UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q

(Mark One)


☑

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

For the quarterly period ended:  December 31, 2017
or
☐ TRANSITION REPORT UNDER SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2020

or

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to


Commission File Number: 333-194857001-38355


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

 NEVADA 46-5027260 
 (State or other jurisdiction of incorporation or organization) (I.R.S. Tax. I.D.Employer Identification No.) 
 
Advanced Technology Innovation Centre,
Loughborough University Science and Enterprise Parks,
5 Oakwood Drive,
Loughborough, Leicestershire
LE11 3QF
United Kingdom

57 West 57th Street

Manhattan, NY 10019

(Address of Principal Executive Offices) (Zip Code)
 
+ 00 44 1509 222912646-416-8000
(Registrant'sRegistrant’s Telephone Number, Including Area Code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

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 ☑☒ No ☐


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


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


Large accelerated filer ☐
 
Accelerated filer ☑
☐

Non-accelerated filer ☐

(Do not check if a smaller reporting company)
☒

 

Smaller reporting company  ☐

☒
Emerging growth company ☑
☐


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

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

☑

The number of shares of common stock, par value $0.001 per share, outstanding as of February 7, 2018November 9, 2020 was 67,676,000.22,908,705.


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements, other than statements of historical fact, included in this Quarterly Report on Form 10-Q regarding development of our strategy, future operations, future financial position, projected costs, prospects, plans and objectives of management are forward-looking statements. Forward-looking statements may include, but are not limited to, statements about:

The words "believe," "anticipate," "design," "estimate," "plan," "predict," "seek," "expect," "intend," "may," "could," "should," "potential," "likely," "projects," "continue," "will," and "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements reflect our current views with respect to future events, are based on assumptions and are subject to risks and uncertainties. We cannot guarantee that we actually will achieve the plans, intentions or expectations expressed in our forward-looking statements and you should not place undue reliance on these statements. There are a number of important factors that could cause our actual results to differ materially from those indicated or implied by forward-looking statements. These factors and the other cautionary statements made in this Quarterly Report on Form 10-Q should be read as being applicable to all related forward-looking statements whenever they appear herein. Except as required by law, we do not assume any obligation to update any forward-looking statement. We disclaim any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

2 

NEMAURA MEDICAL INC.

TABLE OF CONTENTS


 Page
PART I: FINANCIAL INFORMATION3
ITEM 1 INTERIM FINANCIAL STATEMENTS3
                 Condensed Consolidated Balance Sheets as of December 31, 2017September 30, 2020 (unaudited) and March 31, 2017202034
  Condensed Consolidated Statements of Comprehensive Loss for the Three and NineSix Months Ended December 31, 2017September 30, 2020 and 20162019 (unaudited)45
  Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months ended September 30, 2020 and 2019 (unaudited) and the Six Months ended September 30, 2020 and 2019 (unaudited)6-7
Condensed Consolidated Statements of Cash Flows for the Nine MonthsSix Months Ended December 31, 2017September 30, 2020 and 20162019 (unaudited)58
                Notes to Condensed Consolidated Financial Statements (unaudited)69-15
ITEM 2��MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS1316-20
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK1621
ITEM 4 CONTROLS AND PROCEDURES1621
PART II: OTHER INFORMATION1922
ITEM 1 LEGAL PROCEEDINGS1922
ITEM 1A RISK FACTORS1922
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS1922
ITEM 3 DEFAULTS UPON SENIOR SECURITIES1922
ITEM 4 MINE SAFETY DISCLOSURES1922
ITEM 5 OTHER INFORMATION1922
ITEM 6 EXHIBITS1922
SIGNATURES2023


3 

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

September 30,

2020

(Unaudited)

 

As of

March 31, 2020

 

  ($)  ($) 
ASSETS        
Current assets:        
Cash  16,948,939   106,107 
Prepaid expenses and other receivables  358,404   452,463 
Inventory (raw materials)  411,620   286,309 
Total current assets  17,718,963   844,879 
         
Other assets:        
Property and equipment, net of accumulated depreciation  152,893   162,064 
Intangible assets, net of accumulated amortization  237,150   213,080 
Total other assets  390,043   375,144 
Total assets  18,109,006   1,220,023 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)        
Current liabilities:        
Accounts payable  155,609   293,608 
Liability due to related parties  153,533   830,093 
Other liabilities and accrued expenses  47,609   168,966 
Notes payable, net of unamortized discount  2,431,913   —   
Deferred revenue  96,930   93,022 
Total current liabilities  2,885,594   1,385,689 
         
Non-current portion of notes payable, net of unamortized discount  2,785,515   —   
Non-current portion of deferred revenue  1,195,470   1,147,278 
Total non-current liabilities  3,980,985   1,147,278 
Total liabilities  6,866,579   2,532,967 
         
Commitments and contingencies:        
         
Stockholders’ equity (deficit):        
Series A convertible preferred stock, $0.001 par value, 200,000 shares authorized; 0 shares issued and outstanding at September 30, 2020 and March 31, 2020  —     —   
Common stock, $0.001 par value,        
42,000,000 shares authorized and 22,893,705 and 20,850,848        
shares issued and outstanding at September 30, 2020 and March 31, 2020, respectively  22,894   20,851 
Additional paid-in capital  31,838,383   16,589,272 
Accumulated deficit  (20,267,348)  (17,586,075)
Accumulated other comprehensive loss  (351,502)  (336,992)
Total stockholders’ equity / (deficit)  11,242,427   (1,312,944)
Total liabilities and stockholders’ equity  18,109,006   1,220,023 

See notes to the unaudited condensed consolidated financial statements

statements.



3
4 


NEMAURA MEDICAL INC.
Condensed Consolidated Statements Ofof Comprehensive Loss

(Unaudited)

(in Dollars, except Share Amounts)


  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 September 30, Six Months Ended September 30,
  2020  2019  2020   2019
         
Revenue:  —     —     —     —   
Total revenue  —     —     —     —   
                 
Operating expenses:                
Research and development  456,280   462,517   771,592   1,018,699 
General and administrative  771,533   654,523   1,367,253   1,353,532 
Total operating expenses  1,227,813   1,117,040   2,138,845   2,372,231 
                 
Loss from operations  (1,227,813)  (1,117,040)  (2,138,845)  (2,372,231)
                 
Interest (expense) income  (353,404)  —     (542,428)  3,926 
Net loss  (1,581,217)  (1,117,040)  (2,681,273)  (2,368,305)
                 
Other comprehensive loss:                
Foreign currency translation adjustment  (19,333)  (7,401)  (14,510)  (23,152)
Comprehensive loss  (1,600,550)  (1,124,441)  (2,695,783)  (2,391,457)
                 
Loss per share:                
  Basic and diluted  (0.07)  (0.05)  (0.12)  (0.11)
Weighted average number of shares outstanding  22,390,114   20,802,197   21,638,907   20,792,967 

See notes to the unaudited condensed consolidated financial statements

statements.

4

NEMAURA MEDICAL INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)5 
  
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 

NEMAURA MEDICAL INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended September 30, 2020 and 2019 (Unaudited)

   Common Stock   Additional Paid-in    Accumulated    Accumulated Other Comprehensive    Total Stockholders’  
   Shares   

Amount

($)

   

Capital 

($)

   

Deficit

($)

   

Loss

($)

   

Equity

($)

 
Balance at June 30, 2020  21,282,133   21,282   20,957,486   (18,686,131)  (332,169)  1,960,468 
Issuance of common shares, net of offering costs of $834,280  1,601,572   1,602   10,817,707   —     —     10,819,309 
Restricted shares issued as stock-based compensation to consultants and investor relations  10,000   10   63,190   —     —     63,200 
Foreign currency translation adjustment  —     —     —     —     (19,333)  (19,333)
Net loss  —     —     —     (1,581,217)  —     (1,581,217)
Balance at September 30, 2020  22,893,705   22,894   31,838,383   (20,267,348)  (351,502)  11,242,427 
                         
Balance at June 30, 2019  20,801,680   20,802   16,320,359   (14,677,144)  (355,639)  1,308,378 
Restricted shares issued as stock-based compensation to consultants and investor relations  1,250   1   12,375   —     —     12,376 
Foreign currency translation adjustment  —     —     —     —     (7,401)  (7,401)
Net loss  —     —     —     (1,117,040)  —     (1,117,040)
Balance at September 30, 2019  20,802,930   20,803   16,332,734   (15,794,184)  (363,040)  196,313 

See notes to the unaudited condensed consolidated financial statementsstatements.

6 

5

NEMAURA MEDICAL INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Six Months Ended September 30, 2020 and 2019 (Unaudited)

   Common Stock   Additional Paid-in    Accumulated    Accumulated Other Comprehensive    Total Stockholders’  
   Shares   

Amount 

($)

   

Capital

($)

   

Deficit  

($)

   

Loss

($)

   

Equity

($)

 
Balance at March 31 2020  20,850,848   20,851   16,589,272   (17,586,075)  (336,992)  (1,312,944)
Issuance of common shares, net of offering costs of $957,193  1,994,924   1,995   14,791,484   —     —     14,793,479 
Restricted shares issued as stock-based compensation to consultants and investor relations  10,000   10   63,190   —     —     63,200 
Exercise of warrants  37,933   38   394,437   —     —     394,475 
Foreign currency translation adjustment  —     —     —     —     (14,510)  (14,510)
Net loss  —     —     —     (2,681,273)  —     (2,681,273)
Balance at September 30, 2020  22,893,705   22,894   31,838,383   (20,267,348)  (351,502)  11,242,427 
                         
Balance at March 31, 2019  20,765,592   20,766   15,971,905   (13,425,879)  (339,888)  2,226,904 
Exercise of warrants  2,500   2   25,998   —     —     26,000 
Issuance of common shares, net of offering costs of $9,575  14,338   14   142,903   —     —     142,917 
Restricted shares issued as stock-based compensation to consultants and investor relations  20,500   21   191,928   —     —     191,949 
Foreign currency translation adjustment  —     —     —     —     (23,152)  (23,152)
Net loss  —     —     —     (2,368,305)  —     (2,368,305)
Balance at September 30, 2019  20,802,930   20,803   16,332,734   (15,794,184)  (363,040)  196,313 
                         

See notes to the unaudited condensed consolidated financial statements.

7 

NEMAURA MEDICAL INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

  Six Months Ended
September 30,
  

2020

($)

 

2019

($)

     
Cash Flows From Operating Activities:        
Net loss  (2,681,273)  (2,368,305)
         
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization  40,746   28,338 
Accretion of debt discount  542,428   —   
Stock-based compensation  59,000   277,664 
Changes in assets and liabilities:        
Prepaid expenses and other receivables  94,059   263,022 
Inventory  (125,311)  (170,371)
Accounts payable  (137,999)  59,010 
Liability due to related parties  (676,560)  100,533 
Other liabilities and accrued expenses  (121,357)  (52,608)
Net cash used in operating activities  (3,006,267)  (1,862,717)
         
Cash Flows from Investing Activities:        
Capitalized patent costs  (27,600)  (28,310)
Purchase of property and equipment  (14,032)  (133,716)
Net cash used in investing activities  (41,632)  (162,026)
         
Cash Flows from Financing Activities:        
Costs incurred in relation to equity financing  (957,193)  (9,575)
Commission paid on note payable  (325,000)  —   
Proceeds from issuance of notes  5,000,000   —   
Proceeds from issuance of common stock in relation to equity financing  15,750,672   152,492 
Proceeds from warrant exercise  394,475   26,000 
Repayments of note payable  (82,555)  —   
Net cash provided by financing activities  19,780,399   168,917 
         
Net increase (decrease) in cash  16,732,500   (1,855,826)
Effect of exchange rate changes on cash  110,332   (113,723)
Cash at beginning of period  106,107   3,740,664 
Cash at end of period  16,948,939   1,771,115 
         
Supplemental disclosure of non-cash financing activities:        
Prepayment of equity compensation  —     85,715 
         
         

See notes to the unaudited condensed consolidated financial statements.

8 

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.sugarBEAT™.. The sugarBEATsugarBEAT™. 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 sugarBEATsugarBEAT™. 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%)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%)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%)100% of Dermal Diagnostics Limited, an England and Wales corporation formed on January 20, 2009 ("DDL"(“DDL”), and one hundred percent (100%)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,sugarBEAT™.device, which consists of a disposable patch containing a sensor, and a non-disposable miniature electronic watchwireless transmitter 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:September 30, 2020:

9 

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$20,267,348 as of December 31, 2017.September 30, 2020. 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 U.S. Food and Drug Administration (“FDA”). 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 unaudited condensed consolidated financial statements. The Company has $1,664,616an $8 million unsecured senior credit facility made available from certain major stockholders on August 1, 2019. The credit facility is non-dilutive carrying 8% interest with quarterly interest payments only and the principal being due on maturity in 5 years. No draw down has been made to date.

On April 15, 2020, the Company entered into a note purchase agreement resulting in cash proceeds of readily$4,675,000; as set out in Note 6. The Company has $16,948,939 cash at September 30, 2020. The Company believes the cash position as of September 30, 2020, plus the credit facility made available from certain major stockholders, is adequate for our current level of operations through at least November 2021, and for the achievement of certain of our product development milestones. Our plan is to utilize the cash, on hand at December 31, 2017 and approximately $4.79 million of cash in a fixed rate deposit account which matures in December 2018 (see note 3(b)).


Management's strategic plans includeplus loan draw down if required, to continue establishing commercial manufacturing operations for the following:

- continuing to advance commercializationcommercial supply of the Company's principal product,sugarBEAT™.device and patches now that CE mark approval has been received.

NOTE 2 – BASIS OF PRESENTATION

(a)Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the 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 and

- continuing to explore and execute prospective partnering or distribution opportunities.

NOTE 2 -- BASIS OF PRESENTATION

(a)Basis of presentation:

six months ended September 30, 2020 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 with the instructions to Form 10-Q and Article 8 of Regulation S-X. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2020, as filed with the SEC.

The accompanying unaudited 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 presentationthe reporting currency is the U.S. Dollar (“USD”).

(b) Changes to significant accounting policies

The Company adopted Accounting Standards Update ("ASU") No. 2016-02, Leases, as of April 1, 2020 and the impact of adoption of this ASU on the Company’s consolidated financial position and results of operations in conformity with accounting principles generally accepted in the United States of Americastatements is not significant. There have been condensed or omitted. It is therefore suggested that these financial statements be read in conjunction with the summary ofno other material changes to our significant accounting policies and notes to financial statements includedfrom those detailed in the Company'sCompany’s 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.

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 values2020, 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 associatedfiled 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.
SEC.

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(c) Recently adopted 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.

9pronouncements
NEMAURA MEDICAL INC.
Notes to Condensed Consolidated Financial Statements
Three and Nine Months Ended December 31, 2017 and 2016
(Unaudited)
(l) Recent 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 consolidated financial statements and assures that there are proper controls in place to ascertain that the Company's consolidated financial statements properly reflect the change.


In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updates ("ASU") No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 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, 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 adopt this standardQuarterly Report on April 1, 2019.


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- 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.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments. ASU No. 2016-15 is intended to reduce diversity in how certain cash receipts and cash payments are presented in the statement of cash flows. The new guidance clarifies the classification of cash activity 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 corporate and bank-owned life insurance policies, distributions received from equity-method investments, and beneficial interests 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. This ASU is effective for public entities for annual and interim periods beginning after December 15, 2017. Early adoption is permitted as of the beginning of any interim or annual reporting period. The Company is currently evaluating the impact this standard will have on its financial statements and related disclosures, butForm 10-Q does not expect itdiscuss recent pronouncements that are not anticipated to have a material effectcurrent and/or future impact on the Company's 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 introduceor are unrelated to the UK market after completionCompany’s financial condition, results 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.
10
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 ofoperations, cash flows for the nine months ended December 31, 2016 have been reclassified from financing activities into operating activities.
or disclosures.

10 
 

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 (the “Licensee”), that granted to the third partyLicensee the exclusive right to market and promote the sugarBEAT devicesugarBEAT™.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$1.292 million and $1.245$1.240 million as of December 31, 2017September 30, 2020 and March 31, 20172020, respectively), which is wholly non-refundable, upon signing the agreement.


As

The Company is in ongoing dialogue with the Company has continuing performance obligations underLicensee about the agreement,timing of its plans with respect to its product launch. The current expectation is for this to occur in the up frontthird quarter ending December 31, 2020. The upfront 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. As the Company expects commercialization of the sugarBEAT device to occur in the year ending March 31, 2019,agreement. Consequently, approximately $101,000$97,000 and $93,000 of the deferred revenue has been classified as a current liability.


In April 2014, a Letterliability as of Intent was signed with the third party which specified a 10 year termSeptember 30, 2020 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 product in the United Kingdom, and purchase the product at specified prices.

11
NEMAURA MEDICAL INC.
Notes to Condensed Consolidated Financial Statements
Three and Nine Months Ended DecemberMarch 31, 2017 and 2016
(Unaudited)
2020, respectively.

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, President, director and majority shareholder, stockholder, Dewan F.H. Chowdhury.


In accordance with the United States Securities and Exchange Commission (SEC) Staff Accounting Bulletin 55, these

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, Pharma invoices DDL 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.


Following istotal costs incurred.

The table below provides a summary of activity between the Company and Pharma and NDM for the ninesix months ended DecemberSeptember 30, 2020 and 2019, and the year ended March 31, 2017 and 2016.2020. 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) 

   

Six Months Ended September 30, 2020

(unaudited)

($)

   

Six Months Ended September 30, 2019

(unaudited)

($)

   

Year Ended March 31, 2020

 

($)

 
Liability due to related parties at beginning of period  830,093   964,679   964,679 
Amounts invoiced by Pharma to DDL, NM and TCL (1)  698,300   966,425   1,800,517 
Amounts invoiced by DDL to Pharma  (7,060)  (814)  (10,963)
Amounts paid by DDL to Pharma  (1,388,874)  (867,013)  (1,897,222)
Foreign exchange differences  21,074   (56,743)  (26,918)
Liability due to related parties at end of period  153,533   1,006,534   830,093 

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

The Company has an $8 million unsecured senior credit facility made available from certain majority stockholders as of August 1, 2019. No draw down has been made against this facility to date.

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

12 

NOTE 5 – STOCKHOLDERS’ EQUITY

Reverse stock split

The Company was notified by The NASDAQ Stock Market (“NASDAQ”) on July 15, 2019 that the Company no longer met the requirements of NASDAQ Rule 5550(a)(2) requiring listed securities to maintain a minimum closing bid price of $1.00 per share. Thereafter, the Company effected:

(i)A reverse split of the Company’s issued and outstanding common stock on a one (1) for ten (10) basis; and

(ii)A decrease in the Company’s authorized number of shares of common stock on the same basis from 420,000,000 shares of common stock to 42,000,000 shares of common stock.

The reverse stock split and decrease in authorized common stock were effective on December 5, 2019. On December 19, 2019, the Company received confirmation from NASDAQ that the Company had regained compliance with NASDAQ’s minimum bid price rule and the matter is now resolved. Amounts are retroactively restated for all periods presented.

Other equity transactions

On October 19, 2018, the Company entered into an Equity Distribution Agreement (the “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. During the six month period ended September 30, 2020, a total of 408,718 shares were issued under the Distribution Agreement, generating gross proceeds of $4,250,676 with associated costs of $127,520.

On August 8, 2020, pursuant to the terms of the Distribution Agreement, as amended, between the Company and Maxim, the Company provided notice of termination of the Distribution Agreement, as amended, to Maxim. Accordingly, the Distribution Agreement, as amended, terminated on August 18, 2020.

On July 28, 2020, the Company entered into a placement agency agreement with Kingswood Capital Markets, a division of Benchmark Investments, Inc. (“Kingswood” or the “Placement Agent”), with respect to the issuance and sale of an aggregate of 1,586,206 shares of the Company’s common stock, and warrants to purchase up to 793,103 shares of common stock. Each share of common stock and accompanying one-half of a warrant were sold for a combined purchase price of $7.25, for a total deal size of approximately $11.5 million, not including any future proceeds from the exercise of the warrants and before deducting the Placement Agent fees and offering expenses. Each whole warrant is immediately exercisable at a price of $8.00 per share, subject to adjustment in certain circumstances, and will expire five years from the date of issuance. The shares of common stock were offered together with the warrants, but the securities were issued separately and are separately transferable.

The closing of the offering took place on July 30, 2020 and the net proceeds from the sale of the common stock and warrants were approximately $10.7 million after deducting the Placement Agent commission and other expenses incurred by the Company as a result of the offering.

During the six month period ended September 30, 2020, 37,933 warrants were exercised, generating $394,475 in additional funds; no warrants were exercised in the three month period ended September 30, 2020. During the six month period ended September 30, 2019, 2,500 warrants were exercised generating funds of $26,000, all of which were exercised during the three month period ended September 30, 2019.

At September 30, 2020, there were 940,740 warrants outstanding.

Effective December 18, 2018, the Company issued a unit purchase option to the Placement Agent to purchase 9,710 shares and 9,710 warrants. The Company has classified this option as equity. The unit purchase option has a term of three years and an exercise price of $13.00.

13 

Loss per share

The following table sets forth the computation of basic and diluted loss per share for the periods indicated.

  Three months ended September 30, Six months ended September 30,
  2020 2019 2020 2019
Net loss attributable to common stockholders ($)  (1,581,217)  (1,117,040)  (2,681,273)  (2,368,305)
Weighted average basic and diluted shares outstanding  22,390,114   20,802,197   21,638,907   20,792,967 
Basic and diluted loss per share ($):  (0.07)  (0.05)  (0.12)  (0.11)
                 

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

Basic loss per share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period. For the three and six month periods ended September 30, 2020 and 2019, warrants to purchase one million shares of common stock were anti-dilutive and were excluded from the calculation of diluted loss per share. For the three and six month periods ended September 30, 2020, warrants to purchase 147,637 and 940,740 shares of common stock, respectively, and a unit purchase option to purchase 9,710 shares of common stock were considered anti-dilutive and were also excluded from the calculation of diluted loss per share. For the three and six month periods ended September 30, 2019, the equivalent number of warrants excluded from this calculation was 185,570 and the unit purchase option was 9,710.

NOTE 6 – NOTES PAYABLE

On April 15, 2020, the Company entered into a note purchase agreement (the “Note Purchase Agreement”) with Chicago Venture Partners, L.P. (the “Investor”).

Pursuant to the terms of the Note Purchase Agreement, the Company agreed to issue and sell to the Investor and the Investor agreed to purchase from the Company, a secured promissory note (the “Secured Note”) in the original principal amount of $6,015,000. In consideration thereof, on April 15, 2020 (the closing date), (i) the Investor (a) paid $1,000,000 in cash, (b) issued to the Company by Pharma(1) Investor Note #1 in the principal amount of $2,000,000 (“Investor Note #1”), and NDM.

Subsequent to December 31, 2017,(2) Investor Note #2 in the principal amount of $2,000,000 (“Investor Note #2” and together with Investor Note #1, the “Investor Notes”), and (ii) the Company made paymentsdelivered the Secured Note on behalf of the Company, to Pharmathe Investor, against delivery of the Purchase Price. For these purposes, the “Purchase Price” means the Investor’s initial cash purchase price, together with the sum of the initial principal amounts of the Investor Notes.

The Secured Note is secured by all patents and related rights and items as defined in the related security agreement within the Secured Note. The Secured Note carries an original issue discount (“OID”) of $1,000,000. In addition, the Company agreed to pay $15,000 to the Investor to cover the Investor’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of the Secured Note (the “Transaction Expense Amount”), all of which amount is included in the initial principal balance of the Secured Note. The Purchase Price for the Secured Note is $5,000,000, computed as follows: $6,015,000 original principal balance, less the OID, less the commission expense of $325,000, resulting in cash proceeds of $4,675,000. The debt less the discount will be accreted over the 24-month term of the Secured Note using the effective interest method. The effective interest rate is 34.3%. A monitoring fee equal to 0.833% of the outstanding balance will automatically be added to the outstanding balance on the outstanding balances atfirst day of each month. Accretion for the three and six month periods ended September 30, 2020 was $188,579 and $542,428, respectively.

14 

NOTE 7 – OTHER ITEMS

(a) COVID-19 Pandemic

The outbreak of COVID-19 originating in Wuhan, China, in December 31, 20172019 has since rapidly increased its exposure globally. On March 11, 2020, the World Health Organization declared the outbreak a pandemic. We continue to monitor the global outbreak of £280,000.COVID-19 and are working with our customers, employees, suppliers and other stakeholders to mitigate the risks posed by its spread, COVID-19 is not expected to have any long-term detrimental effect on the Company’s success. While key suppliers have not been accessible throughout the whole period of the outbreak, we have been able to be flexible in our priorities and respond favorably to the challenges faced during the outbreak. We have also seen a surge in the uptake of technologies for remote and patient self-monitoring, which therefore potentially enhances the prospects for the likes of the Company and its CGM product and planned digital healthcare offering.

(b) Management consultancy agreements

During the six month period ended September 30, 2020, $59,000 in stock-based compensation was shown as expense in relation to a management consulting company as a result of a release of prepaid expenses. This stock-based compensation was issued in the three month period ended September 30, 2020.

Total stock-based compensation recognized during the three and six month periods ended September 30, 2019 was $115,410 and $277,644, respectively.

(c) Subsequent events

None noted for disclosure.

15 

12


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

Overview:

Overview

We are a medical technology company developing sugarBEAT™., a non-invasive, affordable and flexible continuous glucose monitoring system for adjunctive use by persons with diabetes. sugarBEAT™.consists of a disposable adhesive skin-patch connected to a rechargeable wireless transmitter that displays glucose readings at regular five minute intervals via a mobile app. sugarBEAT™. works by extracting glucose from the skin into a chamber in the patch that is in direct contact with an electrode-based sensor. The transmitter sends the raw data to a mobile app where it is processed by an algorithm and displayed as a glucose reading, with the ability to track and trend the data over days, weeks and months. While sugarBEAT™.requires once per day calibration by the patient using a blood sample obtained by a finger stick, we believe sugarBEAT™.will be adopted by non-insulin dependent persons with diabetes alongside insulin-injecting persons with diabetes who all perform multiple daily finger sticks to manage their disease.

CE approval was granted by the European Notified Body BSI in May 2019, allowing the product to be made available for commercial sale. The Company commenced a phase 1 launch whereby devices were made available to limited cohorts of users to gauge their feedback so that any fine-tuning could be completed prior to a mass market launch. A mass-market launch is due to commence in the UK in the coming months via its UK licensee DB Ethitronix, whereby sugarBEAT™.will be available via a number of subscription models that are yet to be determined. In July 2020, Nemaura filed a PMA application with the FDA to use sugarBEAT™. as an adjunct to finger prick testing for blood glucose trending. In addition it has been pursuing the possibility of launching sugarBEAT™.under the FDA Wellness guidance which would preclude it from an FDA assessment and allow the product to be launched in the U.S. for Wellness use, to provide prompts and educate users on factors affecting their blood sugar profiles. Further to discussions with the FDA Nemaura established that sugarBEAT™.can be classified under the Wellness guidance when it is used according to the FDA Wellness guidance notes. Nemaura plans to launch this in the U.S. under the brand proBEAT™. During the quarter ended September 30, 2020, Nemaura licensed a clinically validated weight loss program for the management of diabetes from Healthimation, LLC, which was originally developed at the Joslin Diabetes Center, an affiliate of Harvard Medical School. This program, together with proBEAT™. is planned for launch in the U.S. in December 2020, aimed at the management or reversal of Type 2 diabetes.

We believe there are additional applications for sugarBEAT™.and the underlying BEAT technology platform, which may include:

·a web-server accessible by physicians and diabetes professionals to track the condition remotely, thereby reducing healthcare costs and managing the condition more effectively;
·a complete virtual doctor that monitors a person's vital signs and transmits results via the web;
·other patches using the BEAT technology platform to measure alternative analytes, including lactate, uric acid, lithium and drugs. This would be a step-change in the monitoring of conditions, particularly in the hospital setting. Lactate monitoring is currently used to determine the relative fitness of professional athletes and we completed preliminary studies demonstrating the application of the BEAT technology for continuous lactate monitoring;
·a continuous temperature monitoring system which could have various applications, including use for individuals to monitor their temperature in connection with diagnosis and monitoring of symptoms of novel coronavirus (COVID-19);
·monitoring disease progression in COVID-19 patients using continuous lactate monitoring (CLM).

The Company has experienced recurring losses and negative cash flows from operations. At December 31, 2017,September 30, 2020, the Company had approximate cash and fixed rate cash account balances of $6,454,000,$16,948,939, working capital of $5,509,000,$14,833,369, total stockholders' equity of $4,498,000$11,242,427 and an accumulated deficit of $8,420,000.$20,267,348. 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.

16 

Management's strategic assessment includes the following potential options:


•

·obtaining further regulatory approval for the sugarBEAT™.device in other countries such as the U.S.;
·pursuing capital raising opportunities;
·exploring licensing opportunities; and
·developing the sugarBEAT™.device for commercialization for other applications.

COVID-19 Pandemic

The outbreak of COVID-19 originating in Wuhan, China, in December 2019 has since rapidly increased its exposure globally. On March 11, 2020, the World Health Organization declared the outbreak a pandemic. We continue to monitor the global outbreak of COVID-19 and are working with our customers, employees, suppliers and other stakeholders to mitigate the risks posed by its spread, COVID-19 is not expected to have any long-term detrimental effect on the Company’s success. While key suppliers have not been accessible throughout the whole period of the outbreak, we have been able to be flexible in our priorities and respond favorably to the challenges faced during the outbreak. We have also seen a surge in the uptake of technologies for remote and patient self-monitoring, which therefore potentially enhances the prospects for the sugarBEAT device

• pursuing additional capital raising opportunities;
• exploring licensing opportunities;likes of the Company and
• developing the sugarBEAT device for commercialization.

its CGM product and planned digital healthcare offering.

Results of Operations


Comparative Results for the NineSix Months Ended December 31, 2017September 30, 2020 and 2016


2019

Revenue


There was no revenue recognized in the ninesix months ended December 31, 2017September 30, 2020 and 2016.2019. In 2014, we received an upfront non-refundable cash payment of £1,000,000GBP 1 million (approximately $1.292 million and $1.240 million as of September 30, 2020 and March 31, 2020, 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 devicesugarBEAT™.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,September 30, 2020, 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$771,592 and $794,433$1,018,699 for the ninesix months ended December 31, 2017September 30, 2020 and 2016,2019, respectively. This amount consisted primarily of expenditureexpenditures on clinical trials,wages and sub-contractor activities consultancy fees and wages and demonstrated continuing expenditureincurred for improvements made to the sugarBEATsugarBEAT™. device. The decrease of $80,848$247,107 is due to decreasesa decrease in these costs as the sugarBEAT productsugarBEAT™.product is nearing completion.

commercial launch.

General and Administrative Expenses

General and administrative expenses were $627,605$1,367,253 and $397,598$1,353,532 for the ninesix months ended December 31, 2017September 30, 2020 and 2016,2019, respectively. These consisted of fees for legal, professional, consultancy, audit services, charitable donationsinvestor relations, insurance and wages.  The increase of $230,007 was due to increases in professional fees as the CGM device continues clinical trials and legal fees incurred as the company prepares for future product launch, plus £123,000 in charitable donations. We expect general and administrative expenses to remain at similar levels going forward, in the long term, as therewe anticipate that most 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.

17 


13

Other Comprehensive Loss

For the ninesix months ended December 31, 2017September 30, 2020 and 2016,2019, other comprehensive income (loss)loss was $398,705$14,510 and ($786,148)$23,152, respectively, arising from foreign currency translation adjustments.


Comparative Results for the Three Months Ended December 31, 2017September 30, 2020 and 2016


2019

Revenue


There was

As noted above, the business is currently pre-revenue. As such, no revenue was recognized in the three months ended December 31, 2017September 30, 2020 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.

2019.

Research and Development Expenses

Research and development expenses were $355,300$456,280 and $267,638$462,517 for the three monthsmonth periods ended December 31, 2017September 30, 2020 and 2016,2019, respectively. This amount consisted primarilycontinues to be largely composed of expenditure on clinical trials,wages and sub-contractor activities consultancy fees and wages and demonstrated continuing expenditureincurred in finalizing the product design for improvements madethe sugarBEAT™.device in order to enable scaling of the sugarBEAT device.  The increase of $87,662 is due to increases in these costs as the sugarBEAT product entered clinical trials.

production ability.

General and Administrative Expenses

General and administrative expenses were $121,053$771,533 and $107,728$654,523 for the three monthsmonth periods ended December 31, 2017September 30, 2020 and 2016,2019, respectively. These consistedGiven the nature of the Company’s activities has remained unchanged, the cost drivers in this area have also remained consistent and are largely representative of fees for legal, professional, consultancy, audit services, investor relations, insurance 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 therewe anticipate that most 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.

Other Comprehensive Loss

For the three months ended December 31, 2017September 30, 2020 and 2016,2019, other comprehensive income/(loss)loss was $36,641$19,333 and ($396,445)$7,401, 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$20,267,348 through December 31, 2017.September 30, 2020. We have historically financed our operations through the issuances of equity and contributions of services from related entities.


At December 31, 2017,September 30, 2020, the Company had net working capital of $5,509,132$14,833,369 which included cash and short-term fixed rate cash account balances of $6,453,745.$16,948,939. The Company reported a net loss of $1,267,184 for the nine monthsthree and six month periods ended December 31, 2017.September 30, 2020 of $1,581,217 and $2,681,273, respectively.

We have completed clinical studies required for FDA submission and in July 2020, we submitted an application to the FDA for approval of the device. Therefore we expect that research and development costs for glucose monitoring will be reduced. The Company had an $8 million unsecured senior credit facility made available from certain major stockholders on August 1, 2019. No draw down has been made to date.

On April 15, 2020, the Company entered into a note purchase agreement (the “Note Purchase Agreement”) with Chicago Venture Partners, L.P. (the “Investor”).

18 

While our current

Pursuant to the terms of the Note Purchase Agreement, the Company agreed to issue and sell to the Investor and the Investor agreed to purchase from the Company a secured promissory note (the “Secured Note”) in the original principal amount of $6,015,000. In consideration thereof, on April 15, 2020 (the closing date), (i) the Investor (a) paid $1,000,000 in cash, level (including fixed rate(b) issued to the Company (1) Investor Note #1 in the principal amount of $2,000,000 (“Investor Note #1”), and (2) Investor Note #2 in the principal amount of $2,000,000 (“Investor Note #2” and together with Investor Note #1, the “Investor Notes”), and (ii) the Company delivered the Secured Note on behalf of the Company, to the Investor, against delivery of the Purchase Price. For these purposes, the “Purchase Price” means the Investor’s initial cash accounts)purchase price, together with the sum of the initial principal amounts of the Investor Notes.

The Secured Note is sufficientsecured by all patents and related rights and items as defined in the related security agreement within the Secured Note. The Secured Note carries an original issue discount (“OID”) of $1,000,000. In addition, the Company agreed to pay $15,000 to the Investor to cover the Investor’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of the Secured Note (the “Transaction Expense Amount”), all of which amount is included in the initial principal balance of the Secured Note. The Purchase Price for the completionSecured Note is $5,000,000, computed as follows: $6,015,000 original principal balance, less the OID, less the Transaction Expense Amount.

The borrowing period is 24 months, and the Company shall pay the outstanding balance and all fees on maturity. A monitoring fee equal to 0.833% of the clinical studies andoutstanding balance will automatically be added to the initial scale upoutstanding balance on the first day of our manufacturing, our longeach month. The debt less the discount will be accreted over the term business plan is contingent upon our ability to raise additional funds.  This may include a combination of debt, equity and licensing fees.  If we are not successful in raising the funds needed in the specified timelines, the target dates for the achievement of the milestones will be extended.


Secured Note using the effective interest method.

We believe the cash position as of December 31, 2017September 30, 2020 plus the credit facility made available from certain major stockholders, is adequate for our current level of operations through February 2019,at least November 2021, and for the achievement of certain of our product development milestones. Our plan is to utilize theWe believe that our cash on hand will be sufficient to complete the following:


–  Establishcontinue establishing commercial manufacturing operations for the commercial supply of the sugarBEAT devicesugarBEAT™.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 ninesix months ended December 31, 2017September 30, 2020 was $1,261,104 which reflected our$3,006,267, with the key drivers being: net loss of $1,267,184, increased by$2,681,273 which includes a risenon-cash amount of $542,428 in accrued interest receivablerelation to the accretion of $58,504 anddebt discount, non-cash stock-based compensation of $59,000, a risedecrease in prepayments and other receivablesprepaid expenses of $63,405 and offset by changes$94,059, an increase in theinventory of $125,311, a decrease in accruals of $121,357, a decrease in 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 a decrease in prepayments and other receivables of $69,121$676,560 and a decrease in accounts payable and other liabilities of $20,584, and$137,999.

Net cash used in operating activities for the six months ended September 30, 2019 was $1,862,717, with the key drivers being: net loss of $2,368,305, non-cash stock-based compensation of $277,664, a decrease in prepaid expenses of $263,022, an increase of inventory of $170,371, an decrease in accruals of $52,608, an increase in liability due to related partyparties of $423,237.


$100,533, and an increase in accounts payable of $59,010.

Net cash realised byused in investing activities was $1,925,757$41,632 for the ninesix months ended December 31, 2017,September 30, 2020, which reflected $1,955,489 returned frompatent filing costs of $27,600 and the maturitypurchase of a fixed rate savings account, but reduced by the expenditures made in developing intellectual property primarily related to patent filingsand equipment of $29,732.


$14,032.

Net cash used by ourin investing activities was $64,271$162,026 for the ninesix months ended December 31, 2016,September 30, 2019, which reflected expenditures on intellectualpatent filing costs of $28,310 and the purchase of property and other assets.equipment of $133,716.

Net cash provided by financing activities for the six months ended September 30, 2020 was $19,780,399. Shares issued during the period delivered proceeds of $15,750,672 via a combination of the ATM facility and the placement facilitated by Kingswood, with costs directly associated with these activities totalling $957,193. $394,475 was also raised in relation to the exercise of 37,933 warrants and proceeds were also received from the issuance of notes totalling $5,000,000 less commission expense of $325,000.

Net cash provided by financing activities for the six months ended September 30, 2019 was $168,917. The ATM facility delivered proceeds of $152,492. 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.

19 

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 materialassumptions if changes in one or more factors require us to the financial statements. The mostmake accounting adjustments. We believe our critical accounting policies affect our more significant accountingjudgments and estimates inherentused in the preparation of ourthe unaudited condensed consolidated financial statements include estimates associatedstatements. During the six months ended September 30, 2020, we have made no material changes or additions with researchregard to such policies and development, income taxes and intangible assets.

estimates.


20 
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 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.
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 the Company's business environment and any resulting impairment charges are recorded at that time.

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 USU.S. dollar, our reporting currency. Currently, the majoritymost of our expenses and cash and fixed rate deposits are denominated in Great Britain Pounds Sterling (“GBP”), with the remaining portion denominated in USU.S. dollars. Fluctuations in exchange rates, primarily the USU.S. dollar against the Pound Sterling,GBP, will affect our financial position. At December 31, 2017,September 30, 2020, the Company held approximately $6$2.925 million in GBP-denominated bank and fixed rate cash accounts. Based on this balance, a 1% depreciation of the PoundGBP against the USU.S. dollar would cause an approximate $60 thousand$29,250 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. Dewan F.H. Chowdhury, who is our

Based on their evaluation as of September 30, 2020, the Company’s Chief Executive Officer and Mr. Iain S. Anderson, who is our PrincipalChief Financial and Accounting Officer have evaluatedconcluded that, as of September 30, 2020, the effectiveness of ourCompany’s 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(as defined in Rules 13a-15(e) and 15d-15(e)13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"“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 the 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, at the reasonable assurance level due to a material weakness in ourthe Company’s internal control over financial reporting, which is described below.


reporting.

16

Changes in Internal Control over Financial Reporting

As of December 31, 2017, our management,

In connection with the participation of our Principalevaluation during the quarter ended September 30, 2020, as required by Rule 15d-15 promulgated under the Exchange Act, the Chief Executive Officer and PrincipalChief Financial Officer evaluated ouridentified certain changes, as identified in this paragraph, in the Company’s internal control over financial reporting. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that no changes in our internal control over financial reporting occurred during the quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, ourthe Company’s internal control over financial reporting.


As described in our Annual Report on Form 10-K for On September 15, 2020, the year ended March 31, 2017, management assessedCompany’s Board of Directors appointed Justin Mclarney to serve as the effectivenessCompany’s Chief Financial Officer. Mr. Mclarney has significant experience building and maintaining accounting and business functions compliant with the Sarbanes-Oxley Act of our2002, as amended. Prior to Mr. Mclarney’s appointment, Mr. Chowdhury, the Company’s Chief Executive Officer, President and member of the Company’s Board of Directors, also served as interim Chief Financial Officer. Following Mr. Mclarney’s appointment, Mr. Chowdhury continues to serve as the Company’s Chief Executive Officer, President and director. In addition, the Company hired Mazars, LLP, to provide third party internal audit support to facilitate the creation and maintenance of an internal control over financial reporting as of March 31, 2017. In making this assessment we usedenvironment to remediate the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013). material weakness identified.

As a result of its assessment, management identified material weaknessesthe onboarding of a permanent Chief Financial Officer, in our internal control over financial reporting. Based oncombination with the material weaknesses as described below, management concludedon-going work that the Company has been undertaking with the guidance of Mazars, LLP, we believe 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.


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 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:

· 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'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.

Notwithstanding the identified material weaknesses, management believes the 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 at and for the periods presented in accordance with U.S. GAAP.
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. Securities laws, including hiring additional qualified personnel such as a CFO with US listed company experience.
· In assembling this team, the Company will 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 requiring 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" within the definition of the applicable Securities and Exchange Commission. 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 regarding our remediation plans is contained in our Annual Report on Form 10-K for the year ended March 31, 2017.  We are continuing to address these issues and to date have:
 · On December 12, 2016, appointed Mr. Iain Anderson to serve as the Chief Financial Officer. 
  · Engaged 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 for certain of our controls, including purchasing processes, payment processes, and month end closing procedures.
· Duringimproved significantly during the quarter ended September 30, 2017,2020. However, the board of directors appointed three independent directorschanges and improvement made were not sufficiently embedded during the quarter ended September 30, 2020, to serve on our board of directors, each of whom meetenable the definition of 'independent" as set forth under The Nasdaq Stock Market rules.  The Board has established an audit committee with each ofCompany to conclude that the independent directors serving as members 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.".material weakness noted above had been fully remediated.

21 








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 providedfiled as part of this report.


Exhibit No.Document Description
31.1
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
31.2
Certification of the Principal Financial 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 adoptedand Principal Financial Officer pursuant to Section 302906 of the Sarbanes-Oxley Act of 2002
32.2
101.INS
Certification of the Principal Financial 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
XBRL Instance Document
101101.SCHInteractive Data Files (1)XBRL Taxonomy Extension Schema
101.CALXBRL Taxonomy Extension Calculation
101.DEFXBRL Taxonomy Extension Definition
101.LABXBRL Taxonomy Extension Labels
101.PREXBRL Taxonomy Extension Presentation Linkbase


22 
(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.

19SIGNATURES


SIGNATURES

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



 NEMAURA MEDICAL INC.
   
 Dated:  February 9, 2018Date: November 13, 2020By:/s/ Dewan F HF.H. Chowdhury
 Dewan F HF.H. Chowdhury Chief Executive Officer and President (Principal Executive Officer)
 
Chief Executive Officer (Principal Executive Officer)
 Dated:  February 9, 2018/s/ Iain S Anderson
 Iain S Anderson
 
Date: November 13, 2020By:/s/ Justin J. Mclarney

Justin J. Mclarney

Chief Financial Officer (Principal

(Principal Financial Officer and Principal Accounting Officer)

23 
 

20
EXHIBIT INDEX

Exhibit No.Description
31.1Certification by Chief Executive Officer (Principal Executive Officer) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2Certification by Chief Financial Officer (Principal Financial and Accounting Officer) pursuant to Section 302 of the Sarbanes-Oxly Act of 2002.
32.1Certification by Chief Executive Officer (Principal Executive Officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2Certification by Chief Financial Officer (Principal Financial and Accounting Officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.