The Securities and Exchange Commission has imposed a cease-and-desist order against India Globalization Capital and its founder and chief executive for claims made by the company in 2018 regarding what it described as a cannabis-based product aimed at treating symptoms of Alzheimer’s disease.

The enforcement action comes after MarketWatch highlighted the many red flags surrounding IGC’s IGC, +5.35% business and products that led to the stock being temporarily delisted from the NYSE American stock exchange that same year.

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The SEC said the enforcement action stems from Potomac, Maryland-based IGC’s announcement on March 26, 2018 that it would have its first cannabis-based product called Hyalolex “on the shelves in April” in Puerto Rico, even though it was nowhere close to being ready for sale at the time.

IGC did not respond to an emailed request for comment, while the NYSE Amex exchange said it “cannot comment on specific companies.”

IGC, which started in 2005 as a blank-check company looking to acquire or merge with businesses operating in India, had a legacy infrastructure business, before becoming interested in the then-emerging cannabis scene in 2013.

“In fact, Hyalolex was “not ‘on the shelves’ at any time in 2018,” the SEC wrote in its enforcement action. “At that time, IGC lacked experience in selling cannabis products, and was not able to meet the significant hurdles that needed to be cleared before sales could begin in such a regulated industry.”

Despite that challenge, from April through June 2018, IGC registered securities offerings and issued stock through ‘at-the-market” offerings. In September of 2018, it raised $1 million in a private placement of restricted stock that it said was earmarked to help with the commercialization of the product, said the SEC.

The releases were the responsibility of IGC founder and CEO Ram Mukunda, who the SEC has fined for his role in the deception. IGC will pay $175,000 in civil penalties, while Mukunda will pay $35,000.

IGC has agreed to retain a qualified independent compliance consultant to review its corporate governance structure and internal policies, and determine whether ” the culture of IGC is supportive of ethical and compliant conduct, including strong, explicit, and visible support and commitment by the Board and senior management,” said the SEC.

The consultant will be provided with complete access of key documents, including business principles, Code of Conduct, policies and procedures, social media account logins and passwords, relevant internal training materials and internal communications, said the SEC. A first review is required within 120 days of the issuance of the order, which is dated Dec. 21.

Among other promises, Mukunda said in an April 10, 2018 release that Puerto Rico would be followed by sales of the product in states including Maryland, Washington, D.C. and California. By the end of 2018, Mukunda said the company would have its Alzheimer’s product in 10 U.S. states.

In reality, the plan was dependent on the agreement of the owner of cannabis dispensaries in Puerto Rico to stock the product, but IGC had never secured written assurances and the owner declined to do so. The company was unable to persuade other dispensaries to stock it.

“The fact that the dispensaries were not obligated to purchase or stock Hyalolex further shows it was not reasonable for IGC to state that sales would begin in April,” said the SEC.

IGC did not correct the March 26 release, but instead in results filed with the SEC in June of 2018, it said Hyalolex would start being sold in the second half of the year. The company raised about $135,000 from the issuance of equity stock from April through June of 2018.

IGC’s website, which was once dominated by its cannabis ambitions, now mostly reflects its legacy infrastructure business. The company’s most recent earnings showed it had revenue of $125,000 in the quarter to end September, down from $1.82 million in the year-earlier period. The company posted a net loss of $1.5 million, wider than the $1.3 million loss posted in the year-earlier period.

The site still says the company is planning Phase 1 trials of Hyalolex in Alzheimer’s patients. The U.S. Food and Drug Administration did not respond to a request for comment.

IGC shares were up 10% at $1.99 on Monday.

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