Nemaura Medical Inc.
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(Exact name of small business issuer as specified in its charter)
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NEVADA
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46-5027260
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Tax. I.D. No.)
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Advanced Technology Innovation Centre,
Loughborough University Science and Enterprise Parks,
5 Oakwood Drive,
Loughborough, Leicestershire
LE11 3QF
United Kingdom
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(Address of Principal Executive Offices)
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+ 00 44 1509 222912
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(Registrant’s Telephone Number, Including Area Code)
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Large accelerated filer ☐
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Accelerated filer ☑
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Non-accelerated filer ☐
(Do not check if a smaller reporting company)
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Smaller reporting company ☐
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Emerging growth company ☑
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Page
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PART I: FINANCIAL INFORMATION
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3
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ITEM 1
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INTERIM FINANCIAL STATEMENTS
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3
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Condensed Consolidated Balance Sheets as of June 30, 2017 (unaudited) and March 31, 2017
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3
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Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended June 30, 2017 and 2016 (unaudited)
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4
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Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2017 and 2016 (unaudited)
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5
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Notes to Condensed Consolidated Financial Statements (unaudited)
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6
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ITEM 2
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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10
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ITEM 3
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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13
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ITEM 4
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CONTROLS AND PROCEDURES
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13
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PART II: OTHER INFORMATION
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16
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ITEM 1
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LEGAL PROCEEDINGS
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16
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ITEM 1A
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RISK FACTORS
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16
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ITEM 2
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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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16
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ITEM 3
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DEFAULTS UPON SENIOR SECURITIES
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16
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ITEM 4
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MINE SAFETY DISCLOSURES
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16
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ITEM 5
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OTHER INFORMATION
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16
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ITEM 6
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EXHIBITS
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16
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SIGNATURES
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17
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NEMAURA MEDICAL INC.
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Condensed Consolidated Balance Sheets
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As of June 30,
2017
($)
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As of March 31,
2017
($)
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(Unaudited)
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ASSETS
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Current Assets:
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Cash
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1,284,443
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911,359
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Fixed rate cash account
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1,294,900
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1,867,950
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Prepaid expenses and other receivables
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65,751
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51,086
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Total Current Assets
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2,645,094
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2,830,395
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Other Assets:
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Property and equipment, net
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8,476
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9,161
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Intangible assets, net of accumulated amortization
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220,384
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203,800
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228,860
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212,961
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Long Term Assets:
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Fixed rate cash account
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4,532,150
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4,358,550
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Total assets
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7,406,104
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7,401,906
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current Liabilities:
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Accounts payable
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97,275
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77,530
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Liability due to related party
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812,229
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687,609
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Other liabilities and accrued expenses
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137,348
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87,232
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Total current liabilities
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1,046,852
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852,371
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Deferred revenue
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1,197,784
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1,183,035
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1,197,784
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1,183,035
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Total liabilities
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2,244,636
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2,035,406
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Commitments and contingencies:
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Stockholders’ Equity:
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Common stock, $0.001 par value,
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420,000,000 shares authorized and 205,000,000
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shares issued and outstanding
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205,000
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205,000
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Additional paid in capital
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12,919,672
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12,919,672
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Accumulated deficit
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(7,560,420
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)
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(7,152,633
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)
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Accumulated other comprehensive (loss)/income
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(402,784
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)
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(605,539
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)
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Total stockholders’ equity
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5,161,468
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5,366,500
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Total liabilities and stockholders’ equity
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7,406,104
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7,401,906
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NEMAURA MEDICAL INC.
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Condensed Consolidated Statements Of Comprehensive Income/(Loss)
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(Unaudited)
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Three Months Ended June 30,
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2017
($)
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2016
($)
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Revenue:
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-
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-
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Total revenue
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-
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-
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Operating Expenses:
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Research and development
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149,198
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306,081
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General and administrative
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268,122
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188,102
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Total operating expenses
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417,320
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494,183
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Loss from operations
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(417,320
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)
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(494,183
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)
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Interest income
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9,533
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-
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Net loss
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(407,787
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)
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(494,183
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)
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Other comprehensive income:
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Foreign currency translation adjustment
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202,755
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(530,015
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Comprehensive loss
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(205,032
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)
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(1,024,198
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)
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Loss per share
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Basic and diluted
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*
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*
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Weighted average number of shares outstanding
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205,000,000
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205,000,000
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NEMAURA MEDICAL INC.
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Condensed Consolidated Statements of Cash Flows
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(Unaudited)
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Three Months Ended
June 30, |
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2017
($)
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2016
($)
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Cash Flows From Operating Activities:
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Net Loss
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(407,787
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(494,183
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Adjustments to reconcile net loss to net cash used in operating activities:
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Depreciation and amortization
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5,069
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4,917
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Changes in assets and liabilities:
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Prepaid expenses and other receivables
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(13,014
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)
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34,573
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Accounts payable
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17,949
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41,876
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Liability due to related party
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95,617
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193,419
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Other liabilities and accrued expenses
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14,200
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-
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Net cash used in operating activities
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(287,966
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)
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(219,398
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)
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Cash Flows From Investing Activities:
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Purchase of intangible assets
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(12,358
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)
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(34,769
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)
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Fixed rate savings account
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647,450
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-
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Net cash provided by (used in) investing activities
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635,092
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(34,769
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)
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Net increase (decrease) in cash
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347,126
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(254,167
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)
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Effect of exchange rate changes on cash
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25,958
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(655,649
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)
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Cash at beginning of period
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911,359
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9,403,965
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Cash at end of period
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1,284,443
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8,494,149
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(a)
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Basis of presentation:
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(a) |
Cash and cash equivalents
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(b) |
Fixed rate cash accounts:
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(c)
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Fair value of financial instruments
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(d)
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Property and equipment
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(e)
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Intangible assets
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(f)
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Revenue Recognition
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(g)
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Research and development expenses
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(h)
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Income taxes
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(i) |
Earnings per share
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(j)
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Use of estimates
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(k)
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Foreign currency translation
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Three months ended
June 30,
2017
(unaudited)
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Three months ended
June 30,
2016
(unaudited)
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Twelve months ended
March 31,
2017
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Period end GBP : US$ exchange rate
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1.294
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1.332
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1.245
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Average period/yearly GBP : US$ exchange rate
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1.275
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1.394
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1.315
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(l)
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Recent accounting pronouncements
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(m)
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Risks and Uncertainties
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Three Months Ended
June 30, 2017
(unaudited)
($)
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Three Months Ended
June 30, 2016
(unaudited)
($)
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Balance due from (to) Pharma and NDM at beginning of period
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(687,609
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)
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(494,145
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)
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Amounts invoiced by Pharma to DDL and TCL (1)
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(95,617
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)
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(209,444
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)
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Amounts invoiced by DDL to Pharma
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-
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16,025
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Foreign exchange differences
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(29,003
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)
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41,667
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Balance due to Pharma and NDM at end of the period
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(812,229
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)
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(645,897
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)
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•
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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,
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•
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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;
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•
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there is a lack of review and approval of journal entries which could result in the improper initiation and reporting of transactions; and
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there is a lack of access controls and documentation over the Company’s IT applications which could result in the improper initiation and reporting of significant transactions.
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•
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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.
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•
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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.
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•
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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.
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•
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In assembling this team, the Company will put in place controls to segregate duties in the processing of key transactions, controls to ensure the review and approval of journal entries and controls to ensure that access to IT systems is limited to authorized users and adequately documented based on the applications and their functions within the organization.
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•
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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.
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•
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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
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•
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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
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•
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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.
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Exhibit No.
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Document Description
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31.1
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Certification of the Principal Executive Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2
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Certification of the Principal Financial Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1
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Certification of the Principal Executive Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.2
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Certification of the Principal Financial Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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101
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Interactive Data Files (1)
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NEMAURA MEDICAL INC.
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Dated: August 8, 2017
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/s/ Dewan F H Chowdhury
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Dewan F H Chowdhury
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Chief Executive Officer (Principal Executive Officer)
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Dated: August 8, 2017
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/s/ Iain S Anderson
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Iain S. Anderson
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Chief Financial Officer (Principal Financial Officer)
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Exhibit No.
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Document Description
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31.1
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Certification of the Principal Executive Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2
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Certification of the Principal Financial Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1
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Certification of the Principal Executive Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.2
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Certification of the Principal Financial Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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By:
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/s/ Dewan F. H, Chowdhury
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Dewan F. H, Chowdhury
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Chief Executive Officer and President
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Dated: August 8, 2017
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(Principal Executive Officer)
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By:
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/s/ Iain S. Anderson
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Iain S. Anderson
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Chief Financial Officer
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Dated: August 8, 2017
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(Principal Financial Officer)
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Dated: August 8, 2017
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By:
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/s/ Dewan F.H. Chowdhury | |
Dewan F.H. Chowdhury
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Chief Executive Officer and President
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(Principal Executive Officer)
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Dated: August 8, 2017
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By:
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/s/ Iain S. Anderson | |
Iain S. Anderson
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Chief Financial Officer
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(Principal Financial Officer)
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.-NYL8Z9..M NOTE
1 – ORGANIZATION AND PRINCIPAL ACTIVITIES Nemaura
Medical Inc. ("Nemaura" or the "Company"), through its operating subsidiaries, performs medical device research
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. Except for a US cash account
(approximately $48,000 at June 30, 2017), all of the Company’s operations and assets are located in England. The
following diagram illustrates our corporate and shareholder structure as of June 30, 2017: Nemaura
Medical Inc. Nevada
Corporation Region
Green Limited British
Virgin Islands Corporation Dermal
Diagnostics (Holdings) Limited England
and Wales Corporation Dermal
Diagnostics Limited England
and Wales Corporation Trial
Clinic Limited England
and Wales Corporation The Company has a limited operating history,
recurring losses from operations and an accumulated deficit of $7,560,420 as of June 30, 2017. The Company expects to continue
to incur losses from operations at least until clinical trials are completed later this year and the product becomes available
to be marketed. Management has evaluated its ability to continue as a going concern for the next twelve months from the issuance
of these June 30, 2017 consolidated financial statements, and considered 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 $1,284,000 of readily available
cash on hand at June 30, 2017 and approximately $1.3 million will be available in December 2017, which is currently in a fixed
rate deposit account. In addition, the Company has approximately $4.5 million of cash in a fixed rate deposit account which
comes due in December 2018. Management's strategic plans include the
following: - continuing to advance commercialization
of the Company's principal product, in the 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 The accompanying condensed 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 the instructions to quarterly reports on Form 10-Q. In the opinion
of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position,
results of operations and changes in financial position at June 30, 2017 and for all periods presented have been made. Certain
information and footnote data necessary for fair presentation of financial position and results of operations in conformity with
accounting principles generally accepted in the United States of America have been condensed or omitted. It is therefore suggested
that these financial statements be read in conjunction with the summary of significant accounting policies and notes to financial
statements included in the Company’s Annual Report on Form 10-K for the Year Ended March 31, 2017. The results of operations
for the period ended June 30, 2017 are not necessarily an indication of operating results for the full year. NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES 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. 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, $1,295,000
through December 2017 and $4,532,000 through December 2018. Early withdrawal may generally be made for liquidity needs. The Company's financial instruments primarily
consist of cash, 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. Property and equipment is stated at cost
and depreciated using the straight-line method over the estimated useful lives of the assets, generally four years for fixtures
and fittings. 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. Revenue is recognized when the four basic
criteria of revenue recognition are met: (1) a contractual agreement exists; (2) transfer of rights has been completed; (3)
the fee is fixed or determinable; and (4) collectability is reasonably assured. The Company may enter into product development
and other agreements and with collaborative partners. The terms of the agreements may include nonrefundable signing and licensing
fees, milestone payments and royalties on any product sales derived from collaborations. The Company recognizes up front license
payments as revenue upon delivery of the license only if the license has stand alone value to the customer. However, where further
performance criteria must be met, revenue is deferred and recognized on a straight line basis over the period the Company is expected
to complete its performance obligations. Royalty revenue will be recognized upon
the sale of the related products provided the Company has no remaining performance obligations under the agreement. 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. Income taxes are accounted for under the
asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases,
and operating loss carry forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on
deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date. A valuation allowance is provided to reduce the carrying amount of deferred income tax assets if it is considered more likely
than not that some portion, or all, of the deferred income tax assets will not be realized. The Company recognizes the effect of income
tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured
at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in
the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized
tax benefits as part of income tax expense in the consolidated statements of comprehensive loss. The Company does not have any
accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense related to unrecognized
tax benefits recognized for the three months ended 30 June, 2017 and 2016. 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 30 June, 2017 and 2016. For the three months ended 30 June, 2017 and 2016,
warrants to purchase 10 million shares of common stock were anti-dilutive and were excluded from the calculation of diluted loss
per share. 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. 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: Three months ended June 30, 2017 (unaudited) Three months ended June 30, 2016 (unaudited) Twelve months ended March 31, 2017 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. 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. The Company is currently evaluating the impact that this standard will have on
its financial statements and related disclosures, which are expected to be insignificant until the Company begins to generate revenue.
The standard permits the use of either the retrospective or cumulative effect transition method. The Company has not yet selected
a transition method. In August 2014, the FASB issued ASU No.
2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's
Ability to Continue as a Going Concern. ASU 2014-15 describes how an entity's management should assess, considering both quantitative
and qualitative factors, whether there are conditions and events that raise substantial doubt about an entity's ability to continue
as a going concern within one year after the date that the financial statements are issued, which represents a change from the
existing literature that requires consideration about an entity's ability to continue as a going concern within one year after
the balance sheet date. The Company adopted this standard during the fourth quarter of the year ended March 31, 2017. The
implementation of this standard did not have a material impact on its consolidated financial statements but did result in additional
disclosures. 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. The Company has not yet determined the effect of the standard on its ongoing reporting. 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. In November 2016, the FASB issued ASU No.
2016-18, Statement of Cash Flows - Restricted Cash. ASU 2016-18 requires entities to show the changes in the total of cash, cash
equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents, restricted
cash and restricted cash equivalents are presented in more than one line item on the balance sheet, a reconciliation of the totals
in the statement of cash flows to the related captions in the balance sheet is required. 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. 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. 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 $1.294 million and
$1.245 million as of June 30, 2017 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, 2018, approximately $96,000 of the deferred revenue has been classified
as a current liability. In April 2014, a Letter of Intent was signed
with the third party which specified a 10 year term and in November 2015, a Licence, Supply and Distribution agreement with an
initial 5 year term was executed. The Company grants the exclusive right to market and promote its product in the United Kingdom,
and purchase the product at specified prices. NOTE 5 – RELATED PARTY TRANSACTIONS Nemaura Pharma Limited (Pharma) and NDM
Technologies Limited (NDM) are entities controlled by the Company’s majority shareholder, Dewan F.H. Chowdhury. In accordance with the United States Securities
and Exchange Commission (SEC) Staff Accounting Bulletin 55, these financial statements are intended to reflect all costs associated
with the operations of DDL and TCL. Pharma has invoiced DDL and TCL for research and development services. In addition, certain
operating expenses of DDL and TCL were incurred and paid by Pharma and NDM which have been invoiced to the Company. Certain
costs incurred by Pharma and NDM are directly attributable to DDL and TCL and such costs were billed to the Company. Prior
to the year ended March 31, 2016, other costs were shared between the organizations. In situations where the costs were shared,
expense has been allocated between Pharma and NDM and DDL and TCL using a fixed percentage allocation and were billed to the Company.
Management believes the allocation methodologies used are reasonable. DDL and TCL advanced Pharma certain amounts to cover
a portion of the costs. Following is a summary of activity between
the Company and Pharma and NDM for the three months ended June 30, 2017 and 2016. These amounts are unsecured, interest free, and
payable on demand. Three Months Ended June 30, 2017 (unaudited) ($) Three Months Ended June 30, 2016 (unaudited) ($) (1) These amounts are included primarily in research and
development expenses charged to the Company by Pharma and NDM. Subsequent to June 30, 2017, the Company made payments to Pharma
on the outstanding balances at June 30, 2017 of $440,000. 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. 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, $1,295,000
through December 2017 and $4,532,000 through December 2018. Early withdrawal may generally be made for liquidity needs. The Company's financial instruments
primarily consist of cash, 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. Property and equipment is stated
at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally four years for
fixtures and fittings. 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. Revenue is recognized when the four
basic criteria of revenue recognition are met: (1) a contractual agreement exists; (2) transfer of rights has been completed;
(3) the fee is fixed or determinable; and (4) collectability is reasonably assured. The Company may enter into product
development and other agreements and with collaborative partners. The terms of the agreements may include nonrefundable signing
and licensing fees, milestone payments and royalties on any product sales derived from collaborations. The Company recognizes up front
license payments as revenue upon delivery of the license only if the license has stand alone value to the customer. However, where
further performance criteria must be met, revenue is deferred and recognized on a straight line basis over the period the Company
is expected to complete its performance obligations. Royalty revenue will be recognized
upon the sale of the related products provided the Company has no remaining performance obligations under the agreement. 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. Income taxes are accounted for under
the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases,
and operating loss carry forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on
deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date. A valuation allowance is provided to reduce the carrying amount of deferred income tax assets if it is considered more likely
than not that some portion, or all, of the deferred income tax assets will not be realized. The Company recognizes the effect
of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions
are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are
reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related
to unrecognized tax benefits as part of income tax expense in the consolidated statements of comprehensive loss. The Company does
not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense related
to unrecognized tax benefits recognized for the three months ended 30 June, 2017 and 2016. 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 30 June, 2017 and 2016. For the three months ended 30 June, 2017 and 2016,
warrants to purchase 10 million shares of common stock were anti-dilutive and were excluded from the calculation of diluted loss
per share. 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. 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: Three months ended June 30, 2017 (unaudited) Three months ended June 30, 2016 (unaudited) Twelve months ended March 31, 2017 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. 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. The Company is currently evaluating the impact that this standard will have on
its financial statements and related disclosures, which are expected to be insignificant until the Company begins to generate revenue.
The standard permits the use of either the retrospective or cumulative effect transition method. The Company has not yet selected
a transition method. In August 2014, the FASB issued
ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's
Ability to Continue as a Going Concern. ASU 2014-15 describes how an entity's management should assess, considering both quantitative
and qualitative factors, whether there are conditions and events that raise substantial doubt about an entity's ability to continue
as a going concern within one year after the date that the financial statements are issued, which represents a change from the
existing literature that requires consideration about an entity's ability to continue as a going concern within one year after
the balance sheet date. The Company adopted this standard during the fourth quarter of the year ended March 31, 2017. The
implementation of this standard did not have a material impact on its consolidated financial statements but did result in additional
disclosures. 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. The Company has not yet determined the effect of the standard on its ongoing
reporting. 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. In November 2016, the FASB issued
ASU No. 2016-18, Statement of Cash Flows - Restricted Cash. ASU 2016-18 requires entities to show the changes in the total of
cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents,
restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, a reconciliation
of the totals in the statement of cash flows to the related captions in the balance sheet is required. 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. 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. The translation rates are as follows: Three months ended June 30, 2017 (unaudited) Three months ended June 30, 2016 (unaudited) Twelve months ended March 31, 2017 These amounts are unsecured, interest free,
and payable on demand. Three Months Ended June 30, 2017 (unaudited) ($) Three Months Ended June 30, 2016 (unaudited) ($)M
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3 Months Ended
Document and Entity Information:
Entity Registrant Name
Nemaura Medical Inc.
Document Type
10-Q
Document Period End Date
Jun. 30, 2017
Amendment Flag
false
Entity Central Index Key
0001602078
Current Fiscal Year End Date
--03-31
Entity Common Stock, Shares Outstanding
205,000,000
Entity Filer Category
Accelerated Filer
Entity Current Reporting Status
Yes
Entity Voluntary Filers
No
Entity Well-known Seasoned Issuer
No
Document Fiscal Year Focus
2018
Document Fiscal Period Focus
Q1
Statement of Financial Position [Abstract]
Common Stock, Par Value
$ 0.001
$ 0.001
Common Stock, Shares Authorized
420,000,000
420,000,000
Common Stock, Shares Issued
205,000,000
205,000,000
Common Stock, Shares Outstanding
205,000,000
205,000,000
3 Months Ended
Revenues
Total revenues
$ 0
$ 0
Operating expenses
Research and development
149,198
306,081
General and administrative
268,122
188,102
Total operating expenses
417,320
494,183
Loss from operations
(417,320)
(494,183)
Interest income
9,533
0
Net loss
(407,787)
(494,183)
Other comprehensive income/ (loss)
Foreign Currency Transaction Adjustment
202,755
(530,015)
Comprehensive loss
$ (205,032)
$ (1,024,198)
Loss per share
Basic and diluted
[1]
Weighted Average Number of Shares Outstanding
205,000,000
201,726,027
[1]
Per share amounts are less than $0.01
3 Months Ended
Cash Flows from Operating Activities:
Net loss
$ (407,787)
$ (494,183)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and Amortization
5,069
4,917
Changes in assets and liabilities:
Prepaid expenses and other receivables
(13,014)
34,573
Accounts payable
17,949
41,876
Liability due to related party
95,617
193,419
Other liabilities and accrued expenses
14,200
0
Net cash used in operating activities
(287,966)
(219,398)
Cash Flows From Investing Activities:
Purchase of intangible assets
(12,358)
(34,769)
Fixed rate savings account
647,450
0
Net cash provided by (used in) investing activities
635,092
(34,769)
Net increase (decrease) in cash
347,126
(254,167)
Effect of exchange rate changes on cash
25,958
(655,649)
Cash, beginning of period
911,359
9,403,965
Cash at end of period
$ 1,284,443
$ 8,494,149
3 Months Ended
Disclosure Text Block [Abstract]
ORGANIZATION, PRINCIPAL ACTIVITIES
3 Months Ended
Disclosure Text Block [Abstract]
Basis of Presentation
(a)
Basis of presentation:
3 Months Ended
Disclosure Text Block [Abstract]
Summary of Significant Accounting Policies
(a)
Cash and cash equivalents
(b)
Fixed rate cash accounts:
(c)
Fair value of financial instruments
(d)
Property and equipment
(e)
Intangible assets
(f)
Revenue Recognition
(g)
Research and development expenses
(h)
Income taxes
(i)
Earnings per share
(j)
Use of estimates
(k)
Foreign currency translation
Period end GBP : US$ exchange rate
1.294
1.332
1.245
Average period/yearly GBP : US$ exchange rate
1.275
1.394
1.315
(l)
Recent accounting pronouncements
(m)
Risks and Uncertainties
3 Months Ended
Disclosure Text Block [Abstract]
Licensing Agreement
3 Months Ended
Disclosure Text Block [Abstract]
Related Party Transactions
Balance due from (to) Pharma and NDM at beginning of period
(687,609
)
(494,145
)
Amounts invoiced by Pharma to DDL and TCL (1)
(95,617
)
(209,444
)
Amounts invoiced by DDL to Pharma
-
16,025
Foreign exchange differences
(29,003
)
41,667
Balance due to Pharma and NDM at end of the period
(812,229
)
(645,897
)
3 Months Ended
Policy Text Block [Abstract]
Cash and Restricted Cash
(a)
Cash and cash equivalents
Fixed rate cash accounts
(b)
Fixed rate cash accounts:
Fair Value of Financial Instruments
(c)
Fair value of financial instruments
Property and equipment
(d)
Property and equipment
Intangible Assets
(e)
Intangible assets
Revenue Recognition
(f)
Revenue Recognition
Research and development expenses
(g)
Research and development expenses
Income Taxes
(h)
Income taxes
Earnings Per Share
(i)
Earnings per share
Use of Estimates
(j)
Use of estimates
Foreign Currency Translation
(k)
Foreign currency translation
Period end GBP : US$ exchange rate
1.294
1.332
1.245
Average period/yearly GBP : US$ exchange rate
1.275
1.394
1.315
Recent Accounting Pronouncements
(l)
Recent accounting pronouncements
Risks and Uncertainties
(m)
Risks and Uncertainties
3 Months Ended
Summary Of Significant Accounting Policies Tables
Translation Rates
Period end GBP : US$ exchange rate
1.294
1.332
1.245
Average period/yearly GBP : US$ exchange rate
1.275
1.394
1.315
3 Months Ended
Related Party Transactions Tables
Schedule of Related Party Transactions
Balance due from (to) Pharma and NDM at beginning of period
(687,609
)
(494,145
)
Amounts invoiced by Pharma to DDL and TCL (1)
(95,617
)
(209,444
)
Amounts invoiced by DDL to Pharma
-
16,025
Foreign exchange differences
(29,003
)
41,667
Balance due to Pharma and NDM at end of the period
(812,229
)
(645,897
)
Organization Principal Activities Details Narrative
Accumulated deficit
$ (7,560,420)
$ (7,152,633)
Cash available on hand
$ 1,300,000
1,284,443
911,359
$ 8,494,149
$ 9,403,965
Fixed rate cash account
$ 4,500,000
$ 4,532,150
$ 4,358,550
3 Months Ended
12 Months Ended
Period End GBP/USD Exchange Rate [Membe]
Exchange rate
1.294
1.332
1.245
Period Average GBP/USD Exchange Rate [Membe]
Exchange rate
1.275
1.394
1.315
3 Months Ended
12 Months Ended
Summary Of Significant Accounting Policies Details Narrative
Fixed rate cash accounts
$ 4,532,000
$ 1,295,000
Anti-dilutive common stock
10,000,000
10,000,000
Licensing Agreement Details Narrative
Non-refundable, upfront cash payment
$ 1,294,000
$ 1,245,000
Deferred revenue
$ 96,000
3 Months Ended
Note 7 - Related Party Transactions Details
Balance due (to) Pharma and NDM at beginning of period
$ (687,609)
$ (494,145)
Amount invoiced by Pharma to DDL and TCL
[1]
(95,617)
(209,444)
Amounts invoiced by DDL to Pharma
0
16,025
Foreign exchange differences
(29,003)
41,667
Net balance due from Pharma and NDM at end of the period
$ (812,229)
$ (645,897)
[1]
These amounts are included primarily in research and development expenses charged to the Company by Pharma and NDM.
3 Months Ended
Disclosure Text Block [Abstract]
Payments to related party
$ 440,000