NOTE 7 – NOTES PAYABLE AND LOANS - OTHERS
On October 16, 2009, the Company consummated the sale of a promissory note in the principal amount of $2,000,000 (the “Bricoleur Note”) to Bricoleur Partners, L.P. (‘Bricoleur’). There was no cash interest payable on the Note and the Note had an initial maturity date of October 16, 2010 (the “Maturity Date”). Prior to the Maturity Date, the Company could pre-pay the Bricoleur Note at any time without penalty or premium and the Note was unsecured. The Note was not convertible into the Company’s Common Stock or other securities of the Company. However, under the Note and Share Purchase Agreement (the “Bricoleur Note and Share Purchase Agreement”), effective as of October 16, 2009, by and among the Company and Bricoleur, as additional consideration for the investment in the Bricoleur Note, IGC issued 53,000 shares of Common Stock to Bricoleur. In February-March 2011, the Company finalized an agreement with Bricoleur to exchange the loan promissory note issued to Bricoleur on October 16, 2009 (the “Bricoleur Note”) for new a new loan with later maturity dates. The Bricoleur Note was extended to June 30, 2011 with no prior payments due and with no cash interest. The Company issued additional 68,850 shares of its common stock to Bricoleur in connection with the extension of the term regarding the Bricoleur note. As reported on a Current Report on Form 8-K filed by the Company on October 9, 2012, the Company and Bricoleur agreed to exchange the 2011 Note for a new note (the “2012 Note”), which bore no cash interest with a new maturity of December 31, 2012. In consideration for the exchange, the Company issued 30,000 shares of IGC to Bricoleur and issued additional 34,200 shares for February and March 2013 as non-tax-deductible payments that were booked as interest. Effective March 31, 2013, the Company and Bricoleur Partners, L.P. agreed to amend the outstanding $1,800,000 loan (“2012 Security”), subject to the same terms of the 2012 Agreement, to extend the maturity date of the 2012 Security from July 31, 2014 to July 31, 2016. Contractually, there is no cash interest paid to Bricoleur on the Note. Instead, the parties have agreed that the Company will make a payment (booked under interest payment) of 30,000 shares of common stock for each month the loan remains unpaid, regardless of the trading price of the stock. The arrangement allows the Company and Bricoleur to pursue permanent conversion of the principal to common stock, or repayment of the principal using common stock. During the years ended March 31, 2014, 2015, 2016 and 2017 the Company issued a total of 205,200, 232,823 305,357 and 333,956 shares each year valued at $270,522, $204,031, $114,678 and $129,816, respectively, to this debt holder, which constitutes non-tax-deductible interest payments for the Company.
The Company’s total interest expense was $223,464 for the year ended March 31, 2017 and $213,928 for the year ended March 31, 2016, respectively. No interest was capitalized for the years ended March 31, 2017 and March 31, 2016.
As on March 31, 2017 the Company has five loans categorized as Loans Others totaling $392,226 at an average annual interest rate of 10%:
Loan 1: We have a loan for $59,726, due on April 25, 2018 bearing 10% annual interest rate. This loan is from one of our Advisors and former director.
Loan 2: We have a loan from an individual for $100,000, at an annual interest rate of 24%, due February 23, 2022. There is no prepayment penalty. The assets of the Company secure the loan.
Loan 3: We have a loan from an individual for $50,000, at an annual interest rate of 15%, due February 23, 2022. There is no prepayment penalty. The assets of the Company secure the loan.
Loan 4: We have a loan of $85,000 from an affiliate of our CEO, at an annual interest rate of 15%, due February 23, 2022. There is no prepayment penalty. The assets of the Company secure the loan.
Loan 5: We have a working capital loan that has a loan balance as of March 31, 2017 of $97,500 from an affiliate of our CEO, at an annual interest rate of zero percent, due February 23, 2022. There is no prepayment penalty. The assets of the Company secure the loan.
Please see Note 12 Related Party Transactions for more details on Other Loans.