UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q

(Mark One)


☑

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:December 31, 2017June 30, 2019

or

[_]☐ TRANSITION REPORT UNDER SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto


Commission File Number:333-194857


Nemaura Medical Inc.
(Exact name of small business issuer as specified in its charter)

 NEVADA 46-5027260 
 (State or other jurisdiction of incorporation or organization) (I.R.S. Tax. I.D. No.) 
 

Advanced Technology Innovation Centre,

Loughborough University Science and Enterprise Parks,

5 Oakwood Drive,

Loughborough, Leicestershire

LE11 3QF

United Kingdom

(Address of Principal Executive Offices)
 
+ 00 44 1509 222912
(Registrant'sRegistrant’s Telephone Number, Including Area Code)

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


Title of each class
Trading Symbol(s)		Name of each exchange on which registered
Common StockNMRDThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required 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  ☑[X]  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 ☑[X]  No☐


[_]  

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


Large accelerated filer ☐
[_]		 
Accelerated filer ☑
[X]

Non-accelerated filer ☐

(Do not check if a smaller reporting company)
[_]

 
Smaller reporting company  [X]
  ☐
Emerging growth company ☑[X]
  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

[_]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐[_]  No [X]

☑

The number of shares of common stock, par value $0.001 per share outstanding as of February 7, 2018August 1, 2019 was 67,676,000.208,016,804.



NEMAURA MEDICAL INC. 

TABLE OF CONTENTS


 Page
PART I: FINANCIAL INFORMATION3
ITEM 1INTERIM FINANCIAL STATEMENTS3
   Condensed Consolidated Balance Sheets as of December 31, 2017June 30, 2019 (unaudited) andMarch 31, 201720193
 Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended December 31, 2017June 30, 2019 and 20162018 (unaudited)4
 Condensed Consolidated Statements of Cash Flows for the NineThree Months Ended December 31, 2017June 30, 2019 and 20162018 (unaudited)5
 Notes to Condensed Consolidated Financial Statements (unaudited)6
ITEM 2MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS13
ITEM 3QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK1615
ITEM 4CONTROLS AND PROCEDURES1615
PART II: OTHER INFORMATION1918
ITEM 1LEGAL PROCEEDINGS1918
ITEM 1ARISK FACTORS1918
ITEM 2UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS1918
ITEM 3DEFAULTS UPON SENIOR SECURITIES1918
ITEM 4MINE SAFETY DISCLOSURES1918
ITEM 5OTHER INFORMATION1918
ITEM 6EXHIBITS1918
SIGNATURES2019


2  

2

PART I – FINANCIAL INFORMATION

ITEM 1. INTERIM FINANCIAL STATEMENTS


NEMAURA MEDICAL INC.
Condensed Consolidated Balance Sheets
  
As of
December 31, 2017
($)
  
As of March 31, 2017
($)
 
  (Unaudited)    
ASSETS      
Current Assets:      
Cash  1,664,616   911,359 
Fixed rate cash account  4,789,129   1,867,950 
Prepaid expenses and other receivables  109,878   51,086 
Total Current Assets  6,563,623   2,830,395 
         
Other Assets:        
Property and equipment, net  6,651   9,161 
Intangible assets, net of accumulated amortization  231,915   203,800 
   238,566   212,961 
         
Long Term Assets:        
Fixed rate cash account  -   4,358,550 
         
Total assets  6,802,189   7,401,906 
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current Liabilities:        
Accounts payable  65,370   77,530 
Liability due to related party  826,310   687,609 
Other liabilities and accrued expenses  162,811   87,232 
Total current liabilities  1,054,491   852,371 
         
Deferred revenue  1,249,675   1,183,035 
   1,249,675   1,183,035 
         
Total liabilities  2,304,166   2,035,406 
         
Commitments and contingencies:        
         
Stockholders' Equity:        
Convertible preferred stock, $0.001 par value, 200,000 shares authorized and 137,324 outstanding at December 31, 2017
  137   - 
Common stock, $0.001 par value,        
420,000,000 shares authorized and 67,676,000 and 205,000,000        
shares issued and outstanding, at December 31, 2017 and March 31, 2017 respectively  67,676   205,000 
Additional paid in capital  13,056,861   12,919,672 
Accumulated deficit  (8,419,817)  (7,152,633)
Accumulated other comprehensive loss  (206,834)  (605,539)
Total stockholders' equity  4,498,023   5,366,500 
Total liabilities and stockholders' equity  6,802,189   7,401,906 

  

As of June 30,

2019

($)

 

As of March 31, 2019

($)

  (Unaudited)  
ASSETS        
Current Assets:        
Cash  3,068,541   3,740,664 
Prepaid expenses and other receivables  552,293   736,460 
Inventory  38,565   38,036 
Total current assets  3,659,399   4,515,160 
         
Other Assets:        
Property and equipment, net of accumulated depreciation  123,286   56,871 
Intangible assets, net of accumulated amortization  192,895   191,684 
Total other assets  316,181   248,555 
Total  assets  3,975,580   4,763,715 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current Liabilities:        
Accounts payable  176,782   161,348 
Liability due to related parties  1,072,676   964,679 
Other liabilities and accrued expenses  140,735   107,759 
Deferred revenue  36,029   65,175 
Total current liabilities  1,426,222   1,298,961 
         
Non-current portion of deferred revenue  1,240,980   1,237,850 
Total liabilities  2,667,202   2,536,811 
         
Commitments and contingencies        
         
Stockholders’ Equity:        
Common stock, $0.001 par value,        
420,000,000 shares authorized; 208,016,804 and 207,655,916        
shares issued and outstanding at June 30, 2019 and March 31, 2019, respectively.  208,017   207,656 
Additional paid-in capital  16,133,144   15,785,015 
Accumulated deficit  (14,677,144)  (13,425,879)
Accumulated other comprehensive loss  (355,639)  (339,888)
Total stockholders’ equity  1,308,378   2,226,904 
Total liabilities and stockholders’ equity  3,975,580   4,763,715 

See notes to the unaudited condensed consolidated financial statements



3
3  


NEMAURA MEDICAL INC.
Condensed Consolidated Statements Ofof Comprehensive Loss
(Unaudited)

  Three Months Ended December 31,  Nine Months Ended December 31, 
  
2017
($)
  
2016
($)
  
2017
($)
  
2016
($)
 
             
Revenue:  -   -   -   - 
Total revenue  -   -   -   - 
                 
Operating Expenses:                
Research and development  355,300   267,638   713,585   794,433 
General and administrative  121,053   107,728   627,605   397,598 
Total operating expenses  476,353   375,366   1,341,190   1,192,031 
                 
Loss from operations  (476,353)  (375,366)  (1,341,190)  (1,192,031)
                 
Interest income  9,988   -   74,006   - 
                 
Net loss  (466,365)  (375,366)  (1,267,184)  (1,192,031)
                 
Other comprehensive income (loss):                
Foreign currency translation adjustment  36,641   (396,445)  398,705   (786,148)
Comprehensive loss  (429,724)  (771,811)  (868,479)  (1,978,179)
                 
Loss per share                
    Basic and diluted  *   *   *   * 
Weighted average number of shares outstanding  121,411,478   205,000,000   177,035,840   205,000,000 

* Per share amounts are less than $0.01



  Three Months Ended June 30,
  

2019

($)

 

2018

($)

     
Revenue:  —     —   
Total revenue  —     —   
         
Operating Expenses:        
Research and development  556,183   429,539 
General and administrative  699,008   342,424 
Total operating expenses  1,255,191   771,963 
         
Loss from operations  (1,255,191)  (771,963)
         
Interest income  3,926   8,809 
Net loss  (1,251,265)  (763,154)
         
Other comprehensive loss:        
Foreign currency translation adjustment  (15,751)  (234,609)
Comprehensive loss  (1,267,016)  (997,763)
         
Loss per share        
    Basic and diluted  (0.01)  (0.01)
Weighted average number of shares outstanding  207,836,368   105,821,556 

See notes to the unaudited condensed consolidated financial statements

4

4  


NEMAURA MEDICAL INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
  
Nine Months Ended
December 31,
 
  
2017
($)
  
2016
($)
 
       
Cash Flows From Operating Activities:      
Net loss  (1,267,184)  (1,192,031)
         
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization  22,467   15,629 
Changes in assets and liabilities:        
Prepaid expenses and other receivables  (63,405)  69,121 
Accounts payable  (15,355)  (20,584)
Liability due to related party  77,654   423,237 
Other liabilities and accrued expenses  43,223   - 
Interest receivable  (58,504)  - 
Net cash used in operating activities  (1,261,104)  (704,628)
         
Cash Flows From Investing Activities:        
Purchase of intangible assets  (29,732)  (57,630)
Purchase of property and equipment  -   (6,641)
Proceeds from fixed rate savings account  1,955,489   - 
Net cash provided by (used in) investing activities  1,925,757   (64,271)
         
Net increase/(decrease) in cash  664,653   (768,899)
Effect of exchange rate changes on cash  88,604   (1,041,712)
Cash at beginning of period  911,359   9,403,965 
Cash at end of period  1,664,616   7,593,354 

  Three Months Ended
June 30,
  

2019

($)

 

2018

($)

     
Cash Flows From Operating Activities:        
Net loss  (1,251,265)  (763,154)
         
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization  11,048   6,776 
Stock-based compensation  162,254   —   
Changes in assets and liabilities:        
Prepaid expenses and other receivables  197,131   (119,909)
Inventory  (1,471)  —   
Accounts payable  16,886   92,470 
Liability due to related party  135,950   199,193 
Other liabilities and accrued expenses  37,309   152,976 
Accrued interest receivable  —     (8,809)
Net cash used in operating activities  (692,158)  (440,457)
         
Cash Flows from Investing Activities:        
Capitalized patent costs  (10,893)  (9,865)
Purchase of property and equipment  (76,691)  —   
Net cash used in investing activities  (87,584)  (9,865)
         
Cash Flows from Financing Activities:        
Costs incurred in relation to ATM equity financing  (9,575)  —   
Gross proceeds from issuance of common stock in relation to ATM financing  152,493   —   
Gross proceeds from warrant exercise  26,000   —   
Net cash provided by financing activities  168,918   —   
         
Net decrease in cash  (610,824)  (450,322)
Effect of exchange rate changes on cash  (61,299)  (52,021)
Cash at beginning of period  3,740,664   822,335 
Cash at end of period  3,068,541   319,992 
         
Supplemental disclosure of non-cash financing activities:        
Conversion of Series A preferred stock to common stock  —     137,324 
Prepayment of equity compensation  103,034   —   

See notes to the unaudited condensed consolidated financial statements

5  

5

NEMAURA MEDICAL INC.

Notes to Condensed Consolidated Financial Statements

Three and Nine Months Ended December 31, 2017 and 2016

(Unaudited)


INTERIM FINANCIAL STATEMENTS



NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES


Nemaura Medical Inc. ("Nemaura"(“Nemaura” or the "Company"“Company”), through its operating subsidiaries, performs medical device research and manufacturing of a continuous glucose monitoring system ("CGM"(“CGM”), named sugarBEAT. The sugarBEAT device is a non-invasive, wireless device for use by persons with Type I and Type II diabetes and may also be used to screen pre-diabetic patients. The sugarBEAT device extracts analytes, such as glucose, to the surface of the skin in a non-invasive manner where it is measured using unique sensors and interpreted using a unique algorithm.


Nemaura is a Nevada holding company organized in 2013. Nemaura owns one hundred percent (100%) of Region Green Limited, a British Virgin Islands corporation (“RGL”) formed ("RGL") on December 12, 2013. Region Green LimitedRGL owns one hundred percent (100%) of the stock in Dermal Diagnostic (Holdings) Limited, an England and Wales corporation ("DDHL"(“DDHL”) formed on December 11, 2013, which in turn owns one hundred percent (100%) of Dermal Diagnostics Limited, an England and Wales corporation formed on January 20, 2009 ("DDL"(“DDL”), and one hundred percent (100%) of Trial Clinic Limited, an England and Wales corporation formed on January 12, 2011 ("TCL"(“TCL”).


DDL is a diagnostic medical device company headquartered in Loughborough, Leicestershire, England, and is engaged in the discovery, development and commercialization of diagnostic medical devices. The Company'sCompany’s initial focus has been on the development of the sugarBEAT device, which consists of a disposable patch containing a sensor, and a non-disposable miniature electronic watch with a re-chargeable power source, which is designed to enable trending or tracking of blood glucose levels. Except for a US cash account (approximately $48,000 at December 31, 2017), allAll of the Company'sCompany’s operations and assets are located in England.


The following diagram illustrates ourNemaura’s corporate and shareholder structure as of December 31, 2017:June 30, 2019:

 

6  

6
NEMAURA MEDICAL INC.
Notes to Condensed Consolidated Financial Statements
Three and Nine Months Ended December 31, 2017 and 2016
(Unaudited)

The Company was incorporated in 2013, and has a limited operating history,reported recurring losses from operations to date and an accumulated deficit of $8,419,817$14,677,144 as of December 31, 2017.June 30, 2019. These operations have resulted in the successful completion of clinical programs to support a CE mark (European Union approval of the product) approval, as well as a De Novo 510(k) medical device application to the US Food and Drug Administration (“FDA”) submission. The Company expects to continue to incur losses from operations at least until revenues are generated through licensing fees or product sales. However, given the completion of the requisite clinical trialsprograms, these losses are completed and the product becomes availableexpected to be marketed.reduced over time. Management has evaluated its abilityentered into licensing agreements with unrelated third parties relating to continue as a going concern for the next twelve months fromUnited Kingdom, Europe, Qatar and all countries in the issuance of these December 31, 2017 consolidated financial statements, and consideredGulf Cooperation Council.

Management has evaluated the expected expenses to be incurred along with its available cash and has determined that there is not substantial doubt as to itsthe Company has the ability to continue as a going concern for at least one year subsequent to the date of issuance of these condensed consolidated financial statements.  The Company had an $8 million unsecured senior credit facility made available from certain major stockholders on August 1, 2019. The first $3.5 million became available immediately for draw down, to help fund the Company’s European commercial launch. The credit facility carries an 8% interest with quarterly interest only payments. The principal is due on maturity in 5 years.

The Company has $1,664,616$3,068,541 of readily available cash on hand at December 31, 2017June 30, 2019. We believe the cash position as of June 30, 2019, plus the credit facility made available from certain major stockholders, is adequate for our current level of operations through at least August 2020, and approximately $4.79 millionfor the achievement of certain of our product development milestones. Our plan is to utilize the cash in a fixed rate deposit account which matures in December 2018 (see note 3(b)).


on hand plus loan draw down to continue establishing commercial manufacturing operations for the commercial supply of the sugarBEAT device and patches now that CE mark approval has been received.

Management's strategic plans include the following:


- continuing

• obtaining further regulatory approval for the sugarBEAT device in other countries such as the USA;

• exploring licensing opportunities;

• developing the sugarBEAT device for commercialization for other applications; and

• secure funding, in the form of conventional interest bearing loans from stockholders, to advance commercializationfund product launch in Europe.

NOTE 2 – BASIS OF PRESENTATION

(a)Basis of presentation

The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Company's principal product,U.S. Securities and Exchange Commission (the “SEC”), and do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. However, such information reflects all adjustments consisting of normal recurring accruals which are, in the UK, Europeanopinion of management, necessary for a fair statement of the financial condition and other international markets;


- pursuing additional capital raising opportunities;results of operations for the interim periods. The results for the three months ended June 30, 2019 are not indicative of annual results. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and

- continuing with the instructions to exploreForm 10-Q and execute prospective partnering or distribution opportunities.

NOTE 2 -- BASIS OF PRESENTATION

(a)Basis of presentation:

Article 10 of Regulation S-X.

The accompanying condensed consolidated financial statements include the accounts of the Company and the Company's subsidiaries, DDL, TCL, DDHLCompany’s subsidiaries. References to “we,” “us,” “our,” or the “Company” refer to Nemaura Medical Inc. and RGL.its consolidated subsidiaries. The condensed consolidated financial statements are prepared in accordance with the instructions to quarterly reports on Form 10-Q. In the opinion of management,U.S. GAAP, and all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operationssignificant intercompany balances and changes in financial position at December 31, 2017 and for all periods presentedtransactions have been made. Certain informationeliminated in consolidation.

The functional currency for the majority of the Company’s operations is the Great Britain Pound Sterling (“GBP”), and footnote data necessary for fair presentation of financial position and results of operations in conformity with accounting principles generally accepted in the United States of Americareporting currency is the US Dollar (“USD”).

7  

(b)Changes to significant accounting policies

There have been condensed or omitted. It is therefore suggested that these financial statements be read in conjunction with the summary ofno material changes to our significant accounting policies and notes to financial statements includedas reported in the Company'sour Annual Report on Form 10-K for the Year Endedyear ended March 31, 2017.  The results of operations for the period ended December 31, 2017 are not necessarily an indication of operating results for the full year.


NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)Cash

Cash includes cash equivalents, which the Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.  Cash and cash equivalents consist primarily of cash deposits maintained in the United Kingdom. From time to time, the Company's cash account balances exceed amounts covered by the Financial Services Compensation Scheme. The Company has never suffered a loss due to such excess balances.

(b)Fixed rate cash accounts:

From time to time the Company invests funds in fixed rate cash savings accounts.  These accounts, at the time of the initial investment, provide a higher interest rate than other bank accounts, and also require the Company to maintain the funds in the accounts for a period of time, $4,789,000 through December 2018.  Early withdrawal may generally be made for liquidity needs.

2019.

7

NEMAURA MEDICAL INC.
Notes to Condensed Consolidated Financial Statements
Three and Nine Months Ended December 31, 2017 and 2016
(Unaudited)

(c) Fair value of financial instruments

The Company's financial instruments primarily consist of cash, fixed rate cash accounts, and accounts payable.  As of the balance sheet dates, the estimated fair values of non-related party financial instruments were not materially different from their carrying values as presented, due to their short maturities. The fair value of amounts payable to related parties are not practicable to estimate due to the related party nature of the underlying transactions.

(d) Property and equipment

Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally four years for fixtures and fittings.

(e) Intangible assets

Intangible assets consist of licenses and patents associated with the sugarBEAT device and are amortized on a straight-line basis, generally over their legal lives of up to 20 years.

(f) Revenue recognition

Revenue is recognized when the four basic criteria of revenue recognition are met:  (1) a contractual agreement exists; (2) transfer of rights has been completed; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured.

The Company may enter into product development and other agreements and with collaborative partners. The terms of the agreements may include nonrefundable signing and licensing fees, milestone payments and royalties on any product sales derived from collaborations.

The Company recognizes up front license payments as revenue upon delivery of the license only if the license has stand alone value to the customer. However, where further performance criteria must be met, revenue is deferred and recognized on a straight line basis over the period the Company is expected to complete its performance obligations.

Royalty revenue will be recognized upon the sale of the related products provided the Company has no remaining performance obligations under the agreement.

(g) Research and development expenses

The Company charges research and development expenses to operations as incurred. Research and development expenses primarily consist of salaries and related expenses for personnel and outside contractor and consulting services. Other research and development expenses include the costs of materials and supplies used in research and development, prototype manufacturing, clinical studies, related information technology and an allocation of facilities costs.
8
NEMAURA MEDICAL INC.
Notes to Condensed Consolidated Financial Statements
Three and Nine Months Ended December 31, 2017 and 2016
(Unaudited)

(h) Income taxes

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss carry forwards. Deferred income tax assets and liabilities are measured using enacted tax rates 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 income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided to reduce the carrying amount of deferred income tax assets if it is considered more likely than not that some portion, or all, of the deferred income tax assets will not be realized.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.  Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits as part of income tax expense in the consolidated statements of comprehensive loss. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense related to unrecognized tax benefits recognized for the three months and nine months ended December 31, 2017 and 2016.  The Company's deferred tax asset consists primarily of net operating loss carried forwards, and are fully allowed for as realization of these assets is not considered to be more likely than not.
In December 2017, the US Tax Cuts and Jobs Act (the"Act") was signed into law.  Generally, this Act reduces corporate rates from a top rate of 35% to a top rate of 21%, effective January 1, 2018.  As the Company's US operations are minimal, and all deferred tax assets are fully allowed for, there is no significant impact to the Company as of and for the three and nine month periods ended December 31, 2017.
(i) Earnings per share

Basic earnings per share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding during the period. There were no potentially dilutive securities as of December 31, 2017 and 2016. For the three and nine month periods ended December 31, 2017 and 2016, warrants to purchase 10 million shares of common stock, and for the three and nine month period ended December 31, 2017, preferred shares potentially convertible into 137,324,000 of common stock were anti-dilutive and were excluded from the calculation of diluted loss per share.

 (j) Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 revenues and expenses during the year. Actual results may differ from those estimates.

(k) Foreign currency translation

The functional currency of the Company is the Great Britain Pound Sterling ("GBP").  The reporting currency is the United States dollar (US$).  Stockholders' equity is translated into United States dollars from GBP at historical exchange rates.  Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rates prevailing during the reporting period.

The translation rates are as follows:

  
Nine months ended
December 31,
2017
(unaudited)
  
Nine months ended
December 31,
2016
(unaudited)
  
Three months ended
December 31,
2017
(unaudited)
  
Three months ended
December 31,
2016
(unaudited)
  
Twelve months ended
March 31,
2017
 
Period end GBP: US$ exchange rate  1.351   1.240   1.351   1.240   1.245 
Average period/yearly GBP : US$ exchange rate  1.300   1.340   1.343   1.255   1.315 

Adjustments resulting from translating the financial statements into the United States dollar are recorded as a separate component of accumulated other comprehensive loss in stockholders' equity.

9
NEMAURA MEDICAL INC.
Notes to Condensed Consolidated Financial Statements
Three and Nine Months Ended December 31, 2017 and 2016
(Unaudited)
(l) RecentRecently adopted accounting pronouncements

The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company's financial reporting, the Company undertakes a study to determine the consequences of the change to its condensed consolidated financial statements and assures that there are proper controls in place to ascertain that the Company's condensed consolidated financial statements properly reflect the change.


In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updates ("ASU") No. 2014-09 (“ASC 606”), Revenue from Contracts with Customers. ASU 2014-09ASC 606 has been modified multiple times since its initial release. This ASU outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09,ASC 606, as amended, becomes effective for annual reporting periods beginning after December 15, 2017. Early adoption is permitted. As an Emerging Growth Company, the Company is allowed to adopt new, or updated, accounting standards using the same time frame that applies to private companies. The Company will adoptadopted this standard on April 1, 2019.

While the Company is not currently recognizing revenue, we have implemented the guidelines within ASC Topic 606,Revenue from Contracts with Customers. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under ASC Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company may enter into product development and other agreements with collaborative partners. The terms of the agreements may include non-refundable signing and licensing fees, milestone payments and royalties on any product sales derived from collaborations.

The Company has entered into license agreements and for these, recognizes up front license payments as revenue upon delivery of the license only if the license has stand-alone value to the customer. However, where further performance criteria must be met, revenue is deferred and recognized over the period the Company is expected to complete its performance obligations. Royalty revenue will be recognized upon the sale of the related products provided the Company has no remaining performance obligations under the agreement.

In June 2018, the FASB issued ASU 2018-07,Improvements to Nonemployee Share-Based Payment Accounting, or ASU 2018-07. ASU 2018-07 simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The Company adopted ASU 2018-07 as of April 1, 2019. The adoption of ASU 2018-07 has not had a material impact on the Company’s financial position, results of operations or related disclosures and no transition adjustment at date of adoption was required.

8  

Recent accounting pronouncements

In March 2016, the FASB issued ASU No. 2016-02, Leases. The main difference between the provisions of ASU No. 2016-02 and previous U.S. GAAP is the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. ASU No. 2016- 022016-02 retains a distinction between finance leases and operating leases, and the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous U.S. GAAP. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize right-of-use assets and lease liabilities. The accounting applied by a lessor is largely unchanged from that applied under previous U.S. GAAP. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. This ASU is effective for public business entities in fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted as of the beginning of any interim or annual reporting period. As an Emerging Growth Company, the Company is allowed to adopt new, or updated, accounting standards using the same time frame that applies to private companies. The Company will adopt this standard on April 1, 2020.


Management is currently evaluating the impact of adoption of this ASU on the Company’s condensed consolidated financial statements.

In August 2016,2018, the FASB issued ASU No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts2018-13,Fair Value Measurement: Disclosure Framework–Changes to the Disclosure Requirements for Fair Value Measurement(ASU 2018-13), which adds and Cash Payments. ASU No. 2016-15 is intended to reduce diversity in howmodifies certain cash receipts and cash payments are presented indisclosure requirements for fair value measurements. Under the statement of cash flows. The new guidance, clarifiesentities will no longer be required to disclose the classificationamount and reasons for transfers between Level 1 and Level 2 of cash activitythe fair value hierarchy, or valuation processes for Level 3 fair value measurements. However, public business entities will be required to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and related to debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporatechanges in unrealized gains and bank-owned life insurance policies, distributions received from equity-method investments, and beneficial interestslosses included in securitization transactions. The guidance also describes a predominance principle pursuant to which cash flows with aspects of more than one class that cannot be separated should be classified based on the activity that is likely to be the predominant source or use of cash flow. Thisother comprehensive income. ASU 2018-13 is effective for public business entities for annual and interim periodsfiscal years beginning after December 15, 2017. Early adoption is permitted as of the beginning of any2019, including interim or annual reporting period. The Companyperiods. Management is currently evaluating the impact that this standardguidance will have on its financial statements and related disclosures, but does not expect it to have a material effect on the Company'sCompany’s condensed consolidated financial statements and related disclosures.


(m) Risks and uncertainties
The Company is in the development stage of one primary product that it expects to introduce to the UK market after completion of clinical trials and CE mark approval (European Union approval of the product). The Company has entered into sales and marketing agreements for the product, but has not yet entered into manufacturing agreements.  These matters raise uncertainties as to the regulatory acceptance of the Company's primary product development efforts and, if acceptance is attained, the cost structure to produce the product.
10statements.
NEMAURA MEDICAL INC.
Notes to Condensed Consolidated Financial Statements
Three and Nine Months Ended December 31, 2017 and 2016
(Unaudited)

(n) Preferred shares

On October 5, 2017, the Company entered into common stock exchange agreements with each of its three largest shareholders, to exchange, in the aggregate, 137,324,000 shares of the Company's common stock for 137,324 shares of Series A Convertible Preferred Stock.  Each share of Series A Convertible Preferred Stock is convertible into 1,000 shares of the Company's common stock, automatically upon the occurrence of all of certain triggering events, as set forth in the Certificate of Designation, namely (a) the sugarBEAT® device to be commercialized has CE regulatory approval; (b) retail sales having commenced; and (c) retail sales exceeding USD$5 million, inclusive of advanced sales or voluntarily by the holder after February 7, 2018, if these triggering events have not occurred.  Each holder of issued and outstanding Series A Convertible Preferred Stock is entitled to a number of votes equal to the number of shares of common stock into which the Series A Convertible Preferred Stock is convertible. Holders of Series A Convertible Preferred Stock are entitled to vote on any and all matters presented to stockholders of the Company, except as provided by law.  The Series A Convertible Preferred Stock has no preference to the common stock as to dividends or distributions of assets upon liquidation or winding up of the Company (which has been agreed to by the holders of the Series A Convertible Preferred Stock).  The Company determined that the fair value of the preferred shares issued for the common shares was equivalent to the fair value of the common shares exchanged.

On November 6, 2017, the transaction was consummated and 137,324,000 shares of common stock were cancelled.  As a result, the Company has 67,676,000 shares of common stock issued and outstanding.
(o) Reclassification

Certain amounts presented in the statement of cash flows for the nine months ended December 31, 2016 have been reclassified from financing activities into operating activities.

NOTE 43 – LICENSING AGREEMENT


AGREEMENTS

United Kingdom and the Republic of Ireland, the Channel Islands and the Isle of Man

In March 2014, the Company entered into an Exclusive Marketing Rights Agreement with an unrelated third party, that granted to the third party the exclusive right to market and promote the sugarBEAT device and related patches under its own brand in the United Kingdom and the Republic of Ireland, the Channel Islands and the Isle of Man. The Company received a non-refundable, up frontup-front cash payment of GBP 1,000,000 (approximately $1.351$1.277 million and $1.245$1.303 million as of December 31, 2017June 30, 2019 and March 31, 20172019, respectively), which is wholly non-refundable, upon signing the agreement.


As the Company has continuing performance obligations under the agreement, the up frontup-front fees received from this agreement have been deferred and will be recorded as income over the term of the commercial licensing agreement beginning from the date of clinical evaluation approval.agreement. As the Company now expects commercialization of the sugarBEAT device to occur in the yearfirst quarter ending March 31, 2019,June 30, 2020, approximately $101,000$36,000 and $65,000 of the deferred revenue has been classified as a current liability.


In April 2014, a Letterliability as ofJune 30, 2019 and March 31, 2019, respectively.

Further details of Intent was signed with the third party which specified a 10 year term and in November 2015, a Licence, Supply and Distribution agreement with an initial 5 year term was executed. The Company grants the exclusive right to market and promote its productlicensing agreements are disclosed in the United Kingdom,Form 10-K as of and purchasefor the product at specified prices.


11
NEMAURA MEDICAL INC.
Notes to Condensed Consolidated Financial Statements
Three and Nine Months Ended Decemberyear ended March 31, 2017 and 2016
(Unaudited)
2019.

NOTE 54 – RELATED PARTY TRANSACTIONS


Nemaura Pharma Limited (Pharma) and(“Pharma”), NDM Technologies Limited (NDM)(“NDM”) and Black and White Health Care Limited (“B&W”) are entities controlled by the Company'sCompany’s Chief Executive Officer and majority shareholder, stockholder, Dewan F.H. Chowdhury.


In accordance with the United States Securities and Exchange Commission (SEC)SEC Staff Accounting Bulletin 55, these condensed consolidated financial statements are intended to reflect all costs associated with the operations of DDL and TCL. Pharma has invoiceda service agreement with DDL, to undertake development, manufacture and TCLregulatory approvals under Pharma’s ISO13485 Accreditation. In lieu of these services, DDL invoices Pharma on a periodic basis for research and developmentsaid services. In addition, certain operating expenses of DDL and TCL were incurred and paid by Pharma and NDM which have been invoicedServices are provided at cost plus a service surcharge amounting to the Company.  Certain costs incurred by Pharma and NDM are directly attributable to DDL and TCL and such costs were billed to the Company.  DDL and TCL advanced Pharma certain amounts to cover a portionless than 10% of the costs.total costs incurred.

9  

Following

The following is a summary of activity between the Company and Pharma and NDM for the ninethree months ended DecemberJune 30, 2019 and 2018, and the year ended March 31, 2017 and 2016.2019. These amounts are unsecured, interest free, and payable on demand.


  
Nine Months Ended
December 31, 2017
(unaudited)
($)
  
Nine Months Ended
December 31, 2016
(unaudited)
($)
 
Balance due from (to) Pharma and NDM at beginning of period  (687,609)  (494,145)
Amounts invoiced by Pharma to DDL and TCL (1)  (554,464)  (483,406)
Amounts invoiced by DDL to Pharma  -   15,399 
Amounts advanced to Pharma  -   45,391 
Amounts repaid by DDL to Pharma  440,266   - 
Amounts paid by DDL on behalf of Pharma  19,889   - 
Foreign exchange differences  (44,392)  96,129 
Balance due to Pharma and NDM at end of the period  (826,310)  (820,632)

(1) 

  

Three Months Ended
June 30, 2019
(unaudited)
($)

 

Three Months Ended
June 30, 2018
(unaudited)
($)

 

Year Ended
March 31, 2019
($)

Balance due to Pharma and NDM at beginning of period  964,679   613,818   613,818 
Amounts invoiced by DDL to Pharma  —     —     (977)
Amounts invoiced by Pharma to DDL, NM and TCL (1)  431,416   521,085   2,312,412 
Amounts repaid by DDL to Pharma  (305,060)  (308,434)  (1,569,496)
Amounts invoiced by B&W to DDL  —     —     2,206 
Amounts repaid by DDL to B&W  —     —     (5,622)
Foreign exchange differences  (22,359)  (68,920)  (84,843)
Forgiveness of payable accounted for as an equity contribution  —     —     (302,819)
Balance due to Pharma and NDM at end of the period  1,072,676   757,549   964,679 

(1)These amounts are included primarily in research and development expenses charged to the Company by Pharma.

The Company routinely reviews its statement of cash flows presentation of related party transactions for financing or operating classification based on the underlying nature of the item and intended repayment.

NOTE 5 – STOCKHOLDERS’ EQUITY

On October 5, 2017, the Company entered into common stock exchange agreements with each of its three largest stockholders, to exchange, in the aggregate, 137,324,000 shares of the Company’s common stock for 137,324 shares of Series A Convertible Preferred Stock (the “Series A Preferred”).  Each share of Series A Preferred is convertible into 1,000 shares of the Company’s common stock, automatically upon the occurrence of all of certain triggering events, as set forth in the Certificate of Designation for the Series A Preferred, namely (a) the sugarBEAT device to be commercialized has CE mark regulatory approval; (b) retail sales having commenced; and (c) retail sales exceeding $5 million, inclusive of advanced sales or voluntarily by the holder after February 7, 2018, if these triggering events have not occurred.  Each holder of issued and outstanding Series A Preferred is entitled to a number of votes equal to the number of shares of common stock into which the Series A Preferred is convertible. Holders of Series A Preferred are entitled to vote on any and all matters presented to stockholders of the Company, except as provided by law.  The Series A Preferred has no preference to the common stock as to dividends or distributions of assets upon liquidation or winding up of the Company (which has been agreed to by the holders of the Series A Preferred).  The Company determined that the fair value of the shares of Series A Preferred issued for the shares of common stock was equivalent to the fair value of the shares of common stock exchanged.

10  

On November 6, 2017, the transactions contemplated by the exchange agreements were consummated and 137,324,000 shares of common stock were cancelled. As a result, the Company had 67,676,000 shares of common stock issued and outstanding as of March 31, 2018.

On June 5, 2018, the three holders of the Company’s Series A Preferred each delivered notices of conversion to voluntarily convert their Series A Preferred, in the aggregate amount of 137,324 of Series A Preferred shares, into 137,324,000 shares of common stock.  The holders had the right to voluntarily convert each share of Series A Preferred into 1,000 shares of common stock of the Company. 

On October 19, 2018, the Company entered into an Equity Distribution Agreement (“Distribution Agreement”) with Maxim Group LLC, as sales agent (“Maxim”), pursuant to which the Company may offer and sell, from time to time, through Maxim (the “Offering”), up to $20,000,000 in shares of its common stock (the “Shares”). Between October 31, 2018, and March 31, 2019, the Company issued 234,998 shares of its common stock through the Distribution Agreement and received gross proceeds of $455,105. $161,102 of costs were incurred in relation to this transaction. In the three months ended June 30, 2019, an additional 143,388 shares were issued under the Distribution Agreement generating gross proceeds of $152,493 and costs of $9,575. As of June 30, 2019, the Company may sell, from time to time, the remaining $19,392,402 in shares of common stock under the Distribution Agreement.

On December 18, 2018, the Company entered into a placement agency agreement with Dawson James Securities, Inc. with respect to the issuance and sale of an aggregate of up to 2,400,000 units, each unit consisting of one share of common stock, par value $0.001 per share, together with one warrant to purchase one share of common stock at an exercise price equal to $1.04 per share, in a public offering. The warrants offered in the public offering will terminate on the fifth anniversary of the date of issuance. The public offering price for each unit was $1.04.

The closing of the offering occurred on December 20, 2018 and at such closing the Company sold 1,942,061 shares of common stock and 1,942,061 warrants for gross proceeds of $2,019,743. The net proceeds to the Company from the sale of the shares of common stock and the warrants was $1,691,443, after deducting $328,302 of placement agent commissions and other offering expenses payable by Pharma and NDM.

Subsequent tothe Company. As of June 30, 2019, 86,357 of the warrants had been exercised, generating $89,811 of additional proceeds.

Effective December 31, 2017,18, 2018, the Company issued a unit purchase option to the placement agent to purchase 97,103 shares and 97,103 warrants. The Company has classified this option as equity. The unit purchase option has a term of three years and an exercise price of $1.30.

Earnings (loss) per share

The following table sets forth the computation of basic and diluted earnings (loss) per share (“EPS”) for the periods indicated.

  Three months ended June 30,
  2019 2018
   ($)    ($) 

Basic and diluted earnings (loss) per share:

Net loss attributable to common stockholders

  (1,251,265)  (763,154)
Weighted average basic and diluted shares outstanding  207,836,368   105,821,556 
Basic and diluted earnings (loss) per share:  (0.01)  (0.01)
         

The Company excludes warrants outstanding, which are anti-dilutive given the Company is in a loss position, from the basic and diluted earnings per share calculation.

Basic earnings (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period. For the three months ended June 30, 2019 and 2018, warrants to purchase 10 million shares of common stock were anti-dilutive and were excluded from the calculation of diluted loss per share.For the three month period ended June 30, 2019, warrants to purchase 1,855,704 shares of common stock and a unit purchase option to purchase 97,103 shares of common stock as well as 97,103 warrants were considered anti-dilutive and were also excluded from the calculation of diluted loss per share.

11  

NOTE 6 – OTHER ITEMS

(a) Investor relations agreements

The Company currently has contracts with several investor relations specialists to help support the ongoing financing activities of the business. Further details of historic fees paid and arrangements are detailed in our Form 10-K for the year ended March 31, 2019.

Investor Relations Company 2 -On May 1, 2019, the existing agreement with investor relations company 2 was restated, still as a rolling monthly contract with a three month assumed length, although cancellable after each completed month. A payment of $7,500 was agreed at the beginning of each month, plus an additional $2,500 per month for additional services, if taken; and if the contract runs for the whole three month term, 12,500 shares will be issued at the end of the term. $20,000 was expensed in the three months ended June 30, 2019 relating to cash payments.

Investor Relations Company 3 -On March 18, 2019 the Company cancelled its existing agreement with investor relations company 3 and entered into a new agreement. The term of this contract has been agreed to be on a month to month basis. Compensation is partly in cash and partly in restricted common stock. At the beginning of each monthly term a cash payment of $5,000 will be made paymentsand 7,500 shares of restricted stock will be issued. This contract ended in May 2019. 7,500 shares with a fair value of $1.04 were issued in April and 7,500 shares with a fair value of $0.90 were issued in May totaling $14,550. $13,320 was expensed in relation to Pharmacash paid for this agreement during the three months ended June 30, 2019, including $2,097 released from prepaid expenses at April 1, 2019. Total stock compensation expense for the three months ended June 30, 2019 was $17,888.

(b) Management Consultancy Agreement

Management Consulting Company 1-On June 1, 2019, the terms for management consulting company 1 were amended being for a 4-month period from June 1, 2019 to September 30, 2019, with $40,000 cash to be paid up front and 27,500 shares issued up front. $30,000 of this cash expense is within prepaid expenses at June 30, 2019. The shares were recorded at fair value on the outstanding balancesfirst day of the contract of $0.87 and the cost will be expensed over the 4-month term of which $18,434 was included in prepaid expenses at DecemberJune 30, 2019. Cash payments expensed of $36,667 include the release of $26,667 prepaid at April 1, 2019 and $26,091 was expensed for share expense including $20,600 in prepaid expenses at April 1, 2019, all of which were expensed during the quarter ended June 30, 2019.

Management Consulting Company 2 -On January 7, 2019 the Company entered into a six-month contract with management consulting company 2 for the provision of specialist consulting services. 150,000 restricted shares were issued on the fourth month after commencement of the original contract, being May 2019. A fair value of $0.94, being the share price on May 7, 2019 (the first day of the first amendment of the consulting agreement) was applied as the shares were issued fully and irrecoverably on the first day of the contract. The cost is being expensed evenly over the 5-month contract term, with a prepaid expense of $84,600 at June 30, 2019. $118,275 was expensed in relation to this agreement for the quarter ended June 30, 2019, including $61,875 released from prepaid expenses at April 1, 2019.

Total stock based compensation recognized during the quarter ended June 30, 2019 was $162,254.

(c) Subsequent events

On July 10, 2019 the Company submitted its De Novo 510(k) medical device application to the US Food and Drug Administration for sugarBEAT, following clinical studies and usability studies.

The Company was notified by NASDAQ on July 15, 2019 that the Company no longer meets the requirements of NASDAQ Rule 5550(a)(2) requiring listed securities to maintain a minimum closing bid price of $1 per share. If the closing bid price of the Company’s common stock is $1.00 per share or more for a minimum of 10 consecutive business days at any time prior to January 11, 2020, the Company will regain compliance.

On July 31, 20172019, the Company entered into a loan agreement with Carter Gem Properties Limited (“Carter Gem”) pursuant to which Carter Gem agreed to lend the Company up to $8,000,000 in tranches with a 20 day calendar notice prior to each tranche. The loan carries an 8% interest rate with quarterly interest payments and balloon maturity date in five years. Carter Gem has discretion to proceed with each tranche. The first $3.5 million became available immediately for draw down, to help fund the Company’s European commercial launch. Carter Gem is a company owned by a trust designed to benefit the family of £280,000.Sufyan Ismail, who is a major stockholder of the Company. The transaction was approved by the Company’s Audit Committee, as a related party transaction

12  

12


ITEM 2: MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview:


The Company has experienced recurring losses and negative cash flows from operations. At December 31, 2017,June 30, 2019, the Company had approximate cash and fixed rate cash account balances of $6,454,000,$3,068,541, working capital of $5,509,000,$2,233,177, total stockholders' equity of $4,498,000$1,308,378 and an accumulated deficit of $8,420,000.$14,677,144. To date, the Company has in large part relied on equity financing to fund its operations. Additional funding has come from related party contributions. The Company expects to continue to incur losses from operations for the near-term and these losses could be significant as product development, regulatory activities, clinical trials and other commercial and product development related expenses are incurred.


Management's strategic assessment includes the following potential options:


• obtaining further regulatory approval for the sugarBEAT device

• pursuing additional capital raising opportunities;
in other countries such as the USA;

• exploring licensing opportunities; and

• developing the sugarBEAT device for commercialization.


commercialization for other applications; and

• secure funding, in the form of conventional interest bearing loans from stockholders, to fund product launch in Europe.

Results of Operations


Comparative Results for the NineThree Months Ended December 31, 2017June 30, 2019 and 2016


2018

Revenue


There was no revenue recognized in the ninethree months ended December 31, 2017June 30, 2019 and 2016.2018, respectively. In 2014, we received an upfront non-refundable cash payment of £1,000,000approximately GBP 1 million (approximately $1.277 million, $1.320 million and $1.303 million as of June 30, 2019, June 30, 2018 and March 31, 2019, respectively) in connection with an Exclusive Marketing Rights Agreement with an unrelated third party that provides the third party the exclusive right to market and promote the sugarBEAT device and related patch under its own brand in the United Kingdom and the Republic of Ireland. We have deferred this licensing revenue until we complete our continuing performance obligations, which include securing successful CE marking of the sugarBEAT  patch,sales are due to commence, and we expect to record the revenue inas income over an approximately 10 year10-year term from the date CE marking approval is obtained.sales commence. Although the revenue is deferred at December 31, 2017,June 30, 2019, the cash payment became immediately available and was beinghas been used to fund our operations, including research and development costs associated with successfully obtaining the CE markingmark approval.

Research and Development Expenses

Research and development expenses were $713,585$556,183 and $794,433$429,539 for the ninethree months ended December 31, 2017June 30, 2019 and 2016,2018, respectively. This amount consisted primarily of expenditureexpenditures on clinical trials, sub-contractor activities, consultancy fees and wages and demonstrated continuing expenditureexpenditures for improvements made to the sugarBEAT device. The decreaseincrease of $80,848$126,644 is due to decreasesincreases in these costs as the sugarBEAT product is nearing completion.

commercial launch.

General and Administrative Expenses

General and administrative expenses were $627,605$699,008 and $397,598$342,424 for the ninethree months ended December 31, 2017June 30, 2019 and 2016,2018, respectively. These consisted of fees for legal, professional, audit services, charitable donationsinvestor relations, insurance and wages. The increase of $230,007$356,584 was due to increases in professional fees as the CGM device continues clinical trialsinvestor relations activities and legal fees incurred as the company prepares for future product launch, plus £123,000 in charitable donations.insurance expenses, due to an increased level of insurance purchased. We expect general and administrative expenses to remain at similar levels going forward in the long term, as theremost of these costs will continueneed to be professional, consultancy and legal fees associated with planned fundraising.incurred for the day to day running of the Company.

13  


13

Other Comprehensive Loss

For the ninethree months ended December 31, 2017June 30, 2019 and 2016,2018, other comprehensive income (loss)loss was $398,705$15,751 and ($786,148)$234,609, respectively, arising from foreign currency translation adjustments.


Comparative Results for the Three Months Ended December 31, 2017 and 2016

Revenue

There was no revenue recognized in the three months ended December 31, 2017 and 2016.  In 2014, we received an upfront non-refundable cash payment of £1,000,000 in connection with an Exclusive Marketing Rights Agreement with an unrelated third party that provides the third party the exclusive right to market and promote the sugarBEAT device and related patch under its own brand in the United Kingdom and the Republic of Ireland.  We have deferred this licensing revenue until we complete our continuing performance obligations, which include securing successful CE marking of the sugarBEAT  patch, and we expect to record the revenue in income over an approximately 10 year term from the date CE marking approval is obtained.  Although the revenue is deferred at December 31, 2017, the cash payment became immediately available and was being used to fund our operations, including research and development costs associated with obtaining the CE marking approval.
Research and Development Expenses
Research and development expenses were $355,300 and $267,638 for the three months ended December 31, 2017 and 2016, respectively. This amount consisted primarily of expenditure on clinical trials, sub-contractor activities, consultancy fees and wages and demonstrated continuing expenditure for improvements made to the sugarBEAT device.  The increase of $87,662 is due to increases in these costs as the sugarBEAT product entered clinical trials.
General and Administrative Expenses
General and administrative expenses were $121,053 and $107,728 for the three months ended December 31, 2017 and 2016, respectively.  These consisted of fees for legal, professional, audit services, and wages.  The increase of $13,325 was due to increases in professional fees as the CGM device enters clinical trials and legal fees incurred as the company prepares for future product launch.  We expect general and administrative expenses to remain at similar levels going forward in the long term, as there will continue to be professional, consultancy and legal fees associated with planned fundraising.
Other Comprehensive Loss
For the three months ended December 31, 2017 and 2016, other comprehensive income/(loss) was $36,641 and ($396,445) respectively, arising from foreign currency translation adjustments.

Liquidity and Capital Resources


We have experienced net losses and negative cash flows from operations since our inception. We have sustained cumulative losses of $8,419,817$14,677,144 through December 31, 2017.June 30, 2019. We have historically financed our operations through the issuances of equity and contributions of services from related entities.


At December 31, 2017,June 30, 2019, the Company had net working capital of $5,509,132$2,233,177 which included cash and short-term fixed rate cash account balances of $6,453,745.$3,068,541. The Company reported a net loss of $1,267,184$1,251,265 for the ninethree months ended December 31, 2017.


While our current cash level (including fixed rate cash accounts) is sufficientJune 30, 2019.

We have completed clinical studies required for FDA submission and submitted an application to the completionFDA for approval of the clinical studiesdevice in July 2019, and the initial scale up of our manufacturing, our long term business plan is contingent upon our ability to raise additional funds.  This may include a combination of debt, equitytherefore we expect that research and licensing fees.  If we are not successful in raising the funds needed in the specified timelines, the target datesdevelopment costs for the achievement of the milestonesglucose monitoring will be extended.


reduced. The Company had an $8 million unsecured senior credit facility made available from certain major stockholders on August 1, 2019. The first $3.5 million became available immediately for draw down, to help fund the Company’s European commercial launch. The credit facility is non-dilutive carrying 8% interest with quarterly interest only payments. The principal is due on maturity in 5 years.

We believe the cash position as of December 31, 2017June 30, 2019, plus the credit facility made available from certain major stockholders, is adequate for our current level of operations through February 2019,at least August 2020, and for the achievement of certain of our product development milestones. Our plan is to utilize the cash on hand plus loan draw down to complete the following:


–  Establishcontinue establishing commercial manufacturing operations for the commercial supply of the sugarBEAT device and patches.

–  Complete clinical studies forpatches now that CE mark approval of the body worn miniaturised device with Bluetooth connectivity.

has been received.

14Cash Flows


Operating activities

Net cash consumed by ourused in operating activities for the ninethree months ended December 31, 2017June 30, 2019 was $1,261,104$692,158 which reflected our net loss of $1,267,184, increased by a rise in accrued interest receivable of $58,504 and a rise in prepayments and other receivables of $63,405 and offset by changes in the liability due to related parties of $77,654 and accounts payable and accrued expenses of $27,868.


Net cash used by our operating activities for the nine months ended December 31, 2016 was $704,628 which reflected our net loss of $1,192,031 together with$1,251,265, a decrease in prepayments and other receivables of $69,121 and a decrease$197,131, an increase in accounts payable and other liabilitiesaccruals of $20,584, and$37,309, non-cash stock-based compensation of $162,254, an increase in liability due to related partyparties of $423,237.

$135,950, and an increase in accounts payable of $16,886.

Net cash realisedused in operating activities for the three months ended June 30, 2018 was $440,457 which reflected our net loss of $763,154, and offset by an increase in accounts payable, liability due to related parties and accrued expenses of $444,639, and increased by an increase in prepayments and other receivables of $128,718.

Net cash used in investing activities was $1,925,757$87,584 for the ninethree months ended December 31, 2017,June 30, 2019, which reflected $1,955,489 returned frompatent filing costs of $10,893 and the maturitypurchase of a fixed rate savings account, but reduced byproperty and equipment of $76,691.

Net cash used in investing activities was $9,865 for the three months ended June 30, 2018, which reflected the direct expenditures made in developing intellectual property, primarily related to patent filings of $29,732.


filings.

Net cash usedprovided by our investingfinancing activities was $64,271 for the ninethree months ended December 31, 2016, which reflected expenditures on intellectual property and other assets.

June 30, 2019 was $168,918. The ATM facility delivered gross proceeds of $152,493. In addition, $26,000 was raised in relation to the exercise of 25,000 warrants. The Company also incurred direct costs of $9,575 related to the ATM financing.

For the three months ended June 30, 2018, there were no cash flows from financing activities.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements, including unrecorded derivative instruments that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies


The preparation of

When we prepare our condensed consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles generally accepted in the United States of America (GAAP) requires management to(“U.S. GAAP”), we must make estimates and assumptions about future events that affect the amounts reported in the financial statementswe report. Certain of these estimates result from judgements that can be subjective and accompanying notes. Future eventscomplex. As a result of that subjectivity and their effects cannot be determined with absolute certainty. Therefore, the determinationcomplexity, and because we continuously evaluate these estimates and assumptions based on a variety of estimates requires the exercise of judgment. Actualfactors, actual results inevitably willcould materially differ from thoseour estimates and such differences may be material to the financial statements. The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with research and development, income taxes and intangible assets.


The Company's financial position, results of operations and cash flows are impacted by the accounting policies the Company has adopted. In order to get a full understanding of the Company's financial statements, one must have a clear understanding of the accounting policies employed. A summary of the Company's critical accounting policies follows:

Research and Development Expenses:  The Company charges research development expenses to operations as incurred.  Research and development expenses primarily consist of salaries and related expenses for personnel and outside contractor and consulting services.  Other research and development expenses include the costs of materials and supplies used in research and development, prototype manufacturing, clinical studies, related information technology and an allocation of facilities costs.

Income taxes:  Income taxes are accounted for under the asset and liability method.  Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss carry forwards.  Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled.  The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  A valuation allowance is provided to reduce the carrying amount of deferred income tax assetsassumptions if it is considered more likely than not that some portion, or all, of the deferred income tax assets will not be realized.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.  Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.  Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.  The Company has elected to classify interest and penalties related to unrecognized tax benefits as part of income tax expense in the consolidated statements of comprehensive loss.
15

Intangible Assets:    Intangible assets primarily represent legal costs and filings associated with obtaining patents on the Company's new discoveries. The Company amortizes these costs over the shorter of the legal life of the patent or its estimated economic life using the straightline method. The Company tests intangible assets with finite lives upon significant changes in one or more factors require us to make accounting adjustments. During the Company's business environmentthree months ended June 30, 2019, we have made no material changes or additions with regard to such policies and any resulting impairment charges are recorded at that time.estimates.

14  

Revenue Recognition:  Revenue is recognized when the four basic criteria of revenue recognition are met: (1) a contractual agreement exists; (2) transfer of rights has been completed; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured.

The Company may enter into product development and other agreements and with collaborative partners. The terms of the agreements may include non-refundable signing and licensing fees, milestone payments and royalties on any product sales derived from collaborations.

The Company recognizes up front license payments as revenue upon delivery of the license only if the license has stand-alone value to the customer. However, where further performance criteria must be met, revenue is deferred and recognized on a straight-line basis over the period the Company is expected to complete its performance obligations.

Royalty revenue will be recognized upon the sale of the related products provided the Company has no remaining performance obligations under the agreement.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

The Company's exposure to interest rate risk is minimal.  We have no bank borrowings and, although we have placed funds on deposit to earn interest during the year, these are of fixed-term and fixed-rate and therefore offer little exposure to interest rate risk.

Foreign Exchange Risk


Our foreign currency exposure gives rise to market risk associated with exchange rate movements against the US dollar, our reporting currency. Currently, the majority of our expenses and cash and fixed rate deposits are denominated in Great Britain Pounds Sterling (“GBP”), with the remaining portion denominated in US dollars. Fluctuations in exchange rates, primarily the US dollar against the Pound Sterling, will affect our financial position. At December 31, 2017,June 30, 2019, the Company held approximately $6$1.98 million in GBP-denominated bank and fixed rate cash accounts. Based on this balance, a 1% depreciation of the PoundGBP against the US dollar would cause an approximate $60$20 thousand reduction in cash and fixed rate deposit account balances.


We have not utilized any hedging instruments in order to mitigate the foreign currency risk.


Inflation


Historically, with UK inflation rates having been low in recent years, inflation has not had a significant effect on our business in the UK, the location of the substantial part of our activities.


ITEM 4. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


Mr.

Dr. Dewan F.H. Chowdhury, who is our Chief Executive Officer and Mr. Iain S. Anderson, who is our PrincipalInterim Chief Financial and Accounting Officer, havehas evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to thea company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on this evaluation, management concluded that our disclosure controls and procedures were not effective as of December 31, 2017,June 30, 2019, at the reasonable assurance level due to a material weaknessweaknesses in our internal control over financial reporting, which is described below.


16

Changes in Internal Control over Financial Reporting

As of December 31, 2017,June 30, 2019, our management, with the participation of our PrincipalChief Executive Officer, and Principalwho is also serving as our Interim Chief Financial Officer, evaluated our internal control over financial reporting. Based on that evaluation, our Principal Executive Officer and Principal Financial Officerhe concluded that no changes in our internal control over financial reporting occurred during the quarterthree-month period ended December 31, 2017June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


As described in our Annual Report on Form 10-K for the year ended March 31, 2017,2019, management assessed the effectiveness of our internal control over financial reporting as of March 31, 2017.2019. In making this assessment we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)(“COSO”) in Internal Control – Integrated Framework (2013). As a result of its assessment, management identified material weaknesses in our internal control over financial reporting. Based on the material weaknesses as described below, management concluded that our internal control over financial reporting was not effective as of March 31, 2017. Accordingly, our internal control over financial reporting is not effective as of December 31, 2017 because of the material weaknesses identified and described below.June 30, 2019.

15  

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that, there is a reasonable possibility that a material misstatement of our annual or interim condensed consolidated financial statements will not be prevented or detected on a timely basis. As a result of our assessment, management identified the following material weaknesses in internal control over financial reporting as of March 31, 2017:


June 30, 2019:

· Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal control system. This has resulted in a number of internal control deficiencies. Specifically,

· there is a lack of segregation of duties in the processing of financial transactions which could result in inappropriate initiation, processing and review of transactions and the financial reporting of such transactions whether due to errors or fraud;

· there is a lack of review and approval of journal entries which could result in the improper initiation and reporting of transactions; and

· there is a lack of access controls and documentation over the Company'sCompany’s IT applications which could result in the improper initiation and reporting of significant transactions.


· Management has identified that there is a lack of adequate financial expertise related to the assessment of complex transactions and a lack of adequate resources to review out of the ordinary transactions and arrangements of the Company. This could result in the improper reporting of significant transactions or arrangements.


· Related party transactions. Specifically, there are limited policies and procedures to ensure that financial statement disclosures reconcile fully to the underlying accounting records and that Board approval of these transactions is not documented.


· Accounting and reporting for complex areas due to lack of financial expertise on complex US Accounting and Reportingincluding:

-Deferred offering costs and cutoff for accrued expenses were not properly accounted for.
-Stock based compensation was not properly accounted for.
-Preparation of condensed consolidated financial statements.

The Company has enhanced the quarterly reporting process by taking the following actions:

oExternal advice from a specialized third-party provider has been sought to provide technical guidance on accounting for equity offering and related costs.
oAdditional training for accounting personnel on the proper accounting and reporting for stock-based compensation and complex equity transactions.
oThe month end process has been enhanced and additional controls such as full balance sheet reconciliations have been implemented.
oIn addition, the increased size of the finance team has enabled and increased level of segregation of duties and enhanced opportunity for review.

Notwithstanding the identified material weaknesses, management believes the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows atas of and for the periods presented in accordance with U.S. GAAP.

16  

17


Remediation of Material Weaknesses

We are in the process of implementing improvements and remedial measures in response to the material weaknesses, including:


· Assembling a team from our finance department to be responsible for the preparation of financial statements under U.S. Securitiessecurities laws, including hiring additional qualified personnel such as a CFO with US listed company experience.

· In assembling this team, the Company willintends to put in place controls to segregate duties in the processing of key transactions, controls to ensure the review and approval of journal entries and controls to ensure that access to IT systems is limited to authorized users and adequately documented based on the applications and their functions within the organization.

· Engaging a third party consulting firm to assist in assessing, designing, implementing, and monitoring controls related to financial statement preparation, IT general controls, journal entries, and significant operating processes.

· Organizing regular training sessions on US GAAP for our finance department in the form of workshops, seminars and newsletters as well as requiringRequiring our finance personnel to participate in annual in-house or public US GAAP training courses; and

· Implementing stronger internal controls and processes over related party transactions including segregating reviews and approvals, as well as continuing efforts to reduce the amount and volume of related party transactions; and

· Establishing an audit committee with an "audit committee financial expert" withinContinuing to develop and formalize the definitionactivities of the applicable Securities and Exchange Commission.audit committee. The committee will be helped by an outsourced internal audit department to review our internal control processes, policies and procedures to ensure compliance with the Sarbanes-Oxley Act.


Further information regardingAct of 2002.

In addition to the remediation plan, we intend to put our remediation plans is containedefforts, in the coming year, in improving our Annual Reportcontrol environment detailed below:

· Ongoing assessment of our current Internal Control Over Financial Reporting against COSO 2013 and the requirements set forth by Sarbanes-Oxley Act Section 404. This task will be conducted by an independent expert.

· Continued testing of the operating effectiveness of the controls that have been identified and implemented in order to prevent misstatement of the financial statements. In addition, the Company will focus on Form 10-K for the year ended March 31, 2017.  We are continuingdesign and implementation of Key Performance Indicators (“KPIs”) in order to address these issuesmeasure the quality of the processes in place, and the efficiency of the controls.

· Continue to date have:

 · On December 12, 2016, appointed Mr. Iain Anderson to serve as the Chief Financial Officer. 
  · Engagedengage with a third party consulting firm to help us assess our current internal control over financial reporting against COSO 2013, as well as identifying a gap analysis, suggest improvements in controls, and assist us in testing our control systems. These items have been completed forFurther testing has occurred of certain of our controls, including purchasing processes, payment processes, and month end closing procedures.
· During In addition, an initial assessment of IT general controls has been conducted, with a view to assessing the quartercurrent situation and strengthening these controls where deemed necessary. The Company has set a target to design and implement controls that will address the material weaknesses by March 31, 2020. The independent advisers have agreed to a table of work to complete all controls reviews, implementation and testing in this timeframe and the Company has committed to meeting this timeframe. However, as this process is ongoing and there will need to be sufficient time to ensure implemented controls are operating effectively, there is no assurance that all material weaknesses will be fully remediated by March 31, 2020.

Certain aspects of this plan were implemented in the years ended September 30, 2017,March 31, 2019 and 2018 and other aspects are expected to be implemented on, or around, the boardtime that we are prepared to take our sugarBEAT product to market.

Further information regarding our remediation plans is contained in our Annual Report on Form 10-K for the year ended March 31, 2019. While we are continuing to address these issues, we have not completed any of directors appointed three independent directors to serve on our board of directors, each of whom meet the definition of 'independent"these remediation actions as set forth under The Nasdaq Stock Market rules.  The Board has established an audit committee with each of the independent directors serving as membersdate of the audit committee.  The Board has also designated one of the independent directors to serve as Chair of the audit committee who meets the definition of an "audit committee financial expert.".this report.

17  








18

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS


None.


ITEM 1A. RISK FACTORS

None.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


None.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES


None.

ITEM 4. MINE SAFETY DISCLOSURES


Not Applicable.


ITEM 5. OTHER INFORMATION

None.


ITEM 6. EXHIBITS


The exhibits listed on the Exhibit Index below are provided as part of this report.


Exhibit No.Document Description
31.1
10.1
Loan Agreement, dated July 31, 2019, by and between the Company and Carter Gem Properties Limited
31.1Certification of the Principal Executive Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification of the Principal Financial and Accounting Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification of the Principal Executive Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.2
Certification of the Principal Financial and Accounting Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
101Interactive Data Files (1)

(1) Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be filed by the Company for purposes of Section 18 or any other provision of the Exchange Act of 1934, as amended.

18  

19SIGNATURES


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.



 NEMAURA MEDICAL INC.
  
  Dated:  FebruaryAugust 9, 20182019/s/ Dewan F HF.H. Chowdhury
 Dewan F HF.H. Chowdhury

Chief Executive Officer (Principal Executive Officer)

  Dated:  FebruaryAugust 9, 20182019/s/ Iain S AndersonDewan F.H. Chowdhury
 Iain S AndersonDewan F.H. Chowdhury

Interim Chief Financial Officer (Principal Financial and Accounting Officer)


19  
20

EXHIBIT INDEX

Exhibit No.Document Description
10.1Loan Agreement, dated July 31, 2019, by and between the Company and Carter Gem Properties Limited
31.1Certification by Chiefof the Principal Executive Officer (Principal Executive Officer)pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002
31.2Certification by Chief Financial Officer (Principalof the Principal Financial and Accounting Officer)Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-OxlySarbanes-Oxley Act of 2002.2002
32.1Certification by Chiefof the Principal Executive Officer (Principal Executive Officer) pursuant to 18 U.S.C. Section 1350,Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 906302 of the Sarbanes-Oxley Act of 2002.2002
32.2Certification by Chief Financial Officer (Principalof the Principal Financial and Accounting Officer)Officer pursuant to 18 U.S.C. Section 1350,Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 906302 of the Sarbanes-Oxley Act of 2002.2002




20