SECURITIES & EXCHANGE COMMISSION EDGAR FILING
Nemaura Medical Inc.
Form: 10-K
Date Filed: 2018-06-12
Corporate Issuer CIK: 1602078
© Copyright 2018, Issuer Direct Corporation. All Right Reserved. Distribution of this document is strictly prohibited, subject to the terms of use.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
—————
FORM 10-K
——————
ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2018
OR
For the transition period from _________ to _________
Commission File Number 001-38355
NEMAURA MEDICAL INC.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
46-5027260
(I.R.S. Employer Identification No.)
Advanced Technology Innovation Centre,
Loughborough University Science and Enterprise Parks
5 Oakwood Drive,
Loughborough, Leicestershire
LE11 3QF
United Kingdom
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: + 44 1509 222912
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Common Stock,$0.001 Par Value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ý.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ý.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ý 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 ý No ☐.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ☐
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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 ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)
Emerging growth company ý
Accelerated filer ý
Smaller reporting 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 ý.
The aggregate market value of the registrant’s common stock held by non-affiliates computed based on the closing sales price of such stock on
September 30, 2017 was $291,923,562.
The number of shares outstanding of the registrant's common stock, as of June 7, 2018 was 205,000,000.
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NEMAURA MEDICAL INC.
INDEX TO ANNUAL REPORT ON FORM 10-K
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Business.
Risk Factors.
Unresolved Staff Comments.
Properties.
Legal Proceedings.
Mine Safety Disclosures
PART I
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Selected Financial Data.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
Quantitative and Qualitative Disclosures About Market Risk.
Financial Statements and Supplementary Data.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Controls and Procedures.
Other Information.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Directors, Executive Officers and Corporate Governance.
Executive Compensation.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Certain Relationships and Related Transactions, and Director Independence.
Principal Accountant Fees and Services.
Item 15.
Exhibits, Financial Statement Schedules.
PART IV
Page
2
14
23
23
23
23
23
23
23
29
F-1
30
30
31
32
35
36
37
37
38
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Annual Report that are not historical facts constitute forward-looking statements, within the meaning of the
Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created by that Act. Reliance should not be
placed on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, which may cause actual
results, performance, or achievements to differ materially from those expressed or implied. Any forward-looking statement speaks only as of the
date made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which they
are made.
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. These forward-looking statements are not guarantees of the future as there are a number of
meaningful factors that could cause Nemaura Medical Inc.’s (“Nemaura Medical”) actual results to vary materially from those indicated by such
forward-looking statements. These statements are based on certain assumptions made based on experience, expected future developments and
other factors Nemaura Medical believes are appropriate in the circumstances. Factors which could cause actual results to differ from expectations,
many of which are beyond Nemaura Medical’s control, include, but are not limited to, obtaining regulatory approval for our sugarBEAT device,
conducting successful clinical trials, executing agreements required to successfully advance the Company's objectives; retaining the management
and scientific team to advance the product; overcoming adverse changes in market conditions and the regulatory environment; obtaining and
enforcing intellectual property rights; obtaining adequate financing in the future through product licensing, public or private equity or debt financing
or otherwise; dealing with general business conditions and competition; and other factors referenced herein in “Risk Factors.” 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.
1
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PART I
ITEM 1. BUSINESS.
Business 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 and 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. We have applied for an on-site CE Mark review and approval for sugarBEAT, and
expect this to be completed by the end of 2018 to enable commercial launch in Europe. CE approval is the process to achieve a mandatory
conformity marking for the sugarBEAT device to allow it to be legally sold in the European Union. It is a manufacturers' declaration that the product
meets the requirements of the applicable European laws. We also plan to commence a 525 patient days clinical trial in the U.S. to support a Pre-
Market Approval Application ("PMA") for FDA approval to market sugarBEAT in the U.S. The timing of such clinical trial has not yet been
determined.
We previously developed a wristwatch-based version of sugarBEAT for which we obtained CE approval in February 2016. Since then we
have developed sugarBEAT using the same underlying technology as the wristwatch. The European clinical trial programme for sugarBEAT
evaluated 525 patient days across 75 Type 1 and Type 2 diabetic patients and was completed in December 2017. We are currently awaiting CE
approval to allow sugarBEAT to be legally sold in the European Union. CE approval is disclosed by the use of the CE Mark, a manufacturers'
declaration that the product meets the requirements of the applicable European laws. Although at this time we may not seek to commercially
market and sell the wristwatch-based version of sugarBeat, we may continue to use it in clinics, or sell it as an introductory product in the event
there are delays in securing CE approval for the skin-patch version.
·
·
·
·
·
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; and
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.
Our Business Strategy
We intend to lead in the discovery, development and commercialization of innovative and targeted diagnostic medical devices that improve disease
monitoring, management and overall patient care. Specifically, we intend to focus on the monitoring of molecules that can be drawn out through the
skin non-invasively using our technology platform. In addition to glucose, such molecules may include lactic acid monitoring and the monitoring of
prescription drugs and blood biomarkers that may help in the diagnosis, prevention or management of diseases, such as diabetes. We plan to
take the following steps to implement our broad business strategy. Our key commercial strategies post-approval will first be implemented in
Europe and then in parts of the Middle East and Asia, and then the U.S., as follows:
·
Commercialise sugarBEAT in the United Kingdom and Republic of Ireland with Dallas Burston Pharma (Jersey) Limited, with whom we
have an exclusive marketing rights agreement for these two countries.
We have also signed a full commercial agreement with Dallas Burston Ethitronix (Europe) Limited in May 2018 for all other European territories as
part of an equal joint venture agreement. The joint venture intends to seek sub-license rights opportunities to one or more leading companies in
the diabetes monitoring space, to leverage their network, infrastructure and resources.
Dallas Burston (Jersey) Limited was founded by Dr. Dallas Burston, MBBS, an entrepreneur who has founded and sold several companies
specializing in marketing pharmaceuticals. For example, in 1999, he sold 49% of Ashbourne Pharmaceuticals to HSBC Private Equity for £32
million and Bartholomew-Rhodes to Galen Ltd. for £19.8 million. More recently, in 2015, he sold DB Ashbourne Limited, a provider of off-patent
branded pharmaceuticals for the UK market, to Ethypharm. At the time of the sale, DB Ashbourne Limited was estimated to have revenue of
approximately £90 million.
·
Establish licensing or joint venture agreements with other parties to market sugarBEAT in other geographies . We are in detailed
discussions and negotiations with several other parties worldwide for licensing or joint venture agreements for the sale of the sugarBEAT device
·
·
Conduct a clinical trial in the U.S. to support a PMA for sugarBEAT. We will conduct further clinical trials to support a PMA for FDA
approval to market sugarBEAT in the U.S, timings for which are yet to be confirmed.
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·
Expand the indications for which the sugarBEAT device may be used. We believe that the sugarBEAT device may offer significant
benefits as compared to those found in the non-acute setting for the monitoring of other diseases. This includes monitoring of lactic acid for
performance athletics, and the monitoring of drugs. We intend to complete initial proof of concept in laboratory settings followed by a clinical
program.
2
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·
Expand our product pipeline through our proprietary platform technologies, acquisitions and strategic licensing arrangements. We intend
to leverage our proprietary platform technologies to grow our portfolio of product candidates for the diagnosis of diabetes and other diseases. In
addition, we intend to license our product and acquire products and technologies that are consistent with our research and development and
business focus and strategies. This may include drug delivery products for the improved management of diabetes, for example improved insulin
injector systems, and/or combination drug products for diabetes related drugs.
Product Development
Management has extensive experience in regulatory and clinical development of diagnostic medical devices. We intend to take advantage
of this experience in the field of diagnostic medical devices in an attempt to increase the probability of product approval. The overall regulatory
process for diagnostic medical devices for diabetes is currently similar to those governing other diagnostic devices. The timelines are shorter than
where for example new drugs or completely invasive diagnostic devices are trialled in clinics. We believe that the non-invasive nature of
sugarBEAT means the device can be tested and evaluated for its clinical output, in this case the accuracy and safety with which it can trend blood
glucose levels, which is in the order of several hours and days to see the endpoint, as compared to several months and years for an invasive
device. In addition, because the results are instantaneous, and the device is worn for 24 hours at any given time, the clinical trials do not initially
require long term follow-up for primary endpoints, which ordinarily would otherwise take significant periods of time to evaluate. As we continue to
raise funds for marketing the device in some European Union territories, we also intend to seek collaborations with future licensees and marketing
partners to achieve our product development and meet our projected milestones.
The table below provides our current estimate of our timeline:
Product Development Timelines
Milestone
Target Start Date
Target Completion Date
Completion of clinical studies in Type 1 and Type 2 diabetic subjects to define
final device claims and for submission for CE Mark approval with final device
claims.
Scale up of commercial sensor/patch manufacturing
(Scale up means we have started looking at larger scales - sufficient for product
launch in the UK. It refers to the manufacturing process for sensors.)
Scale up of device (transmitter) manufacturing
CE Mark for body worn transmitter device
Commercial launch in the UK, followed by major territories in Europe
Commence clinical trial to support U.S. PMA submission
July 2017
Completed
January 2017
Completed
January 2017
April 2018
Q4 2018
To be determined
Ongoing
December 2018
Staggered launch
To be determined
Market Opportunity for the Company's Products
According to the International Diabetes Federation Atlas (the "IDF"), there are approximately 425 million people in the world who had
diabetes as of December 2017. The IDF is predicting that by 2035 this will rise to 592 million people. The number of people with Type 2 diabetes
is increasing in every country and currently eighty percent (80%) of people with diabetes live in low- and middle-income countries. The greatest
number of people with diabetes is between 40 and 59 years of age.
Statistics published by the IDF report that diabetes is a huge and growing problem, and the costs to society are high and escalating. In
addition, Europe has the highest prevalence of children with Type 1 diabetes.
Adult population
(20-79 years, millions)
Regional prevalence (%)
Comparative prevalence (%)
Number of people with diabetes
(millions)
Regional prevalence (%)
Comparative prevalence (%)
Number of people with IGT (millions)
Number of children with Type 1
diabetes (thousands)
Number of newly diagnosed cases per year
(thousands)
Statistical Data for Diabetes in Europe
2013
659
Diabetes (20 – 79 years)
8.5
6.8
56.3
Impaired Glucose Tolerance (20 – 79 years)
9.2
8.1
60.6
Type 1 diabetes (0 – 14 years)
129.4
20.0
Each year approximately 600,000 people die from diabetes in Europe.
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2035
669
10.3
7.1
68.9
11.0
8.9
73.7
-
-
3
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Deaths From Diabetes
Europe has the highest incidence of children with Type 1 diabetes according to data supplied from IDF.org. The top five countries for the number
of people afflicted with diabetes in Europe are listed in the table below.
Top 5 Countries In Europe For People Afflicted With Diabetes 20-79 Years (2013)
Countries/Territories
Russian Federation
Germany
Turkey
Spain
Italy
Millions
10.9
7.6
7.0
3.8
3.6
Type 1 diabetes, once known as juvenile diabetes or insulin-dependent diabetes, is a chronic condition in which the pancreas produces
little or no insulin, a hormone needed to allow sugar (glucose) to enter cells to produce energy. The far more common Type 2 diabetes occurs
when the body becomes resistant to the effects of insulin or doesn't make enough insulin.
Various factors may contribute to Type 1 diabetes including genetics and exposure to certain viruses. Although Type 1 diabetes typically
appears during childhood or adolescence, it also can develop in adults.
Despite active research, Type 1 diabetes has no cure, although it can be managed. With proper treatment, people who have Type 1
diabetes can expect to live longer, healthier lives than they did in the past. Type 1 diabetes includes autoimmune Type 1 diabetes (Type 1a)
which is characterized by having positive autoantibodies, as well as idiopathic Type 1 diabetes (Type 1b) where autoantibodies are negative and
c-peptide is low. Patients with Type 1 diabetes (insulin dependent) require long term treatment with exogenous insulin and these patients perform
self-monitoring of blood glucose (SMBG) to calculate the appropriate dose of insulin. SMBG is done by using blood samples obtained by finger
sticks but frequent SMBG does not detect all the significant deviations in blood glucose, specifically in patients who have rapidly fluctuating
glucose levels.
Type 2 diabetes, once known as adult-onset or noninsulin-dependent diabetes, is a chronic condition that affects the way your body
metabolizes sugar (glucose), your body's main source of fuel. With Type 2 diabetes, your body either resists the effects of insulin, a hormone that
regulates the movement of sugar into your cells, or doesn't produce enough insulin to maintain a normal glucose level. Untreated, Type 2 diabetes
can be life-threatening.
More common in adults, Type 2 diabetes increasingly affects children as childhood obesity increases. There's no cure for Type 2 diabetes,
but it can be managed by eating well, exercising and maintaining a healthy weight. If diet and exercise don't control the blood sugar, diabetes
medications or insulin therapy may be required.
Each year, millions of patients undergo diabetes testing in the European Union and in the U.S. The main reason for this testing is to detect
and evaluate diabetes in patients with symptoms of diabetes. These studies provide clinical benefit in the initial evaluation of patients with
suspected but unproven diabetes, and in those patients in whom a diagnosis of diabetes has been established and information on prognosis or
risk is required.
We believe that our market opportunity is a direct function of the number of persons tested, diagnosed and treated for either Type 1 or
Type 2 diabetes. The IDF indicates that the total world market opportunity for a continuous glucose monitoring device is in the billions of dollars
and is projected to grow annually through the year 2035.
We do not believe it is possible to estimate the number of diabetes patients that undergo finger pricks or other types of invasive glucose
monitoring. However, we are unaware of any product currently on the market that may allow for non-invasive continuous glucose monitoring. We
believe the sugarBEAT device may be readily adopted by the medical community for the assessment of a patient continuously.
We believe our non-invasive sugarBEAT device possesses many significant advantages and may represent an ideal device for the
detection of discordances in an individual's blood sugar levels. If approved for commercialization, we believe the sugarBEAT device may
represent a best in class non-invasive continuous glucose monitoring device to reach those afflicted with diabetes. While we cannot estimate the
market share that our sugarBEAT device may capture, we believe that the sugarBEAT device will capture a significant share of the non-invasive
continuous glucose monitoring market, in-particular the market that has been established by the Abbott Freestyle Libre device for glucose
trending, as well as be adopted by non-insulin dependent diabetics who have not historically used continuous glucose monitoring devices due to
their invasiveness.
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Commercialization Plan
We intend to develop our products through the completion of European CE mark and FDA PMA approvals, to verify the claims that the device may
be used as an adjunct to a finger-stick measurement, and/or a glucose trending device such as those claims made by the Abbott Freestyle Libre
device. We will seek to partner with organizations that may facilitate the further development and distribution of our products at all stages of
development. We also intend to seek strategic partners early in the research and development cycle for programs that may fall outside of our core
competencies.
4
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Competitive Landscape
We expect to compete with several medical device manufacturing companies including Dexcom, Abbott, and Senseonics. Our competitors
may:
· develop and market products that are less expensive or more effective than our future product;
· commercialize competing products before we or our partners can launch any products developed by us;
· operate larger research and development programs or have substantially greater financial resources than we do;
· initiate or withstand substantial price competition more successfully than we can;
· have greater success in recruiting skilled technical and scientific workers from the limited pool of available talent;
· more effectively negotiate third-party licenses and strategic relationships; and
· take advantage of acquisition or other opportunities more readily than we can.
We will compete for market share against large pharmaceutical and biotechnology companies, smaller companies that are collaborating
with larger pharmaceutical companies, new companies, academic institutions, government agencies and other public and private research
organizations. Many of these competitors, either alone or together with their partners, may develop new products that will compete with ours, and
these competitors may, and in certain cases do, operate larger research and development programs or have substantially greater financial
resources than we do.
We anticipate that we will have competition from specific companies. Although it is difficult to analyze our major competitors since
currently there are no non-invasive diagnostic medical devices to continuously monitor blood glucose levels, we anticipate that specific companies
may compete with us in the future.
Information relating to our competitors is listed in the table below.
Manufacturer
Technology
Reliability (Overall
MARD)
Reliability (Clarke Error
Grid A+B zone)
Patients Studied
Patient Days Studies
Warm-up Time
Daily Calibration
Glucose Display
Frequency
Patch/Senor Life
Regulatory Approvals
Basis for reimbursement
Daily Avg.
Reimbursement Cost
Daily Retail Cost UK
(exc. VAT)
FreeStyle Libre™(1)
Abbott
Inserted Sensor
Platinum G6®(2)
Dexcom
Inserted Sensor
Platinum G5®(3)
Dexcom
Inserted Sensor
Eversense™(4)
Senseonics
Implanted Sensor
SugarBEAT®
Nemaura Medical
Non-invasive Sensor
11.4%
99%
72
14
1 hour
None
On manual activation of
sensor
14 days
EU
Finger stick
9.8%
Not available
324
10
2 hours
None
9.0%
97.0%
97
9
2 hours
2x
11.4%
99.1%
44
90
NA
2x
<14%*
>95.0%
>75
1 to 4
30-60 min
1x
Every 5 min
Every 5 min
Every 5 min
Every 5 min
10 days
US
Not available
7 days
Worldwide
CGM
$9 (US)
90 days
EU
CGM
1 day
EU **
Finger stick
Not available
$2.50***
$2.50 (Germany)
Not available
£3.50 (Patch)
£50 (Reader)
Not available
£7.30 (Patch)
£475 (Hardware)
Not available
£2*** (Daily Patch)
£30*** (Transmitter)
Sources: (1) Diabetes Technology & Therapeutics, Timothy Bailey, MD, et al., Nov. 2015; (2) Dexcom’s press release, Mar. 2018; Dexcom G6
user’s guide (3) Dexcom’s press release, Aug. 2015; Dexcom G5 user’s guide; (4) SenseonicsHoldings’ 8-K, Dec. 2015. * based on summary data
released in January 2018; ** CE Mark obtained on watch format, with CE Mark for patch format applied for and expected before the end of
calendar year 2018. *** Estimated
Regulatory Requirements
Our device has been electrically safety tested, and all biocompatibility conformance also demonstrated, against the relevant European Medical
Device Directives. When new materials are introduced, these undergo a biocompatibility risk assessment, and further testing where necessary.
Batches of the device and patches were manufactured for human clinical studies that took place between November 2014 and December 2015.
This was a functional watch device with a wire connection to a skin adhered sensor and electrode. Subsequent to studies conducted in India the
device received a CE mark approval in February 2016. The device has since been upgraded to include wireless communication from a body
worn/adhered transmitter and also to reduce the device size, and with an enhanced sensor system. Further clinical studies are ongoing to confirm
the accuracy of the device and absence of skin irritation after which a further CE submission will be made to include new claims on the basis of
which the body worn device will be launched in those territories that accept the CE mark approval. The watch device has been further miniaturised
and in light of its somewhat obtrusive nature, it has been reserved for future clinical studies in critical care settings.
Prior to launching commercial sales of our product, we must complete key material points:
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· Completion of the technical dossier, documenting the entire design process including the industrial design, electronic design and
software design for the final commercial product, incorporating the final aesthetics and materials for product launch.
· Completion of human clinical studies in Type I and Type II diabetic patients against a defined clinical protocol, the outcome of which
must support the claims for the device; additional ethics committee approvals and regulatory body approvals will be required if the
device is to be tested in clinics other than those where ethics approval has already been obtained, or if clinical studies are planned in
other countries, respectively.
· CE approval in Europe and subsequent regulatory approvals in other territories with new claims; and
·
Prepare the body worn transmitter, and sensor-electrode system for manufacturing for commercial sales, i.e., in large volumes. The
patches (containing the sensors) and the device have been manufactured in small batches sufficient for clinical studies and laboratory
testing. The scale up of the processes will be undertaken to mass-produce the sensors and patches and the devices in a scale that
allows large volume batches to be produced cost effectively. This is necessary to ensure that the manufacturing costs of our products
are minimized in order to effectively meet market demands.
5
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Intellectual Property
We believe that clear and extensive intellectual property relating to our technologies is central to long-term success and we intend to invest
accordingly. This applies to both domestic and international patent coverage, and trade secrets, and trademarks.
The SugarBEAT technology is protected by our portfolio of intellectual property comprised of issued and pending patents and trade secrets
covering a range of claims, including the methods and apparatus for measuring glucose extracted from human skin in a non-invasive manner, the
formula for the cumulative measurement of an analyte, and the formulation and process for preparation of the enzyme solution used in the sensor.
On May 8, 2014, NDM Technologies Limited, a related company, assigned the UK patent application 1208950.4 and International (PCT)
patent application PCT/GB2013/051322 entitled "Cumulative Measurement of an Analyte" to Dermal Diagnostics Limited (“DDL”) for a nominal
consideration.
A further patent is planned for filing which allows the application of the sugarBEAT device and sensor to the skin in a single step,
eliminating several manual steps.
Additionally, we retain substantial trade secrets relating to the sensor formulation, which have taken over five years to develop, and will
prove very difficult to reverse engineer as it consist of formulation components in addition to processing methods in unique combinations that are
unique to the final functional sensor. Patents will not be filed on this aspect of the technology to avoid any public dissemination of the know-how.
These patents and know-how cover aspects of the technology platform. Furthermore the trademark BEAT and sugarBEAT has been
registered in all major territories globally. Accordingly, all intellectual property essential to the sugarBEAT product is owned by us, and not subject
to royalty payments. We intend to take the lead in the preservation and/or prosecution of these patents and patent applications going forward as
required. We intend to file additional patents as the development progresses, where deemed to be of value to protecting the technology platform
and future modifications and improvements. Where patents cannot be secured, the intellectual property will be limited to know-how and trade
secrets, and these will be diligently guarded.
Trade Secrets, Trademarks, and Patents Filed, Granted and Pending
IP: Patent (Core Claim), Know-
how, Trademark
Patent: Cumulative Measurement of
an Analyte*.
Patent: Patches for Reverse
Iontophoresis**
Expiration
Date
Jurisdictions in which Granted/
Issued
May 20, 2032 Australia, France, Germany, Italy,
July 1, 2029
Poland, Spain, Netherlands, UK
Australia, Germany, France, UK,
Italy, Netherlands, Switzerland,
China, Hong Kong, Japan.
N/A
Trade Secret
To be filed N/A
None
N/A
N/A
Jurisdictions in which
Pending
Brazil, Canada, China, India, Japan,
Qatar, United Arab Emirates, U.S.
Ongoing Royalty
or Milestone
Payments
None
Know-how: Sensor Formulation
Patent: Patch Application to the
skin: Device for applying the
sugarBEAT to the skin in a single
step, to eliminate multiple manual
steps.
Trademark: BEAT
Trademark: sugarBEAT
Renewal due
in 2026
Renewal due
in 2025
UK, China, EU, India, Japan
Canada
UK, Australia, Switzerland, China,
Canada
Egypt, EU, Israel, India, Iran, Japan,
North Korea, Morocco, Mexico,
Norway, New Zealand, Russia,
Singapore, Tunisia, Turkey, USA
None
N/A
N/A
N/A
N/A
* This patent provides a formula for calculating the amount of glucose extracted over a defined period of time by deducting the difference between
two readings to allow rapid sensing without needing to deplete the analyte being measured.
** This patent provides a reverse iontophoresis patch with means for releasing a conductive medium onto the skin during use and means for
transporting analyte to a separate location for analysis.
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Clinical Trials
Our clinical testing is conducted by contract clinical research organizations in various centres around the world to cover a wide demographic –
including Asia and Europe – and is managed by our in-house management team.
We have had 2 pre-submission meetings with the FDA in June 2016, whereby the regulatory approval route has been defined by the FDA as
being PMA and a clinical roadmap clarified. As a result, a detailed clinical plan has been developed and approved internally and a clinical site in
Europe has been selected and audited and approved for commencement of clinical studies using the body worn transmitter device version of the
sugarBEAT.
In August 2017, we commenced a European three-stage 75 patient clinical study, consisting of 80% Type 1 and 20% Type 2 diabetics. The study
was designed as a single centre open-label, single arm, within-subject comparison of sugarBEAT, with blood samples drawn from a venous
catheter at corresponding time points, with glucose concentration measured using a laboratory blood glucose analyser, ARCHITECT C8000. The
European clinical trial programme consisted of a total of 525 patient days, with each patient continuously wearing sugarBEAT for 14 hours on
seven consecutive days in a combination of home and clinic settings. Three of the seven days were in-clinic where venous blood samples were
taken at 15 minute intervals over a continuous 12 hour period. The clinical study was completed in December 2017. An interim analysis of the
data has thus far indicated a precision of 1.07 and accuracy as determined by the Mean Absolute Relative Deviation (MARD) of less than 14%,
with no serious or major adverse events. The precision and accuracy of sugarBEAT observed in the study was similar to other CE Mark approved
continuous glucose monitors. The full clinical evaluation is expected to be reported in June 2018.
Research and development
We spent $993,833 and $1,034,605 in 2018 and 2017, respectively, on research and development. We anticipate that for the year ending March
2019, research and development expenditures will increase to further develop the device for commercial launch in the UK and Europe.
Development and clinical test costs in support of our current product, as well as costs to file patents and revise and update previous filings on our
technologies, will continue to be substantial as we assess the next steps to advance the product.
Manufacturing
The manufacture and sale of CE certified medical devices are controlled and governed by guidelines stipulated in the International Organisation
for Standardisation (ISO), more specifically ISO13485; sugarBEAT will be manufactured and marketed according to ISO13485 quality standards.
In preparation for our anticipated commercial launch of sugarBEAT in the UK during the fourth quarter of 2018 we initiated scale-up manufacturing
of the various sugarBEAT components alongside facilities for final assembly and packaging. As part of this process, we expanded our
manufacturing and assembly capabilities by occupying additional space within our existing headquarters site at Loughborough Science Park in the
UK.
Manufacturers for our sensors are Parlex (a division of Johnson Electrics), Isle of White, UK; Polarseal Limited, Surrey, England for our patches;
and Datalink Limited located in Loughborough, UK manufactures our electronics.
We expect to enter into the following types of agreements during 2018:
- Manufacturing agreements for the sensor manufacture
- Manufacturing agreements for the patch manufacture
- Manufacturing agreements for the CGM watch device and transmitter device manufacture
Sales and Marketing
An Exclusive Marketing Rights agreement for the UK and Republic of Ireland was signed on March 31, 2014 with Dallas Burston Pharma, a Jersey
(Channel Island) based company who has pharmaceutical product marketing operations in the UK and has demonstrated a very successful model
for the marketing of prescription medical products directly to general practitioners. We received a non-refundable upfront payment of $1.67 million
in return for providing the company with the exclusive right to sell the sugarBEAT device in the UK and Republic of Ireland, both direct to
consumer and through prescriptions by general practitioners. Subsequently, on April 4, 2014, a Letter of Intent was entered into outlining the basic
terms of the cost at which the patches and watch will be supplied and minimum order quantities in the first two (2) years. The key terms of the
Exclusive Marketing Rights Agreement were concluded in a Commercial Agreement signed in August 2015.
In addition, a joint venture agreement was entered into with Dallas Burston Ethitronix (Europe) in May 2018, whereby we will share equally the
costs and net profits of the sales of our sugarBEAT system in all territories in Europe, with the exception of the United Kingdom, which is the
subject of a separate agreement with Dallas Burston Pharma (Jersey) Limited.
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Regulatory matters
Government Regulation
Our business is subject to extensive federal, state, local and foreign laws and regulations, including those relating to the protection of the
environment, health and safety. Some of the pertinent laws have not been definitively interpreted by the regulatory authorities or the courts, and
their provisions are open to a variety of subjective interpretations. In addition, these laws and their interpretations are subject to change, or new
laws may be enacted.
Both federal and state governmental agencies continue to subject the healthcare industry to intense regulatory scrutiny, including
heightened civil and criminal enforcement efforts. We believe that we have structured our business operations to comply with all applicable legal
requirements. However, it is possible that governmental entities or other third parties could interpret these laws differently and assert otherwise.
We discuss below the statutes and regulations that are most relevant to our business.
United Kingdom and Wales and the European Union regulations
Government authorities in the United Kingdom and Wales and the European Union as well as other foreign countries extensively regulate,
among other things, the research, development, testing, manufacture, labelling, promotion, advertising, distribution, sampling, marketing and
import and export of medical devices, including patches and other pharmaceutical products. Our body worn transmitter devices in the United
Kingdom and Wales will be subject to strict regulation and require regulatory approval prior to commercial distribution. The process of obtaining
governmental approvals and complying with ongoing regulatory requirements requires the expenditure of substantial time and financial resources.
In addition, statutes, rules, regulations and policies may change and new legislation or regulations may be issued that could delay such approvals.
If we fail to comply with applicable regulatory requirements at any time during the product development process, approval process, or after
approval, we may become subject to administrative or judicial sanctions. These sanctions could include the authority's refusal to approve pending
applications, withdrawals of approvals, clinical holds, warning letters, product recalls, product seizures, total or partial suspension of our
operations, injunctions, fines, civil penalties or criminal prosecution. Any agency enforcement action could have a material adverse effect on us.
The European Commission on Public Health (the "ECPH") provides the regulation for the development and commercialization of new
medical diagnostic devices. Any medical device placed on the European market must comply with the relevant legislation, notably with Directive
93/42/EEC, with the active implantable devices Directive 90/385/EEC or with the in vitro devices Directive 98/79/EC. We must first determine
whether the device we intend to manufacture or import falls under any of these directives. All medical devices must fulfil the essential
requirements set out in the above-mentioned directives. Where available, relevant standards may be used to demonstrate compliance with the
essential requirements defined in the devices Directives.
Manufacturers also need to determine the appropriate conformity assessment route. For devices falling under Directive 93/42/EEC, other
than custom-made devices and devices intended for clinical investigation, the conformity assessment route depends on the class of the device, to
be determined in accordance with certain rules set forth in the directives. Once the applicable class or list has been determined, manufacturers
need to follow the appropriate conformity assessment procedure. Subject to the type of the device, this may require manufacturers to have their
quality systems and technical documentation reviewed by a Notified Body before they can place their products on the market. A Notified Body is a
third party body that can carry out a conformity assessment recognized by the European Union. The Notified Body will need to assure itself that
relevant requirements have been met before issuing relevant certification. Manufacturers can then place the CE marking on their products to
demonstrate compliance with the requirements.
The CE approval is the process of achieving a mandatory conformity marking for the sugarBEAT device to allow it to be legally sold in the
European Union. It is a manufacturers' declaration that the product meets the requirements of the applicable European laws. The process for the
sugarBEAT device CE submission and approval will involve the following:
1. The device is classified depending on certain categories described by the European Directive with Class I products being low risk (e.g. band
aid plasters), through Class III devices being the highest risk. The classes are Class I, IIa, IIb and III. Risk is based upon the potential harm to the
patient should a problem arise with a product or its use. The sugarBEAT device is classified as a IIa device.
2. A 'technical file' containing all of the information required to demonstrate that the product meets the essential requirements of the European
directive will be prepared. This includes information relating to performance and safety of the device such as product specifications, labelling,
instructions for use, risk analysis and specific test information/clinical evidence relating to the product that support the claims being made for the
product.
3. Clinical evidence included in the technical file is expected to demonstrate that the device is safe and meets defined performance requirements.
This clinical evidence can be in the form of literature data where substantial published data exists that utilizes the same technique for glucose
extraction and measurement (albeit in a different device format), or data from actual clinical studies performed using the sugarBEAT device. The
first CE mark submission will be based on literature evaluation of 3rd party published clinical data available in the public domain. The final CE mark
submission with final claims will be based on literature evaluation and actual clinical data from human clinical studies performed using the
sugarBEAT device. The clinical data will be generated to show that the sugarBEAT device can trend blood glucose levels in a human subject by
taking measurements up to 4 times per hour. The clinical trial data must demonstrate the sugarBEAT device blood glucose trend can be used to
supplement normal finger prick measurements.
4. The technical file will be assessed by an independent inspector (the Notified Body), regulated by the competent authority, (Medicines and
Healthcare products Regulatory Agency, MHRA in the United Kingdom). The Notified Body (an organization in the European Union that has been
accredited by a member state to determine whether a medical device complies with the European medical device directives), will then notify The
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European Commission on Public Health (the "ECPH") of the approval and a certificate will be issued to the Company by the notified body and we
will then be able to apply the CE mark to the device, and legally offer the product for sale in the European Economic Area (EEA).
5. The review of the technical file typically takes a matter of days although the lead time can be 90 days depending upon the notified body, and
approval is usually attained within 3-6 months of submission and review.
6. Generating the information required to complete the technical file takes the most time and this information is collated throughout the product
development cycle. Delays arise where the company has not consulted its Notified Body prior to technical file review and elements may require
further detail before the Notified Body can confirm that the device meets the essential requirements. This could delay an approval process by
several weeks or in more drastic cases by several months depending on the time taken to provide any additional information requested by the
Notified Body. Nemaura has been in regular communication with the Notified Body throughout the development of the sugarBEAT device, and
continues to do so for the forthcoming CE approval.
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U.S. Food and Drug Administration regulation of medical devices.
The FDCA and FDA regulations establish a comprehensive system for the regulation of medical devices intended for human use.
sugarBeat is a medical device that is subject to these, as well as other federal, state, local and foreign, laws and regulations. The FDA is
responsible for enforcing the laws and regulations governing medical devices in the United States.
The FDA classifies medical devices into one of three classes (Class I, Class II, or Class III) depending on their level of risk and the types of
controls that are necessary to ensure device safety and effectiveness. The class assignment is a factor in determining the type of premarketing
submission or application, if any, that will be required before marketing in the United States. sugarBeat falls under Class III.
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Class I devices present a low risk and are not life-sustaining or life-supporting. The majority of Class I devices are subject only to
"general controls" (e.g., prohibition against adulteration and misbranding, registration and listing, good manufacturing practices, labeling,
and adverse event reporting. General controls are baseline requirements that apply to all classes of medical devices.)
Class II devices present a moderate risk and are devices for which general controls alone are not sufficient to provide a reasonable
assurance of safety and effectiveness. Devices in Class II are subject to both general controls and "special controls" (e.g., special
labeling, compliance with performance standards, and post market surveillance. Unless exempted, Class II devices typically require FDA
clearance before marketing, through the premarket notification (510(k)) process.)
Class III devices present the highest risk. These devices generally are life-sustaining, life-supporting, or for a use that is of substantial
importance in preventing impairment of human health, or present a potential unreasonable risk of illness or injury. Class III devices are
devices for which general controls, by themselves, are insufficient and for which there is insufficient information to determine that
application of special controls would provide a reasonable assurance of safety and effectiveness. Class III devices are subject to general
controls and typically require FDA approval of a premarket approval ("PMA") application before marketing.
Unless it is exempt from premarket review requirements, a medical device must receive marketing authorization from the FDA prior to
being commercially marketed, distributed or sold in the United States. The most common pathways for obtaining marketing authorization are
510(k) clearance and PMA. After preliminary discussions with the FDA in June 2016 as part of a pre-submission meeting it was determined that
the pathway for sugarBeat would be a PMA approval.
Premarket approval pathway
The PMA approval process requires an independent demonstration of the safety and effectiveness of a device. PMA is the most stringent
type of device marketing application required by the FDA. PMA approval is based on a determination by the FDA that the PMA contains sufficient
valid scientific evidence to ensure that the device is safe and effective for its intended use(s). A PMA application generally includes extensive
information about the device including the results of clinical testing conducted on the device and a detailed description of the manufacturing
process.
After a PMA application is accepted for review, the FDA begins an in-depth review of the submitted information. FDA regulations provide
180 days to review the PMA and make a determination; however, in reality, the review time is normally longer (e.g., 1-3 years). During this review
period, the FDA may request additional information or clarification of information already provided. Also during the review period, an advisory
panel of experts from outside the FDA may be convened to review and evaluate the data supporting the application and provide recommendations
to the FDA as to whether the data provide a reasonable assurance that the device is safe and effective for its intended use. In addition, the FDA
generally will conduct a preapproval inspection of the manufacturing facility to ensure compliance with Quality System Regulation, which imposes
comprehensive development, testing, control, documentation and other quality assurance requirements for the design and manufacturing of a
medical device.
Based on its review, the FDA may (i) issue an order approving the PMA, (ii) issue a letter stating the PMA is "approvable" (e.g., minor
additional information is needed), (iii) issue a letter stating the PMA is "not approvable," or (iv) issue an order denying PMA. A company may not
market a device subject to PMA review until the FDA issues an order approving the PMA. As part of a PMA approval, the FDA may impose post-
approval conditions intended to ensure the continued safety and effectiveness of the device including, among other things, restrictions on labeling,
promotion, sale and distribution, and requiring the collection of additional clinical data. Failure to comply with the conditions of approval can result
in materially adverse enforcement action, including withdrawal of the approval.
Most modifications to a PMA approved device, including changes to the design, labeling, or manufacturing process, require prior approval
before being implemented. Prior approval is obtained through submission of a PMA supplement. The type of information required to support a
PMA supplement and the FDA's time for review of a PMA supplement vary depending on the nature of the modification.
Clinical trials
Clinical trials of medical devices in the United States are governed by the FDA's Investigational Device Exemption ("IDE") regulation. This
regulation places significant responsibility on the sponsor of the clinical study including, but not limited to, choosing qualified investigators,
monitoring the trial, submitting required reports, maintaining required records, and assuring investigators obtain informed consent, comply with the
study protocol, control the disposition of the investigational device, submit required reports, etc.
Clinical trials of significant risk devices (e.g., implants, devices used in supporting or sustaining human life, devices of substantial
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importance in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health) require FDA and Institutional
Review Board ("IRB") approval prior to starting the trial. FDA approval is obtained through submission of an IDE application. Clinical trials of non-
significant risk ("NSR"), devices (i.e., devices that do not meet the regulatory definition of a significant risk device) only require IRB approval before
starting. The clinical trial sponsor is responsible for making the initial determination of whether a clinical study is significant risk or NSR; however, a
reviewing IRB and/or FDA may review this decision and disagree with the determination.
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An IDE application must be supported by appropriate data, such as performance data, animal and laboratory testing results, showing that it
is safe to evaluate the device in humans and that the clinical study protocol is scientifically sound. There is no assurance that submission of an
IDE will result in the ability to commence clinical trials. Additionally, after a trial begins, the FDA may place it on hold or terminate it if, among other
reasons, it concludes that the clinical subjects are exposed to an unacceptable health risk.
As noted above, the FDA may require a company to collect clinical data on a device in the post-market setting.
The collection of such data may be required as a condition of PMA approval. The FDA also has the authority to order, via a letter, a post-
market surveillance study for certain devices at any time after they have been cleared or approved.
Pervasive and continuing FDA regulation
After a device is placed on the market, regardless of its classification or premarket pathway, numerous additional FDA requirements
generally apply. These include, but are not limited to:
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Establishment registration and device listing requirements;
Quality System Regulation ("QSR"), which governs the methods used in, and the facilities and controls used for, the design,
manufacture, packaging, labelling, storage, installation, and servicing of finished devices;
Labelling requirements, which mandate the inclusion of certain content in device labels and labelling, and generally require the label and
package of medical devices to include a unique device identifier ("UDI"), and which also prohibit the promotion of products for uncleared
or unapproved, i.e., "off-label," uses;
Medical Device Reporting ("MDR") regulation, which requires that manufacturers and importers report to the FDA if their device may
have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or
serious injury if it were to recur; and
Reports of Corrections and Removals regulation, which requires that manufacturers and importers report to the FDA recalls (i.e.,
corrections or removals) if undertaken to reduce a risk to health posed by the device or to remedy a violation of the Federal Food, Drug
and Cosmetic Act that may present a risk to health; manufacturers and importers must keep records of recalls that they determine to be
not reportable.
The FDA enforces these requirements by inspection and market surveillance. Failure to comply with applicable regulatory requirements
can result in enforcement action by the FDA, which may include, but is not limited to, the following sanctions:
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Untitled letters or warning letters;
Fines, injunctions and civil penalties;
Recall or seizure of our products;
Operating restrictions, partial suspension or total shutdown of production;
Refusing our request for 510(k) clearance or premarket approval of new products;
Withdrawing 510(k) clearance or premarket approvals that are already granted; and
Criminal prosecution.
We would be subject to unannounced device inspections by the FDA, as well as other regulatory agencies overseeing the implementation
of and compliance with applicable state public health regulations. These inspections may include our suppliers' facilities.
Other Regulation in the United Kingdom and Wales and the EU
Healthcare Reimbursement
Government and private sector initiatives to limit the growth of healthcare costs, including price regulation, competitive pricing, coverage and
payment policies, and managed-care arrangements, are continuing in many countries where we do business, including the United Kingdom and
Wales. These changes are causing the marketplace to put increased emphasis on the delivery of more cost-effective medical products.
Government programs, private healthcare insurance and managed-care plans have attempted to control costs by limiting the amount of
reimbursement they will pay for particular procedures or treatments. This has created an increasing level of price sensitivity among customers for
products. Some third-party payers must also approve coverage for new or innovative devices or therapies before they will reimburse healthcare
providers who use the medical devices or therapies. Even though a new medical product may have been cleared for commercial distribution, we
may find limited demand for the product until reimbursement approval has been obtained from governmental and private third-party payers.
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Environmental Regulation
We are also subject to various environmental laws and regulations both within and outside the United Kingdom and Wales. Like many other
medical device companies, our operations involve the use of substances, including hazardous wastes, which are regulated under environmental
laws, primarily manufacturing and sterilization processes. We do not expect that compliance with environmental protection laws will have a
material impact on our consolidated results of operations, financial position or cash flow. These laws and regulations are all subject to change,
however, and we cannot predict what impact, if any, such changes might have on our business, financial condition or results of operations.
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Foreign Regulation
Whether or not we obtain regulatory approval for a product, we must obtain approval from the comparable regulatory authorities of foreign
countries before we can commence clinical trials or marketing of the product in those countries. The approval process varies from country to
country, and the time may be longer or shorter than that required for EC approval. The requirements governing the conduct of clinical trials,
product licensing, pricing and reimbursement also vary greatly from country to country.
Under European Union regulatory systems, we may submit marketing authorization applications under a decentralized procedure. The
decentralized procedure provides for mutual recognition of national approval decisions. Under this procedure, the holder of a national marketing
authorization may submit an application to the remaining member states. Within 90 days of receiving the applications and assessment report,
each member state must decide whether to recognize approval. This procedure is referred to as the mutual recognition procedure, or called the
MRP.
In addition, regulatory approval of prices is required in most countries other than the United States. We face the risk that the prices which result
from the regulatory approval process would be insufficient to generate an acceptable return to us or our collaborators.
EU General Data Protection Regulation
The EU General Data Protection Regulation (the “GDPR”) came into force in all EU Member States from 25 May 2018 and replaced previous EU
data privacy laws. Although a number of basic existing principles will remain the same, the GDPR introduces new obligations on data controllers
and rights for data subjects, including, among others:
• accountability and transparency requirements, which will require data controllers to demonstrate and record compliance with the GDPR and to
provide more detailed information to data subjects regarding processing;
• enhanced data consent requirements, which includes “explicit” consent in relation to the processing of sensitive data;
• obligations to consider data privacy as any new products or services are developed and limit the amount of information collected, processed,
stored and its accessibility;
• constraints on using data to profile data subjects;
• providing data subjects with personal data in a useable format on request and erasing personal data in certain circumstances; and
• reporting of breaches without undue delay (72 hours where feasible).
The GDPR also introduces new fines and penalties for a breach of requirements, including fines for serious breaches of up to the higher of 4% of
annual worldwide turnover or €20m and fines of up to the higher of 2% of annual worldwide turnover or €10m (whichever is highest) for other
specified infringements. The GDPR identifies a list of points to consider when imposing fines (including the nature, gravity and duration of the
infringement).
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The Company has assessed the implications of the GDPR on all personal data it holds and has implemented measures to ensure that personal
data shall be:
- Processed lawfully, fairly and in a transparent manner in relation to the data subject.
- Collected for a specified, explicit and legitimate purpose and not further processed in a manner that is incompatible with those purposes.
- Adequate, relevant and limited to what is necessary in relation to the purposes for which they are processed.
- Kept in a form which permits identification of data subjects for no longer than is necessary for the purposes for which the personal data are
processed.
- Processed in a manner that ensures appropriate security of the personal data, including protection against unauthorised or unlawful
processing and against accidental loss, destruction or damage, using appropriate technical or organisational measures.
- Maintained accurately and up to date and that every reasonable step is taken to ensure that personal data that are inaccurate, having
regard to the purposes for which they are processed, are erased or rectified without delay.
At the current stage of the Company’s development and, with being pre-revenue at this stage, the scope of data held, and consequently the impact
of GDPR, is limited. Increased application of GDPR will be assessed and implemented prior to further Company developments that warrant
additional GDPR measures. As the Company progresses with product commercialization, the extent to which GDPR will affect the Company will
increase, which will require additional changes to the Company’s procedures and policies which could adversely impact operational and
compliance costs. Further, there is a risk that the measures will not be implemented correctly or that individuals within the business will not be fully
compliant with the new procedures. If there are breaches of these measures, the Company could face significant administrative and monetary
sanctions as well as reputational damage which may have a material adverse effect on its operations, financial condition and prospects.
Corporate Information
Our principal executive offices are located at The Advanced Technology Centre, Oakwood Drive, Loughborough, Leicestershire, LE113QF,
UK. Our website is located at www.nemauramedical.com and our telephone number is +44 1509 222912. Information found on, or accessible
through, our website is not a part of, and is not incorporated into, this Annual Report, and you should not consider it part of the Annual Report.
Employees
We currently employ 8 personnel. We believe our relationships with our employees and contractors are good.
Corporate History and Restructuring
We are a holding corporation that owns one hundred percent (100%) of a diagnostic medical device company specializing in discovering,
developing and commercializing specialty medical devices. We were organized on December 24, 2013 under the laws of the State of Nevada.
We own one hundred percent (100%) of Region Green Limited, a British Virgin Islands corporation formed on December 12, 2013. Region Green
Limited owns one hundred percent (100%) of the stock in Dermal Diagnostic (Holdings) Limited, an England and Wales corporation formed on
December 11, 2013. Dermal Diagnostics (Holdings) Limited owns one hundred percent (100%) of the stock in Dermal Diagnostics Limited, an
England and Wales corporation formed on January 20, 2009, and one hundred percent (100%) of the stock in Trial Clinic Limited, an England and
Wales corporation formed on January 12, 2011.
In December 2013, we restructured the Company and re-domiciled as a domestic corporation in the United States. The corporate re-organization
was accomplished to preserve the tax advantages under the laws of the England and Wales tax laws for the benefit of the shareholders of both
Dermal Diagnostics Limited (“DDL”) and Trial Clinic Limited (“TCL”).
DDL is a diagnostic medical device company headquartered in Loughborough, Leicestershire, England. DDL was founded on January 20, 2009 to
engage in the discovery, development and commercialization of diagnostic medical devices. The Company’s initial focus has been on the
development of a novel continuous glucose monitoring (CGM) device.
On July 10, 2017 the Registrant’s Board of Directors amended the Company’s By-laws to provide that any action required or permitted by law, or
by the Articles of Incorporation to be taken at any meeting of the stockholders may be taken without a meeting, without prior notice, and without a
vote, if a written consent, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a meeting by less than unanimous written consent shall be given to
those stockholders who have not consented in writing thereto.
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On October 5, 2017, the Registrant entered into common stock exchange agreements (the “Agreements”) with each of its three largest
shareholders, (i) Dewan F.H. Chowdhury, who is the Registrant’s Chief Executive Officer and serves as a Director on the Board of Directors of the
Registrant (the “Board”), (ii) Bashir Timol, who serves as a Director on the Board, and (iii) Sufyan Ismail. Pursuant to the Agreements, the
shareholders would exchange, in the aggregate, 137,324,000 shares of the Registrant’s common stock (the “Shares”) for 137,324 shares of
Series A Convertible Preferred Stock (the “Transaction”). On October 10, 2017, the Registrant filed a Certificate of Designation with the
Secretary of State of the State of Nevada to designate two hundred thousand shares of preferred stock as 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 certain triggering events, as set forth in the Certificate of Designation, or voluntarily by the holder after February 1, 2019, if these
triggering events have not occurred and the Board, in its sole and absolute discretion, could change the date of voluntary conversion. 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 preference to
the common stock as to dividends or distributions of assets upon liquidation or winding up of the Company. On November 6, 2017, the
transaction was consummated and the Shares were cancelled. As a result, the Registrant has 67,676,000 shares of common stock issued and
outstanding.
On February 7, 2018, the Board by unanimous written consent, approved to change the date on which the holders of Series A Convertible
Preferred Stock can voluntarily convert their shares of Series A Convertible Preferred Stock from February 1, 2019 to February 7, 2018.
On February 7, 2018, the holders of the Series A Convertible Preferred Stock waived their rights to have any preferential rights to dividends or
distributions of assets upon liquidation or winding up of the Company.
On June 5, 2018, the three holders of our Series A Convertible Preferred Stock (the “Series A Preferred”) each delivered notices of conversion to
voluntarily convert their Series A Preferred, in the aggregate amount of 137,324 shares, into 137,324,000 shares of our common stock. The
holders had the right to voluntarily convert each share of Series A Preferred into 1,000 shares of common stock of the Company. As a result of the
conversion, we currently have 205,000,000 shares of common stock outstanding.
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ITEM 1A. — RISK FACTORS
If any of the following risks actually occur, they could materially adversely affect our business, financial condition or operating results. In that case,
the trading price of our common stock could decline.
Risks Related to Our Product Candidate and Operation
We are largely dependent on the success of our sole product candidate, the sugarBEAT device, and we may not be able to successfully
commercialize this potential product.
We have incurred and will continue to incur significant costs relating to the development and marketing of our sole product candidate, the
sugarBEAT device. We have not obtained approval to market this potential product in any jurisdiction and we may never be able to obtain
approval or, if approvals are obtained, to commercialize this product successfully.
If we fail to successfully commercialize our product(s), we may be unable to generate sufficient revenue to sustain and grow our business, and our
business, financial condition and results of operations will be adversely affected.
If we fail to obtain regulatory approval of the sugarBEAT device or any of our other future products, we will be unable to commercialize
these potential products.
The development, testing, manufacturing and marketing of our product is subject to extensive regulation by governmental authorities in Great
Britain and the European Union. In particular, the process of obtaining CE approval by a Notified Body, a third party that can carry out a conformity
assessment recognized by the European Union, is costly and time consuming, and the time required for such approval is uncertain. Our product
must undergo rigorous preclinical and clinical testing and an extensive regulatory approval process mandated for the CE. Such regulatory review
includes the determination of manufacturing capability and product performance. As of the date of this filing we have not applied for CE approval
for the latest version of our product.
Whilst we have received a CE approval on our current sugarBEAT device, which excludes any wireless communication capabilities, we can give
no assurance that our future products will be approved by the European Union or Great Britain or any other governmental body. In addition, there
can be no assurance that all necessary approvals will be granted for future products or that CE review or actions will not involve delays caused by
requests for additional information or testing that could adversely affect the time to market for and sale of our product. Further failure to comply
with applicable regulatory requirements can, among other things; result in the suspension of regulatory approval as well as possible civil and
criminal sanctions.
Failure to enroll patients in our clinical trials may cause delays in developing the sugarBEAT device or any of our future products.
We may encounter delays in the development and commercialization, or fail to obtain marketing approval, of the sugarBEAT device or any other
future products if we are unable to enroll enough patients to complete clinical trials. Our ability to enroll sufficient numbers of patients in our clinical
trials depends on many factors, including the severity of illness of the population, the size of the patient population, the nature of the clinical
protocol, the proximity of patients to clinical sites, and the eligibility criteria for the trial and competing clinical trials. Delays in planned patient
enrolment may result in increased costs and harm our ability to complete our clinical trials and obtain regulatory approval.
Delays in clinical testing could result in increased costs to us and delay our ability to generate revenue.
Significant delays in clinical testing could materially adversely impact our product development costs. We do not know whether planned clinical
trials will begin on time, will need to be restructured or will be completed on schedule, if at all. Clinical trials can be delayed for a variety of reasons,
including delays in obtaining regulatory approval to commence and continue a study, delays in reaching agreement on acceptable clinical study
terms with prospective sites, delays in obtaining institutional review board approval to conduct a study at a prospective site and delays in recruiting
patients to participate in a study.
Significant delays in testing or regulatory approvals for any of our current or future products, including the sugarBEAT device, could prevent or
cause delays in the commercialization of such product candidates, reduce potential revenues from the sale of such product candidates and cause
our costs to increase.
Our clinical trials for any of our current or future products may produce negative or inconclusive results and we may decide, or
regulators may require us, to conduct additional clinical and/or preclinical testing for these products or cease our trials.
We will only receive regulatory approval to commercialize a product candidate if we can demonstrate to the satisfaction of the applicable
regulatory agency that the product is safe and effective. We do not know whether our future clinical trials will demonstrate safety and efficacy
sufficiently to result in marketable products. Because our clinical trials for the sugarBEAT device may produce negative or inconclusive results, we
may decide, or regulators may require us, to conduct additional clinical and/or preclinical testing for this product or cease our clinical trials. If this
occurs, we may not be able to obtain approval for this product or our anticipated time to market for this product may be substantially delayed and
we may also experience significant additional development costs. We may also be required to undertake additional clinical testing if we change or
expand the indications for our product.
If approved, the commercialization of our product, the sugarBEAT device, may not be profitable due to the need to develop sales,
marketing and distribution capabilities, or make arrangements with a third party to perform these functions.
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In order for the commercialization of our potential product to be profitable, our product must be cost-effective and economical to manufacture on a
commercial scale. Subject to regulatory approval, we expect to incur significant sales, marketing, distribution, and to the extent we do not
outsource manufacturing, manufacturing expenses in connection with the commercialization of the sugarBEAT device and our other potential
products. We do not currently have a dedicated sales force or manufacturing capability, and we have no experience in the sales, marketing and
distribution of medical diagnostic device products. In order to commercialize the sugarBEAT device or any of our other potential products that we
may develop, we must develop sales, marketing and distribution capabilities or make arrangements with a third party to perform these functions.
Developing a sales force is expensive and time-consuming, and we may not be able to develop this capacity. If we are unable to establish
adequate sales, marketing and distribution capabilities, independently or with others, we may not be able to generate significant revenue and may
not become profitable. Our future profitability will depend on many factors, including, but not limited to:
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
· the costs and timing of developing a commercial scale manufacturing facility or the costs of outsourcing the manufacturing of the sugarBEAT
device;
· receipt of regulatory approval of the sugarBEAT device;
· the terms of any marketing restrictions or post-marketing commitments imposed as a condition of approval by regulatory authorities;
· the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
· costs of establishing sales, marketing and distribution capabilities;
· the effect of competing technological and market developments; and
· the terms and timing of any collaborative, licensing and other arrangements that we may establish.
Even if we receive regulatory approval for the sugarBEAT device or any other product candidates, we may never receive significant revenues from
any of them. To the extent that we are not successful in commercializing our potential products, we will incur significant additional losses if we do
not successfully commercialize our products.
Our proprietary rights may not adequately protect our intellectual property and product and if we cannot obtain adequate protection of
our intellectual property and product, we may not be able to successfully market our product.
Our commercial success will depend in part on obtaining and maintaining intellectual property protection for our technologies and product. We will
only be able to protect our technologies and product from unauthorized use by third parties to the extent that valid and enforceable patents cover
them, or that other market exclusionary rights apply. While we have issued enforceable patents covering the sugarBEAT device, the patent
positions of companies like ours can be highly uncertain and involve complex legal and factual questions for which important legal principles
remain unresolved. No consistent policy regarding the breadth of claims allowed in such companies’ patents has emerged to date in Great Britain
and the European Union. The general patent environment outside the United States involves significant uncertainty. Accordingly, we cannot
predict the breadth of claims that may be allowed or that the scope of these patent rights would provide a sufficient degree of future protection that
would permit us to gain or keep our competitive advantage with respect to this product and technology. Additionally, companies like ours are
dependent on creating a pipeline of products. We may not be able to develop additional proprietary technologies or products that produce
commercially viable products or that are themselves patentable.
Our issued patents may be subject to challenge and possibly invalidated by third parties. Changes in either the patent laws or in the
interpretations of patent laws in Great Britain or the European Union or other countries may diminish the market exclusionary ability of our
intellectual property.
In addition, others may independently develop similar or alternative technologies that may be outside the scope of our intellectual property. Should
third parties obtain patent rights to similar technology, this may have an adverse effect on our business.
To the extent that consultants or key employees apply technological information independently developed by them or by others to our product,
disputes may arise as to the proprietary rights of the information, which may not be resolved in our favour. Consultants and key employees that
work with our confidential and proprietary technologies are required to assign all intellectual property rights in their discoveries to us. However,
these consultants or key employees may terminate their relationship with us, and we cannot preclude them indefinitely from dealing with our
competitors. If our trade secrets become known to competitors with greater experience and financial resources, the competitors may copy or use
our trade secrets and other proprietary information in the advancement of their products, methods or technologies. If we were to prosecute a claim
that a third party had illegally obtained and was using our trade secrets, it would be expensive and time consuming and the outcome would be
unpredictable. In addition, courts in Great Britain and the European Union are sometimes less willing to protect trade secrets than courts in the
United States. Moreover, if our competitors independently develop equivalent knowledge, we would lack any contractual claim to this information,
and our business could be harmed.
Our ability to commercialize our product will depend on our ability to sell such products without infringing the patent or proprietary
rights of third parties. If we are sued for infringing intellectual property rights of third parties, such litigation will be costly and time
consuming and an unfavorable outcome would have a significant adverse effect on our business.
Our ability to commercialize our product will depend on our ability to sell such products without infringing the patents or other proprietary rights of
third parties. Third-party intellectual property in the field of diagnostic medical devices is complicated, and third-party intellectual property rights in
this field are continuously evolving. We have not performed searches for third-party intellectual property rights that may raise freedom-to-operate
issues, and we have not obtained legal opinions regarding commercialization of our product other than patent research prior to the filing of our
patent applications, and search and examination reports from the respective patent examination offices.
In addition, because patent applications are published months after their filing, and because applications can take several years to issue, there
may be currently pending third-party patent applications that are unknown to us, which may later result in issued patents. If a third-party claims that
we infringe on its patents or other proprietary rights, we could face a number of issues that could seriously harm our competitive position,
including:
· infringement claims that, with or without merit, can be costly and time consuming to litigate, can delay the regulatory approval process and
can divert management’s attention from our core business strategy;
· substantial damages for past infringement which we may have to pay if a court determines that our products or technologies infringe upon a
competitor’s patent or other proprietary rights;
· if a license is available from a holder, we may have to pay substantial royalties or grant cross licenses to our patents or other proprietary
rights; and
· Re-designing our process so that it does not infringe the third-party intellectual property, which may not be possible, or which may require
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substantial time and expense including delays in bringing our own products to market.
Such actions could harm our competitive position and our ability to generate revenue and could result in increased costs.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Nemaura Medical Inc. is an Emerging Growth Company (EGC) as defined under the Jumpstart Our Business Startups (JOBS) Act.
An “emerging growth company” is an issuer whose initial public offering was or will be completed after Dec. 8, 2011, and had total annual gross
revenues of less than $1 billion during its most recently completed fiscal year. An issuer’s EGC status terminates on the earliest of:
· The last day of the first fiscal year of the issuer during which it had total annual gross revenues of $1 billion or more;
· The last day of the fiscal year of the issuer following the fifth anniversary of the date of the issuer’s initial public offering;
· The date on which such issuer has issued more than $1 billion in non-convertible debt securities during the prior three-year period
determined on a rolling basis; or
· The date on which the issuer is deemed to be a “large accelerated filer” under the Exchange Act, which means, among other things, that it
has a public float in excess of $700 million.
Pursuant to the JOBS Act of 2012, as an emerging growth company the Company can elect to opt out of the extended transition period for any
new or revised accounting standards that may be issued by the PCAOB or the SEC. The Company has elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the
Company, as an emerging growth company, can adopt the standard for the private company. This may make comparison of the Company's
financial statements with any other public company which is not either an emerging growth company nor an emerging growth company which has
opted out of using the extended transition period difficult or impossible as possible different or revised standards may be used.
The Company has elected to use the extended transition period for complying with new or revised financial accounting standards available under
Section 102(b)(2)(B) of the Act. Among other things, this means that the Company's independent registered public accounting firm will not be
required to provide an attestation report on the effectiveness of the Company's internal control over financial reporting so long as it qualifies as an
emerging growth company, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go
undetected. Likewise, so long as it qualifies as an emerging growth company, the Company may elect not to provide certain information, including
certain financial information and certain information regarding compensation of executive officers that would otherwise have been required to
provide in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate the Company. As a result,
investor confidence in the Company and the market price of its common stock may be adversely affected.
If our product, the sugarBEAT device, does not gain market acceptance among physicians, patients and the medical community, we
will be unable to generate significant revenue, if any.
The sugarBEAT device that we developed may not achieve market acceptance among physicians, patients, third-party payers and others in the
medical community. If we receive the regulatory approvals necessary for commercialization, the degree of market acceptance will depend upon a
number of factors, including:
· limited indications of regulatory approvals;
· the establishment and demonstration in the medical community of the clinical efficacy and safety of our product and its potential advantages
over existing diagnostic medical devices;
· the prevalence and severity of any side effects;
· our ability to offer our product at an acceptable price;
· the relative convenience and ease of use of our product;
· the strength of marketing and distribution support; and
· sufficient third-party coverage or reimbursement.
The market may not accept the sugarBEAT device based on any number of the above factors. If the sugarBEAT device is approved, there may be
other therapies available which directly compete for the same target market. The market may choose to continue utilizing the existing products for
any number of reasons, including familiarity with or pricing of these existing products. The failure of any of our product to gain market acceptance
could impair our ability to generate revenue, which could have a material adverse effect on our future business.
We have no commercial manufacturing facility for our sugarBEAT device and no experience in manufacturing products for commercial
purposes and the failure to find manufacturing partners or create a manufacturing facility ourselves could have an adverse impact on
our ability to grow our business.
We have no commercial manufacturing facility for the sugarBEAT device and no experience in manufacturing commercial quantities of our
product. As such, we are dependent on third parties to supply our product according to our specifications, in sufficient quantities, on time, in
compliance with appropriate regulatory standards and at competitive prices. We cannot be sure that we will be able to obtain an adequate supply
of our product candidates on acceptable terms, or at all.
Manufacturers supplying diagnostic medical devices must comply with regulations which require, among other things, compliance with evolving
regulations under Medical Device Directives stipulated under ISO13485. The manufacturing of products at any facility will be subject to strict
quality control, testing and record keeping requirements, and continuing obligations regarding the submission of safety reports and other post-
market information. Both the sensor and patch manufacturing facilities for the sugarBEAT device are currently ISO13485 certified. We cannot
guarantee that the facilities will continue to pass regulatory inspection, or that future changes to ISO13485 standards will not also affect the
manufactures of the sensors and patches.
If we fail to attract and retain senior management, consultants, advisors and scientific and technical personnel, our product
development and commercialization efforts could be impaired.
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Our performance is substantially dependent on the performance of our senior management and key scientific and technical personnel, particularly
Dr. Dewan Fazlul Hoque Chowdhury, President, Chairman and Chief Executive Officer. Although we have entered into an employment agreement
with Dr. Chowdhury, there is no assurance that he will remain in our employ for the entire term of such employment agreement. The loss of the
services of any member of our senior management or our scientific or technical staff may significantly delay or prevent the development of our
product and other business objectives by diverting management’s attention to transition matters and identification of suitable replacements, if any,
and could have a material adverse effect on our business, operating results and financial condition.
We also rely on consultants and advisors to assist us in formulating our research and development strategy. All of our consultants and advisors
are either self-employed or employed by other organizations, and they may have conflicts of interest or other commitments, such as consulting or
advisory contracts with other organizations, that may affect their ability to contribute to us.
In addition, we believe that we will need to recruit additional executive management and scientific and technical personnel. There is currently
intense competition for skilled executives and employees with relevant scientific and technical expertise, and this competition is likely to continue.
The inability to attract and retain sufficient scientific, technical and managerial personnel could limit or delay our product development efforts,
which would adversely affect the development of our product and commercialization of our potential product and growth of our business.
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We expect to expand our research, development, clinical research and marketing capabilities and, as a result, we may encounter
difficulties in managing our growth, which could disrupt our operations.
We expect to have significant growth in expenditures, the number of our employees and the scope of our operations, in particular with respect to
those potential products that we elect to commercialize independently or together with others. To manage our anticipated future growth, we must
continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to train qualified
personnel. Due to our limited resources, we may not be able to effectively manage the expansion of our operations or train additional qualified
personnel. The physical expansion of our operations may lead to significant costs and may divert our management and business development
resources. Any inability to manage growth could delay the execution of our business plan or disrupt our operations.
We will need to raise additional funds in order to finance the anticipated commercialization of our product by incurring indebtedness,
through collaboration and licensing arrangements, or by issuing securities which may cause dilution to existing stockholders, or
require us to relinquish rights to our technologies and our product.
Developing our product, conducting clinical trials, establishing manufacturing facilities and developing marketing and distribution capabilities is
expensive. We will need to finance future cash needs through additional public or private equity offerings, debt financings or corporate
collaboration and licensing arrangements. We cannot be certain that additional funding will be available to us on acceptable terms, or at all. If
adequate funds are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our research or development
programs or our commercialization efforts. To the extent that we raise additional funds by issuing equity securities, our stockholders may
experience dilution. To the extent that we raise additional funds through collaboration and licensing arrangements, it may be necessary to
relinquish some rights to our technologies or our product or grant licenses on terms that are not favorable to us.
We have a limited operating history and you should not rely on our historical financial data as an indicator of our future financial
performance.
We have a limited operating history in the medical device industry. You should consider our business and prospects in light of the risks and
difficulties we face with our limited operating history and should not rely on our past results as an indication of our future performance. In particular,
we may face challenges in planning our growth strategy and forecasting market demand accurately as a result of our limited historical data and
limited experience in implementing and evaluating our business strategies. If we are unable to successfully address these risks, difficulties and
challenges as a result of our limited operating history, our ability to implement our strategic initiatives could be adversely affected, which may in
turn have a material adverse effect on our business, financial condition, results of operations and prospects.
We have a history of losses and may not achieve or maintain profitability.
We have incurred net losses every year since our inception in 2009 and have not generated revenue from the period of our inception from product
sales or licenses to date. As of March 31, 2018, we had an accumulated deficit of approximately $9.0 million. We may expect to incur losses for
the next several years and cannot be certain that we will ever achieve profitability. As a result, our business is subject to all of the risks inherent in
the development of a new business enterprise, such as the risk that we may not obtain substantial additional capital needed to support the
expenses of developing our technology and commercializing our potential products; develop a market for our potential products; successfully
transition from a company with a research focus to a company capable of either manufacturing and selling potential products or profitably
licensing our potential products to others; and/or attract and retain qualified management, technical and scientific staff.
We currently have not generated any revenue from product sales and may never become profitable.
To date, we have generated no revenue for product sales and we do not know when or if our product will generate revenue. Our ability to generate
revenue depends on a number of factors, including our ability to successfully complete clinical trials for the sugarBEAT device and obtain
regulatory approval to commercialize these potential products. Even then, we will need to establish and maintain sales, marketing, distribution and
to the extent we do not outsource manufacturing, manufacturing capabilities. We plan to rely on one or more strategic collaborators to help
generate revenues in markets outside of Great Britain however, we cannot be sure that our collaborators, if any, will be successful. Our ability to
generate revenue will also be impacted by certain challenges, risks and uncertainties frequently encountered in the establishment of new
technologies and products in emerging markets and evolving industries. These challenges include our ability to:
· execute our business model;
· create brand recognition;
· manage growth in our operations;
· create a customer base cost-effectively;
· retain customers;
· access additional capital when required; and
· attract and retain key personnel.
We cannot be certain that our business model will be successful or that it will successfully address these and other challenges, risks and
uncertainties. If we are unable to generate significant revenue, we may not become profitable, and we may be unable to continue our operations.
Even if we are able to commercialize the sugarBEAT device, we may not achieve profitability for at least several years, if at all, after generating
material revenue.
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Fluctuations in foreign exchange rates may adversely affect our financial condition and results of operations.
Our functional currency is the Great Britain Pound Sterling (“GBP”). The reporting currency is the United States dollar (US$). Income and
expenditures are translated at the average exchange rates prevailing during the reporting period. Assets and liabilities are translated at the
exchange rates as of balance sheet date. Stockholder’s equity is translated into United States dollars from GBP at historical exchange rates.
Currency fluctuations and restrictions on currency exchange may adversely affect our business, including limiting our ability to convert GBP into
foreign currencies and, if the GBP were to decline in value, reducing our revenue in U.S. dollar terms. To the extent the U.S. dollar strengthens
against foreign currencies, the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses
and net income for our international operations. Similarly, to the extent the U.S. dollar weakens against foreign currencies, the translation of these
foreign currency denominated transactions results in increased revenue, operating expenses and net income for our international operations. We
are also exposed to foreign exchange rate fluctuations as we convert the financial statements of our foreign subsidiaries into U.S. dollars in
consolidation. If there is a change in foreign currency exchange rates, the conversion of the foreign subsidiaries’ financial statements into U.S.
dollars will lead to a translation gain or loss which is recorded as a component of other comprehensive income (loss). We have not entered into
agreements or purchased instruments to hedge our exchange rate risks. The availability and effectiveness of any hedging transaction may be
limited and we may not be able to successfully hedge our exchange rate risks.
In addition, following the UK’s Brexit vote to leave the EU, there has been a weakening of GBP against many currencies. We expect to have to pay
some of our service providers and vendors in USD and we will pay approximately 10% more at present than we would have done prior to the
Brexit vote. The currency exchange rate continues to be very unstable and therefore the future impact or further weakening of GBP is not known
at this time.
Risks Related to Our Industry
Our competitors may develop products that are less expensive, safer or more effective, which may diminish or eliminate the
commercial success of any potential products that we may commercialize.
If our competitor’s market products that are less expensive, safer or more effective than our future products developed from our product
candidates, or that reach the market before our products, we may not achieve commercial success. For example, if approved, the sugarBEAT
device’s primary competition in the glucose monitoring device setting will be companies such as Dexcom, Abbott, and Senseonics who produce
glucose monitoring devices. The market may choose to continue utilizing the existing products for any number of reasons, including familiarity
with or pricing of these existing products. The failure of our product to compete with products marketed by our competitors would impair our ability
to generate revenue, which would have a material adverse effect on our future business, financial condition and results of operations.
We expect to compete with several companies including Dexcom, Abbott, and Senseonics, and our competitors may:
· develop and market products that are less expensive or more effective than our future product;
· commercialize competing products before we can launch any products developed from our product candidate;
· operate larger research and development programs or have substantially greater financial resources than we do;
· initiate or withstand substantial price competition more successfully than we can;
· have greater success in recruiting skilled technical and scientific workers from the limited pool of available talent;
· more effectively negotiate third-party licenses and strategic relationships; and
· take advantage of acquisition or other opportunities more readily than we can.
We expect to compete for market share against large medical diagnostic device manufacturing companies, smaller companies that are
collaborating with larger companies, new companies, and other public and private research organizations.
In addition, our industry is characterized by rapid technological change. Because our research approach integrates many technologies, it may be
difficult for us to stay abreast of the rapid changes in each technology. If we fail to stay at the forefront of technological change, we may be unable
to compete effectively. Our competitors may render our technologies obsolete by advances in existing technological approaches or the
development of new or different approaches, potentially eliminating the advantages in our product discovery process that we believe we derive
from our research approach and proprietary technologies.
The use of hazardous materials in our operations may subject us to environmental claims or liabilities.
Our research and development activities involve the use of hazardous chemical materials. Injury or contamination from these materials may occur
and we could be held liable for any damages, which could exceed our available financial resources. This liability could materially adversely affect
our business, financial condition and results of operations.
We are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of hazardous materials and waste
products. We may be required to incur significant costs to comply with environmental laws and regulations in the future that could materially
adversely affect our business, financial condition and results of operations.
If we fail to comply with extensive regulations enforced by regulatory agencies with respect to diagnostic medical device products, the
commercialization of our product could be prevented, delayed or halted.
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Research, preclinical development, clinical trials, manufacturing and marketing of our product is subject to extensive regulation by various
government authorities. We have not received marketing approval for the sugarBEAT device. The process of obtaining the required regulatory
approvals is lengthy and expensive, and the time required for such approvals is uncertain. The approval process is affected by such factors as:
· the indication and claims of the diagnostic device;
· the quality of submission relating to the product;
· the product’s clinical efficacy and safety;
· the manufacturing facility compliance;
· the availability of alternative devices;
· the risks and benefits demonstrated in clinical trials; and
· the patent status and marketing exclusivity rights of certain innovative products.
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Any regulatory approvals that we or our partners receive for our product may also be subject to limitations on the indicated uses for which the
product may be marketed or contain requirements for potentially costly post-marketing follow-up studies. The subsequent discovery of previously
unknown problems with the product, including adverse events of unanticipated severity or frequency, may result in restrictions on the marketing of
the product and withdrawal of the product from the market.
Manufacturing, labelling, storage and distribution activities also are subject to strict regulation and licensing by government authorities. The
manufacturing facilities for our product will be subject to periodic inspection by the regulatory authorities and from time to time, these agencies
may send notice of deficiencies as a result of such inspections. Our failure or the failure of our manufacturing facilities, to continue to meet
regulatory standards or to remedy any deficiencies could result in corrective action by the authorities, including the interruption or prevention of
marketing, closure of our manufacturing facilities, and fines or penalties.
Regulatory authorities also will require post-marketing surveillance to monitor and report potential adverse effects of our product. If approved, any
of our products’ subsequent failure to comply with applicable regulatory requirements could, among other things, result in warning letters, fines,
suspension or revocation of regulatory approvals, product recalls or seizures, operating restrictions, injunctions and criminal prosecutions.
Government policies may change and additional government regulations may be enacted that could prevent or delay regulatory approval of our
product. We cannot predict the likelihood, nature or extent of adverse government regulation that may arise from future legislation or
administrative action. If we are not able to maintain regulatory compliance, we might not be permitted to market our product and our business
could suffer.
In the future, we hope to distribute and sell our product outside of the United Kingdom and the European Union, which will subject us
to further regulatory risk.
In addition to seeking approval from the United Kingdom and the European Union for the sugarBEAT device, we may seek regulatory approval
from Saudi Arabia and the United Arab Emirates, Hong Kong, Australia, and the USA, to market the sugarBEAT device, however, there is no
guarantee we will do so. We may in the future also seek approvals for additional countries. The regulatory review process varies from country to
country, and approval by foreign government authorities is unpredictable, uncertain and generally expensive. The ability to market our product
could be substantially limited due to delays in receipt of, or failure to receive, the necessary approvals or clearances. Marketing of our product in
these countries, and in most other countries, is not permitted until we have obtained required approvals or exemptions in each individual country.
Failure to obtain necessary regulatory approvals could impair our ability to generate revenue from international sources.
Market acceptance of our product will be limited if users are unable to obtain adequate reimbursement from third-party payers.
Government health administration authorities, private health insurers and other organizations generally provide reimbursement for products like
our product and our commercial success will depend in part on these third-party payers agreeing to reimburse patients for the costs of our
product. Even if we succeed in bringing our product to market, we cannot assure you that third-party payers will consider our product cost
effective or provide reimbursement in whole or in part for its use.
Significant uncertainty exists as to the reimbursement status of newly approved health care products. Our product is intended to replace or alter
existing therapies or procedures. These third-party payers may conclude that our product is less safe, effective or cost-effective than existing
therapies or procedures. Therefore, third-party payers may not approve our product for reimbursement.
If third-party payers do not approve our product for reimbursement or fail to reimburse for them adequately, sales will suffer as some physicians or
their patients will opt for a competing product that is approved for reimbursement or is adequately reimbursed. Even if third-party payers make
reimbursement available, these payers’ reimbursement policies may adversely affect our ability and the ability of our potential collaborators to sell
our product on a profitable basis.
The trend toward managed healthcare, the growth of organizations such as health maintenance organizations and legislative proposals to reform
healthcare and government insurance programs could significantly influence the purchase of healthcare services and products, resulting in lower
prices and reduced demand for our product which could adversely affect our business, financial condition and results of operations.
In addition, legislation and regulations affecting the pricing of our product may change in ways adverse to us before or after the regulatory
agencies approve our product for marketing. While we cannot predict the likelihood of any of these legislative or regulatory proposals, if any
government or regulatory agencies adopt these proposals, they could materially adversely affect our business, financial condition and results of
operations.
Product liability claims may damage our reputation and, if insurance proves inadequate, the product liability claims may harm our
business.
We may be exposed to the risk of product liability claims that is inherent in the diagnostic medical device. A product liability claim may damage our
reputation by raising questions about our product’s safety and efficacy and could limit our ability to sell our product by preventing or interfering
with commercialization of our product.
In addition, product liability insurance for our industry is generally expensive to the extent it is available at all. There can be no assurance that we
will be able to obtain and maintain such insurance on acceptable terms or that we will be able to secure increased coverage if the
commercialization of our product progresses, or that future claims against us will be covered by our product liability insurance. Moreover, there
can be no assurance that any product liability coverage from any insurance policy and/or any rights of indemnification and contribution that we
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may have will offset any future claims. We currently do not maintain product liability insurance. A successful claim against us with respect to
uninsured liabilities and not subject to any indemnification or contribution could have a material adverse effect on our business, financial condition
and results of operations.
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We could be negatively impacted by the application or enforcement of fraud and abuse laws, including anti-kickback laws and other
anti-referral laws.
We are not aware of any current business practice which is in violation of any fraud and abuse law. However, continued vigilance to assure
compliance with all potentially applicable laws will be a necessary expense associated with product development. For example, all product
marketing efforts must be strictly scrutinized to assure that they are not associated with improper remunerations to referral sources in violation of
any anti-kickback statutes. Remunerations may include potential future activities for our product, including discounts, rebates and bundled sales,
which must be appropriately structured to take advantage of statutory and regulatory “safe harbors.” From time to time we may engage physicians
in consulting activities. In addition, we may decide to sponsor continuing medical education activities for physicians or other medical personnel.
We also may award or sponsor study grants to physicians from time to time. All relationships with physicians, including consulting arrangements,
continuing medical education and study grants, must be similarly reviewed for compliance with any anti-kickback statute to assure that
remuneration is not provided in return for referrals. Patient inducements may also be unlawful. Inaccurate reports of product pricing, or a failure to
provide a product at an appropriate price to various governmental entities, could also serve as a basis for an enforcement action under various
theories.
Claims which are “tainted” by virtue of kickbacks or a violation of self-referral rules may be alleged as false claims if other elements of a violation
are established. Because our potential customers may seek payments from healthcare programs for our product, even during the clinical trial
stages, we must assure that we take no actions which could result in the submission of false claims. For example, free product samples which are
knowingly or with reckless disregard billed to healthcare programs could constitute false claims. If the practice was facilitated or fostered by us, we
could be liable. Moreover, inadequate accounting for or a misuse of grant funds used for product research and development could be alleged as a
violation of relevant statutes.
The risk of our being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the regulatory
authorities or the courts, and their provisions are open to a variety of interpretations, and additional legal or regulatory change.
Risks Related to Our Common Stock
Our stock price may be volatile.
The stock market, particularly in recent years, has experienced significant volatility particularly with respect to pharmaceutical, biotechnology and
other diagnostic medical device company stocks. The volatility of pharmaceutical, biotechnology and other diagnostic medical device company
stocks often does not relate to the operating performance of the companies represented by the stock. Factors that could cause this volatility in the
market price of our Common Stock include:
· results from and any delays in our clinical trials;
· failure or delays in entering our product into clinical trials;
· failure or discontinuation of any of our research programs;
· delays in establishing new strategic relationships;
· delays in the development or commercialization of our product;
· market conditions in the diagnostic medical device sectors and issuance of new or changed securities analysts’ reports or recommendations;
· actual and anticipated fluctuations in our financial and operating results;
· developments or disputes concerning our intellectual property or other proprietary rights;
· introduction of technological innovations or new commercial products by us or our competitors;
· issues in manufacturing our product;
· market acceptance of our product;
· third-party healthcare reimbursement policies;
· regulatory actions affecting us or our industry;
· litigation or public concern about the safety of our product; and
· additions or departures of key personnel.
These and other external factors may cause the market price and demand for our Common Stock to fluctuate substantially, which may limit or
prevent investors from readily selling their shares of Common Stock and may otherwise negatively affect the liquidity of our Common Stock. In the
past, when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company
that issued the stock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a
lawsuit could also divert the time and attention of our management.
We have not paid and may not pay any dividends on our Common Stock.
We have paid no dividends on our Common Stock to date and may not pay dividends to holders of our Common Stock in the foreseeable future.
While our future dividend policy will be based on the operating results and capital needs of the business, it is currently anticipated that any
earnings will be retained to finance our future expansion and for the implementation of our business plan. As an investor, you should take note of
the fact that a lack of a dividend can further affect the market value of our stock, and could significantly affect the value of any investment in our
Company.
We are subject to the reporting requirements of federal securities laws. This can be expensive and may divert resources from other
projects, and thus impairing our ability to grow.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
We are subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other
federal securities laws, including compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The costs of preparing and filing
annual and quarterly reports, proxy statements and other information with the SEC (including reporting of any Merger that may occur in the future)
and furnishing audited reports to stockholders will cause our expenses to be higher than they would have been if we had remained privately held.
20
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately
or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely
impact the trading price of our Common Stock.
We are subject to reporting obligations under the U.S. securities laws. The Securities and Exchange Commission, or the SEC, as required by
Section 404 of the Sarbanes- Oxley Act of 2002, or the Sarbanes-Oxley Act, adopted rules requiring every public company to include a
management report on such company’s internal control over financial reporting in its annual report, which contains management’s assessment of
the effectiveness of the company’s internal control over financial reporting. Our management has concluded that our internal control over our
financial reporting is not effective. Our reporting obligations as a public company will place a significant strain on our management, operational and
financial resources and systems for the foreseeable future.
Prior to 2014, we were a private company with a short operating history and limited accounting personnel and other resources with which to
address our internal control and procedures over financial reporting. We have identified material weaknesses, which include (i) 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, (ii) 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, (iii) limited policies and procedures over related party
transactions. We will continue to implement measures to remedy these material weaknesses as well as other deficiencies. If we fail to timely
achieve and maintain the adequacy of our internal controls, we may not be able to conclude that we have effective internal control over financial
reporting. Moreover, effective internal control over financial reporting is necessary for us to produce reliable financial reports and is important to
help prevent fraud. As a result, our failure to achieve and maintain effective internal control over financial reporting could result in the loss of
investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the market price of
our commons stock.
Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or
prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our
business and reputation with investors may be harmed. As a result, our small size and any current internal control deficiencies may adversely
affect our financial condition, results of operation and access to capital. We have not performed an in-depth analysis to determine if historical un-
discovered failures of internal controls exist and may in the future discover areas of our internal control that need improvement.
We have disclosed a material weakness in our internal control over financial reporting which could have an adverse effect on our ability
to report our financial condition, results of operations or cash flows accurately and on a timely basis.
We have disclosed a material weakness in our internal control over financial reporting due to (i) 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, (ii) 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, (iii) limited policies and procedures over related party transactions. A material weakness
is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. We have determined
that further improvements are required in our accounting processes and personnel before we can consider the material weakness remediated.
Management's procedures and testing identified errors that, although not material to the consolidated financial statements, led management to
conclude that control deficiencies exist related to the timely production and filing of financial information. As a result of these deficiencies, it is
reasonably possible that internal controls over financial reporting may not have prevented or detected errors from occurring that could have been
material, either individually or in the aggregate.
A material weakness in our internal control over financial reporting could adversely impact our ability to provide timely and accurate financial
information. While considerable actions have been taken and are underway to improve our internal controls in response to the identified material
weaknesses and further action steps to strengthen controls have been taken, additional work continues to address and remediate the identified
material weakness. If we are unsuccessful in implementing or following our remediation plan, we may not be able to timely or accurately report our
financial condition, results of operations or cash flows or maintain effective internal controls over financial reporting. If we are unable to report
financial information timely and accurately or to maintain effective disclosure controls and procedures, we could be subject to, among other things,
regulatory or enforcement actions by the SEC, which could adversely affect the valuation of our common stock and could adversely affect our
business prospects.
Public company compliance may make it more difficult to attract and retain officers and directors.
The Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have required changes in corporate governance practices of
public companies. As a public company, we expect these new rules and regulations to increase our compliance costs in 2018 and beyond and to
make certain activities more time consuming and costly. As a public company, we also expect that these new rules and regulations may make it
more difficult and expensive for us to obtain director and officer liability insurance in the future and we may be required to accept reduced policy
limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract
and retain qualified persons to serve on our board of directors or as executive officers.
Our Common Stock will be deemed a “penny stock,” which makes it more difficult for our investors to sell their shares.
Our Common Stock will be subject to the “penny stock” rules adopted under Section 15(g) of the Exchange Act. The penny stock rules generally
apply to companies whose common stock is not listed on The Nasdaq Stock Market or other national securities exchange and trades at less than
$5.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things,
that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of
investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote
information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock
rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny
stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. If our securities are subject to the
penny stock rules, investors will find it more difficult to dispose of our securities.
Offers or availability for sale of a substantial number of shares of our Common Stock may cause the price of our Common Stock to
decline.
If our stockholders sell substantial amounts of our Common Stock in the public market upon the expiration of any statutory holding period, under
Rule 144, or issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang”
and in anticipation of which the market price of our Common Stock could fall. The existence of an overhang, whether or not sales have occurred
or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the
future at a time and price that we deem reasonable or appropriate.
21
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
The interests of Dr. Chowdhury, or the controlling shareholders, may not always coincide with the interests of us and our other
shareholders, and the controlling shareholders may exert significant control or substantial influence over us and may take actions that
are not in, or may conflict with, public shareholders’ best interests.
The controlling shareholders will control the exercise of voting rights of over 50 % of the shares eligible to vote in any of our annual or special
meeting. Therefore, these controlling shareholders will be able to exercise significant influence over all matters that require us to obtain
shareholder approval, including the election of directors to our board and approval of significant corporate transactions that we may consider, such
as a merger or other sale of our company or its assets. The controlling shareholders may cause us to take actions that are not in, or may conflict
with, the interests of us or the public shareholders. In the case where the interests of the controlling shareholders conflict with those of our other
shareholders, or if the controlling shareholders choose to cause us to pursue objectives that would conflict with the interests of our other
shareholders, such other shareholders could be left in a disadvantageous position by such actions caused by the controlling shareholders and the
price of our common stock could be adversely affected.
We are subject to the anti-takeover provisions of the Nevada Revised Statutes governing business combinations and control share
acquisition.
Applicability of the Nevada business combination statute would discourage parties interested in taking control of our company if they cannot obtain
the approval of our board of directors. These provisions could prohibit or delay a merger or other takeover or change in control attempt and,
accordingly, may discourage attempts to acquire our company even though such a transaction may offer our stockholders the opportunity to sell
their stock at a price above the prevailing market price.
The effect of the Nevada control share statute is that the acquiring person, and those acting in association with the acquiring person, will obtain
only such voting rights in the control shares as are conferred by a resolution of the stockholders at an annual or special meeting of the
stockholders. The Nevada control share law, if applicable, could have the effect of discouraging takeovers of our company based on our
organizational structure.
We are subject to compliance with multiple tax jurisdictions.
As we transact out of both the UK and United States we must comply with tax filing requirements in both jurisdictions.
We may not manage to implement changes to our control environment within the timeframes required
We have identified changes that we need to make to our control environment in order to move to SOX compliance. Whilst we have an action plan
in place, it may not be possible for us to implement all of the changes required by the required date.
22
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
Our offices are located at ATIC Building, 5 Oakwood Drive, Loughborough, Leicestershire, United Kingdom. The offices house our headquarters;
offices; laboratory; and small in-house manufacturing facility. The monthly rent is $2,500. The lease is on flexible terms with annual renewal. We
believe that we will be able to continue on a year to year lease for as long as necessary.
ITEM 3. LEGAL PROCEEDINGS.
We do not know of any material, active, pending or threatened proceeding against us or our subsidiaries, nor are we, or any subsidiary, involved
as a plaintiff or defendant in any material proceeding or pending litigation.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES.
Market Information
Our common stock began quotation on the OTCBB under the symbol “NMRD” on November 4, 2014. On June 30, 2017, our common stock
began quotation on the OTCQB.
On January 25, 2018, the Company’s common stock commenced trading on the NASDAQ Capital Market under its existing trading symbol,
“NMRD”. For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. The following quotations
reflect the high and low bids for our shares of common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.
Fiscal Year 2017
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Fiscal Year 2018
First Quarter
Second Quarter
Third Quarter
Fourth Quarter*
Fiscal Year 2019
First Quarter (through June 1, 2018)
* Our common stock commenced trading on the NASDAQ Capital Market.
As of June 4, 2018, we had approximately 92 holders on record of our common stock.
23
High Bid
1.99
1.95
1.90
2.50
High Bid
9.00
6.99
6.49
6.80
High Bid
4.95
Low Bid
1.50
1.90
1.50
1.40
Low Bid
2.00
4.04
4.20
4.50
Low Bid
2.76
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Dividends
Since incorporation, we have not paid any dividend on any class of equity securities. We anticipate that for the foreseeable future all earnings will
be retained for use in our business and no cash dividends will be paid to stockholders. Any payment of cash dividends in the future on the
Company’s common stock or preferred stock, will be dependent upon our financial condition, results of operations, current and anticipated cash
requirements, plans for expansion, as well as other factors that the Board of Directors deems relevant.
Securities Authorized for Issuance Under Equity Compensation Plans
Currently, there is no equity compensation plan in place.
Performance Graph
The graph below charts the cumulative total return of our common stock listed on Nasdaq, the Nasdaq Composite index and the S&P 1500 Health
Care Technology Index, for the fiscal years ended March 31, 2015, 2016, 2017 and 2018. Our stock began trading on Nasdaq on January 25,
2018.
Unregistered Sales of Securities
None.
Purchases of Equity Securities by the Registrant and Affiliated Purchasers
We have not repurchased any shares of our common stock during the fiscal year ended March 31, 2018.
24
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
ITEM 6. SELECTED FINANCIAL DATA.
Financial highlights
Year Ended March 31,
2018
2017
2016
2015
2014
Net loss
Diluted loss per share
Cash, cash equivalents, and short-term
investments
Total assets
Long-term obligations
Deferred Revenue
Stockholders’ equity/(deficit)
$
$
$
$
$
$
$
(1,820,449) $
(0.01) $
(1,551,266) $
* $
(1,539,637) $
* $
(1,319,840) $
*
(586,233)
*
5,733,886 $
6,255,402 $
- $
1,333,128 $
4,110,965 $
2,779,309 $
7,401,906 $
- $
1,183,035 $
5,366,500 $
9,403,965 $
9,732,783 $
- $
1,396,005 $
7,678,765 $
354,749 $
913,108 $
(170,000) $
1,538,300 $
(917,411) $
1,873,141
2,049,774
-
1,667,200
373,900
* less than $0.01
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The discussion and analysis below includes certain forward-looking statements that are subject to risks, uncertainties and other factors, as
described in “Risk Factors” and elsewhere in this Annual Report on Form 10-K, that could cause our actual growth, results of operations,
performance, financial position and business prospects and opportunities for this fiscal year and the periods that follow to differ materially from
those expressed in, or implied by, those forward-looking statements.
Corporate Overview
Since inception we have devoted substantially all of our efforts establishing a new business and while operations have commenced we have
generated no revenue from our limited operations. We are a holding company for a diagnostic medical device company and a clinical trial
company specializing in discovering, developing and commercializing diagnostic medical devices with initial applications in the area of diabetes.
We are a holding corporation that owns one hundred percent (100%) of a diagnostic medical device company specializing in discovering,
developing and commercializing specialty medical devices. We were organized on December 24, 2013 under the laws of the State of Nevada. We
own one hundred percent (100%) of Region Green Limited, a British Virgin Islands corporation formed on December 12, 2013. Region Green
Limited owns one hundred percent (100%) of the stock in Dermal Diagnostic (Holdings) Limited, an England and Wales corporation formed on
December 11, 2013. Dermal Diagnostics (Holdings) Limited owns one hundred percent (100%) of the stock in DDL, an England and Wales
corporation formed on January 20, 2009, and one hundred percent (100%) of the stock in Trial Clinic Limited, an England and Wales corporation
formed on January 12, 2011.
In December 2013, we restructured the Company and re-domiciled as a domestic corporation in the United States. The corporate re-organization
was accomplished to preserve the tax advantages under the laws of the England and Wales tax laws for the benefit of the shareholders of both
DDL and TCL.
Affiliated Company Relationships
Pharma was incorporated in November 2005. Through October 2013, all technology development and related transactions were incurred by
Pharma. As new technology platforms were invented and developed, additional companies were set up to contain these new technology
platforms to aid in the process of raising further investments to progress the development of these subsequent technologies. However, due to the
small size of the operations, low number of employees and laboratory and office space required, only one payroll was maintained initially. Invoices
were posted in Pharma and recharges were made as required. Prior to the year ended March 31, 2016, recharges included a proportion of the
overhead allocated based on management’s assessment. Management believes that the allocation methodologies are reasonable.
Dr. D. F Chowdhury and Mr. Bashir Timol are officers of Pharma. However, Pharma plans a management restructuring and a new management
team is planned to be recruited in due course, aligned with commercial launch plans. The current management at DDL, including Dr. D. F.
Chowdhury will allocate 15%-20% of their time to oversee the current operations at Pharma and the implementation of the new management team
and to provide ongoing support in an advisory role. Pharma is a drug delivery company, which means that its activities are entirely related to the
delivery of drugs to the body of a human or animal subject. DDL is a diagnostic company, which means it is entirely focused on extracting
molecules from the human or animal subject and analyzing it to make a diagnosis or to monitor the level of a particular molecule such as glucose.
These are two independent businesses engaged in different activities, therefore there is no conflict of interest between the two and management
does not see any conflicts arising from the allocations of some of DDL management time to overseeing the operations of Pharma.
Payments made solely for work that Dr. Chowdhury performed/performs for Pharma in his capacity as Manager are not recharged to Nemaura
Medical Inc. and are not included in our financial statements.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
25
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
RESULTS OF OPERATIONS
Management’s plans and basis of presentation
The Company has experienced recurring losses and negative cash flows from operations. At March 31, 2018, the Company had approximate
cash and fixed rate cash account balances of $5,734,000, working capital of $5,187,000, total stockholders’ equity of $4,111,000 and an
accumulated deficit of $8,973,000. To date, the Company has in large part relied on equity financing to fund its operations. Additional funding has
come from related party contributions. The Company expects to continue to incur losses from operations for the near-term and these losses could
be significant as product development, regulatory activities, clinical trials and other commercial and product development related expenses are
incurred.
Management’s strategic assessment includes the following potential options:
•
•
•
•
obtaining regulatory approval for the sugarBEAT device: CE mark review and approval in Europe is anticipated in 2018, and FDA clinical
program and PMA submission timing is yet to be determined.
pursuing additional capital raising opportunities;
exploring licensing opportunities; and
undertaking manufacturing development and scale-up of the sugarBEAT device for commercialization.
Results of Operations
Year Ended March 31, 2018 Compared To The Year Ended March 31, 2017
Revenue
There was no revenue recognized in the years ended March 31, 2018 and March 31, 2017. In 2014, we received an upfront non-refundable cash
payment of £1 million (approximately $1.40 million at March 31, 2018) 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 March 31, 2018 and 2017, the
cash payment became immediately available and was being used to fund our operations, including research and development costs associated
with obtaining the CE marking approval.
Research and Development Expenses
Research and development expenses were $993,833 and $1,034,605 for the years ended March 31, 2018 and 2017, respectively. This amount
related to clinical trials and improvements made to the sugarBEAT device, and expenditures included sub-contractor activities, and consultancy
fees and wages. We expect research and development expenses to continue to be a significant cost in future periods as we continue our clinical
studies of our sugarBEAT device and pursue strategic opportunities.
General and Administrative Expenses
General and administrative expenses were $915,132 and $516,661 for the years ended March 31, 2018 and 2017, respectively. These consisted
primarily of legal, professional and audit fees plus wages and charitable contributions. General and administrative expenses will be expected to
significantly increase as we commence product manufacture and commercialisation.
Other Comprehensive Income
For the years ended March 31, 2018 and 2017 other comprehensive income/(loss) was $564,914 and ($760,999), respectively, arising from
foreign currency translation adjustments.
Year Ended March 31, 2017 Compared To The Year Ended March 31, 2016
Revenue
There was no revenue recognized in the years ended March 31, 2017 and March 31, 2016. In 2014, we received an upfront non-refundable cash
payment of approximately $1.67 million 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 March 31, 2017 and 2016, 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
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
26
Research and Development Expenses
Research and development expenses were $1,034,605 and $1,028,224 for the years ended March 31, 2017 and 2016, respectively. This amount
consisted primarily of expenditure on sub-contractor activities, consultancy fees and wages and demonstrated continuing expenditure for
improvements made to the sugarBEAT device. We expect research and development expenses to continue to be a significant cost in future
periods as we continue our clinical studies of our sugarBEAT device and pursue strategic opportunities.
General and Administrative Expenses
General and administrative expenses were $516,661 and $511,413 for the years ended March 31, 2017 and 2016, respectively. These consisted
primarily of legal, professional and audit fees plus wages. General and administrative expenses will be expected to significantly increase as we
commence product manufacture and commercialisation.
Other Comprehensive Income
For the years ended March 31, 2017 and 2016 other comprehensive (loss)/income was ($760,999) and $135,813 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
$8,973,082 through March 31, 2018. We have historically financed our operations through the issuances of equity, UK government grants and
contributions of services from related entities.
At March 31, 2018, the Company had net working capital of $5,187,224 which included cash and short-term fixed rate cash account balances of
$5,733,886. The Company reported a net loss of $1,820,449 for the year ended March 31, 2018.
While our current cash level (including fixed rate cash accounts) is sufficient for the completion of the clinical studies and the initial scale up of our
manufacturing, our long term business plan is contingent upon our ability to raise additional funds. This may include a combination of debt, 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.
We believe the cash position as of March 31, 2018 is adequate for our current level of operations through June 2019, and for the achievement of
certain of our product development milestones. Our plan is to utilize the cash on hand to complete the following:
-
-
Establish commercial manufacturing operations for commercial supply of the sugarBEAT device and patches.
Complete clinical studies for CE approval of the body worn miniaturised device with Bluetooth connectivity.
In November 2015 we received proceeds of $10,000,000 in connection with the private placement of 5 million shares and warrants for up to 10
million shares of our common stock.
Operating activities
Net cash consumed by our operating activities for the year ended March 31, 2018 was $2,136,977 which reflected our net loss of $1,820,449,
increased by an increase in accounts payable, an increase in prepayments, a decrease in liability due to related parties and an increase in
accrued interest receivable of $452,535, and offset by an increase in accruals of $106,751.
Net cash consumed by our operating activities for the year ended March 31, 2017 was $1,192,828 which reflected our net loss of $1,551,266, and
offset by a net increase in accounts payable, liability due to related parties and accrued expenses of $252,638, and by a decrease in prepayments
and other receivables of $85,367.
Net cash consumed by our operating activities for the year ended March 31, 2016 was $1,209,365 which reflected our net loss of $1,539,637, a
decrease in accounts payable and accrued expenses of $160,983 and offset by a decrease in prepayments and other receivables of $224,392
and decrease in prepayment to related party of $249,459.
Net cash generated by investing activities was $1,949,215 for the year ended March 31, 2018, which reflected the cash received from the maturity
of a fixed rate savings account of $1,994,475 offset by expenditures made in developing intellectual property, primarily related to patent filings of
$45,260.
Net cash used in investing activities was $6,306,089 for the year ended March 31, 2017, which reflected the expenditures made in developing
intellectual property, primarily related to patent filings of $73,070, property and equipment of $6,519 and $6,226,500 invested in fixed rate savings
account.
Net cash used in investing activities was $87,564 for the year ended March 31, 2016, which reflected the expenditures made in developing
intellectual property, primarily related to patent filings of $78,197 and property and equipment of $9,367.
For the years ended March 31, 2018 and 2017, there were no financing activities.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Net cash provided by financing activities was $10,299,434 for the year ended March 31, 2016. Net cash provided by financing activities
represents proceeds from the issuance of common stock for cash of $10,000,000 and costs paid for by a related party of $299,434.
27
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
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.
Contractual Obligations
None
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP)
requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and
accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates
requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial
statements. The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with
research and development, income taxes and intangible assets.
The Company’s financial position, results of operations and cash flows are impacted by the accounting policies the Company has adopted. In
order to get a full understanding of the Company’s financial statements, one must have a clear understanding of the accounting policies employed.
A summary of the Company’s critical accounting policies follows:
Research and Development Expenses: The Company charges research development expenses to operations as incurred. Research and
Development expenses primarily consist of salaries and related expenses for personnel and outside contractor and consulting services. Other
research and development expenses include the costs of materials and supplies used in research and development, prototype manufacturing,
clinical studies, related information technology and an allocation of facilities costs.
Income taxes: Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their
respective tax bases, and operating loss carry forwards. Deferred income tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on
deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A
valuation allowance is provided to reduce the carrying amount of deferred income tax 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 income (loss).
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.
28
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
The Company’s exposure to interest rate risk is minimal. We have no bank borrowings and, although we have placed funds on deposit to earn
interest during the year, these are of fixed-term and fixed-rate and therefore offer little exposure to interest rate risk.
Foreign Exchange Risk
Our foreign currency exposure gives rise to market risk associated with exchange rate movements against the US dollar, our reporting currency.
Currently, the majority of our expenses and cash and fixed rate deposits are denominated in Pounds Sterling, with the remaining portion
denominated in US dollars. Fluctuations in exchange rates, primarily the US dollar against the Pound Sterling, will affect our financial position. At
March 31, 2018, the Company held approximately USD 5.7 million in GBP-denominated bank and fixed rate cash accounts. Based on this
balance, a 1% depreciation of the Pound against the US dollar would cause an approximate USD 57 thousand reduction in cash and fixed rate
deposit account balances.
We have not utilized any hedging instruments in order to mitigate the foreign currency risk.
Inflation
Historically, with UK inflation rates having been low in recent years, inflation has not had a significant effect on our business in the UK, the location
of the substantial part of our activities.
29
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NEMAURA MEDICAL INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2018 AND 2017
Reports of Independent Registered Public Accounting Firms
Consolidated Balance Sheets as of March 31, 2018 and 2017
Consolidated Statements of Comprehensive Loss for the years ended March 31, 2018, 2017 and 2016
Consolidated Statements of Changes of Stockholders’ Equity for the years ended March 31, 2018, 2017 and 2016
Consolidated Statement of Cash Flows for the years ended March 31, 2018, 2017 and 2016
Notes to Consolidated Financial Statements
Page
F-2
F-4
F-5
F-6
F-7
F-8-15
F-1
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Stockholders and the Board of Directors of Nemaura Medical Inc.
Loughborough, United Kingdom
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Nemaura Medical Inc. (the "Company") as of March 31, 2018 and 2017, the
related consolidated statements of comprehensive loss, changes in stockholders’ equity (deficit), and cash flows for each of the two years in the
period ended March 31, 2018, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Company as of March 31, 2018 and 2017, and the results of its operations and
its cash flows for each of the two years in the period ended March 31, 2018, in conformity with accounting principles generally accepted in the
United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is
not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting in accordance with the standards of
the PCAOB. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion in
accordance with the standards of the PCAOB.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.
Emphasis of Matter – Related Party Transactions
The Company has significant transactions and relationships with related parties that are described in Note 7 to the consolidated financial
statements.
/s/ Crowe Horwath LLP
We have served as the Company's auditor since 2017.
Denver, Colorado
June 12, 2018
F-2
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
THIS REPORT IS A COPY OF THE PREVIOUSLY ISSUED REPORT. GHP HORWATH, P.C. HAS CEASED OPERATIONS AND
THEREFORE, HAS NOT REISSUED THE REPORT.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Nemaura Medical Inc.
We have audited the accompanying consolidated balance sheet of Nemaura Medical Inc. and its subsidiaries (the “Company”) as of March 31,
2016, and the related consolidated statements of comprehensive income/(loss), changes in stockholders’ equity (deficit), and cash flows for each
of the years ended March 31, 2016 and 2015. These financial statements are the responsibility of the Company’s management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nemaura
Medical Inc. and its subsidiaries as of March 31, 2016, and the results of their operations and their cash flows for each of the years ended March
31, 2016 and 2015 in conformity with accounting principles generally accepted in the United States of America.
The Company has significant transactions and relationships with related parties that are described in Note 8 to the consolidated financial
statements. It is possible that the terms of these transactions may not be the same as those that would result from transactions among unrelated
parties.
/s/ GHP Horwath, P.C.
Denver, Colorado
June 13, 2016
F-3
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NEMAURA MEDICAL INC.
CONSOLIDATED BALANCE SHEETS
As of March 31, As of March 31,
2018
($)
2017
($)
822,335
4,911,551
187,139
77,508
5,998,533
911,359
1,867,950
51,086
-
2,830,395
5,770
251,099
256,869
9,161
203,800
212,961
-
4,358,550
6,255,402
7,401,906
49,912
613,818
147,579
77,530
687,609
87,232
811,309
852,371
1,333,128
1,333,128
1,183,035
1,183,035
2,144,437
2,035,406
137
-
67,676
205,000
13,056,859
(8,973,082)
(40,625)
4,110,965
12,919,672
(7,152,633)
(605,539)
5,366,500
6,255,402
7,401,906
ASSETS
Current assets:
Cash
Fixed rate cash account
Prepaid expenses and other receivables
Accrued interest receivable
Total current assets
Other assets:
Property and equipment, net
Intangible assets, net of accumulated amortization
Long term assets:
Fixed rate cash account
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable
Liability due to related party
Other liabilities and accrued expenses
Total current liabilities
Deferred revenue
Total liabilities
Commitments and contingencies
Stockholders’ equity:
Convertible Series A preferred stock, $0.001 par value, 200,000 shares authorized and 137,324
outstanding at March 31, 2018
Common stock, $0.001 par value, 420,000,000 shares authorized and 67,676,000 shares issued
and outstanding at March 31, 2018 (205,000,000 issued and outstanding at March 31, 2017)
Additional paid in capital
Accumulated deficit
Accumulated other comprehensive loss
Total stockholders’ equity
Total liabilities and stockholders’ equity
See notes to the consolidated financial statements
F-4
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NEMAURA MEDICAL INC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Revenues
Total revenues
Operating expenses:
Research and development
General and administrative
Total operating expenses
Loss from operations
Interest income
Net loss
Other comprehensive income/ (loss)
Foreign currency translation adjustment
Comprehensive loss
Loss per share
Basic and diluted
2018
($)
Year Ended March 31,
2017
($)
2016
($)
-
-
-
993,833
915,132
1,908,965
1,034,605
516,661
1,551,266
1,028,224
511,413
1,539,637
(1,908,965)
(1,551,266)
(1,539,637)
88,516
-
-
(1,820,449)
(1,551,266)
(1,539,637)
564,914
(1,255,535)
(760,999)
(2,312,265)
135,813
(1,403,824)
(0.01)
*
*
Weighted average number of shares outstanding
150,070,400
205,000,000
201,726,027
* less than $0.01
See notes to the consolidated financial statements
F-5
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NEMAURA MEDICAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY/(DEFICIT)
YEARS ENDED MARCH 31, 2018 AND 2017
Common Stock
($)
Convertible
preferred stock
($)
Additional Paid
in Capital
($)
Accumulated
Deficit
($)
Accumulated
Other
Comprehensive
Income
($)
Total
Stockholders’
Equity
($)
200,000
-
2,924,672
(4,061,730)
19,647
(917,411)
5,000
-
-
9,995,000
-
-
(1,539,637)
-
-
10,000,000
(1,539,637)
-
-
-
-
135,813
135,813
205,000
12,919,672
(5,601,367)
155,460
7,678,765
-
-
-
(1,551,266)
-
(1,551,266)
-
-
-
-
(760,999)
(760,999)
205,000
-
12,919,672
(7,152,633)
(605,539)
5,366,500
(137,324)
-
137
-
137,187
-
-
(1,820,449)
-
-
-
(1,820,449)
-
-
-
-
564,914
564,914
67,676
137
13,056,859
(8,973,082)
(40,625)
4,110,965
See notes to the consolidated financial statements
Balance at April 1,
2015
Common stock issued
for cash
Net loss
Other comprehensive
income - foreign
currency translation
gain
Balance at March 31,
2016
Net loss
Other comprehensive
income - foreign
currency translation
loss
Balance at March 31,
2017
Cancellation of
ordinary stock and
issue of convertible
preferred stock
Net loss
Other comprehensive
income - foreign
currency translation
gain
Balance at March 31,
2018
F-6
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NEMAURA MEDICAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash Flows from Operating Activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
Changes in assets and liabilities:
Prepaid expenses and other receivables
Prepayment to related party for clinical trials
Accounts payable
Liability due to related party
Accrued expenses
Accrued interest receivable
Net cash used in operating activities
Cash Flows from Investing Activities:
Decrease in restricted cash
Purchase of intangible assets
Purchase of property and equipment
Fixed rate savings account
Net cash provided by/ (used in) investing activities
Cash Flows from Financing Activities:
Net proceeds from issuance of common stock
Net advances from related party
Net cash provided by financing activities
Net (decrease)/increase in cash
Effect of exchange rate changes on cash
Cash at beginning of year
Cash at end of year
Supplemental disclosure of cash flow information:
2018
($)
Year Ended March 31
2017
($)
2016
($)
(1,820,449)
(1,551,266)
(1,539,637)
29,256
20,433
17,404
(138,859)
-
(31,247)
(162,644)
60,407
(73,441)
(2,136,977)
85,367
-
2,522
270,975
(20,859)
-
(1,192,828)
224,392
249,459
(31,279)
-
(129,704)
-
(1,209,365)
-
(45,260)
-
1,994,475
1,949,215
-
(73,070)
(6,519)
(6,226,500)
(6,306,089)
-
(78,197)
(9,367)
-
(87,564)
-
-
-
-
-
-
10,000,000
299,434
10,299,434
(187,762)
98,738
911,359
822,335
(7,498,917)
(993,689)
9,403,965
911,359
9,002,505
46,711
354,749
9,403,965
Schedule of non-cash investing and financing transactions:
Transfer of property and equipment and intangible assets to related party
-
-
23,428
See notes to the consolidated financial statements
F-7
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NEMAURA MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
NOTE 1 – ORGANIZATION, PRINCIPAL ACTIVITIES AND MANAGEMENT’S PLANS
Nemaura Medical Inc. (“Nemaura” or the “Company”), through its operating subsidiaries, performs medical device research and manufacturing of
a continuous glucose monitoring system (“CGM”), named sugarBEAT. The sugarBEAT device is a non-invasive, wireless device for use by
persons with Type I and Type II diabetes, and may also be used to screen pre-diabetic patients. The sugarBEAT device extracts analytes, such as
glucose, to the surface of the skin in a non-invasive manner where it is measured using unique sensors and interpreted using a unique algorithm.
Nemaura is a Nevada holding company organized in 2013. Nemaura owns one hundred percent (100%) of Region Green Limited, a British Virgin
Islands corporation formed (“RGL”) on December 12, 2013. Region Green Limited owns one hundred percent (100%) of the stock in Dermal
Diagnostic (Holdings) Limited, an England and Wales corporation (“DDHL”) formed on December 11, 2013, which in turn owns one hundred
percent (100%) of Dermal Diagnostics Limited, an England and Wales corporation formed on January 20, 2009 (“DDL”), and one hundred percent
(100%) of Trial Clinic Limited, an England and Wales corporation formed on January 12, 2011 (“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’s initial focus has been on the development of the sugarBEAT
device, which consists of a disposable patch containing a sensor, and a non-disposable miniature electronic watch with a re-chargeable power
source, which is designed to enable trending or tracking of blood glucose levels. All the Company’s operations and assets are located in England.
The following diagram illustrates Nemaura’s corporate and shareholder structure as of March 31, 2018:
F-8
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NEMAURA MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
The Company has a limited operating history, recurring losses from operations and an accumulated deficit as of March 31, 2018. The Company
expects to continue to incur losses from operations at least until clinical trials are completed later this year, when management expects that the
product will become available to be marketed. 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 its ability to continue as a going concern for at least one year subsequent to the date
of issuance of these financial statements. The Company has approximately $822,000 of readily available cash on hand at March 31, 2018 and
approximately $4.9 million that will become available in December 2018 (Note 3b). Early withdrawal may generally be made for liquidity needs.
Management’s strategic plans include the following:
- continuing to advance commercialization of the Company’s principal product, in both UK, European and other international markets;
- pursuing additional capital raising opportunities; and
- continuing to explore and execute prospective partnering or distribution opportunities;
NOTE 2 – BASIS OF PRESENTATION
(a) Basis of presentation
The accompanying consolidated financial statements include the accounts of the Company and the Company’s subsidiaries, DDL, TCL, DDHL
and RGL. The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of
America, and all significant intercompany balances and transactions have been eliminated on consolidation.
The functional currency for the majority of the Company’s operations is the Great Britain Pound Sterling (“GBP”), and the reporting currency is the
US Dollar.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Cash and cash equivalents
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, currently
$4.9 million through December 2018. Early withdrawal may generally be made for liquidity needs.
(c) Fair value of financial instruments
The Company’s financial instruments primarily consist of cash, accounts receivable, fixed rate cash accounts, and accounts payable. As of the
year-end dates, the estimated fair values of non-related party financial instruments were not materially different from their carrying values as
presented, due to their short maturities. The fair value of amounts payable to related parties are not practicable to estimate due to the related party
nature of the underlying transactions.
(d) Property and equipment
Property and equipment is stated at cost and depreciated using the straight-line method
over the estimated useful lives of the assets, generally ten years for fixtures and fittings.
(e) Intangible assets
Intangible assets consist of licenses and patents associated with the sugarBEAT device and are amortized on a straight-line basis, generally over
their legal lives of up to 20 years and are reviewed for impairment. The Company evaluates its intangible assets (all have finite lives) and other
long-lived assets for impairment whenever events or circumstances indicate that they may not be recoverable, or at least annually. Recoverability
of finite and other long-lived assets is measured by comparing the carrying amount of an asset group to the future undiscounted net cash flows
expected to be generated by that asset group. The Company groups assets for purposes of such review at the lowest level for which identifiable
cash flows of the asset group are largely independent of the cash flows of the other groups of assets and liabilities. The amount of impairment to
be recognized for finite and other long-lived assets is calculated as the difference between the carrying value and the fair value of the asset group,
generally measured by discounting estimated future cash flows. There were no impairment indicators present during the years ended March 31,
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
2018, 2017 or 2016.
F-9
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NEMAURA MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
(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 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 (note 4).
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.
(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 years ended March 31, 2018, 2017 and 2016.
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 twelve month periods ended March 31, 2018.
(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 March 31, 2018, 2017 and 2016. For the years ended March 31, 2018, 2017 and 2016, warrants to purchase 10 million shares of common
stock and preferred stock convertible to 137,324,000 shares of common stock were anti-dilutive and were excluded from the calculation of diluted
loss per share.
(j) Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results may differ from those
estimates.
(k) Foreign currency translation
The functional currency of the Company is the Great Britain Pound Sterling (“GBP”). The reporting currency is the United States dollar (US$).
Stockholders’ equity is translated into United States dollars from GBP at historical exchange rates. Assets and liabilities are translated at the
exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rates prevailing during the reporting
period. The translation rates are as follows for each year end to March 31:
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Year end GBP : US$ exchange rate
Average period/yearly GBP : US$ exchange rate
2018
1:1.4033
1:1.3305
2017
1:1.2453
1:1.3146
2016
1:1.4318
1:1.5224
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.
F-10
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NEMAURA MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
(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 standard on April 1, 2019.
Management is currently evaluating the impact of adoption of this ASU on the Company’s consolidated financial statements.
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. Management is currently evaluating the impact of adoption of this ASU on the Company’s consolidated
financial statements.
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, but does not expect it to have a material effect 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 introduce to the UK market after completion of clinical trials
and CE mark approval (European Union approval of the product). The Company has entered into sales and marketing agreements for the product
but has not yet entered into manufacturing agreements. These matters raise uncertainties as regulatory acceptance of the Company’s primary
product development efforts and if acceptance is attained, the cost structure to produce the product.
(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.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
(o) Subsequent events
We have signed a full commercial agreement with Dallas Burston Ethitronix Limited in May 2018 for all other European territories as part of an
equal joint venture agreement. The joint venture intends to seek sub-license rights opportunities to one or more leading companies in the diabetes
monitoring space, to leverage their network, infrastructure and resources.
On June 5, 2018, the three holders of our Series A Convertible Preferred Stock (the “Series A Preferred”) each delivered notices of conversion to
voluntarily convert their Series A Preferred, in the aggregate amount of 137,324 shares, into 137,324,000 shares of our common stock. The
holders had the right to voluntarily convert each share of Series A Preferred into 1,000 shares of common stock of the Company. As a result of the
conversion, we currently have 205,000,000 shares of common stock outstanding.
F-11
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NEMAURA MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
NOTE 4 – LICENSING AGREEMENT
In March 2014, the Company entered into an Exclusive Marketing Rights Agreement with an unrelated third party, that granted to the third party
the exclusive right to market and promote the sugarBEAT device and related patches under its own brand in the United Kingdom and the Republic
of Ireland, the Channel Islands and the Isle of Man. The Company received a non-refundable, up front cash payment of GBP 1,000,000
(approximately $1.403 million and $1.245 million as of March 31, 2018 and March 31, 2017 respectively) which is wholly non-refundable, upon
signing the agreement.
As the Company has continuing performance obligations under the agreement, the up-front fees received from this agreement have been
deferred and will be recorded as income over the term of the commercial licensing agreement beginning from the date of clinical evaluation
approval. As the Company expects commercialization of the sugarBEAT device to occur in the year ending March 31, 2019, approximately
$70,000 of the deferred revenue has been classified as a current liability.
In April 2014, a Letter of Intent was signed with the third party which specified a 10 year term and in November 2015, a Licence, Supply and
Distribution agreement with an initial 5 year term was executed. The Company grants the exclusive right to market and promote its product in the
United Kingdom, and purchase the product at specified prices.
NOTE 5– PROPERTY AND EQUIPMENT
As of March 31, 2018, and March 31, 2017 property and equipment is summarized as follows.
Fixtures and fittings
Less accumulated depreciation
NOTE 6 - INTANGIBLE ASSETS
As of March 31, 2018, and March 31, 2017 intangible assets are summarized as follows:
Patents and licenses
Less accumulated amortization
Estimated amortization expense is approximately $22,000 for each of the next five years.
F-12
March 31, 2018
($)
March 31, 2017
($)
18,213
(12,443)
5,770
16,163
(7,002)
9,161
March 31, 2018
($)
March 31, 2017
($)
323,987
(72,888)
251,099
244,457
(40,657)
203,800
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NEMAURA MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
NOTE 7 – RELATED PARTY TRANSACTIONS
Nemaura Pharma Limited (Pharma) and NDM Technologies Limited (NDM) are entities controlled by the Company’s majority shareholder, DFH
Chowdhury.
In accordance with the United States Securities and Exchange Commission (SEC) Staff Accounting Bulletin 55, these financial statements are
intended to reflect all costs associated with the operations of DDL and TCL. Pharma has invoiced DDL and TCL for research and development
services. In addition, certain operating expenses of DDL and TCL were incurred and paid by Pharma and NDM which have been invoiced to the
Company. Certain costs incurred by Pharma and NDM are directly attributable to DDL and TCL and such costs were billed to the Company.
Management believes the allocation methodologies used are reasonable. DDL and TCL advanced Pharma certain amounts to cover a portion of
the costs.
Following is a summary of activity between the Company and Pharma and NDM for the years ended March 31, 2018, 2017 and 2016. These
amounts are unsecured, interest free, and payable on demand.
Balance due from Pharma and NDM at beginning of period
Amounts advanced to Pharma
Amounts received from Pharma
Reduction in prepayments to Pharma for clinical trials
Amounts invoiced by Pharma to DDL, NM and TCL (1)
Amounts invoiced by DDL to Pharma
Amounts repaid by DDL to Pharma
Amounts paid by DDL on behalf of Pharma
Sale of fixed and intangible assets to Pharma and NDM
Foreign exchange differences
Net balance due to Pharma and NDM at end of the period
Year Ended
March 31,
2018
($)
Year Ended
March 31,
2017
($)
Year Ended
March 31,
2016
($)
(687,609)
-
(145,214)
-
(842,739)
-
1,096,767
19,889
-
(54,912)
(613,818)
(494,145)
-
(2,480)
-
(577,481)
15,305
249,060
42,403
-
79,729
(687,609)
192,484
58,197
(228,361)
(247,596)
(331,714)
16,307
-
-
17,775
28,763
(494,145)
(1) These amounts are included primarily in research and development expenses.
The Company routinely reviews its statement of cashflows presentation of related party transactions for financing or operating classification based
on the underlying nature of the item and intended repayment.
Total costs charged to the Company by Pharma and NDM were $842,739, $577,481 and $331,714 for the years 2018, 2017 and 2016
respectively.
Subsequent to March 31, 2018, the Company made payments to Pharma on the outstanding balances at March 31, 2018 of £279,792.
NOTE 8 – INCOME TAXES
The Company and its subsidiaries file separate income tax returns.
The United States of America
The Company is incorporated in the US, and as a result of the new US Tax Cuts and Jobs Act, is subject to a US federal corporate income tax
blended rate of 30.79% for the year ended March 31, 2018. The federal corporate income tax rate for future years is scheduled to be 21%.
British Virgin Islands
RGL is incorporated in the British Virgin Islands (“BVI”). Under the current laws of the BVI, RGL is not subject to tax on income or capital gains. In
addition, upon payments of dividends by RGL, no BVI withholding tax is imposed. During the years ended March 31, 2018, 2017 and 2016, there
was no income or expenses in the BVI.
F-13
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NEMAURA MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
UK
DDL, TCL and DDHL are all incorporated in the United Kingdom (UK) and the applicable UK statutory income tax rate for these companies is
19%.
For the years ended March 31, 2018, 2017 and 2016 loss before income tax expense (benefit) arose in the UK and U.S.
Loss before income taxes arising in UK
Loss before income taxes arising in United States
Total loss before income tax
2018
$
Year ended March 31,
2017
$
(1,353,243)
(467,206)
(1,820,449)
(1,251,870)
(299,396)
(1,551,266)
2016
$
(1,300,468)
(239,169)
(1,539,637)
Reconciliation of our effective tax rate to loss to the statutory U.S federal tax rate is as follows:
Loss before income taxes
Expected tax benefit
Foreign tax differential
Enhanced research and development
Other
Change in valuation allowance
Actual income tax benefit
2018
$
(1,820,449)
(561,000)
36,000
(215,000)
35,000
705,000
-
Year ended March 31,
2017
$
(1,551,266)
(527,000)
217,000
(198,000)
-
455,000
-
(31%)
2%
(12%)
2%
39%
-
(34%)
14%
(13%)
-
29%
-
2016
$
(1,539,637)
(523,000)
216,000
(177,000)
-
484,000
-
(34%)
14%
(11%)
-
31%
-
The tax effects of the temporary differences that give rise to significant portions of deferred income tax assets are presented below:
Net operating tax loss carried forwards
Valuation allowance
Net deferred tax assets
As of March 31,
2018
2017
$
$
2,229,000
(2,229,000)
-
1,818,000
(1,818,000)
-
For each of the years ended March 31, 2018, 2017 and 2016, the Company did not have unrecognized tax benefits, and therefore no interest or
penalties related to unrecognized tax benefits were accrued. Management does not expect that the amount of unrecognized tax benefits will
change significantly within the next twelve months.
The Company mainly files income tax returns in the United States and the UK. The Company is subject to U.S. federal income tax examination by
tax authorities for tax years beginning in 2014. The UK tax returns for the Company’s UK subsidiaries are open to examination by the UK tax
authorities for the tax years beginning in April 1, 2012.
As of March 31, 2018, the Company has net operating losses (NOLs) of approximately $1.4 million in the US and $7.1 million in the UK. These US
and UK NOLs may be carried forward indefinitely.
NOTE 9 – STOCKHOLDERS’ EQUITY
In November 2015, the Company issued 5 million shares of common stock and warrants to purchase 10 million shares of common stock for total
proceeds of $10 million. The warrants are exercisable at $0.50 per share through to the fifth anniversary of the listing of the Company on a
national exchange. The Company listed to the Nasdaq exchange on January 25, 2018.
F-14
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NEMAURA MEDICAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2018
NOTE 10 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following is a summary of consolidated quarterly financial information:
2018
June 30
Sept. 30
Dec. 31
March 31
Quarter Ended
Total revenue
Loss from operations
Net loss
Basic and diluted loss per share
Weighted average number of shares outstanding
2017
Total revenue
Loss from operations
Net loss
Basic and diluted loss per share
Weighted average number of shares outstanding
* less than $0.01
$
$
$
$
$
$
$
$
-
(417,320)
(407,787)
*
$
$
$
$
205,000,000
-
(447,516)
(393,031)
*
$
$
$
$
205,000,000
-
(476,353)
(466,365)
*
$
$
$
$
121,411,478
-
(567,776)
(553,266)
*
150,070,400
Quarter Ended
June 30
Sept. 30
Dec. 31
March 31
-
(494,183)
(494,183)
*
205,000,000
$
$
$
$
-
(322,482)
(322,482)
*
205,000,000
$
$
$
$
-
(375,366)
(375,366)
*
205,000,000
$
$
$
$
-
(359,235)
(359,235)
*
205,000,000
F-15
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Mr. Dewan F.H. Chowdhury, who is our Chief Executive Officer and Mr Iain S. Anderson, who is our Principal Financial and Accounting Officer,
have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-
K. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be
disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to 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 at the reasonable assurance level due to a material weakness in our internal control over financial reporting, which
is described below.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act
Rule 13a-15(f). Our internal control system is a process designed by, or under the supervision of, our principal executive and principal financial
officer, or persons performing similar functions, and effected by our Board of Directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.
generally accepted accounting principles (“U.S. GAAP”).
Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance
with the authorization of our management and directors; and provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.
Because of our inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2018. In making this assessment we used
the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated
Framework (2013). As a result of its assessment, management identified material weaknesses in our internal control over financial reporting.
Based on the material weaknesses as described below, management concluded that our internal control over financial reporting was not effective
as of March 31, 2018.
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, 2018:
· 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 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.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
· 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 Annual Report on
Form 10-K 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.
30
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Remediation of Material Weaknesses
We are in the process of implementing improvements and remedial measures in response to these assessments and recommendations, 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 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.
In addition of the immediate remediation plan, we will put our effort, in the coming year, in improving our control environment detailed below:
· Ongoing assessment of our current Internal Control Over Financial Reporting against COSO 2013 and the requirements set forth by
Sarbanes-Oxley Act section 404. This task will be conducted by an independent expert.
· Continued testing of the operating effectiveness of the controls that have been identified and implemented in order to prevent misstatement
of the financial statements. In addition, the company will focus on the design and implementation of Key Performance Indicators (KPIs) in
order to measure the quality of the processes in place, and the efficiency of the controls.
As described below, certain aspects of this plan were implemented in the year ended March 31, 2018 and other aspects are expected to be
implemented on, or around, the time that we are prepared to take our sugarBEAT product to market.
Attestation Report of the Registered Public Accounting Firm
As an Emerging Growth Company, we are not required to provide in this Annual Report on Form 10-K, an attestation report of our registered
public accounting firm on our internal control over financial reporting.
Changes in Internal Control over Financial Reporting
During the year ended March 31, 2018, we continued to implement the remediation plan discussed above. We have implemented the following
changes:
· We have continued to engage with a third party consulting firm to help us assess our current internal control over financial reporting against
COSO 2013, as well as identifying a gap analysis, suggest improvements in controls, and assist us in testing our control systems. Further
testing has occurred of certain controls, including purchasing processes, payment processes, and month end closing procedures. In
addition, an initial assessment of IT general controls has been conducted, with a view to assessing the current situation and strengthening
these controls where deemed necessary. The Company has set a target to design and implement controls that will address the material
weaknesses by March 31, 2019. The independent advisers have agreed a table of work to complete all controls reviews, implementation
and testing in this timeframe and the Company has committed to meeting this timeframe. However, as this process is ongoing and there
will need to be sufficient time to ensure implemented controls are operating effectively, there is no assurance that all material weaknesses
will be fully remediated by March 31, 2019.
· During the quarter ended September 30, 2017, the Board of Directors (“Board”) appointed three independent directors to serve on our
Board, each of whom meet the definition of “independent” as set forth under The Nasdaq Stock Market rules. The Board has established
an audit committee with each of 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.”.
· During the year, members of our accounting department have attended training courses relating to US accounting practice and changes in
taxation laws.
There have been no other changes in our internal control over financial reporting during our last fiscal year that have materially affected or are
reasonably likely to materially affect our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
31
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
PART III
The following persons are our executive officers and directors, and hold the positions set forth opposite their respective names.
Name
Dewan Fazlul Hoque Chowdhury
Bashir Timol
Iain Anderson
Thomas Moore
Dr. Salim Natha
Timothy Johnson
Age
Position
45
43
58
54
51
34
Chief Executive Officer, President and
Director
Director
Chief Business Officer
Chief Financial Officer
Independent Director
Independent Director
Independent Director
Date of Appointment
December 24, 2013
December 24, 2013
April 9, 2018
December 12, 2016
August 3, 2017
July 26, 2017
July 17, 2017
Our directors hold office until the earlier of their death, resignation or removal or until their successors have been qualified.
Dewan Fazlul Hoque Chowdhury. Dr. Chowdhury has been our President, Chief Executive Officer and a member of our board of directors since
our incorporation on January 20, 2009. He is in charge of research and development of our core technologies, product development, innovation
and commercialization. He also coordinates and oversees legal compliance; development of the company mission; policy and planning. Prior to
establishing the Company, Dr. Chowdhury was the founder and CEO of Microneedle Technologies and Nemaura Pharma Limited where he played
a pivotal role in the development, manufacture and launch of a microneedle device used in skin clinics, which is also currently being evaluated for
skin cancer drug delivery. Dr. Chowdhury has been responsible for negotiating licensing deals for a transdermal patch to treat Alzheimer’s
disease. Additionally, he was involved in negotiations for out-licensing patches to treat Parkinson’s and Hypertension, and in-licensing
complementary technologies.
Dr. Chowdhury originally trained as a pharmaceutical scientist and has an MSc in Microsystems and Nanotechnology from Cranfield University,
and a Doctorate from the University of Oxford on nano-drug delivery. His experience in the Pharmaceutical Industry includes product
development; manufacturing; and technical and corporate management.
Bashir Timol. Mr. Timol has been a Director since Nemaura Medical Inc. was organized on December 24, 2013. He has been a director of
Dermal Diagnostics Limited from October 30, 2013. On April 9, 2018 Mr Timol was appointed to the role of Chief Business Officer. Mr, Timol
possesses over 10 years’ experience in food and beverage, franchise, and logistic operations. His experience includes constructing sales
contracts and having the responsibility for overseeing the key managers in the operation of a large scale retail food chain. He has experience as
an entrepreneur investing in and operating a number of retail food chains in the UK, including DIXY Chicken and Costa Coffee. Prior to joining
Nemaura Mr. Timol has been employed as a director at SABT 1 Ltd. since March of 2009 and One-E Group since January of 2007. Mr. Timol
holds a bachelor degree in Economics from the University of Central Lancashire, UK.
Iain Anderson. Mr Anderson qualified as a Chartered Certified Accountant in 1993 whilst working for Touche Ross (now Deloitte) and received
an MBA from Loughborough University in 1999. Having initially worked in accounting practices in audit and accounting roles, he has since worked
in industry for a number of businesses, including more than 20 years with American-owned companies. These have included subsidiaries of
publicly-owned corporations such as Hitachi, TriMas Corporation, Precision Castparts Corporation and Hospira Inc., with site and regional
responsibility for group reporting and SOX compliance. His current responsibilities include the preparation of accounting information, development
of the internal control environment of the company and regulatory compliance.
Timothy Johnson. Mr. Johnson was elected as a director in July 2017. He is currently serving in executive positions in Diagnostax advisory,
EQIQ and Protech Professional. Mr. Johnson received his first class Masters of Science in Mathematics and Physics from the University of
Manchester, UK.
Salim Natha. Dr. Natha was elected as a director in July 2017. He is currently practicing as an Eye Surgeon in the UK National Health Service
(NHS), and is the clinical lead for a retinopathy screening programme for over 20,000 diabetics in the Ashton, Wigan and Leigh region. He has
published several articles in the medical literature and is a peer reviewer for the English National Diabetic Retinopathy Screening Programme. Dr.
Natha graduated with honours from the University of Liverpool Medical School.
Thomas Moore. Mr. Moore was elected as a director in August 2017. He is currently working as a management consultant, having built up three
decades of experience in the accountancy and consultancy fields at leading accountancy firms including Grant Thornton, KPMG
and PricewaterhouseCoopers. He is a practicing Chartered Tax Adviser and earned his first class Bachelor of Arts in French and Russian from the
University of Northumbria, UK.
Family Relationships
There are no family relationships between any of our directors or executive officers.
Involvement in Certain Legal Proceedings.
None.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
32
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Board of Directors
All directors hold office until the next Annual Meeting of shareholders and until their successors have been duly elected and qualified.
Directors are elected at the annual meetings to serve for one-year terms. Officers are elected by, and serve at the discretion of, the Board of
Directors. Our Board of Directors shall hold meetings on at least a quarterly basis.
The board of directors complies with the NASDAQ Listing Rules with respect to corporate governance matters. Under the NASDAQ rules
we are required to maintain a board of directors comprised of at least 50% independent directors, and an audit committee of at least two members,
comprised solely of independent directors who also meet the requirements of Rule 10A-3 under the Securities Exchange Act of 1934.
Director Independence
The board of directors has reviewed the independence of our directors, applying the NASDAQ independence standards. Based on this
review, the board of directors determined that each of Thomas Moore, Dr. Salim Natha and Timothy Johnson are independent within the meaning
of the NASDAQ rules. In making this determination, our board of directors considered the relationships that each of these non-employee directors
has with us and all other facts and circumstances our board of directors deemed relevant in determining their independence. As required under
applicable NASDAQ rules, we anticipate that our independent directors will meet on a regular basis as often as necessary to fulfil their
responsibilities, including at least annually in executive session without the presence of non-independent directors and management.
Board Committees
Our board of directors has established standing committees in connection with the discharge of its responsibilities. These committees
include an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Our board of directors has
adopted written charters for each of these committees. Copies of the charters are available on our website. Our board of directors may establish
other committees as it deems necessary or appropriate from time to time.
Audit Committee
Our Audit Committee was established on July 26, 2017 and is comprised of our independent directors: Thomas Moore, Dr. Salim Natha
and Timothy Johnson. Mr. Johnson qualifies as the Audit Committee financial expert as defined in Item 407(d)(5) of Regulation S-K promulgated
under the Securities Act.
According to its charter, the Audit Committee consists of at least three members, each of whom shall be a non-employee director who has
been determined by the Board to meet the independence requirements of NASDAQ, and also Rule 10A-3(b)(1) of the SEC, subject to the
exemptions provided in Rule 10A-3(c). The Audit Committee Charter describes the primary functions of the Audit Committee, including the
following:
• Oversee the Company’s accounting and financial reporting processes;
• Oversee audits of the Company’s financial statements;
• Discuss policies with respect to risk assessment and risk management, and discuss the Company’s major financial risk exposures and the
steps management has taken to monitor and control such exposures;
• Review and discuss with management the Company’s audited financial statements and review with management and the Company’s
independent registered public accounting firm the Company’s financial statements prior to the filing with the SEC of any report containing such
financial statements.
• Recommend to the board that the Company’s audited financial statements be included in its annual report on Form 10-K for the last fiscal year;
• Meet separately, periodically, with management, with the Company’s internal auditors (or other personnel responsible for the internal audit
function) and with the Company’s independent registered public accounting firm;
• Be directly responsible for the appointment, compensation, retention and oversight of the work of any independent registered public accounting
firm engaged to prepare or issue an audit report for the Company;
• Take, or recommend that the board take, appropriate action to oversee and ensure the independence of the Company’s independent registered
public accounting firm; and
• Review major changes to the Company’s auditing and accounting principles and practices as suggested by the Company’s independent
registered public accounting firm, internal auditors or management.
Compensation Committee
The Compensation Committee is responsible for, among other matters:
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
• reviewing and approving, or recommending to the board of directors to approve the compensation of our CEO and other executive officers and
directors reviewing key employee compensation goals, policies, plans and programs;
• administering incentive and equity-based compensation;
• reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and
• appointing and overseeing any compensation consultants or advisors.
Our Compensation Committee was established on July 26, 2017, and currently consists of Thomas Moore, Dr. Salim Natha and Timothy
Johnson. Dr. Salim Natha serves as chair of the Compensation Committee.
33
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Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee is responsible for, among other matters:
• selecting or recommending for selection candidates for directorships;
• evaluating the independence of directors and director nominees;
• reviewing and making recommendations regarding the structure and composition of our board and the board committees;
• developing and recommending to the board corporate governance principles and practices;
• reviewing and monitoring the Company’s Code of Ethics; and
• overseeing the evaluation of the Company’s management.
Our Corporate Governance and Nominating Committee was established on July 26, 2017, and currently consists of Thomas Moore, Dr. Salim
Natha and Timothy Johnson. Mr. Johnson serves as chair of the Corporate Governance and Nominating Committee.
Material Changes to Procedures by which Security Holders May Recommend Board Nominees
None.
Board Leadership Structure and Role in Risk Oversight
Mr. Chowdhury holds the positions of chief executive officer and chairman of the board of the Company. The board believes that Mr.
Chowdhury’s services as both chief executive officer and chairman of the board is in the best interest of the Company and its shareholders. Mr.
Chowdhury possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing the Company in its business and is thus
best positioned to develop agendas that ensure that the Board’s time and attention are focused on the most critical matters relating to the business
of the Company. His combined role enables decisive leadership, ensures clear accountability, and enhances the Company’s ability to
communicate its message and strategy clearly and consistently to the Company’s shareholders, employees and customers.
The board has not designated a lead director. Given the limited number of directors comprising the Board, the independent directors call
and plan their executive sessions collaboratively and, between meetings of the Board, communicate with management and one another directly.
Under these circumstances, the directors believe designating a lead director to take on responsibility for functions in which they all currently
participate might detract from rather than enhance performance of their responsibilities as directors.
Management is responsible for assessing and managing risk, subject to oversight by the board of directors. The board oversees our risk
management policies and risk appetite, including operational risks and risks relating to our business strategy and transactions. Various committees
of the board assist the board in this oversight responsibility in their respective areas of expertise.
• The Audit Committee assists the board with the oversight of our financial reporting, independent auditors and internal controls. It is charged
with identifying any flaws in business management and recommending remedies, detecting fraud risks and implementing anti-fraud measures. The
audit committee further discusses Nemaura’s policies with respect to risk assessment and management with respect to financial reporting.
• The Compensation Committee oversees compensation, retention, succession and other human resources-related issues and risks.
• The Corporate Governance and Nominating Committee overviews risks relating to our governance policies and initiatives.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act), the Company's directors, executive officers
and persons who own more than ten percent (10%) of our common stock are required to file with the Securities and Exchange Commission (the
SEC), initial reports of ownership and reports of changes in ownership of the common stock and other equity securities of the Company. To the
Company's knowledge, based solely on a review of copies of such reports furnished to the Company during and/or with respect to year ended
March 31, 2018, the Company is not aware of any late or delinquent filings required under Section 16(a) of the Exchange Act in respect of the
Company's equity securities, other than the following:
Name
Dewan F.H. Chowdhury
Bashir Timol
Sufyan Ismail
Timothy Johnson
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Form
Transaction
Cancellation of 87,537,000 shares of common stock;
Acquisition of 87,537 shares of preferred stock
Cancellation of 27,082,000 shares of common stock;
Acquisition of 27,082 shares of preferred stock
Cancellation of 22,705,000 shares of common stock;
Acquisition of 22,705 shares of preferred stock
Appointment as a director owning -0- shares
4
4
4
3
Salim Natha
Thomas J. Moore
Code of Ethics
3
3
Appointment as a director owning 4,006,389 shares
Appointment as a director owning -0- shares
We have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer and other persons performing
similar functions. A copy of our Code of Ethics is available on our website. We intend to post amendments to, or waivers from a provision of, our
Code of Ethics that apply to our principal executive officer, principal financial officer or persons performing similar functions on our website.
34
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ITEM 11. EXECUTIVE COMPENSATION.
Summary Compensation Table
This table provides disclosure, for fiscal years 2018 and 2017, of the compensation paid to our named executive officers.
Named Executive Officer
and Principal Position
Dewan Fazlul Hoque
Chowdhury
Chief Executive Officer
(Principal Executive Officer)
Iain Anderson
Chief Financial Officer
(Principal Financial Officer)
Dr. Chowdhury
Year
2018
2017
2018
2017
Salary
($)
Bonus
($)
All Other
Compensation
($)
Total
($)
106,440
105,168
57,938
34,761
-
-
-
-
390
-
297
-
106,830
105,168
58,235
34,761
We entered into an employment agreement with Dr. Chowdhury on November 2, 2013. Dr. Chowdhury’s contract is for an unspecified
period. He may leave the Company with notice or the Company may terminate his contract with notice. Termination may be with or without
cause. Dr. Chowdhury receives an annual salary of £90,000 pounds sterling or $118,000 USD. Our contract with Dr. Chowdhury does not include
any provision for stock options or equity incentives.
Under the executive employment agreement Dr. Chowdhury’s annual salary was adjusted on a pro rata basis to reflect only work that was
performed for Nemaura Medical Inc. The disclosure set forth in the table reflects his pro rata compensation from April 1, 2016 through March 31,
2018.
Mr. Anderson
We do not have a written employment contract with our Chief Financial Officer, Iain Anderson. Mr. Anderson had an annual salary of
£80,000 (approximately USD106,000), which was increased to £100,000 (approximately USD140,000) in March 2018. These amounts have been
prorated for the 2017 and 2018 fiscal years based on actual time working for the Company. Either party may terminate employment by providing
the other party with no less than three months' prior notice. Our contract with Mr. Anderson does not include any provision for stock options or
equity incentives.
Outstanding Equity Awards for 2018
None. We do not currently have an equity incentive plan.
Potential payments upon termination or change-in-control.
None. Upon termination by us or Mr. Chowdhury, he shall only be entitled to receive his base salary through the date of termination.
35
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Director Compensation
Each of our independent directors receive annual fees of £5,000 pounds sterling or $7,000 USD for their service on our board of directors and
committees. We currently have no plan for compensating our executive directors for their services in their capacity as directors. Although we have
agreements with each of our independent directors to serve on our board, in which we provide for the grant of options, at this time no such option
grants have been made and no equity compensation plan has been approved.
Fees Earned or
paid in Cash
($US) (1)
Non-Equity
Incentive Plan
Compensation
($US)
All other
Compensation
($US)
Total
($US)
Name
Timothy Johnson
Salim Natha
Thomas Moore
(1) Reflects pro rata amount of fees paid for fiscal 2018 commencing on such director’s date of appointment.
4,726
4,568
4,387
-0-
-0-
-0-
-0-
-0-
-0-
4,726
4,568
4,387
Compensation Committee Interlocks and Insider Participation
No member of our Compensation Committee has at any time been an officer or employee of ours or our subsidiaries. No interlocking relationship
exists between our Board of Directors or Compensation Committee and the Board of Directors or Compensation Committee of any other
company, nor has any interlocking relationship existed in the past.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCK HOLDER
MATTERS.
The following tables set forth certain information as of June 7, 2018 regarding the beneficial ownership of our Common Stock, by (i) each person
or entity who, to our knowledge, owns more than 5% of our Common Stock; (ii) our executive officers; (iii) each director; and (iv) all of our
executive officers and directors as a group.
Unless otherwise indicated in the footnotes to the following table, each person named in the table has sole voting and investment power and that
person’s address is c/o NEMAURA MEDICAL INC., Advanced Technology Innovation Centre, 5 Oakwood Drive, Loughborough, Leicestershire,
United Kingdom LE11 3QF. Shares of Common Stock subject to options, warrants, or other rights currently exercisable or exercisable within 60
days of June 7, 2018, are deemed to be beneficially owned and outstanding for computing the share ownership and percentage of the stockholder
holding such options, warrants or other rights, but are not deemed outstanding for computing the percentage of any other stockholder.
On June 5, 2018, Mr. Chowdhury, Mr. Timol and Mr. Ismail, the three holders of our Series A Convertible Preferred Stock (the “Series A
Preferred”), each delivered notices of conversion to voluntarily convert their Series A Preferred, in the aggregate amount of 137,324 shares, into
137,324,000 shares of our common stock. The holders had the right to voluntarily convert each share of Series A Preferred into 1,000 shares of
common stock of the Company. As a result of the conversion, we currently have 205,000,000 shares of common stock outstanding.
Beneficial Ownership
Shares
Beneficially
Owned
Percentage Total
Voting Power1
87,537,000
27,082,100
0
0
4,006,389
0
118,625,489
22,705,250
43%
13%
-
-
2%
-
58%
11%
Name of Beneficial Owner
Chowdhury, Dewan F.H.
Timol, Bashir
Iain Anderson
Timothy Johnson
Salim Natha
Thomas Moore
Total Officers and Directors as a Group
Holders of 5% or more of our Common Stock
Ismail, Sufyan
1 Based upon 205,000,000 shares of our Common Stock outstanding.
36
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Nemaura Pharma Limited (Pharma) and NDM Technologies Limited (NDM) are entities controlled by our Chief Executive Officer,
President, Chairman of the Board and majority shareholder, Dewan F.H. Chowdhury.
Pharma has invoiced our subsidiaries, Dermal Diagnostics Limited (DDL) and Trial Clinical Limited (TCL) for research and development
services. In addition, certain operating expenses of DDL and TCL were incurred and paid by Pharma and NDM which have been invoiced to us.
Certain costs incurred by Pharma and NDM are directly attributable to DDL and TCL and such costs were billed to us. Prior to the year ended
March 31, 2016, other costs were shared between the organizations. In situations where the costs were shared, expense has been allocated
between Pharma and NDM and DDL and TCL using a fixed percentage allocation and were billed to the Company. DDL and TCL advanced
Pharma certain amounts to cover a portion of the costs.
Total costs charged to us by Pharma and NDM were $842,739 for the year 2018.
Following is a summary of activity between the Company and Pharma and NDM for the year ended March 31, 2018. These amounts are
unsecured, interest free, and payable on demand.
Balance due from Pharma and NDM at beginning of period
Amounts advanced to Pharma
Amounts received from Pharma
Reduction in prepayments to Pharma for clinical trials
Amounts invoiced by Pharma to DDL, NM and TCL (1)
Amounts invoiced by DDL to Pharma
Amounts repaid by DDL to Pharma
Amounts paid by DDL on behalf of Pharma
Sale of fixed and intangible assets to Pharma and NDM
Foreign exchange differences
Net balance due to Pharma and NDM at end of the period
Year Ended
March 31,
2018
($)
(687,609)
-
(145,214)
-
(842,739)
-
1,096,767
19,889
-
(54,912)
(613,818)
(1) These amounts are included primarily in research and development expenses.
REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS
It is Company policy to not enter any transaction (other than compensation arrangements in the ordinary course) with any director,
executive officer, employee, or principal stockholder or party related to them, unless authorized by a majority of the directors having no interest in
the transaction, upon a favorable recommendation by the Audit Committee (or a majority of its disinterested members).
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate fees billed to us for the fiscal years ended March 31, 2018 and 2017 by Crowe Horwath LLP.
Audit Fees
Audit Related Fees
Tax Fees
Other Fees
Totals
2018
2017
$
$
$
106,000 $
-
6,765 $
-
112,765 $
84,000
-
6,000
-
90,000
Audit fees represent amounts billed for professional services rendered or expected to be rendered for the audit of our annual financial statements.
Audit-related fees represent professional services rendered or expected to be rendered for assurance and related services by the accounting firm
that are reasonably related to the performance of the audit or review of our financial statements that are not reported under audit fees
Tax fees represent professional services rendered by the accounting firm for tax compliance.
The Audit Committee approves all auditing services and the terms thereof and non-audit services (other than non-audit services published under
Section 10A(g) of the Exchange Act or the applicable rules of the SEC or the Pubic Company Accounting Oversight Board) to be provided to us by
the independent auditor; provided, however, the pre-approval requirement is waived with respect to the provisions of non-audit services for us if
the "de minimus" provisions of Section 10A(i)(1)(B) of the Exchange Act are satisfied.
Audit Committee Pre-Approval Policy
Under provisions of the Sarbanes-Oxley Act of 2002, our principal accountant may not be engaged to provide non-audit services that are
prohibited by law or regulation to be provided by it, and the Audit Committee must pre-approve the engagement of the our principal accountant to
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
provide audit and permissible non-audit services. The Audit Committee has not established any policies or procedures other than those required
by applicable laws and regulations.
37
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PART IV
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
Exhibit No.
3.1
3.1(a)*
3.2*
3.3*
4.1
4.2
10.1
10.2
10.3
10.4
10.5+
10.6
10.7
10.8+
14.1
21.1*
23.1*
31.1
31.2
32.1
32.2
101
Description
Articles of Incorporation filed March 28, 2014 (incorporated by reference from the Registrant’s Registration Statement on Form
S‑1 (File No. 333-194857), filed August 12, 2014)
Certificate of Amendment to the Articles of Incorporation
Certificate of Designation for Series A Convertible Preferred Stock
Amended and Restated Company By-laws
Form of Subscription Agreement (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on
December 2, 2015)
Form of Common Stock Purchase Warrant (incorporated by reference from the Registrant’s Current Report on Form 8-K filed
on December 2, 2015)
Employment Agreement dated November 1, 2013 between the Company and Dewan F.H. Chowdhury (incorporated by
reference from the Registrant’s Registration Statement on Form S‑1 (File No. 333-194857), filed August 12, 2014)
Exclusive Rights License Agreement between Dallas Burston Pharma (DBP) Jersey Limited and Dermal Diagnostics Limited,
dated March 31, 2014 (incorporated by reference from the Registrant’s Registration Statement on Form S‑1 (File No. 333-
194857), filed August 12, 2014)
Assignment Agreement between NDM Technologies Limited and Dermal Diagnostics Limited, dated May 8, 2014 (incorporated
by reference from the Registrant’s Registration Statement on Form S‑1 (File No. 333-194857), filed August 12, 2014)
Assignment Agreement between Nemaura Pharma Limited and Dermal Diagnostics Limited, dated May 8, 2014 (incorporated
by reference from the Registrant’s Registration Statement on Form S‑1 (File No. 333-194857), filed August 12, 2014)
License, Supply and Distribution Agreement (incorporated by reference from the Registrant’s Current Report on Form 8-K filed
on December 2, 2015)
Verbal Agreement between the Company and Iain Anderson regarding compensation. (incorporated by reference from the
Registrant’s Current Report on Form 8-K filed on December 13, 2016)
Form of Common Stock Exchange Agreement (incorporated by reference from the Registrant’s Current Report on Form 8-K
filed on November 7, 2017)
Joint Collaboration Agreement’, between Dallas Burston Ethitronix (Europe) Limited and Nemaura Medical Inc., dated May 21 ,
2018 (incorporated by reference from the Registrant’s Current Report on Form 8-K filed on May 25, 2018)
Code of Ethics adopted by the Board of Directors (incorporated by reference from the Registrant’s Registration Statement on
Form S‑1 (File No. 333-194857), filed August 12, 2014)
Subsidiaries
Consent of Crowe Horwath LLP
Rule 13a-14(a)/15d-14(a) - Certification of Chief Executive Officer
Rule 13a-14(a)/15d-14(a) - Certification of Chief Financial Officer.
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Balance Sheets, (ii) the Statements of Comprehensive
Loss, (iii) Statements of Stockholders Equity, (iv) the Statement of Cash Flows and (v) the Notes to the Financial Statements
·
*Filed herewith
·
+Portions of this Exhibit have been omitted pursuant to a request for confidential treatment.
38
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf on June 12, 2018 by the undersigned thereunto duly authorized.
SIGNATURES
NEMAURA MEDICAL INC.
By: /s/ Dewan F. H. Chowdhury
Dewan F. H. Chowdhury
President, Chief Executive Officer (Principal
Executive Officer)
By: /s/ Iain S Anderson
Iain S Anderson
Chief Financial Officer (Principal Financial Officer)
Pursuant to the requirements of the Securities and Exchange Act of 1934, this Report has been signed below by the following persons on behalf of
the Registrant on June 12, 2018, in the capacities indicated.
Name
Position
Date
/s/ Dewan F.H. Chowdhury
Dewan F.H, Chowdhury
/s/ Bashir Timol
Bashir Timol
/s/ Timothy Johnson
Timothy Johnson
/s/ Salim Natha
Salim Natha
/s/ Thomas Moore
Thomas Moore
President, Chief Executive Officer (Principal Executive Officer) Chief Financial Officer
June 12, 2018
Director
Independent Director
Independent Director
Independent Director
39
June 12, 2018
June 12, 2018
June 12, 2018
June 12, 2018
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Exhibit 3.1(a)
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Exhibit 3.2
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CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
NEMAURA MEDICAL, INC.
(Pursuant to Section 78.1955 of the Nevada Revised Statutes)
1. Designation and Number. There shall be a series of preferred stock, par value $0.001 per share, designated as “Series A Convertible
Preferred Stock,” and the number of shares constituting such series shall be Two Hundred Thousand (200,000) shares. Such series is referred
to herein as the “Series A Preferred.”
2. Rank. As to payment of individual dividends and as to distributions of assets upon liquidation or winding up of the corporation, whether
voluntary or involuntary (“Distributions”) the Series A Preferred shall have superior rights to the Corporation's shares of common stock, par value
$0.001 per share (the “Common Stock”).
3. No Dividends. The holders of record of shares of the Series A Preferred shall not be entitled to receive dividends.
4. Voting Rights. The Series A Preferred shall vote together as a class on all matters which adversely impact the rights or preferences of the
Series A Preferred, as provided herein. Whenever holders of the Series A Preferred are required or permitted to take any action by vote, such
action may be taken without a meeting by written consent, setting forth the action so taken and signed by the holders of the outstanding Series A
Preferred of the Corporation having not less than the minimum number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Each holder of outstanding shares of Series A Preferred shall be entitled to vote with holders of outstanding shares of Common Stock, voting
together as a single class, with respect to any and all matters presented to the stockholders of the Corporation for their action or consideration
(whether at a meeting of stockholders of the Corporation, by written action of stockholders in lieu of a meeting or otherwise), except as provided by
law. In any such vote, each share of Series A Preferred shall be entitled to a number of votes equal to the number of shares of Common Stock into
which the share Series A Preferred is convertible pursuant to Section 6 herein as of the record date for such vote or written consent or, if there is
no specified record date, as of the date of such vote or written consent. Each holder of outstanding shares of Series A Preferred Stock shall be
entitled to notice of all stockholder meetings (or requests for written consent) in accordance with the Corporation's bylaws.
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5. Liquidation Preference. There shall be no liquidation preference for the shares of Series A Preferred Stock.
6. Conversion. The holder of shares of Series A Preferred shall have the following conversion rights (the "Conversion Rights"):
(i)
Automatic Conversion. After all of the following events occur:(a) the sugarBEAT® device to be commercialized has CE
regulatory approval; (b) retail sales have commenced; and (c) retail sales exceed USD$5 million, which includes any advanced sales (the
“Triggering Events”); the disinterested members of the Board shall confirm the satisfaction of all Triggering Events by written notice to the
Corporation’s transfer agent. On such date, the shares of Series A Preferred then outstanding shall be converted, automatically and without
further action on the part of any person or the Corporation into such number of fully paid and non-assessable shares of Common Stock at a
conversion ratio of 1,000-for-1 (the “Conversion Ratio”), such that each share of Series A Preferred Stock shall be convertible into 1,000 shares of
Common Stock (the “Automatic Conversion Date”).
(ii)
Mechanics of Automatic Conversion. Holders of shares of the Series A Preferred so converted may deliver to the Corporation at
its executive office, or to the Corporation’s transfer agent, as applicable, the certificate or certificates for the Series A Preferred Stock so
converted. As promptly as practicable thereafter, the Corporation shall issue, or shall cause its transfer agent to issue and deliver to such holder a
certificate or certificates for the number of shares of Common Stock to which such holder is entitled. Until such time as a holder of shares of the
Series A Preferred shall surrender its certificates therefor as provided above, such certificates shall be deemed to represent the shares of
Common Stock issuable pursuant to this Section 6(i). The person or persons entitled to receive the shares of Common Stock issuable upon
automatic conversion of Series A Preferred shall be treated for all purposes as the record holder or holders of such shares of Common Stock on
the Automatic Conversion Date.
(iii)
Holders Right to Voluntarily Convert. If by 1st February 2019, which date is subject to amendment by the Board of Directors of
the Corporation, the Triggering Events have not occurred each holder of any shares of Series A Preferred then outstanding may, at such holder's
option, elect to convert (a “Voluntary Conversion”) all or any portion of the shares of Series A Preferred held by such holder into a number of fully
paid and nonassessable shares of Common Stock at the Conversion Ratio then in effect. The Voluntary Conversion of shares of Series A
Preferred shall be conducted in the following manner:
(A) Holder's Delivery Requirements. To convert shares of Series A Preferred into full shares of Common Stock on any date (the
“Voluntary Conversion Date”), the holder thereof shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 5:00 p.m.,
New York time on such date, a copy of a fully executed and completed notice of conversion in the form attached hereto as Exhibit A (the
“Conversion Notice”), to the Corporation, and (B) surrender to a common carrier for delivery to the Corporation as soon as practicable
following such Voluntary Conversion Date but in no event later than three (3) Business Days (as defined below) after such date the original
certificates representing the shares of Series A Preferred being converted (or an indemnification undertaking with respect to such
certificates in the case of their loss, theft or destruction) (the “Preferred Stock Certificates”) and the originally executed Conversion Notice.
The person or persons entitled to receive the shares of Common Stock issuable upon a Voluntary Conversion of Series A Preferred shall
be treated for all purposes as the record holder or holders of such shares of Common Stock on the Voluntary Conversion Date.(B)
Corporation's Response. Upon receipt by the Corporation of a facsimile copy of a Conversion Notice, the Corporation shall within three (3)
Business Days send, via facsimile, a confirmation of receipt of such Conversion Notice to such holder. Upon receipt by the Corporation of
an originally executed Conversion Notice, the Corporation or its designated transfer agent (the “Transfer Agent”), as applicable, shall,
within three (3) Business Days following the date of receipt by the Corporation of the originally executed Conversion Notice (so long as the
applicable Preferred Stock Certificates and original Conversion Notice are received by the Corporation on or before the third (3rd) Business
Day), issue and deliver to the Depository Trust Corporation (“DTC”) account on the holder's behalf via the Deposit Withdrawal Agent
Commission System (“DWAC”) as specified in the Conversion Notice, registered in the name of the holder or its designee, for the number
of shares of Common Stock to which the holder shall be entitled. Notwithstanding the foregoing to the contrary, the Corporation or the
Transfer Agent shall only be required to issue and deliver the shares to the DTC on a holder's behalf via DWAC if such conversion is in
connection with a sale and all requirements to effect such DWAC have been met, including, but not limited to, such shares being registered
for resale pursuant to an effective registration statement and satisfaction of applicable prospectus delivery requirements, if any. If the
Corporation or the Transfer Agent cannot issue the shares to a holder via DWAC because the aforementioned conditions are not satisfied,
the Corporation shall deliver physical certificates to the holder or its designee. If the number of shares of Series A Preferred represented
by the Preferred Stock Certificate(s) submitted for conversion is greater than the number of shares of Series A Preferred being converted,
then the Corporation shall, as soon as practicable, issue and deliver to the holder a new Preferred Stock Certificate representing the
number of shares of Series A Preferred not converted.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
(iv)
Adjustments of Conversion Ratio.
(A)
Adjustments for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the
Issuance Date, effect a stock split of the outstanding shares of Common Stock, the Conversion Ratio shall be proportionately decreased. If the
Corporation shall at any time or from time to time after the Issuance Date, combine the outstanding shares of Common Stock, the Conversion
Ratio shall be proportionately increased. Any adjustments under this Section 6(iv)(A) shall be effective at the close of business on the date the
stock split or combination becomes effective.
(B)
Adjustments for Dividends and Distributions of Common Stock. If the Corporation shall at any time or from time to time
after the Issuance Date, make or issue or set a record date for the determination of holders of shares of Common Stock entitled to receive a
dividend or other distribution payable in shares of Common Stock, then, and in each event, the Conversion Ratio shall be adjusted as of the time
of such issuance or, in the event such record date shall have been fixed, as of the close of business on such record date, by multiplying the
Conversion Ratio then in effect by a fraction:
(1)
the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on such record date; and
(2)
the denominator of which shall be the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock
issuable in payment of such dividend or distribution.
(C)
Adjustment for Merger or Reorganization, etc. If at any time or from time to time after the Issuance Date there shall
occur any reorganization, recapitalization, reclassification, consolidation, merger or other reorganization event (collectively, the “Reorganization
Adjustment Event”) involving the Corporation, then, following any such Reorganization Adjustment Event, each share of Series A Preferred shall
thereafter be convertible (without taking into account any limitations or restrictions on the convertibility of the shares of Series A Preferred), in lieu
of the shares of Common Stock, into the kind and amount of securities, cash or other property which a holder of the number of shares of Common
Stock of the Corporation issuable upon conversion of one share of Series A Preferred immediately prior to such Reorganization Adjustment Event
would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the
Board of Directors) shall be made in the application of the provisions in this Section 6(iv)(C) with respect to the rights and interests thereafter of
the holders of shares of Series A Preferred, to the end that the provisions set forth in this Section 6(iv)(C) (including provisions with respect to
changes in and other adjustments to the Conversion Ratio) shall thereafter be applicable, as nearly as reasonably may be, in relation to any
securities or other property thereafter deliverable upon the conversion of the shares of Series A Preferred.
7. Redemption. The Corporation shall have no rights to redeem the Series A Preferred.
8. Transfer of Shares. A holder of shares of Series A Preferred may assign some or all of the shares and the accompanying rights hereunder held
by such holder, without the consent of the Corporation; provided that such assignment is in compliance with applicable securities laws.
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
IN WITNESS HEREOF, Nemaura Medical, Inc. has caused this Certificate of Designation to be signed on Wednesday 4th October 2017.
_________________________________
Name: Dr Faz Chowdhury
Title: CEO and Chairperson
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
NEMAURA MEDICAL, INC.
CONVERSION NOTICE
EXHIBIT A
Reference is made to the Certificate of Designation of the Series A Convertible Preferred Stock of Nemaura Medical, Inc. (the "Certificate
of Designation"). In accordance with and pursuant to the Certificate of Designation, the undersigned hereby elects to convert the number of
shares of Series A Preferred Stock, each with a par value of $0.001 per share (the "Preferred Shares"), of Nemaura Medical, Inc., a Nevada
corporation (the "Company"), indicated below into shares of Common Stock, par value $0.001 per share (the " Common Stock"), of the Company,
by tendering the stock certificate(s) representing the share(s) of Preferred Shares specified below as of the date specified below.
Date of Conversion:
Number of Preferred Shares to be converted:
Stock certificate no(s). of Preferred Shares to be converted:
Please confirm the following information:
Conversion Price:
Number of shares of Common Stock to be issued:
Number of shares of Common Stock beneficially owned or deemed
beneficially owned by the Holder on the Date of Conversion:
Please issue the Common Stock into which the Preferred Shares are being converted and, if applicable, any check drawn on an account of the
Company in the following name and to the following address:
Issue to:
Facsimile Number:
Authorization:
Dated:
By: ________________________________
Name:
Title:
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Exhibit 3.3
AMENDED AND RESTATED BY LAWS
OF
NEMAURA MEDICAL INC.
ARTICLE I - OFFICES
The principal office of the corporation shall be established and maintained as designated in the Articles of Incorporation. The corporation may also
have offices at such places within or without the State of Nevada as the Board of Directors (hereinafter, "Board") may from time to time establish.
ARTICLE II - STOCKHOLDERS
1. PLACE OF MEETINGS. Meetings of the Stockholders shall be held at the principal office of the corporation or at such place within or
without the State of Nevada as the Board shall authorize.
2. ANNUAL MEETING. The annual meeting of Stockholders shall be held on the first Monday of each year in the month of February;
however, if such day falls on a legal holiday, then on the next business day following at the same time. At the annual meeting of
Stockholders, the Stockholders shall elect the Board of Directors and transact such other business as may properly come before the
meeting.
3. SPECIAL MEETINGS. Special meetings of the Stockholders may be called by the Board or by the President or at the written request of
Stockholders owning a majority of the stock entitled to vote at such meeting. A meeting requested by the Stockholders shall be called for a
date not less than ten (10) nor more than sixty (60) days after a request is made. The Secretary shall issue the call for the meeting unless
the President, the Board or the Stockholders shall designate another to make said call.
4. NOTICE OF MEETINGS. Written Notice of each meeting of Stockholders shall state the purpose of the meeting and the time and place of
the meeting. Notice shall be mailed to each Stockholder having the right and entitled to vote at such meetings to their last address as it
appears on the records of the corporation, not less than ten (10) nor more than sixty (60) days before the date set for such meeting. Such
notice shall be sufficient for the meeting and any adjournment thereof. If any Stockholder shall transfer his stock after notice, it shall not be
necessary to notify the transferee. Any Stockholder may waive notice of any meeting before, during or after the meeting.
5. RECORD DATE. The Board may fix a record date not more than forty (40) days prior to the date set for a meeting of Stockholders as the
date of which the Stockholders of record who have the right to and are entitled to notice of and to vote at such meeting and any
adjournment thereof shall be determined. Notice that such date has been fixed may be published in the city, town or county where the
principal office of the corporation is located and in each city or town where a transfer agent of the stock of the corporation is located.
1
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
6. VOTING. Every Stockholder shall be entitled at each meeting and upon each proposal presented at each meeting to one vote for each
share of voting stock recorded in her name on the books of the corporation on the record date as fixed by the Board. If no record date was
fixed, on the date of the meeting the book of records of Stockholders shall be produced at the meeting upon the request of any
Stockholder. Upon demand of any Stockholder, the vote for Directors and the vote upon any question before the meeting shall be by ballot.
All elections for Directors shall be decided by plurality vote; all other questions shall be decided by majority vote.
7. QUORUM. The presence, in person or by proxy, of Stockholders holding a majority of the stock of the corporation entitled to vote shall
constitute a quorum at all meetings of the Stockholders. In case quorum shall not be present at any meeting, a majority in interest of the
Stockholders entitled to vote thereat present in person or by proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until the requisite amount of stock entitled to shall be present. At any such adjourned
meeting at which the requisite amount of stock entitled to vote be represented, any business may be transacted which might have been
transacted at the meeting as originally noticed; but only those Stockholders entitled to vote at the meeting shall be entitled to vote at any
adjournment or adjournments thereof.
8. PROXIES. At any Stockholders' meeting or any adjournment thereof, any Stockholder of record having the right and entitled to vote
thereat may be represented and vote by proxy appointed in an instrument. No such proxy shall be voted after three years from the date of
the instrument unless the instrument provides for a longer period. In the event that any such instrument provides for or more persons to act
as proxies, a majority of such persons present at the meeting, or if only one is present, that one, shall have all the powers conferred by the
instrument upon all persons so designated unless the instrument shall otherwise provide.
9. STOCKHOLDER LIST. After fixing a record date for a meeting, the corporation shall prepare an alphabetical list of the names of all its
Stockholders who are entitled to notice of a Stockholders' meeting. Such list shall be arranged by voting group with the names and
addresses of, and the number class and series if any, of shares held by each. This list shall be available for inspection by any Stockholder
for a period of ten days prior to the meeting.
10. ACTION BY CONSENT. Any action required or permitted by law or by the Articles of Incorporation to be taken at any meeting of the
stockholders may be taken without a meeting, without prior notice, and without a vote, if a written consent, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in
writing thereto
2
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS. The business of the corporation shall be managed and its corporate powers exercised by a Board each of
whom shall be of full age. It shall not be necessary for Directors to be Stockholders. The number of Director(s) shall be determined by the
Stockholders at their annual meeting. There shall be no less than one (1) director and no more than fifteen (15) directors.
2. ELECTION AND TERM OF DIRECTORS. Directors shall be elected at the annual meeting of stockholders and each Director elected shall
hold office until her successor has been elected and qualified, or until the Director's prior resignation or removal.
3. VACANCIES. If the office of any Director, member of a committee or other office becomes vacant the remaining Directors in office, by a
majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until a successor shall
be duly chosen.
4. REMOVAL OF DIRECTORS. Any or all of the Directors may be removed with or without cause by a vote of a majority of all the stock
outstanding and entitled to vote at a special meeting of Stockholders called for that purpose.
5. NEWLY CREATED DIRECTORSHIPS. The number of Directors may be increased by amendment of these Bylaws by the affirmative vote
of a majority of the Directors, though less than a quorum, or, by the affirmative vote of a majority in interest of the Stockholders, at the
annual meeting or at a special meeting called for that purpose, and by like vote the additional Directors may be chosen at such meeting to
hold office until the next annual election and until their successors are elected and qualify.
6. RESIGNATION. A Director may resign at any time by giving written notice to the Board, the President or the Secretary of the Corporation.
Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the Board or such officer, and the
acceptance of the resignation shall not be necessary to make it effective.
7. QUORUM OF D1RECTORS. A majority of the Directors shall constitute a quorum for the transaction of business. If at any meeting of the
Board there shall be less than a quorum present, a majority of those present may adjourn the meeting until a quorum is obtained and no
further notice thereof need be given other than by announcement at the meeting which shall be so adjourned.
8. PLACE AND TIME OF BOARD MEETINGS. The Board may hold its meetings at the office of the corporation or at such other places
either within or without the State of Nevada as it may from time to time determine. There shall be semi-annual meetings of the Board of
Directors to conduct a review of the business and policies of the corporation and to conduct any business that may be brought forward.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
9. REGULAR ANNUAL MEETING. A regular meeting of the Board shall be held immediately following the annual meeting of the
Stockholders at the place of such annual meeting of Stockholders.
10. CONDUCT OF BUSINESS WITHOUT MEETINGS. Any action of the Directors or committees may be taken without a meeting if consent
in writing, setting forth the action so taken, shall be signed by all persons who would be entitled to vote on such action at a meeting and
filed with the Secretary of the corporation as part of the proceedings of the Directors or committees as the case may be.
11. NOTICE OF MEETINGS OF THE BOARD. Regular meetings of the Board may be held without notice at such time and place as it shall
from time to time determine. Special meetings of the Board shall be held upon notice to the Directors and may be called by the President
upon three days’ notice to each Director either personally or by mail or by wire or by facsimile; special meetings shall be called by the
President or by the Secretary in a like manner on written request by two Directors. Notice of a meeting need not be given to any Director
who submits a Waiver of Notice whether before or after the meeting or who attends the meeting without protesting prior thereto or at its
commencement, the lack of notice to him.
12. EXECUTIVE AND OTHER COMMITTEES. The Board, by resolution, may designate two or more of their number to one or more
committees, which, to the extent provided in said resolution or these Bylaws may exercise the powers of the Board in the management of
the business of the corporation.
13. COMPENSATION. Directors, as such may receive, pursuant to a resolution of the Board of Directors, fees and other compensation for
their services as directors, including without limitation their services as members of committees of the Board of Directors.
1. OFFICERS. ELECTION AND TERM.
ARTICLE IV - OFFICERS
1.1
1.2
The Board may elect or appoint a Chairman, a President, one or more Vice-Presidents, a Secretary, an Assistant Secretary, a
Treasurer and an Assistant Treasurer and such other officers as it may determine who shall have duties and powers as hereinafter
provided.
All officers shall be elected or appointed to hold office until the meeting of the Board following the next annual meeting of
Stockholders and until their successors have been elected or appointed and qualified.
2. REMOVAL. RESIGNATION. SALARY. ETC.
2.1
2.2
Any officer elected or appointed by the Board may be removed by the Board with or without cause.
In the event of the death, resignation or removal of an officer, the Board in its discretion may elect or appoint a successor to fill the
unexpired term.
4
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
2.3
2.4
2.5
Any two or more offices may be held by the same person.
The salaries of all officers shall be fixed by the Board.
The Directors may require any officer to give security for the faithful performance of her duties.
3. CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER. The Chairman of the Board shall be the Chief Executive Officer (“CEO”)
and shall have general and active overall management of the business and affairs of the corporation subject to the consent and directions of the
Board of Directors, and shall preside at all meetings of the shareholders and Board of Directors.
4. PRESIDENT AND CHIEF OPERATING OFFICER. The President shall be the Chief Operating Officer (“COO”) shall have general and active
management of the daily operational aspects of the business and affairs of the corporation. He shall act in behalf of the Chairman of the Board
when requested to do so by the Chairman. Except as the Board shall authorize the execution thereof in some other manner, the President shall
execute bonds, mortgages and other contracts in behalf of the corporation and shall cause the seal to be affixed to any instrument requiring it and
when so affixed, the seal shall be attested by the signature of the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer.
5. VICE PRESIDENTS. During the absence or disability of the President, the Vice-President, or if there be more than one, the executive Vice-
President, shall have all the powers and functions of the President. Each Vice-President shall perform such other duties as the Board shall
prescribe.
5. SECRETARY. The Secretary shall attend all meetings of the Board and of the Stockholders, record all votes and minutes of all proceedings in
a book to kept for that purpose, give or cause to be given notice of all meetings of Stockholders and of meetings and special meetings of the
Board, keep in safe custody the seal of the corporation and affix it to any instrument when authorized by the Board. or the President, when
required, prepare or cause to be prepared and available at each meeting of Stockholders a certified list in alphabetical order of the names of
Stockholders entitled to vote thereat, indicating the number of shares of each respective class held by each, keep all the documents and records of
the corporation as required by law or otherwise in a proper and safe manner, and perform such other duties as may be prescribed by the Board or
assigned by the President.
7. ASSISTANT SECRETARIES. During the absence or disability of the Secretary, the Assistant-Secretary, or if there are more than one, the one
so designated by the Secretary or by the Board, shall have all the powers and functions of the Secretary.
5
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
8. TREASURER AND CHIEF FINANCIAL OFFICER. The Treasurer shall be the Chief Financial Officer (“CFO”) and shall have the custody of
the corporate funds and securities, keep full and accurate accounts of receipts and disbursements in the corporate books, deposit all money and
other valuables in the name and to the credit of the corporation in such depositories as may be designated by the Board, disburse the funds of the
corporation as may be ordered or authorized by the Board and preserve proper vouchers for such disbursements, render to the President and
Board at the regular meetings of the Board, or whenever they require it, an account of all the transactions made as Treasurer and of the financial
condition of the corporation. The Treasurer shall also render a full financial report at the annual meeting of the Stockholders if so requested. The
Treasurer may request and shall be furnished by all corporate officers and agents with such reports and statements as he may require as to all
financial transactions of the corporation, and perform such other duties as are designated by these Bylaws or as from time to time are assigned by
the Board.
9. ASSISTANT TREASURERS. During the absence or disability of the Treasurer, the Assistant Treasurer, or if there be more than one, the one
so designated by the Treasurer or the Board, shall have all the powers and functions of the Treasurer.
10. SURETIES AND BONDS. In case the Board shall so require, any officer or agent of the corporation shall execute to the corporation a bond
in such sum and with such surety or sureties as the Board may direct, conditioned upon the faithful performance of duties to the corporation and
including responsibility for negligence and for the accounting of all property, funds or securities of the corporation which the officer or agent may be
responsible for.
ARTICLE V - CERTIFICATES FOR SHARES
1. CERTIFICATES. The shares of the corporation shall be represented by certificates. They shall be numbered and entered in the books of the
corporation as they are issued. They shall exhibit the holder's name, the number of shares and shall be signed by the President and Secretary and
shall bear the corporate seal. When such certificates are signed by the transfer agent or an assistant transfer agent or by a transfer clerk acting on
behalf of the corporation and a registrar, the signatures of such officers may be facsimiles.
2. LOST OR DESTROYED CERTIFICATES. The Board may direct a new certificate or certificates to be issued in place of any certificates
theretofore issued by the corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the
certificate to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board may, in its discretion as a condition
preceding the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or the owner's legal representative, to
advertise the same in such manner as it shall require and/or give the corporation a bond in such sum and with such surety or sureties as it may
direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or
destroyed.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
3. TRANSFER OF SHARES. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new
certificate to the person entitled thereto, and cancel the old certificate; every such transfer shall be entered on the transfer book of the corporation
which shall be kept at its principal office. Whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in
the entry of the transfer ledger. No transfer shall be made within ten days next preceding the annual meeting of the Stockholders.
4. CLOSING TRANSFER BOOKS. The Board shall have the power to close the share transfer books of the corporation for a period of not more
than ten days during the thirty day period immediately preceding
4.1.
any Stockholder's meeting, or
4.2.
any date upon which Stockholders shall be called upon to have a right to take action without a meeting, or
4.3.
any date fixed for the payment of a dividend or any other form of distribution, and only those Stockholders of record at the time the
transfer books are closed, shall be recognized as such for the purpose of
4.3.1.
4.3.2.
receiving notice of or voting at such meeting or
allowing them to take appropriate action, or
4.3.3. entitling them to receive any dividend or other form of distribution.
ARTICLE VI - DIVIDENDS
The Board may out of funds legally available, at any regular or special meeting declare dividends upon the capital stock of the corporation as and
when it deems expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends, such
sum or sums as the Board from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for
equalizing dividends for such other purposes as the Board shall deem conducive to the interest of the corporation.
7
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
CORPORATE SEAL
The seal of the corporation shall bear the name of the corporation, the year of its organization and the words "CORPORATE SEAL, Nevada" or
"OFFICIAL CORPORATE SEAL, Nevada". The seal may be used by causing it to be impressed directly on the instrument or writing to be sealed,
or upon adhesive substance affixed thereto. The seal on the certificates for shares or on any corporate obligation for the payment of money may
be facsimile, engraved or printed.
ARTICLE VII - EXECUTION OF INSTRUMENTS
All corporate instruments and documents shall be signed or countersigned, executed, verified or acknowledged by such officer or officers or other
person or persons as the Board may from time to time designate. All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and
in such manner as shall be determined from time to time by resolution of the Board.
ARTICLE VIII - FISCAL YEAR
The fiscal year shall begin on the first day of each year and end on December 31st.
ARTICLE IX - NOTICE AND WAIVER OF NOTICE
SUFFICIENCY OF NOTICE. Whenever any notice is required by these Bylaws to be given, personal notice is not meant unless
1.
expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in a United States Postal Service
post office mail collecting container in a sealed postage-paid wrapper, addressed to the person entitled thereto at the last known post office
address, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to
receive notice of any meetings except as otherwise provided by Statute.
WAIVERS. Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Articles
2.
of Incorporation of the corporation or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent thereto.
Whenever a conflict arises between the language of these Bylaws and the Articles of Incorporation, the Articles of Incorporation shall govern.
ARTICLE X - CONSTRUCTION
8
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
ARTICLE XI - AMENDMENTS
1.
2.
These Bylaws may be altered or repealed at any annual meeting of the Stockholders or at any special meeting thereof if notice of the
proposed alteration or repeal to made is contained in the notice of such special meeting, by the affirmative vote of a majority of the stock
issued and outstanding and entitled to vote thereat.
These Bylaws may amended or repealed by the affirmative vote of a majority of the Board except the Board may not amend or repeal any
Bylaw which expressly provides that the Board may not amend or repeal that Bylaw provision.
ARTICLE XII - EMERGENCY BYLAWS
1.
shall be effective only if a quorum of the Directors of the corporation cannot be readily assembled because of some catastrophic event.
CONDUCT OF BUSINESS WITHOUT MEETINGS. Pursuant to Nevada Statues the corporation adopts the following By-laws, which
CALLING A MEETING. In the event of such catastrophic event, any member of the Board shall be authorized to call a meeting of the
2.
Board. Such member calling an emergency meeting shall use any means of communication at their disposal to notify all other members of the
Board of such meeting.
3.
emergency may select any person or persons as additional Board members, officers or agents of the corporation.
QUORUM. Anyone member of the Board shall constitute a quorum of the Board. The members of the Board meeting during such an
INDEMNIFICATION. The members of such emergency Board are authorized to utilize any means at their disposal to preserve and
4.
protect the assets of the corporation. Any action taken in good faith and acted upon in accordance with these Bylaws shall bind the corporation;
and the corporation shall hold harmless any Director, officer, employee or agent who undertakes an action pursuant to these Bylaws.
5.
TERMINATION OF EMERGENCY BYLAWS. These emergency Bylaws shall not be effective at the end of the emergency period.
ARTICLE XIII - MISCELLANEOUS
REPRESENTATION OF SHARES IN OTHER CORPORATIONS. Shares of other corporations standing in the name of this corporation
1.
may be voted or represented and all incidents thereto may be exercised on behalf of the corporation by the Chairman of the Board, the President
or any Vice President and the Secretary or an Assistant Secretary.
SUBSIDIARY CORPORATIONS. Shares of this corporation owned by a subsidiary shall not be entitled to vote on any matter. A
2.
subsidiary for these purposes is defined as a corporation, the shares of which possessing more than 25% of the total combined voting power of all
classes of shares entitled to vote, are owned directly or indirectly through one (1) or more subsidiaries.
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EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
INDEMNITY. Subject to applicable law, the corporation may indemnify any Director, Officer, agent or employee as to those liabilities
3.
and on those terms and conditions as appropriate. In any event, the corporation shall have the right to purchase and maintain insurance on behalf
of any such persons whether or not the corporation would have the power to indemnify such person against the liability insured against.
10
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
SUBSIDIARIES
EXHIBIT 21.1
Region Green Limited
Dermal Diagnostics (Holdings) Limited
Dermal Diagnostics Limited
Trial Clinic Limited
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-210293 on Form S-3 of Nemaura Medical Inc. of our report dated
June 12, 2018 relating to the consolidated financial statements for the years ended March 31, 2018 and 2017, appearing in this Annual Report on
Form 10-K.
Denver, Colorado
June 12, 2018
/s/ Crowe Horwath LLP
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
CERTIFICATION
EXHIBIT 31.1
I, Dewan F.H. Chowdhury, certify that:
1. I have reviewed this Annual Report on Form 10-K of Nemaura Medical Inc. and its subsidiaries;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth
fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: June 12, 2018
By: /s/ Dewan F.H. Chowdhury
Name: Dewan F.H. Chowdhury
Title: Chief Executive Officer (Principal Executive
Officer)
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
CERTIFICATION
EXHIBIT 31.2
I, Iain S. Anderson, certify that:
1. I have reviewed this Annual Report on Form 10-K of Nemaura Medical Inc. and its subsidiaries;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth
fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: June 12, 2018
By: /s/ Iain S. Anderson
Name: Iain S. Anderson
Title: Chief Financial Officer (Principal Financial
and Accounting Officer)
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
WRITTEN STATEMENT
PURSUANT TO
18 U.S.C. SECTION 1350
EXHIBIT 32.1
In connection with Annual Report of Nemaura Medical Inc. and its subsidiaries (the “ Company ”) on Form 10-K for the year ended March 31, 2018
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Dewan F H Chowdhury, Chief
Executive Officer (Principal Executive Officer) of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13a-14(b) or 15d-14(b) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
/s/ Dewan F H Chowdhury
By:
Name: Dewan F H Chowdhury
Title:
Chief Executive Officer (Principal Executive Officer)
Company.
Dated: June 12, 2018
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.
WRITTEN STATEMENT
PURSUANT TO
18 U.S.C. SECTION 1350
EXHIBIT 32.2
In connection with Annual Report of Nemaura Medical Inc. and its subsidiaries (the “ Company ”) on Form 10-K for the year ended March 31, 2018
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Iain S Anderson, Chief Financial Officer
(Principal Financial Officer) of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13a-14(b) or 15d-14(b) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
Dated: June 12, 2018
By:
Name:
Title:
/s/ Iain S Anderson
Iain S Anderson
Chief Financial Officer (Principal Financial Officer)
EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.