5.
18
Item 6.
19
Item 7.
19
Item 7A.
26
Item 8.
28
Item 9.
30
Item 9A.
30
Item 9B.
31
 
 
 
PART III
 
 
 
 
 
Item 10.
32
Item 11.
35
Item 12.
40
Item 13.
41
Item 14.
42
 
 
 
PART IV
 
 
 
 
 
Item 15.
45
 
48
 

PART I
 
Item 1.                   Business
 
Business Overview and Corporate History of Our Company
 
In the United States, through our research on phytocannabinoid-based therapies, we develop intellectual property for the treatment of life altering or life threatening conditions; and for the purpose of leasing we build state-of-the-art farming facilities.  In India, and China, we lease equipment, trade commodities and electronic components, and in Malaysia we plan to develop manage and sell residential and commercial real estate.
 
Phytocannabinoids are chemical compounds that exert a range of effects on the human body, including impacting the immune response, gastrointestinal maintenance and motility, muscle functioning, and nervous system response and functioning. We have filed five provisional patents with the United States Patent and Trademark Office (“USPTO”), in the combination therapy space, for the indications of pain, medical refractory epilepsy and cachexia as part of our intellectual property strategy focused on the phytocannabinoid based health care industry. There is no guarantee that filing a provisional or a non-provisional patent application will result in a successful registration with the USPTO. In addition, when federal laws become more favorable, we intend to build leading edge facilities that we can use to grow, extract, and supply pharmaceutical grade phytocannabinoids.

In Hong Kong, through a majority owned subsidiary, we operate a trading business. Most of our revenue comes from this business. However, for some time, we have been in the process of pivoting away from this business, as there has been a macroeconomic slow-down in this sector, to higher margin niche businesses such as indoor farming, specialized construction and specialty leasing, by organically developing or acquiring this expertise.

Our strategy is to focus on businesses that can generate earnings, and to invest in and develop phytocannabinoid-based intellectual property that can build shareholder value. This important diversification, we believe differentiates us from the majority of publicly traded cannabinoid-based bio-pharmaceutical companies as it mitigates the risks inherent in the nascent cannabinoid-based bio-pharmaceutical industry.
 
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. 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, valued around $5 million, based on various factors including real estate demand in India and exchange rate. 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.  IGC-IMT was formed in December 2008, as a privately held start-up company engaged in the business of trading iron ore. Its current activity is to trade iron ore. In July 2009, IGC-M beneficially purchased 100% of IGC Materials, Private Limited (“IGC-MPL”) based in Nagpur, India, which conducts our quarrying business, and 100% of IGC Logistics, Private Limited (“IGC-LPL”) based in Nagpur, India, which is involved in the transport and delivery of ore, cement, aggregate and other materials. Together, these companies carry out our iron ore trading business in India.

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 to the defendants. It is anticipated that the lawsuit will go to trial in mid-2017. The assets of Ironman are currently shown on the balance sheet of IGC. However, adjudication of the court case in favor of IGC would mean that the Ironman assets would be removed from the balance sheet of IGC reducing the total assets and additional paid in capital. 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”).
 
In May 2014, we completed the acquisition of 51% of the 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 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 $1,052,496 on the closing date of the acquisition. As we are curtailing our low margin trading activity and realigning resources to the phytocannabinoid industry and real estate development and international project management industry, we are negotiating an exit from our ownership of Golden Gate. We anticipate exiting this acquisition and eventually the trading business.

In June 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. 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. We are negotiating a conversion of the investment into shares of a Canadian public vehicle that TerraSphere expects to merge into.

In December 2014, we entered into a Purchase Agreement with Apogee Financial Investments, Inc. (“Apogee”), the previous 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. In consideration of the initial membership interests, we issued to Apogee 1,200,000 shares of our common stock. As a result of Apogee’s inability to obtain requisite approvals to sell us their remaining interest in Midtown Partners, we will remain a 24.9% owner in Midtown Partners for the foreseeable future. We are not seeking to consummate the acquisition of the remaining interest in Midtown Partners at this time.

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 $169,758 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.

The following chart sets forth certain information regarding the corporate structure of our company and our direct and indirect consolidated operating subsidiaries. 



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 principal executive offices are located at 4336 Montgomery Avenue, Bethesda, Maryland 20814, and our telephone number is (301) 983-0998.  We maintain a website at http:// www.igcinc.us. 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.
 
Industry Overview and Target Markets of Our Company

 We are developing a product portfolio of phytocannabinoid-based therapies for the treatment of a wide range of therapeutic indications including treatment of neuropathic and cancer pain, epilepsy, end of life supportive care and debilitating pain management, and adjunctive supportive therapies of chronic neurological and oncological diagnoses, all of which are life altering or life threatening. Our target market for some of these therapies is very large. In 2012, the Journal of Pain reported that the annual estimated national cost of treating pain ranges from $560 billion to $635 billion, which is more than the cost of the nation’s priority health conditions. We are also developing veterinarian therapies including the treatment of epilepsy in dogs and cats, which represent a significantly smaller but important market. Our target market for products developed through these efforts would be humans, and veterinarian animals. There is also no guarantee that filing a provisional or a non-provisional patent application will result in a successful registration with the USPTO. For our development to become products we would have to conduct FDA approved trials that will take between five and seven years. Regulatory approvals for applications in the veterinarian space are significantly shorter and this is an area that we are focused on.

We are also designing indoor vertical farming facilities, processes and technology that allow us to position ourselves to grow legal cannabis and provide phytocannabinoids to the industry, if and when permitted by federal laws. According to a January 2013 market research report by ArcView, the legal cannabis market was about $1.43 billion and is expected to grow 64% in 2014 to about $2.34 billion.  The market is expected to grow to about $10.2 billion over the next five years based on statewide legalization. Our internal estimate, based on data from Colorado, is that the market for cannabis consumption, if all states and the federal government were to legalize recreational use of cannabis, would be about $40 billion. This is consistent with most demand-based studies that estimate the market between $10 billion to $40 billion based on a variety of variables including pricing. We expect the market for peripheral products including phytocannabinoid-based nutraceuticals and pharmaceuticals to be larger. There can be no assurance when or if U.S. federal laws will change to legalize use of cannabis.

According to new research from International Data Corporation (IDC), published in a press release on June 2, 2015, the worldwide Internet of Things market will grow from $655.8 billion in 2014 to $1.7 trillion in 2020. Devices, connectivity and IT services will make up the majority of the IoT market in 2020. Together, they are estimated to account for over two-thirds of the worldwide IoT market in 2020, with devices (modules/sensors) alone representing 31.8% of the total. By 2020, IDC expects that IoT purpose-built platforms, application software and "as a service" offerings will capture a larger percentage of revenue. We target smaller original equipment manufacturers (“OEMs”) that require electronic components for manufacturing devices like routers, lights, cameras, watches and other health care devices. Our platform allows us to connect supply chains in Japan, China and other countries with OEMs.  Our current share of the electronic trading market is less than 1% based on revenue.
 
Core Business Competencies of Our Company
 
Our business strategy in fiscal 2016 and fiscal 2017 is (i) to develop a product portfolio of phytocannabinoid-based therapies for end of care and compassionate use and develop infrastructure for extracting phytocannabinoids; and (ii) to supply electronic parts for the Internet of Things. Our core competencies in these areas are 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 receptor sites. 
·   Knowledge of the legal status of cannabis federally, in various states, and various countries.

·   A sophisticated and integrated approach to bidding, modeling, costing, management and monitoring of trading of electronic components, including an e-commerce platform that connects vendors with product manufacturers.

·   Knowledge, history and ability to work in the electronics sector in China and Hong Kong, among others, including specific knowledge of sourcing components.
 
·   Strong relationships with several important component manufactures.
 

Products and Services by Business Area in Fiscal 2016
 
Phytocannabinoid based therapies

Phytocannabinoids are chemical compounds that exert a range of effects on the human body, including impacting the immune response, gastrointestinal maintenance and motility, muscle functioning, and nervous system response and functioning. We have filed five provisional patents with the United States Patent and Trademark Office (“USPTO”), in the combination therapy space, for the indications of pain, medical refractory epilepsy and cachexia as part of our intellectual property strategy focused on the phytocannabinoid-based health care industry. In September 2015, the USPTO notified us that our provisional patent application (Prov. 62/050,864) based on a novel therapy that uses cannabinoid extracts for the treatment of pain was converted to a utility patent (PCT/US2015/050342, internal formulation IGC501). This formulation uses a combination of phytocannabinoids in a cream, for topical applications, for relieving pain in patients with psoriatic arthritis, fibromyalgia, scleroderma and other conditions. We intend to file the respective non-provisional patent application within 12 months of the provisional patent application. The American Pain Society recommends that pain be made more visible and categorized as the fifth vital sign. The treatment of pain is a great challenge for health care professionals as it often can debilitate individuals in ways that affects their day-to-day functioning, significantly impacting the nation’s productivity. Since 1999 there has been a 22 percent increase in the number of women who attribute their disability to arthritis. Health economists writing in The Journal of Pain, in September 2012, reported that the annual estimated national cost of pain ranges from $560 billion to $635 billion, more than the costs of the nation’s priority health conditions. A major disadvantage of using currently available drug therapies to treat severe chronic pain is that opioid based drugs may lead to side effects like hallucinations, constipation, sedation, nausea, respiratory depression, and dysphoria.

We have filed three phytocannabinoid based provisional patents (Prov. 1644/15, Prov. 1642/15, Prov. 1672/16) for the treatment of multiple types of seizure disorders and epilepsy in humans, dogs, and cats. About 3 million people in the United States and 50 million worldwide are affected by Epilepsy (Sander, 2003). Epilepsy is due to multiple factors including the modulation of Sodium, Potassium, GABA and NMDA channels. Modulating one or more of these receptors are required to maximally control epilepsy. It is believed that mono-therapy is adequate in up to 25 percent of patients. The onset of epileptic seizures can be life threatening including long-term implications (Lutz, 2004) including 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 the fear of consequential injury or the inability to perform daily tasks (Fisher et al., 2000). Current medications using phenytoin provoke a skin rash in 5 to 10% of patients receiving the drug for the treatment of seizures and other disorders. Seizures in dogs and cats are caused by abnormal brain activity; they can be subtle or cause violent convulsions. Some seizures only occur once but repeated seizures require treatment to prevent larger areas of the brain from becoming affected.

In addition, we have filed a phytocannabinoid based provisional patent (Prov. 1646/15) for treating cachexia and eating disorders in humans and veterinary animals. About 1.3 million humans in the United States are affected each year by cachexia which is a weakness and wasting away of the body due to severe illness such as 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. It is often seen at the end-stage of cancer (Payne, et al. 2012; Rapini et al. 2007). Cancer induced cachexia is responsible for about 20% of all cancer deaths. It physically weakens patients to the extent that response to standard treatments is poor (Lainscak, et al. 2007; Bossola, et al. 2007).

There is no guarantee that filing a provisional or a non-provisional patent application will result in a successful registration with the USPTO. In addition, when federal laws become more favorable, we intend to build leading edge facilities that we can use to grow, extract, and supply pharmaceutical grade phytocannabinoids.

Trading of electronic components
 
Our electronic trading activity currently centers on the sale of components manufactured in China and Japan to customers that make products mostly for the Internet of Things and health care. We operate an electronic e-commerce platform that connects supply chains with OEMs in China, Hong Kong, Europe, Japan and a few other countries. Global prices for electronic components have traditionally decreased over time as manufacturing moves to higher automation and lower cost areas.  Our current share of the overall market is less than 1% based on revenue. 
 

The table below gives a brief overview of our trading operations in Hong Kong:
 
Electronic components purchased and sold
 
Average total cost of components purchased
   
Average total price of components sold
 
CMOS, Medical instruments, Power supplies, Integrated circuits, LED lighting
 
$
5,489,887
   
$
6,251,802
 
 
The following are the relevant features of the trading activities carried out by our subsidiary in Hong Kong:
 
The company carries out its trading activity based on purchase orders placed by product manufacturers in China, Japan, and Hong Kong.  We, in turn, place orders with our listed vendors, located in several countries.  There are no long-term contracts both for the purchases and sales made by the subsidiary. During fiscal 2016, our subsidiary did not carry out any value addition to the components sold and the purchases were made based on spot pricing of components.  The Company does carry an inventory of components that it believes to be in high demand. There is no hedging of currency.
 
With respect to the transportation and storage of goods, our subsidiary contracts with local transportation agents for the transportation of goods and manages rental space for storage of components. We have a long-term contract for the warehouse.

In the table included under Note 14 of our consolidated financial statements, we had total property, plant and equipment of $7,074,437 as of March 31, 2016.  Of this amount, the value of the three iron ore beneficiation plants in China, including the one under construction (under capital work-in progress) was $6,198,006.  We have initiated legal proceedings against the original owners of the mines and beneficiation plants and expect a resolution in fiscal year 2017.

Construction management and rental of heavy equipment
 
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 yet to materialize.  As such, we are less focused on the rental of heavy equipment in India. Through our subsidiary, TBL, we are engaged in renting heavy 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 states.  Our current share of the overall market in India is less than 1% based on revenue.
 
Revenue Contribution by Business Area
 
The following table sets out the revenue contribution from our operating subsidiaries:
 
Operating Subsidiaries
 
Business Area
 
Fiscal Year Ended
March 31, 2016
 
TBL, Ultima
 
Construction, rental heavy equipment
 
$
114,748
 
IGC-INT
 
Trading, electronic component, commodities
   
6,251,802
 
Total IGC
 
 
 
$
6,366,550
 
  
Golden Gate Acquisition
 
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 (“Golden Gate”), from Sunny Tsang Hon Sang, the sole shareholder of Golden Gate, pursuant to the terms of a Stock Purchase Agreement by and among the parties. Golden Gate, headquartered in Hong Kong, operates an e-commerce platform for trading of commodities and electronic components. The purchase price of the acquisition consists of up to 1,209,765 shares of our common stock, valued at approximately $1,052,496 on the closing date of the Stock Purchase Agreement. The name of Golden Gate was changed to IGC International.
 

Golden Gate, headquartered in Hong Kong, operates an e-commerce platform that connects supply chains with OEMs.  Golden Gate operates several bank lines of credit facilities and uses an electronic trading e-commerce platform to position itself as the supply chain partner for equipment manufacturers, traders and service providers. It is an international broker that strives to solve urgent sourcing needs. Golden Gate was profitable in the fiscal year ended March 31, 2014, with unaudited revenue of approximately $10,000,000.
 
Pursuant to the terms of the Stock Purchase Agreement, the shares are issuable in four installments, with 205,661 shares having been issued at closing. The balance of the shares are issuable in increments of (i) 205,660 shares following the audit for our fiscal year ending March 31, 2015 for achieving target revenue of HK$75.0 million, and earnings of HK$2.25 million for the period from July 1, 2014 to March 31, 2015, (ii) 399,222 shares following the audit for our fiscal year ending March 31, 2016 for achieving target revenue of HK$160.0 million, and earnings of HK$8.0 million during the 2016 fiscal year, and (iii) 399,222 shares following the audit for our fiscal year ending March 31, 2017 for achieving target revenue of HK$235.0 million, and earnings of HK$14.0 million during the 2017 fiscal year, with the shares delivered by us in each period on a prorated basis if the earnings targets are not fully satisfied. For convenience, on June 4, 2014, the U.S. dollar foreign exchange rate in late New York trading was $1.00 =HK$7.75
 
Notwithstanding the foregoing targets, in the event Golden Gate completes an initial public offering in China or Hong Kong before September 30, 2017, and less than all of our shares have then been issued under the Stock Purchase Agreement, the remaining unissued shares will be issued to Golden Gate, provided the initial public offering price values Golden Gate higher than in accordance with this transaction.
 
The Stock Purchase Agreement provides for "put" options under various circumstances that would allow us and Golden Gate to reverse the transaction by returning each other's shares. The put option held by Mr. Tsang Hon Sang would be triggered based on our share price dropping below certain minimum preset share prices for extended periods of time or the suspension of trading or delisting of our shares. The put option held by us would be triggered if Golden Gate has accumulated negative earnings for any of the next three fiscal years, and both parties have a put option if certain loan facilities cannot be renewed or new bank loans cannot be obtained. Our current share of the electronic trading market is less than 1%. As we are curtailing our low margin trading activity and realigning resources to the phytocannabinoid industry and real estate development and international project management industry, we are negotiating an exit from our ownership of Golden Gate. We anticipate exiting this acquisition and eventually the trading business.
 
Partnership with TerraSphere Systems
 
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, IGC will own 51% of each venture once production is operational. We are negotiating a conversion of the advance into shares of a Canadian public vehicle that TerraSphere expects to merge into.

Midtown Partners & Co., LLC Purchase Agreement

On December 18, 2014, IGC entered into a Purchase Agreement with Apogee, the previous 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”), and acquired, in an initial closing, 24.9% of the outstanding membership interests in Midtown.  In consideration of the initial membership interests, we are required to issue to Apogee 1,200,000 shares of our common stock (subject to downward adjustment based on certain Q4 2014 financial statement matters).  Following the receipt of all required SEC, FINRA and other regulatory approvals, we have agreed to acquire, in a final closing, the remaining 75.1% of the outstanding membership interests in Midtown in consideration of our issuance to Apogee of an additional 700,000 shares of our common stock (subject to downward adjustment based on certain financial statement matters prior to the final closing). The agreement had a deadline of June 30, 2015, for Apogee and Midtown Partners to obtain the requisite approvals from FINRA. Apogee did not file for approval on time, and consequently pursuant to the terms of the Agreement, there are several penalties that will apply, including the cancellation of 700,000 shares of IGC stock and a penalty of $125,000 owed by Apogee to us.  We are not seeking to consummate the acquisition of the remaining interest in Midtown Partners at this time. Midtown’s market share of the investment banking market is less than 1%.

Cabaran Ultima Sdn. Bhd. Acquisition

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 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 $169,758 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. Ultima’s market share of the real estate project planning, construction, and management industry in Malaysia is less than 1%.
 
Our Customers
 
In fiscal year 2016, our customers were product developers and product manufacturers that make routers, cameras, and health care products. In India, our present and past customers include the National Highway Authority of India, several state highway authorities, the Indian railways, and private construction companies.
 
Growth and Expansion Strategy
 
Our current focus is in two areas:
 
·   Continuing with the investments in the development of a portfolio of phytocannabinoid-based therapies; and
 
·   Expanding the real estate development and management in both India and Malaysia.  

Competition and Competitive Advantage
 
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 compete with two large pharmaceutical companies, and three small companies. There are several microcap companies that also compete in this space. Our competitive advantage is based on experience and deep knowledge of medicine, biochemistry, intellectual property protection, FDA trials, extraction techniques, knowledge of plant strains, access to foreign markets where testing has less regulatory hurdles, and a strategy that is well differentiated. In the electronic trading and leasing business we compete on price, low overheads and low marketing expenses.
 
Sales and Marketing
 
For our electronic business, our sales force located in Hong Kong and China consists of individuals that have expertise and contacts in the electronic product development sector.  The sales professional follows the list of bidders for the supply of electronic components and partners with component manufacturers to bid on the order.  Much of this is automated by our e-commerce platform that connects manufacturers to product developers. Once a contract is awarded, we then ensure smooth and high quality logistics and supply to meet deadlines.  Frequently, our sales force will call on suppliers and customers and negotiate an acceptable price point for the components. Typically, the sales cycle lasts between one to two weeks.
 
Technology Platform and Intellectual Property
 
We have intellectual property attorneys that file patents or provisional patent applications for a combination of 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 and cachexia. The Company holds all rights to the patents that have been filed by us with the USPTO.

Employees and Consultants
 
As of July 14, 2016, we employed a work force of approximately 65 employees and contract workers in the United States, Hong Kong, China, India and Malaysia. We have a total of 31 full-time employees, with the rest being part-time or seasonal. In addition, we have several advisors that are highly qualified in their specific areas of expertise.
 
Governmental Regulations
 
In the United States, 25 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 such as determining drug efficacy and toxicity screening of our formulations in the US will require arduous procedural registration and approval from the DEA and sourcing from the NIDA. In order to remain compliant with both federal and state laws we have deferred testing formulations in the US and expect to pursue such testing in a foreign country where it is legal to do so. 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.
 
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 strategy with two distinct lines of business 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 nutraceutical 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 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, electronics and 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-I 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 profitability.
 
Electronics are mostly traded in U.S. dollars.  However, the supply side, including logistics in China is settled in RMB. Therefore, two and sometimes three currencies are involved in a typical trade.  Fluctuations of one currency relative to the others may adversely affect our profit margins.
  
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 electronics 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 have filed a lawsuit against Ironman that could result in a write down of our holdings in China
 
We have 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. It is anticipated that the lawsuit will go to trial in mid-2017. Adjudication of the court case in favor of IGC would mean that the Ironman assets would be removed from the balance sheet of IGC reducing IGC’s total assets and a reduction in the corresponding additional paid in capital. An adverse ruling by the court would result in a potential reevaluation or sale of Ironman assets and a possible write down of the assets.

We may not successfully register the provisional patents with the United States Patent and Trademark Office
 
We have filed five provisional patents with the United States Patent and Trademark Office (“USPTO”), in the combination therapy space, for the indications of pain, medical refractory epilepsy 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 1,165,265 shares of our common stock and stock options to purchase 130,045 shares of our common stock.  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 $0.14 and a high of $0.83 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 prohibits 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 is inexperienced in maintaining books and records and preparing financial statements in accordance with U.S. GAAP and SEC rules and regulations and may make unintentional errors.
 
Our accounting personnel are located in India, Hong Kong, Malaysia, China and the United States, primarily near our businesses.  The staff in Malaysia is new, as they were part of an acquisition made in 2016. While training is ongoing, we cannot guarantee that they will not make a mistake. We have addressed this by hiring consultants with sufficient background in SEC reporting and filing requirements and training staff on accounting and reporting controls and procedures.  In addition, we have engaged a legal firm with extensive SEC reporting expertise and an individual with extensive SEC and GAAP reporting experience to help us with our disclosure controls and procedures and internal controls over financial reporting.  However, despite these efforts, a mistake in our ability to prepare financial statements and maintain 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 new 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 substantially in foreign countries, we experience increased legal, accounting and other expenses.  In addition, the new rules implemented by the SEC and the NYSE MKT have imposed various requirements on public companies, including requiring changes in corporate governance practices.  Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. We expect to take actions that include the curtailment of activity whose reporting and compliance costs exceed any present or future shareholder benefit.  We also anticipate installing improved systems and processes. However, we cannot be certain as to the timing or completion of the remediation actions, or their full impact on our operations.  Furthermore, it is difficult to hire personnel in India, Malaysia and China who have sufficient experience with U.S. GAAP and SEC rules and regulations. We do not foresee a problem other than the time and increased cost required to hire qualified individuals, complete the training and to implement the improved processes.  However, until then we may experience delays in the preparations of financial statements and related disclosures.

Material weaknesses in our internal controls and financial reporting, and our lack of accounting personnel with sufficient U.S. GAAP experience may limit our ability to prevent or detect financial misstatements or omissions.  As a result, our financial reports may not always comply with U.S. GAAP and the Accounting Standards Codification.  Any material weakness, misstatement or omission in our financial statements will negatively affect the market, and price of our stock which could result in significant loss to our investors.
 
We have not had a chief financial officer with significant U.S. GAAP or SEC reporting experience. Our strategy to supplement the gap in reporting knowledge or experience is to use the advisory services of experts. Although we are actively seeking individuals with sufficient knowledge of U.S. GAAP and Accounting Standards Codification and SEC rules and regulations, qualified individuals with necessary language and geographic experience are proving to be difficult to find. Therefore, we may experience “weakness” and potential issues in implementing and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act. This “weakness” also includes a deficiency, or combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.  Management has identified a weakness relating to our company not having sufficient experienced personnel with the requisite technical skills and working knowledge of the application of U.S. GAAP, and internal controls over financial reporting, particularly with our reporting in China.  Projections of any evaluation of effectiveness to future periods are also subject to the risk that controls may become inadequate because of new acquisitions, changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  This may result in significant deficiencies or material weaknesses in our internal controls, which could affect the reliability of our financial statements and prevent us from complying with SEC rules and regulations.  Failure to comply or adequately comply with any laws, rules, or regulations applicable to our business may result in fines or regulatory actions, which may materially adversely affect our business, results of operation, or financial condition and could result in delays in achieving either the effectiveness of a registration statement or the development of an active and liquid trading market for our common stock.  To the extent that the market place perceives that we do not have a strong financial staff and internal controls over financial reporting, the market for and price of our stock may be impaired.
 
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, market new products and services, including but not limited to real estate in Malaysia, leasing products in India, Malaysia and the USA, and achieve customer acceptance in the industries we serve;
·
our ability to accurately predict the future demand of our products;
·
competition in exploiting phytocannabinoids for pharmaceutical and nutraceutical applications;
·
federal and state legislation and administrative policy for 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, India, and China; 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 principal executive offices are located at 4336 Montgomery Avenue, Bethesda, Maryland 20814.  TBL’s headquarters are located in Kochi, India. IGC International is located in Hong Kong. PRC Ironman is located in Linxi, Inner Mongolia, PRC.  Cabaran Ultima’s is located in Kuala Lumpur, Malaysia. In addition, we have offices or representatives in Mauritius, and Nagpur, India.
 
We pay IGN, LLC, an affiliate of Ram Mukunda, our President and Chief Executive Officer, $4,500 per month for office space and certain general and administrative services in the United States.  We believe, based on rents and fees for similar services in the Washington, D.C. metropolitan area, that the fee charged by IGN LLC is at least as favorable as we could have obtained from an unaffiliated third party. The agreement is on a month-to-month basis and may be terminated by our Board of Directors at any time without notice.
 
During the fiscal year ended March 31, 2016, total rent expense was $54,000. We expect that this expense will remain at approximately this level during the fiscal year ending March 31, 2017.
 
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 2016, our company operated through its subsidiaries in India, Hong Kong and Malaysia.
 
In fiscal 2016, 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 a gross value of $58,195.  Our subsidiary TBL has an apartment located in Cochin, India with a gross value of $63,165.
 
PRC Ironman owns three beneficiation plants in Linxi, Inner Mongolia. The beneficiation plants consist of buildings with a gross value of $1,002,484, plant and equipment with gross value of $4,992,484 and construction in progress with a gross value of $4,027,354 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.  The production capacity depends on the quality of raw materials used.  For example, using low grade iron ore with 3% FE content, the plants are designed to produce between 6,000 and 10,000 tons of high grade iron ore a month.  These plants were not operational in fiscal 2016. These assets are part of the lawsuit filed by IGC against the 24 shareholders of Ironman. 


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 operates through its subsidiaries:
 
Location
 
Nature of Activity
 
Type of License Required
 
Type of License held
 
Encumbrances in Obtaining Permit
USA
 
Phytocannabinoid research and facilities
 
General business, (DEA clearance, FDA approvals eventually required in the future)
 
General business licenses
 
In fiscal 2016 we did not apply for DEA permits.
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 2016.
China
 
1. Beneficiation plant
2. Trading in iron ore
 
Permit to beneficiate
 
Business license to beneficiate iron ore and trade iron ore
 
Subject to lawsuit filed by IGC against the 24 shareholders of Ironman
Hong Kong
 
Trading of electronic components
 
General business license
 
General business license
 
There were no encumbrances in maintaining the business license in fiscal 2016
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 2016
 
Item 3.                   Legal Proceedings
 
There are no material pending or threatened legal proceedings against IGC.
 





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 warrants, subsequent to their delisting from the NYSE Market, 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 NYSE MKT.  The quotations listed below reflect inter dealer prices, without retail markup, markdown or commission, and may not necessarily represent actual transactions. The prices of the common stock reported in the table have been adjusted to reflect the 1-for-10 reverse stock split effected on April 19, 2013. This is done for ease of comparison and the convenience of the reader. 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, 2014
   
2.00
     
0.65
     
0.03
     
0.01
 
September 30, 2014
   
1.48
     
0.70
     
0.03
     
0.01
 
December 31, 2014
   
0.83
     
0.60
     
0.01
     
0.01
 
March 31, 2015
   
0.70
     
0.41
     
0.02
     
0.01
 
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
   
0.52
     
0.46
     
-
     
-
 
July 11, 2016
   
0.59
     
0.55
     
-
     
-
 

On July 11 2016, the last reported sale price of our common stock, as reported on the NYSE MKT, was $0.57 per share.
 
Securities Authorized for Issuance Under Equity Compensation Plans
 
The following table shows, as of March 31, 2016, 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 (2)
 
$
130,045
 (3)  
$
5.60
   
$
1,117,273
 
_______________
 
(1) Consists of our 2008 Omnibus Incentive Plan, as amended.  See Note 16, “Stock-Based Compensation” of the Notes to the Consolidated Financial Statements included in this report.
 

(2) Includes grants during fiscal years ended March 31, 2010, 2012, 2013, 2014, 2015 and 2016. There were no grants during the fiscal year ended March 31, 2009, 2011.
 
(3) The number of options outstanding is 1,300,450 with an average exercise price of $0.56. Each option exercised at an average price of $0.56 entitles the holder to one tenth of a share of common stock. Therefore, 10 options each exercised at $0.56 for an aggregate price of $5.60 entitle the holder to one share of common stock. The total number of securities to be issued upon the exercise of all outstanding options is 130,045 shares. The options expire on June 27, 2016.
 
Holders
 
As of June 29, 2016, we had approximately 3,200 holders of record of our common stock, and approximately 2,000 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, 2016, 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 fourth quarter of our fiscal year ended March 31, 2016, we made no purchases of our own equity securities.
 
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, 2016 and 2015 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.
 
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, 2016 and 2015, 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) HK Ironman stockholders in exchange for HK Ironman stock; to (2) Golden Gate Electronics Ltd (“GG”) in exchange for GG stock; to (3) Apogee Financial in exchange for Midtown Partners stock; and to Cabaran Ultima (“Ultima”) in exchange for Ultima’s stock, as contemplated by the respective stock purchase agreements between the Company and HK Ironman, PRC 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 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 are 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.
 
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, IGC International and Cabaran Ultima, which are two of the legal entities in Hong Kong and in Malaysia, respectively, are 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.
 

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 land is determined based on an independent appraisal of the land held by Sricon.  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 $2,921 in fiscal year 2016.
 
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.

Disclosures for Investments in Certain Entities That Calculate Net Asset Value (NAV) per Share: In May 2015, the FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which is intended to reduce diversity in practice related to the categorization of investments measured at NAV within the fair value hierarchy. The ASU removes the current requirement to categorize investments for which fair value is measured using the NAV per share practical expedient within the fair value hierarchy. Adoption of the ASU did not have a material effect on the Company’s financial statements.

Debt Issuance Costs: In April 2015, the FASB issued Accounting Standards Update (ASU) 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, to conform the presentation of debt issuance costs to that of debt discounts and premiums. Thus, the ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The guidance is effective beginning on January 1, 2016. Early adoption is permitted, including adoption in interim period. The company is evaluating the effect that ASU 2015-03 will have on its Consolidated Financial Statements.

Consolidation: In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is intended to improve certain areas of consolidation guidance for legal entities such as limited partnerships, limited liability companies, and securitization structures. The ASU will reduce the number of consolidation models. The ASU will be effective on January 1, 2016. Early adoption is permitted, including adoption in an interim period. The Company is evaluating the effect that ASU 2015-02 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 when it becomes effective on January 1, 2017. Early application is not permitted. 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.

Discontinued Operations and Significant Disposals: In April 2014, the FASB issued ASU 2014-08 “Presentation of Financial Statements (Topic 810) and Property, Plant, and Equipment” (Topic 360), “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU 2014-08 provides a narrower definition of discontinued operations than under previous U.S. GAAP. ASU 2014-08 requires that a disposal of components of an entity (or groups of components) be reported as discontinued operations if the disposal represents a strategic shift that will have a major effect on the reporting entity’s operations and financial results. ASU 2014-08 is effective prospectively for disposals (or classifications of businesses as held-for-sale) of components of an entity that occur in annual or interim periods beginning after December 15, 2014. Additionally, the ASU requires expanded disclosures about discontinued operations that will provide more information about the assets, liabilities, income and expenses of discontinued operations. The impact of adopting the ASU was not material.
 
Results of Operations
 
Fiscal Year ended March 31, 2016 compared to Fiscal Year ended March 31, 2015
 
The following table presents an overview of our results of operations for the fiscal years ended March 31, 2016 and 2015:
 
   
Year ended
March 31
   
Year ended
March 31
             
   
2016
   
2015
   
Change
   
Percent Change
 
Revenue
 
$
6,366,550
   
$
7,680,257
     
(1,313,707
)
   
(17.10
)
Cost of revenues
   
(5,523,256
)
   
(7,100,568
)
   
1,577,312
     
(22.21
)
Selling, General and Administrative expenses
   
(2,702,753
)
   
(4,140,434
)
   
1,437,681
     
(34.72
)
Depreciation
   
(728,741
)
   
(781,546
)
   
52,805
     
(6.76
)
Impairment loss – goodwill
                   
0
     
0.00
 
Loss of investment /joint venture /associates
   
(317,510
)
           
(317,510
)
   
100.00
 
Operating income (loss)
 
$
(2,905,710
)
 
$
(4,342,291
)
   
1,436,581
     
(33.08
)
Interest and other financial expenses
   
(213,928
)
   
(286,332
)
   
72,404
     
(25.29
)
Interest Income
   
2,085
     
6,799
     
(4,714
)
   
(69.33
)
Other Income (loss)
   
284,186
     
(56,367
)
   
340,553
     
(604.17
)
Income before income taxes and minority interest attributable to non-controlling interest
 
$
(2,833,367
)
 
$
(4,678,191
)
   
1,844,824
     
(39.43
)
Tax benefit/(expense)
   
(579
)
   
(5,157
)
   
4,578
     
(88.77
)
Income/Loss after income taxes
 
$
(2,833,946
)
 
$
(4,683,348
)
   
1,849,402
     
(39.49
)
 
Revenue– Total revenue was about $6.36 million for the year ended March 31, 2016, as compared to about $7.68 million for the year ended March 31, 2015, a decrease of about 17.4%. In both fiscal years our main revenue driver was electronic component trading. In fiscal year 2015, we diversified away from iron ore to electronic components through the acquisition of Golden Gate in Hong Kong. The decrease in revenue is based on the volume and product diversity of electronic components. 
 
Cost of Revenue– Cost of electronic components consists of primarily of the cost of purchasing components from the manufactures, transportation, storage costs, local fees, handling and other logistic costs. The cost of revenue decreased in 2016 as a result of a decrease in revenue. Cost of revenue was about $5.52 million in 2016 as compared to about $7.1 million in 2015. The cost of revenue as a percentage of the revenue was approximately 86% during fiscal 2016 as compared to 92% during fiscal 2015. The decrease in the cost of revenue in 2016 over 2015 is based on lower cost of purchasing components from component manufacturers.
 
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 $2.7 million for fiscal 2016 as compared to about $4.14 million for fiscal 2015, a decrease of 34.8%. The overall SG&A for fiscal 2016 consists primarily of (i) non-cash charges associated with ESOP and other share issuances; (ii) one-time expenses associated with raising capital and the acquisition of Ultima; and (iii) some non-cash R&D expenses for the development of phytocannabinoid therapies. Adjusted for these events, the SG&A for fiscal 2016 reflects a steep cut in expenses associated with a further realignment of resources with the current business plan.
 

Depreciation and amortization– The depreciation and amortization expense was about $0.73 million in 2016 as compared to about $0.78 million in fiscal year 2015.
 
Operating income (loss)– Loss from operations was about $2.9 million in fiscal year 2016, as compared to about $4.34 million in fiscal year 2015. The lower operating loss year over year is attributed to lower SG&A. In the operating loss we include $0.73 million of depreciation mostly associated with the beneficiation equipment in China that is not in operation.
 
Interest and other financial expense – The interest expense for the year ended March 31, 2016 was about $0.21 million as compared to about $0.29 million for the year ended March 31, 2015. The payment of interest by the Company is made through the issuance of a fixed amount of stock. Therefore, most of the interest expense is non-cash.
 
Interest income – The interest income for the year ended March 31, 2016 was about $2,085 as compared to about $6,799 for fiscal year 2015.
 
Other income – In fiscal year 2016, we reported a gain of about $0.28 million in other income, and a loss of about $0.06 million in other income in fiscal year 2015. Our operational currencies are the Indian rupee (INR), the Chinese yuan (RMB), the Hong Kong dollar (HKD) and Malaysian ringgit (RM). In fiscal 2016 and fiscal 2015 the Indian rupee weakened, the Chinese currency strengthened and the Hong Kong dollar remained unchanged as it is pegged to the U.S. dollar. The gain in fiscal 2016 was the result of the sale of land by TBL.
 
Deferred Income tax credit – We had an income tax credit of about $0.35 million for the year ended March 31, 2016 as compared to the credit of about $0.32 million for the year ended March 31, 2015. The income tax credit in fiscal 2016 is not shown on the 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 2016 by $1.29 million, primarily related to US net-operating losses.  The company intends to maintain valuation allowances for deferred tax assets until there is sufficient evidence to support the reversal of the valuation allowance.  Deferred tax assets relating to foreign acquisitions costs are expected to be utilized. Therefore, those deferred tax assets remain as part of deferred tax assets.
 
Net loss – The Company had a loss of about $2.8 million for fiscal year 2016 as compared to a loss of about $4.6 million for fiscal year 2015.
 
Balance sheet explanations

Accounts receivable – Our accounts receivable for fiscal 2016 is about $0.96 million and for fiscal 2015 was about $0.99 million. The accounts receivable in fiscal 2016 decreased as our revenue decreased. The primary component of the accounts receivable in fiscal 2016 are receivables from electronic customers and from a construction claim in the amount of $0.47 million that has been awarded to our subsidiary in India. We expect to collect this amount in the next 12 months.
 
Inventory –  In fiscal year 2016, our inventory was about $0.16 million and in fiscal year 2015 was about $0.71 million.  In fiscal year 2016 our inventory consists of electronic components. The electronic component inventory decreased substantially as we started to wind down the business.

Property, plant and equipment, net - As of March 31, 2016, our PP&E net of depreciation is about $7.07 million and, at March 31, 2015, was about $7.78 million.

Investment others – In fiscal year 2016, our investment was about $5.17 million and at March 31, 2015 it was about $0.03 million. The increase in investment stems from the acquisition of land in Nagpur India that was part of the settlement with Sricon. This is a reclassification from Investment in affiliates.

Investment in affiliates –  In fiscal year 2016, our investment in affiliates was about $0.61 million and at March 31, 2015 it was about $6.0 million. The decrease in Investment in affiliates reflects the reclassification between Investment others and Investment in affiliates.

Intangible assets and goodwill – The value of intangible assets as of March 31, 2016 amounted to about $1.29 million as compared to about $1.29 million as of March 31, 2015. There has been an increase in goodwill associated with the acquisition of Ultima in Malaysia which is offset against the amortization of goodwill.
 
Liabilities – The total liability as of March 31, 2016 was about $4.91 million as compared to $5.58 million as of March 31, 2015, a decrease of about $0.68 million. The majority of the decrease comes from our decreased use of short and long term borrowing from banking facilities for the trading of electronic components. We deployed cash from our reserves and from banking facilities to trading electronic components.


Working Capital – Our working capital as of March 31, 2016, is about $0.64 million.
 
Non-controlling interest – The non-controlling interest of $0.47 million in fiscal 2016 is attributed to our 95% ownership of H&F Ironman Ltd.,51% ownership of IGC International and Cabaran Ultima's subsidiaries.
 
Liquidity and Capital Resources
 
This liquidity and capital resources discussion compares the consolidated company results for the years ended March 31, 2016 and 2015. At the end of fiscal year 2016, the Company has about $1.49 million in cash and cash equivalents. In fiscal 2016, 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 $0.86 million. The cash burn is primarily associated with public company expenses, with our large operating subsidiary at 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 2016 and 2015 are shown below.
 
  
Fiscal Year Ended
 
Total Cash held by
foreign subsidiaries
 
March 31, 2016
 
$
611,831
 
March 31, 2015
 
$
724,386
 
 
We intend to repatriate cash from our subsidiaries. Repatriation of funds from Hong Kong does not require any clearances. However, 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 have retained an Indian Foreign Exchange Expert 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 is due on July 31, 2016, as reported in a Current Report on Form 8-K filed by the Company on March 26, 2014.
 
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 Hong Kong, the Company’s customers are companies that build electronic products and are involved in the Internet of Everything and the health care sectors.  In India, the Company’s customers are construction companies and agricultural companies.  In China the Company’s customers are the steel mills and iron ore traders. The loss of a significant client may have a short-term adverse effect on the Company.  The concentration of our revenue in fiscal year 2016 was that we received 80% of our revenue from forty customers.  Further, the three largest customers contributed 15% to our revenue.
 

Commodity Prices and Vendor Risk
 
The Company is affected by the availability, cost and quality of electronic components.  These prices and supply depend on factors beyond the control of the Company, including general economic conditions and competition.  The Company typically keeps inventory of high demand components. We do not currently hedge pricing and do not have forward contracts, which may expose the Company to risks related to falling prices. However, as a precaution, we keep inventory turnover fairly fast and diversified to mitigate this risk.  
 
Labor Risk
 
We see limited labor risk in India, Hong Kong, 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 are mitigating this risk by hiring local consultants and staff who can manage the 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.  A typical trading contract requires that we furnish an earnest money deposit, a performance guaranty and the ability to discount letters of credit. As interest rates rise, our cost of capital is expected to increase and that may impact our margins.
 
Exchange Rate Sensitivity
 
Our subsidiary in Hong Kong, IGC International Ltd., conducts 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, conducts 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. dollars 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 2016 based on the average exchange rate used for fiscal year 2015 to highlight the impact of exchange rate changes on IGC’s revenue and expenses.
 
   
As of March 31, 2016
                   
   
Current Exchange
   
Previous Exchange
   
 
   
Percentage
 
   
Rate
   
Rate
    Change    
change
 
                         
Total Income
 
$
6,366,550
   
$
6,400,274
     
(33,724
)
   
-0.53
%
Total expenses before Taxes
 
$
(9,199,917
)
 
$
(9,332,555
)
   
132,638
     
-1.44
%
                                 
                                 
Net
 
$
(2,833,367
)
 
$
(2,932,281
)
   
98,914
         
 
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)
2006-07
 
INR 45.11 per USD
 
INR 43.10 per USD
2007-08
 
INR 40.13 per USD
 
INR 40.42 per USD
2008-09
 
INR 46.49 per USD
 
INR 50.64 per USD
2009-10
 
INR 47.91 per USD
 
INR 44.95 per USD
2010-11
 
INR 44.75 per USD
 
INR 44.54 per USD
2011-12
 
INR 47.715/RMB 6.29 per USD
 
INR 50.89/RMB 6.30 per USD
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
 
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 FINANCIAL STATEMENTS

 
Page
India Globalization Capital, Inc.
 
  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, 2016 and 2015, 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, 2016.  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, 2016 and 2015, and the results of their operations and their cash flows for each of the years in two-year period ended March 31, 2016, 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 14, 2016
 

 
INDIA GLOBALIZATION CAPITAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Audited)
 
All amounts in USD except share data
 
As of
 
 
 
31-March - 16
   
31-March - 15
 
 
 
(audited)
   
(audited)
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
1,490,693
   
$
824,492
 
Accounts receivable, net of allowances
   
962,658
     
993,296
 
Inventories
   
162,091
     
709,649
 
Prepaid expenses and other current assets
   
1,226,507
     
1,950,295
 
Total current assets
 
$
3,841,949
   
$
4,477,732
 
Goodwill
   
1,180,951
     
982,782
 
Intangible Assets
   
113,321
     
306,131
 
Property, plant and equipment, net
   
7,074,437
     
7,784,447
 
Investments in affiliates
   
609,148
     
5,997,058
 
Investments-others
   
5,175,392
     
30,477
 
Deferred Income taxes
   
356,684
     
318,548
 
Other non-current assets
   
507,300
     
434,284
 
              Total long-term assets
 
$
15,017,233
   
$
15,853,727
 
Total assets
 
$
18,859,182
   
$
20,331,459
 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities:
               
Short -term borrowings
   
27,762
     
1,280,356
 
Trade payables
   
330,631
     
174,584
 
Accrued expenses
   
300,111
     
422,252
 
Loans - others
   
189,680
     
73,707
 
Notes payable
   
1,800,000
      -  
Other current liabilities
   
550,877
     
496,985
 
Total current liabilities
 
$
3,199,061
   
$
2,447,884
 
Long -term borrowings
   
801,467
     
323,904
 
Notes payable
   
-
     
1,800,000
 
Other non-current liabilities
   
910,583
     
1,009,889
 
   
$
1,712,050
   
$
3,133,793
 
Total liabilities
 
$
4,911,111
   
$
5,581,677
 
Stockholders' equity:
               
  Common stock — $.0001 par value; 150,000,000 shares authorized; 14,766,333 issued and outstanding as of March 31, 2015 and 23,265,531 issued and outstanding as of March 31, 2016.
 
$
2,327
   
$
1,477
 
 Additional paid-in capital
   
65,885,243
     
63,479,918
 
 Accumulated other comprehensive income
   
(2,269,357
)
   
(1,913,585
)
 Retained earnings (Deficit)
   
(50,142,199
)
   
(47,333,955
)
Total equity attributable to Parent
 
$
13,476,014
   
$
14,233,855
 
  Non-controlling interest
 
$
472,057
   
$
515,927
 
Total stockholders' equity
 
$
13,948,071
   
$
14,749,782
 
Total liabilities and stockholders' equity
 
$
18,859,182
   
$
20,331,459
 

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 share data
 
 
 
Year ended March 31,
 
 
2016
   
2015
 
 
           
 Revenues
 
$
6,366,550
   
$
7,680,257
 
     Cost of revenues (excluding depreciation)
   
(5,523,256
)
   
(7,100,568
)
     Selling, general and administrative expenses
   
(2,702,753
)
   
(4,140,434
)
     Depreciation
   
(728,741
)
   
(781,546
)
Loss on investments / associates /joint ventures
   
(317,510
)
       
    Operating income (loss)
 
$
(2,905,710
)
 
$
(4,342,291
)
      Interest expense
   
(213,928
)
   
(286,332
)
      Interest income
   
2,085
     
6,799
 
     Other income, net
   
284,186
     
(56,367
)
     Income before income taxes and minority interest attributable to non-controlling interest
 
$
(2,833,367
)
 
$
(4,678,191
)
      Income taxes benefit/ (expense)
   
(579
)
   
(5,157
)
      Net income/(loss)
 
$
(2,833,946
)
 
$
(4,683,348
)
 
               
  Non-controlling interests in earnings of subsidiaries
   
(25,702
)
   
(69,165
)
Net income / (loss) attributable to common stockholders
 
$
(2,808,244
)
 
$
(4,614,183
)
Earnings/(loss) per share attributable to common stockholders:
               
      Basic
 
$
(0.17
)
 
$
(0.31
)
      Diluted
 
$
(0.17
)
 
$
(0.31
)
Weighted-average number of shares used in computing earnings per share amounts:
               
      Basic
   
16,387,290
     
14,755,893
 
      Diluted
   
16,387,290
     
14,755,893
 

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)
 
 
 
Year ended March 31
 
 
 
2016
   
2015
 
 
 
IGC
   
Non-controlling interest
   
Total
   
IGC
   
Non-controlling interest
   
Total
 
Net income / (loss)
 
$
(2,808,244
)
 
$
(25,702
)
 
$
(2,833,946
)
 
$
(4,614,183
)
 
$
(69,165
)
 
$
(4,683,348
)
Foreign currency translation adjustments
   
(355,772
)
   
-
     
(355,772
)
   
103,230
             
103,230
 
Comprehensive income (loss)
 
$
(3,164,016
)
 
$
(25,702
)
 
$
(3,189,718
)
 
$
(4,510,953
)
 
$
(69,165
)
 
$
(4,580,118
)
 
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 share data
 
 
                                         
 
 
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, 2014
   
9,373,569
   
$
937
   
$
58,362,834
   
$
(42,719,772
)
 
$
(2,016,815
)
 
$
518,112
   
$
14,145,296
 
                                                         
Bricoleur loan interest payments
   
232,823
     
23
     
204,008
                             
204,031
 
ESOP & IR Shares
   
1,752,465
     
175
     
885,471
                             
885,646
 
ATM Sale
   
2,001,815
     
201
     
2,960,821
                             
2,961,022
 
Purchase consideration - Golden Gate Electronics Ltd
   
205,661
     
21
     
178,904
                             
178,925
 
Acquisition of Midtown Partners & Co. LLC
   
1,200,000
     
120
     
887,880
                             
888,000
 
Loss on Translation
                                   
103,230
             
103,230
 
Net income for non-controlling interest
                                           
(69,165
)
   
(69,165
)
Net income / (loss)
                           
(4,614,183
)
                   
(4,614,183
)
NCI on acquisition of Golden Gate Electronics Ltd
                                           
66,980
     
66,980
 
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
     
1,809,538
                             
1,810,120
 
ATM Sale
   
1,358,769
     
137
     
331,917
                             
332,054
 
Acquisition of Cabaran Ultima SDN BHD
   
998,571
     
100
     
169,657
                     
(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
)
NCI on acquisition
                                                   
-
 
Balance at March 31, 2016
   
23,265,531
   
$
2,327
   
$
65,885,243
   
$
(50,142,199
)
 
$
(2,269,357
)
 
$
472,057
   
$
13,948,071
 
 
The accompanying notes should be read in connection with the financial statements.
 
INDIA GLOBALIZATION CAPITAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Audited)
 
 
 
Year ended March 31
 
 
 
2016
   
2015
 
Cash flows from operating activities:
           
Net income (loss)
 
$
(2,833,946
)
 
$
(4,683,348
)
Adjustment to reconcile net income (loss) to net cash:
               
Deferred taxes
   
579
     
5,157
 
Depreciation
   
728,741
     
781,546
 
Write back of liability (non-cash)
   
(13,495
)
       
Unrealized foreign exchange gain/loss
   
-
     
90,113
 
Bad debts written off and Creditors restated
   
80,434
     
411,034
 
Non-cash interest expenses
   
94,243
     
204,031
 
ESOP and other stock related expenses
   
214,254
     
833,127
 
IR and other shares
   
184,004
     
52,519
 
Loss of Investment /joint venture /associates
   
317,510
         
Changes in:
               
Accounts receivable
   
80,461
     
146,985
 
Inventories
   
545,293
     
646,662
 
Prepaid expenses and other assets
   
504,005
     
(750,466
)
Trade payables
   
(28,531
)
   
(122,010
)
Other current liabilities
   
90,888
     
406,325
 
Other non – current liabilities
   
-
     
(616,526
)
Non-current assets
           
7,437
 
Accrued Expenses
   
(122,142
)
   
3,772
 
Net cash provided/(used) in operating activities
 
$
(157,702
)
 
$
(2,583,642
)
 
               
Cash flow from investing activities:
               
Proceeds from non-current investment
   
(76,290
)
       
Purchase of property and equipment
   
(122,185
)
   
(76,527
)
Deposits towards acquisition (net of cash acquired)
   
16,405
     
165,908
 
Non-current assets
   
(1,352
)
   
(607,469
)
Net cash provided/(used) by investing activities
 
$
(183,422
)
 
$
(518,088
)
Cash flows from financing activities:
               
Issuance of equity stock
   
1,743,967
     
2,961,022
 
Net movement in short-term borrowings
   
(1,252,594
)
   
369,999
 
Proceeds /(repayment) from long-term borrowing
   
398,660
         
Proceeds from loans
   
121,194
     
(431,307
)
Proceeds from Notes payable
               
Net cash provided/(used) by financing activities
 
$
1,011,227
   
$
2,899,714
 
 
               
Effects of exchange rate changes on cash and cash equivalents
   
(3,902
)
   
(57
)
Net increase/(decrease) in cash and cash equivalents
   
666,201
     
(202,073
)
Cash and cash equivalent at the beginning of the period
   
824,492
     
1,026,565
 
Cash and cash equivalent at the end of the period
 
$
1,490,693
   
$
824,492
 
 
               
Supplementary information:
               
Cash paid for interest
 
$
119,687
   
$
82,301
 
Cash paid for taxes
 
$
-
   
$
-
 
Non-cash items:
               
Common stock issued for interest payment on notes payable
 
$
94,243
   
$
204,031
 
Common stock issued including ESOP, Consultancy & IR
 
$
398,258
   
$
885,646
 
Supplementary information for non-cash financing activities
               
Investment in IGC International Ltd
 
$
-
   
$
178,925
 
Investment in Midtown Partners and Co. LLC
 
$
-
   
$
888,000
 
Investment in Cabaran Ultima SDN BHD
 
$
169,758
   
$
-
 
 
The accompanying notes should be read in connection with the financial statements.

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

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

In the United States, the Company conducts research on phytocannabinoid-based therapies and develops intellectual property, for the treatment of life altering or life threatening conditions, and for the purpose of leasing IGC builds state-of-the-art farming facilities. The operations of IGC are based in USA, Hong Kong, India, and Malaysia. It is headquartered in the United States.

IGC owns 51% of a subsidiary in Hong Kong called IGC International Ltd., 100% of a subsidiary in Mauritius called IGC-Mauritius (“IGC-M”) and 100% of another subsidiary in Hong Kong (“HK Ironman’).  IGC-M in turn operates through four subsidiaries in India.  IGC-M owns one hundred percent (100%) of each Techni Bharathi, Limited (“TBL”), IGC India Mining and Trading Private Limited (“IGC-IMT”), IGC Logistic Private Limited (“IGC-L”), and IGC Materials Private Limited (“IGC-MPL”). HK ironman operates through Linxi HeFei Economic and Trade Co., aka Linxi H&F Economic and Trade Co., a People’s Republic of China-based company ("PRC Ironman"), in which it owns a 95% equity interest. IGC also owns 100% of a subsidiary in Malaysia called Cabaran Ultima (“Ultima”).

The accompanying consolidated financial statements have been prepared in conformity with United States Generally Accepted Accounting Principles (U.S. GAAP). The financial statements include all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of such financial statements.  The Company’s current fiscal year ends on March 31, 2016.
 
a) India Globalization Capital, Inc.
 
IGC, a Maryland corporation organized on April 29, 2005 as a blank check company formed for the purpose of acquiring one or more businesses with operations primarily in India, China, Hong Kong and now Malaysia, through a merger, capital stock exchange, asset acquisition or other similar business combination or acquisition. On March 8, 2006, the Company completed an initial public offering.  On February 19, 2007, the Company incorporated India Globalization Capital, Mauritius, Limited (IGC-M), a wholly owned subsidiary, under the laws of Mauritius.  On March 7, 2008, the Company consummated the acquisition of 63% of the equity of Sricon Infrastructure Private Limited (Sricon) and 77% of the equity of Techni Bharathi Limited (TBL).   Effective October 1, 2009, we reduced our stake in Sricon from 63% to 22% in consideration for the set off of the loan owed by IGC approximating $17.9 million. In March 31, 2013, IGC became the 100% owner of TBL by purchasing the remaining 23.1% shares from TBL’s promoters. 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, valued at approximately $5 million, based on various factors including the exchange rate. 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 February 19, 2009 IGC-M beneficially purchased 100% of IGC Mining and Trading, Limited based in Chennai India. On July 4, 2009 IGC-M beneficially purchased 100% of IGC Materials Private Limited, and 100% of IGC Logistics, Private Limited.  Both these companies are based in Nagpur, India.  

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."
 
IGC India Mining and Trading Private Limited (IGC-IMT), IGC Materials Private Limited (IGC-MPL), and IGC Logistics Private Limited (IGC-LPL) were incorporated for IGC by three different Indian citizens, who acted as the initial directors of these companies as our nominees. This is in accordance with the regulatory requirements for incorporation of companies. Once the companies were incorporated, IGC purchased the shares from the individuals. No premium was paid. None of these companies were operational at the time of purchase and therefore no revenues and earnings were recorded. The individuals were reimbursed for the amounts they paid to incorporate the companies. Please see the below table for further details:
 
Acquired Company
 
Initial Capitalization
 
Purchase Price
IGC – IMT
 
INR
 100,000  ($2,100)
 
INR
 100,000
IGC – MPL
 
INR
 100,000  ($2,100)
 
INR
 100,000
IGC – LPL
 
INR
 100,000  ($2,100)
 
INR
 100,000
 
In order to comply with regulatory requirements, the above companies were incorporated on behalf of IGC, and IGC subsequently purchased these companies at book value. Therefore, effectively, these are not acquisitions but incorporations by IGC. 

The registered capital of PRC Ironman is RMB 2,000,000, equaling to USD $273,800, in which Mr. Zhang Hua owned 80% and Mr. Xu Jianjun owned the remaining 20%. Mr. Zhang Hua and Mr. Xu Jianjun transferred 75% and 20% respectively to HK Ironman on January 18, 2011.  Thus, as of March 31, 2011, 95% of the Company’s registered capital was held by HK Ironman. HK Ironman was incorporated as H&F Ironman Limited, a private limited company, on December 20, 2010 in Hong Kong to acquire PRC Ironman.  HK Ironman’s sole asset is its ownership of a 95% equity interest in Linxi Hefei Economic and Trade Co., Ltd. (“PRC Ironman”), which was incorporated in China on January 8, 2008.  HK Ironman acquired PRC Ironman in January 2011.  As a result of that acquisition, PRC Ironman is now considered an equity joint venture (“EJV”) in view of its foreign ownership through HK Ironman.  An EJV is a joint venture between a Chinese and a foreign company within the territory of China.  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. It is anticipated that the lawsuit will go to trial in mid-2017. The assets of Ironman are currently shown on the balance sheet of IGC. Depending on the outcome of the law-suit, the assets may be removed from the balance sheet of IGC and the corresponding acquisition shares returned to treasury.
 
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.  PRC Ironman is a Sino-foreign EJV established by both foreign and Chinese investors (i.e., Sino means “China” herein).  HK Ironman, a Hong Kong-based company owns 95% of PRC Ironman, and Mr. Zhang Hua, a Chinese citizen owns the remaining 5%. 

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”).

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 we are curtailing our low margin trading activity and realigning resources to the phytocannabinoid industry and real estate development and international project management industry, we are negotiating an exit from our ownership 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.  We are negotiating a conversion of the advance into shares of a Canadian public vehicle that TerraSphere expects to merge into.

On December 18, 2014, we entered into a Purchase Agreement with Apogee Financial Investments, Inc. (“Apogee”), the previous 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”), and acquired, in an initial closing, 24.9% of the outstanding membership interests in Midtown Partners.  In consideration of the initial membership interests, we are required to issue to Apogee 1,200,000 shares of our common stock (subject to downward adjustment based on certain fourth quarter 2014 financial statement matters).  Following the receipt of all required SEC, FINRA and other regulatory approvals, we have agreed to acquire, in a final closing, the remaining 75.1% of the outstanding membership interests in Midtown Partners in consideration of our issuance to Apogee of an additional 700,000 shares of our common stock (subject to downward adjustment based on certain financial statement matters prior to the final closing).  The agreement had a deadline of June 30, 2015, for Apogee and Midtown Partners to obtain the requisite approvals from FINRA. Apogee did not file for approval on time, and consequently pursuant to the terms of the Agreement, there are several penalties that will apply, including the cancellation of 700,000 shares of IGC stock and a penalty of $125,000 owed by Apogee to us.  We are not seeking to consummate the acquisition of the remaining interest in Midtown Partners at this time. The parties are in the process of negotiating a settlement.

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 $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.
 
b)  Merger and Accounting Treatment
 
Most of the shares of Sricon and TBL when acquired were purchased directly from the companies.  The shares of HK 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 “IGC,” “we,” “our” and “us” refer to India Globalization Capital, Inc., together with our subsidiaries.

India Globalization Capital, Inc. (the Registrant, the Company, or we) and its subsidiaries are engaged in 1) research on phytocannabinoid-based therapies, 2) trading commodities and electronic components, leasing heavy machinery, and developing real estate.

The corporate structure of our company direct and indirect consolidated operating subsidiaries is as follows: 


c) Our Securities

The Company had three securities listed on the NYSE MKT (1) Common Stock, $.0001 par value (ticker symbol: IGC) (“Common Stock”), (2) redeemable warrants to purchase Common Stock (ticker symbol: IGC.WT), and (3) units consisting of one share of Common Stock and two redeemable warrants to purchase Common Stock (ticker symbol: IGC.U).  As reported on Form 8-K on February 5, 2013, the Company voluntarily delisted the units from the NYSE MKT and requested its unit holders to contact IGC to get the existing units separated into Common Stock and Warrants.  Each warrant entitles the holder to purchase one share of Common Stock at an exercise price of $5.00.  As reported on Form 8-K filed with the SEC on February 29, 2016, the NYSE delisted the Company’s warrants with CUSIP number 45408X118 expiring on March 6, 2017, due to their abnormally low trading price.
  
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.


The Company had 1,298,921 shares of Common Stock issued and outstanding as of March 31, 2010.  During the twelve months ended March 31, 2011, the Company also issued 3,000 shares of Common Stock to American Capital Ventures and Maplehurst Investment Group for services rendered and 914 shares to Red Chip Companies valued at $8,039 for investor relations related services rendered.

The Company also issued a total of 40,000 shares of Common Stock, as consideration for the extension of the loans under the promissory notes described in Notes Payable during the twelve months ended March 31, 2011.

In February 2011, the Company consummated another transaction with Bricoleur to exchange the promissory note held by Bricoleur for a new note with an extended repayment term.  The Company issued 68,850 shares of Common Stock valued at approximately $419,985 as consideration for the exchange, as discussed in corresponding note.  In March 2011, the Company and Oliveira agreed to exchange the promissory note held by Oliveira for a new note with an extended repayment term and provisions permitting the Company at its discretion to repay the loan through the issuance of equity shares at a stated value over a specific term.  As of December 31, 2011, the Company has issued 157,000 shares of Common Stock valued at $798,176 to this debt holder, which constituted an element of repayment of principal as well as the interest in equated installments.
 
On December 30, 2011, the Company finalized the purchase of HK 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 HK Ironman, the Company’s shareholders approved the issuance of 3,150,000 equity shares to the owners of HK Ironman in exchange for 100% of the equity of HK Ironman (refer to Note 3); these shares have been considered as outstanding as of this date. In addition, the Stock Purchase Agreement provides for a contingent payment by IGC of $1 million provided certain post-closing covenants are met within 30 days of closing.  These post-closing covenants were not met within 30 days of closing and therefore the Company did not make the payment. In addition, there were certain contingent payments by IGC to Ironman stockholders, as follows (i) $1.5 million in cash or stock, which is contingent on IGC achieving earnings growth of at least 30% from the previous year’s closing audit (i.e., March 31, 2011); and (ii) $1.5 million in cash or stock, which is contingent on IGC achieving earnings growth of at least 30% from the previous year’s closing audit (i.e., March 31, 2012).  If either of the foregoing annual targets were missed, there would still be a payout of $3 million provided IGC achieves a cumulative earnings growth of 69% between fiscal years 2011 and 2013.  These post-closing covenants were not met and therefore the Company did not make the payments. The acquisition of HK 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.  No underwriting discounts or commissions were paid with respect to such sale.  These securities were subsequently registered in a Form S-1.
 
As reported on a Current Report on Form 8-K filed by the Company on April 6, 2012, the Company retired a note payable to Oliveira in the amount of $2,232,627.79 on April 5, 2012. The Company projected a reduction in annual interest costs of about $612,000. The Company paid off the loan with 442,630 shares of newly issued Common Stock. There remains a disagreement on some of the technical features of the note that the lender claims result in IGC owing additional principal, interest, and penalty fees.  The lender has sought relief through summary judgment from the court.   IGC believes that IGC followed the clear terms of the note and that the lender's claims are frivolous.  Further, IGC believes that the lender has demonstrated a malicious pattern of harassing behavior in an effort to unduly increase their gains.  IGC was considering a counter suit in response to the lenders actions.  However, on April 8, 2014, IGC decided to issue 12,026 more shares of its common stock to settle the dispute with Oliveira.
 
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 promissory note held by Bricoleur for a new note with an extended repayment term and provisions permitting the Company at its discretion to repay the loan through the issuance of equity shares.  As of March 31, 2014, the Company has issued 205,200 shares of Common Stock valued at $270,522 to this debt holder, which constituted an element of repayment of interest. Effective March 31, 2014, as reported on a Current Report on Form 8-K filed by the Company on March 26, 2014, the Company and Bricoleur Partners, L. P. agreed to amend the outstanding $1,800,000 promissory note (“2012 Security”), subject to the same terms of the 2012 Agreement and Amendments No.1 and No.2, to extend the maturity date of the 2012 Security from July 31, 2014 to July 31, 2016. During the years ended March 31, 2015 and 2016, the Company issued 232,823 and 305,350 shares of its common stock to Bricoleur valued at $204,031 and $114,678 respectively, which constituted an element of repayment of interest.
 
In fiscal 2015 and 2016, we issued 56,193 shares valued at $48,800 and 20,000 shares valued at $8,000 respectively to Marketing Group (MMGI) and others. In fiscal year 2015 and 2016, the Company issued 50,000 and 40,000 shares of Common Stock to Axiom Financial Inc. valued at $43,500 and $16,000, respectively, both for financial and marketing consulting services rendered. During the year ended March 31, 2016, we also issued 50,000 shares of our common stock to Cherin Group, LLC. and 250,000 shares to International Pharma Trials valued at $20,000 and $100,000, respectively, both for research and development consulting services; Further, 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.

On April 2, 2014, as reported on a Current Report on Form 8-K filed by the Company on April 3, 2014, we entered into a securities purchase agreement with certain institutional investors relating to the sale and issuance by our company to the investors of an aggregate of 750,000 shares of our common stock, for a total purchase price of $506,250. Midtown Partners & Co., LLC, (“Midtown”) acted as our exclusive placement agent in this offering. IGC intends to use the net proceeds from the sale of securities offered for working capital needs, repayment of indebtedness, and other general corporate purposes.

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. In fiscal year 2015 out of the amount approved, we issued 1,200,000 shares of common stock with a value of $492,000.

Under the December 18, 2014 Purchase Agreement with Apogee, we issued 1,200,000 common shares of IGC valued at $888,000 for the purchase of 24.9% ownership interest in Midtown Partners & Co., LLC.  Pending downward adjustments, subject to certain balance sheet items of MTP, a total of 500,000 shares of IGC common stock have been held back.  Pending the resolution of these balance sheet items, the shares that have been held back may be cancelled. The agreement had a deadline of June 30, 2015, for Apogee and Midtown Partners to obtain the requisite approvals from FINRA. Apogee did not file for approval on time, and consequently pursuant to the terms of the Agreement, there are several penalties that will apply, including the cancellation of 700,000 shares of IGC stock and a penalty of $125,000 owed by Apogee to us.  We are not seeking to consummate the acquisition of the remaining interest in Midtown Partners at this time.

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 for an aggregate amount of $1.5 million.
  
Further, pursuant to IGC’s employee stock option plan, the Company granted options to purchase 130,045 shares at an average exercise price of $5.60 per share, all of which are outstanding and exercisable as of March 31, 2016 and granted a total of 1,391,705 shares to its directors and some of its employees. As of March 31, 2016, IGC has 23,265,531 shares of Common Stock issued and outstanding.  Disclosures relating to the common shares and options and warrants reflect a 10:1 reverse split that was effected on April 19, 2013.

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 Company accounts for investments by the equity method where its investment in the voting stock gives it the ability to exercise significant influence over the investee but not control.  In situations, such as the Company’s ownership interest in Sricon Infrastructure Private Limited (“Sricon”) and Midtown Partners & Co., LLC (“MTP”), wherein the Company is not able to exercise significant influence in spite of having 20% or more ownership, the Company has accounted for the investment based on the cost method.  In addition, the Company consolidates any Variable Interest Entity (“VIE”) if it is determined to be the primary beneficiary.  However, as of March 31, 2016, the Company does not have any interest in any VIE investment.
 
The non-controlling interest disclosed in the accompanying financial statements for fiscal year 2016 represent the non-controlling interest in IGC International, Linxi H&F Economic and Trade Co. (PRC Ironman) and 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 the Investment in affiliates (22% minority interest investment we had in Sricon) to Investment others (five acres of prime land in Nagpur, India) as the company has returned the shares after transfer of land in its name as per the settlement agreement. The land, valued at approximately $5 million, based on various factors including the exchange rate, 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.
 
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, 2016 and 2015 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, 2016 and 2015, there was no significant liability for income tax associated with unrecognized tax benefits.
 
The issuance by IGC of its common stock to (1) HK Ironman stockholders in exchange for HK 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; and to (4) Cabaran Ultima (“Ultima”) in exchange for Ultima’s stock, as contemplated by the respective stock purchase agreements between the Company and HK Ironman, PRC 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 because of the approval of the shares 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, Hong Kong, and Malaysia, which at times may exceed applicable insurance limits.  The Company has not experienced any losses in such accounts.  The Company believes it is not exposed to any significant credit risk on cash and cash equivalent.  The Company does not invest its cash in securities that have an exposure to U.S. mortgages.
 
i)             Restricted cash
 
Restricted cash consists of deposits pledged to various government authorities and deposits used as collateral with banks for guarantees and letters of credit, given by the Company to its customers or vendors.
 
j)              Foreign currency transactions
 
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:
 
 
 
Period End Average Rate
   
Period End Rate
 
Period
 
(P&L rate)
   
(Balance sheet rate)
 
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
 
                                             
Year ended March 31, 2015
 
INR
 
61.11
 
per
 
USD
   
INR
 
62.31
 
per
 
USD
 
 
 
RMB
 
6.21
 
per
 
USD
   
RMB
 
6.20
 
per
 
USD
 
 
 
HKD
 
7.80
 
per
 
USD
   
HKD
 
7.80
 
per
 
USD
 
 

k)             Accounts receivable
 
Accounts receivable from customers in the electronics business are 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 are 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)            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.
 
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 in spite of being in excess of 20% is not sufficient to exercise significant influence, the Company has accounted for the investment based on the cost method, as is 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, 2016 and 2015, 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)             Business combinations
 
In accordance with ASC Topic 805, Business Combinations, the Company uses the purchase method of accounting for all business combinations consummated after June 30, 2001.  Intangible assets acquired in a business combination are recognized and reported apart from goodwill if they meet the criteria specified in ASC Topic 805.  Any purchase price allocated to an assembled workforce is not accounted separately.
 
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 most of the Company’s workers are contractors employed through agencies or other companies.  In the United States, we provide health insurance, life insurance, and 401 K benefits. The Company makes a 401-K matching contribution up to 6% of the employee’s annual salary. 

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, IGC International and Cabaran Ultima, which are two of the legal entities in Hong Kong and in Malaysia, respectively, are 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.
 
Disclosures for Investments in Certain Entities That Calculate Net Asset Value (NAV) per Share: In May 2015, the FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which is intended to reduce diversity in practice related to the categorization of investments measured at NAV within the fair value hierarchy. The ASU removes the current requirement to categorize investments for which fair value is measured using the NAV per share practical expedient within the fair value hierarchy. Adoption of the ASU did not have a material effect on the Company's financial statements.

Debt Issuance Costs: In April 2015, the FASB issued Accounting Standards Update (ASU) 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, to conform the presentation of debt issuance costs to that of debt discounts and premiums. Thus, the ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The guidance is effective beginning on January 1, 2016. Early adoption is permitted, including adoption in interim period. The company is evaluating the effect that ASU 2015-03 will have on its Consolidated Financial Statements.

Consolidation: In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is intended to improve certain areas of consolidation guidance for legal entities such as limited partnerships, limited liability companies, and securitization structures. The ASU will reduce the number of consolidation models. The ASU will be effective on January 1, 2016. Early adoption is permitted, including adoption in an interim period. The Company is evaluating the effect that ASU 2015-02 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 when it becomes effective on January 1, 2017. Early application is not permitted. 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.

Discontinued Operations and Significant Disposals: In April 2014, the FASB issued ASU 2014-08 "Presentation of Financial Statements (Topic 810) and Property, Plant, and Equipment" (Topic 360), "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." ASU 2014-08 provides a narrower definition of discontinued operations than under previous U.S. GAAP. ASU 2014-08 requires that a disposal of components of an entity (or groups of components) be reported as discontinued operations if the disposal represents a strategic shift that will have a major effect on the reporting entity's operations and financial results. ASU 2014-08 is effective prospectively for disposals (or classifications of businesses as held-for-sale) of components of an entity that occur in annual or interim periods beginning after December 15, 2014. Additionally, the ASU requires expanded disclosures about discontinued operations that will provide more information about the assets, liabilities, income and expenses of discontinued operations. The impact of adopting the ASU was not material.
 
 
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, 2016 and 2015 assume that the Ultima acquisition occurred during the beginning of the comparable period.
 
 
 
Year ended March 31,
 
Particulars
 
2016
   
2015
 
Pro forma revenue
 
$
6,727,396
   
$
8,795,596
 
Pro forma other income
 
$
284,186
   
$
(56,367
)
Pro forma net income attributable to IGC Stockholders
   
(2,525,174
)
   
(3,579,764
)
Pro forma Earnings per share
               
Basic
   
0.15
     
0.23
 
Diluted
   
0.15
     
0.23
 

Midtown Partners & Co., LLC

On December 18, 2014, we entered into a Purchase Agreement with Apogee the previous 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”), and acquired, in an initial closing, 24.9% of the outstanding membership interests in Midtown.  In consideration of the initial membership interests, we have to issue to Apogee 1,200,000 shares of our common stock, subject to downward adjustment. Following the receipt of all required SEC, FINRA and other regulatory approvals, by June 30, 2015, we have agreed to acquire, in a final closing, the remaining 75.1% of the outstanding membership interests in Midtown in consideration of our issuance to Apogee of an additional 700,000 shares of our common stock, subject to downward adjustment.

The agreement had a deadline of June 30, 2015, for Apogee and Midtown Partners to obtain the requisite approvals from FINRA. Apogee did not file for approval on time, and consequently pursuant to the terms of the Agreement, there are several penalties that will apply, including the cancellation of 700,000 shares of IGC stock and a penalty of $125,000 owed by Apogee to us.
 
Golden Gate Electronics Ltd.

On May 31, 2014, the Company acquired 51% of the issued and outstanding share capital of Golden Gate Electronics Limited, a corporation organized and existing under the laws of Hong Kong, now known as IGC International. IGC-INT, headquartered in Hong Kong, operates an e-commerce platform for trading of commodities and electronic components.
 
The acquisition has been accounted for under the acquisition method of accounting in accordance with ASC Topic 805, “Business Combinations”. The total purchase price has been allocated to IGC-INT’s net tangible assets based on their estimated fair values at the date of acquisition. The Purchase Price Allocation is based upon preliminary estimates and assumptions that may be subject to change during the measurement period (up to one year from the Acquisition Date). The Company generally does not expect the goodwill recognized to be deductible for income tax purposes. The results of operations of IGC-INT for the month of December 2014 have been included in the consolidated results as shown in the Statement of Operations included herein. The assets and liabilities of IGC-INT have been recorded in the Consolidated Balance Sheet of the Company as of December 31, 2014.
 

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 and the same will be discharged as follows:
 
 
All amounts in USD
 
Particulars
 
Fair Value
 
       
IGC Stock Consideration
 
$
178,925
 
         
Estimated earn out payment (in the form of Stock)
   
873,571
 
 
       
Total Purchase Consideration
 
$
1,052,496
 
 
The purchase has been preliminarily allocated to the acquired assets and liabilities, as follows:
 
 
All amounts in USD
 
Particulars
 
Fair Value
 
       
Cash and Cash Equivalents
 
$
166,916
 
Property, Plant and Equipment
   
81,730
 
Accounts Receivable
   
427,594
 
Inventory
   
749,133
 
Other Assets
   
211,264
 
Accounts Payable
   
(162,757
)
Loans - Others
   
(1,322,415
)
Other Current Liabilities
   
(14,771
)
Non-Controlling Interest
   
(66,980
)
Goodwill
   
982,782
 
         
Total Purchase Consideration
 
$
1,052,496
 
 
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.
 
IGC-INT 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, 2016 and 2015 assume that the IGC-INT acquisition occurred during the beginning of the comparable period.
 
   
Year ended March 31,
 
Particulars
 
2016
   
2015
 
Pro forma revenue
 
$
6,366,550
   
$
8,883,164
 
Pro forma other income
   
284,186
     
(54,970
)
Pro forma net income attributable to IGC Stockholders
 
$
(2,956,246
)
 
$
(4,610,277
)
Pro forma Earnings per share
               
Basic
   
0.16
     
0.31
 
Diluted
   
0.16
     
0.31
 


HK Ironman

On December 30, 2011, the Company acquired 100% of the issued and outstanding shares of capital stock of H&F Ironman Limited (“HK Ironman”), a Hong Kong company. HK Ironman owns 95% equity in H&F Venture Trade Ltd. aka Linxi Hefei Economic and Trade Co. (“PRC Ironman”). One of IGC’s areas of focus is the export of iron ore to China. HK Ironman through its subsidiary, PRC Ironman, operates a beneficiation plant in China, which converts low-grade iron ore to high-grade iron ore through a dry and wet separation processes. This Acquisition is intended to provide IGC with a platform in China to expand its business and ship low-grade iron ore, which is available for export in India, to China and convert the iron ore to a higher-grade iron ore before selling it to customers in China.

The date of Acquisition, December 30, 2011, is the date on which the Company obtained control of HK Ironman by acquiring control over the majority of the Board of Directors of HK Ironman. The Acquisition has been accounted for under the acquisition method of accounting in accordance with ASC Topic 805, “Business Combination.” For further information on this acquisition and on purchase price allocation, please refer to Form 10-K for fiscal year ended 2012 filed with the SEC on July 16, 2012. 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 to the defendants. It is anticipated that the lawsuit will go to trial in mid-2017. The assets of Ironman are currently shown on the balance sheet of IGC. Depending on the outcome off the law-suit, the assets may be removed from the balance sheet of IGC and the corresponding acquisition shares returned to treasury.  The assets of Ironman are currently shown on the balance sheet of IGC. Depending on the outcome off the lawsuit, the assets may be removed from the balance sheet of IGC and the corresponding acquisition shares returned to treasury.

Advance to TerraSphere System
 
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, IGC 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.  IGC made a $150,000 investment in cash in the venture. The Company is negotiating a conversion of the investment into shares of a Canadian public vehicle that TerraSphere expects to merge into.

Advance to Purchase land from Sricon

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, valued at approximately $5 million, based on various factors including the exchange rate. 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.
 
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, 2016
   
As of March 31, 2015
 
Prepaid /preliminary expenses
  $      
$
1,070
 
Advance to suppliers & services
   
315,659
     
900,864
 
Security/statutory advances
   
14,399
     
18,528
 
Advances to employees
   
878,042
     
978,142
 
Prepaid /accrued interest
   
1,239
     
2,149
 
Deposit and other current assets
   
17,168
     
49,542
 
Total
 
$
1,226,507
   
$
1,950,295
 
 
* Advances to Employees represent advances made to employees of Ironman by Ironman, prior to its acquisition by IGC.
 

Other Non-current assets consist of the following:
 
   
As of March 31, 2016
   
As of March 31, 2015
 
Statutory/Other advances
 
$
507,300
   
$
434,284
 
Total
 
$
507,300
   
$
434,284
 
 
On May 21, 2012, TBL entered into an agreement with Weave & Weave for the purchase of land value $640,000. TBL gave Weave and Wave and advance of $393,195. 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 2016 and fiscal year 2015, the Company had a total of $27,762 and $1,280,356, respectively, in short-term borrowings.

NOTE 7 – NOTES PAYABLE AND LOANS - OTHERS
 
 On October 5, 2009, the Company consummated the exchange of an outstanding promissory note in the total principal amount of $2,000,000 (the “Original Note”) initially issued to the Steven M. Oliveira 1998 Charitable Remainder Unitrust (‘Oliveira’) for a new promissory note (the “New Oliveira Note”) on substantially the same terms as the original note except that the principal amount of the New Oliveira Note was $2,120,000 which reflected the accrued but unpaid interest on the Original Note and the New Oliveira Note did not bear interest. The New Oliveira Note was unsecured and was due and payable on October 4, 2010 (the “Maturity Date”). Prior to the Maturity Date, the Company was permitted to pre-pay the New Oliveira Note at any time without penalty or premium. The New Oliveira Note is not convertible into IGC Common Stock (the “Common Stock”) or other securities of the Company. However, under the Note and Share Purchase Agreement (the “Oliveira Note and Share Purchase Agreement”), effective as of October 4, 2009, by and among the Company and Oliveira, as additional consideration for the exchange of the Original Note, the Company agreed to issue 53,000 shares of Common Stock to Oliveira.

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 interest payable on the Note and the Note was due and payable on 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.  

During the three months ended December 31, 2010, the Company issued an additional 20,000 shares of Common Stock to each of Oliveira and Bricoleur specified above pursuant to the effective agreements respectively as penalties for failure to repay the promissory notes when due.

In February-March 2011, the Company finalized agreements with the Steven M. Oliveira 1998 Charitable Remainder Unitrust (‘Oliveira’) and Bricoleur Partners, L.P. (‘Bricoleur’) to exchange the promissory note issued to Oliveira on October 5, 2009 (the “New Oliveira Note”) and the promissory note issued to Bricoleur on October 16, 2009 (the “Bricoleur Note”) respectively for new promissory notes with later maturity dates. The Oliveira Note was due on March 24, 2012, bearded interest at a rate of 30% per annum and provided for monthly payments of principal and interest, which the Company chose to settle through the issue of equity shares at an equivalent value.  The Bricoleur Note was due on June 30, 2011 with no prior payments due and will not bear 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. This note is due on July 31, 2016.
 
As reported on a Current Report on Form 8-K filed by the Company on April 6, 2012, the Company retired the note payable to Oliveira in the amount of $2,232,627.79 on April 5, 2012. The Company paid off the loan with 4,426,304 (now 442,630) shares of newly issued Common Stock. There remains a disagreement on some of the technical features of the note that the lender claims result in IGC owing additional principal, interest, and penalty fees.  The lender has sought relief through summary judgment from the court. IGC believes that IGC followed the clear terms of the note and that the lender's claims are frivolous.  Further, IGC believes that the lender has demonstrated a malicious pattern of harassing behavior in an effort to unduly increase their gains.  IGC was considering a counter suit in response to the lenders actions. However, on April 8, 2014, IGC decided to issue 12,026 more shares of its common stock to settle the dispute with Oliveira.

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 interest and was due on 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 penalty payments. Effective March 31, 2013, the Company and Bricoleur Partners, L.P. agreed to amend the outstanding $1,800,000 promissory note (“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.  The Bricoleur Note remains outstanding. Contractually the Company makes a penalty payment (booked under interest payment) of 17,100 shares of common stock for each month the loan remains unpaid.  No other "interest" payment is made on the loan. During the years ended March 31, 2014, 2015 and 2016 the Company issued a total of 205,200, 232,823 shares and 305,357 shares each year valued at $270,522, $204,031 and $114,678, respectively, to this debt holder, which constituted an element of repayment of interest.
 
The Company’s total interest expense was $213,928 for the year ended March 31, 2016 and $286,332 for the year ended March 31, 2015, respectively.  The Company capitalized no interest for the year ended March 31, 2016 and March 31, 2015.

One of our previous directors has loaned the Company, on an unsecured basis, working capital of $40,000 at 10% annual interest payable on April 25, 2018.  In Hong Kong the Company has banking facilities for $1,038,961 whose principal, interest and other charges are guaranteed by our CEO and Sunny Tsang, the Managing Director and Founder of IGC International.

NOTE 8 – OTHER CURRENT AND NON-CURRENT LIABILITIES
 
Other current liabilities consist of the following:
 
   
As of March 31, 2016
   
As of March 31, 2015
 
Statutory payables
 
$
31,756
   
$
9,338
 
Employee related liabilities
   
518,587
     
487,647
 
Other liabilities /expenses payable
   
534
     
-
 
Total
 
$
550,877
   
$
496,985
 
 
 Other non-current liabilities consist of the following:
 
         
   
As of March 31, 2016
   
As of March 31, 2015
 
Creditors
 
$
37,012
   
$
136,318
 
Special reserve
   
0
     
-
 
Acquisition related liabilities
   
873,571
     
873,571
 
Total
 
$
910,583
   
$
1,009,889
 
 
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
 
The total other income for the fiscal year is $284,186.  The majority of the other income or $251,264 comes from the sale of land belonging to TBL and located in Kochi, India.
 
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 March 31, 2016
   
As of March 31, 2015
 
Intangible assets at the beginning of the period
 
$
306,131
     
468,091
 
Amortization