Inventory

As of December 31, 2023 and March 31, 2023, inventory consisted of the following:

Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out (“FIFO”) basis. For the nine months ended December 31, 2023, there were additional general write-downs of inventory of approximately $104,000.

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. Revenues from licensingOther research and royalty feesdevelopment 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.

Loss per share

Basic loss per share is computed by dividing the loss available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted loss per common share reflects the potential dilution that could occur if convertible debentures, options and warrants were to be exercised or converted or otherwise resulted in the issuance of common stock that then shared in the earnings of the entity.

Since the effects of outstanding options and warrants are receivedanti-dilutive for the nine months ended December 31, 2023 and 2022, shares of common stock underlying these instruments have been excluded from the grantingcomputation of exclusive sales, marketing, manufacturingloss per common share.

The following sets forth the number of shares of common stock underlying outstanding options and distribution rights associated with the Company’s functional intellectual property (IP). The Company’s performance obligation is satisfied at a point in time (upon delivery to the customer), where the Company has no remaining obligation to support or maintain the intellectual property licensed to the customer. The Company typically requires a non-refundable license fee, paid upfront.warrants as of December 31, 2023 and 2022:

Revenue from license fees are recognized at a point in time when the Company transfers the functional IP to the customer as long as management believes the total consideration owed by the customer for the license fee is probable of being received.Stock-Based Compensation

The Company’s contracts do not include multiple performance obligationsCompany periodically issues share-based awards to employees and non-employees and consultants for services rendered. Stock options vest and expire according to terms established at the issuance date of each grant. Stock grants are measured at the grant date fair value. Stock-based compensation cost is measured at fair value on the grant date and is generally recognized as a charge to operations ratably over the requisite service, or variable consideration. Sincevesting, period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services.

The Company values its equity awards using the Black-Scholes option-pricing model, and accounts for forfeitures when they occur. Use of the Black-Scholes option pricing model requires the input of subjective assumptions, including expected volatility, expected term, and a risk-free interest rate. The expected volatility is based on the historical volatility of the Company’s revenuecommon stock, calculated utilizing a look-back period approximately equal to the contractual life of the stock option being granted. The expected life of the stock option is generated from a small number of customer contracts,calculated as the Company does not have material contract assets or liabilities.mid-point between the vesting period and the contractual term (the “simplified method”). The risk-free interest rate is estimated using comparable published federal funds rates.

Fair valueValue of financial instrumentsFinancial Instruments

In accordance

The authoritative guidance with the FASB ASC 820, “Fair Value Measurements and Disclosures,” the Company determines therespect to fair value of financial instruments with the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishesestablished a fair value hierarchy based onthat prioritizes the level of independent, objective evidence surrounding the inputs to valuation techniques used to measure fair value. Avalue into three levels and requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, as presented below. Disclosure as to transfers in and out of Levels 1 and 2, and activity in Level 3 fair value measurements, is also required. Fair value of a financial instrument’s categorization withininstrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties.

The three levels of the fair value hierarchy isare as follows:

Level 1 - Valuations based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1: Applies to assets or liabilities for which there areon unadjusted quoted prices in active markets for identical assets or liabilities.liabilities that the entity has the ability to access.

Level 2: Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as - Valuations based on quoted prices for similar assets or liabilities, in active markets; quoted prices for identical assets or liabilities in markets with insufficient volumethat are not active, or infrequent transactions (less active markets); or model-derived valuations in which significantother inputs that are observable or can be derived principally from, or corroborated by observable market data.

Level 3: Applies todata for substantially the full term of the assets or liabilities for which thereliabilities.

Level 3 - Valuations based on inputs that are unobservable, inputs to the valuation methodologysupported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities.

Intangible Assets

The Foreign exchange contract derivative liability is valued using Level 2 fair values while the warrant liability is valued using Level 3 fair values.

The following table sets forth by level, within the fair value hierarchy, the Company’s intangiblefinancial assets consistand liabilities at fair value as of patents relatingDecember 31, 2023 and March 31, 2023:

The following table provides a roll-forward of the warrant derivative liability measured at fair value on a recurring basis using unobservable level 3 inputs for the nine months ended December 31, 2023:

As of December 31, 2023 and March 31, 2023, the Company’s outstanding warrants were treated as derivative liabilities and changes in the fair value were recognized in earnings (see Note 3).

The Company believes the carrying amounts of certain financial instruments, including cash, accounts receivable, and accounts payable and accrued liabilities, approximate fair value due to the sensorshort-term nature of such instruments and algorithm that are granted in some territories, and pending still in others. The Company also plans to file further patents asexcluded from the opportunity arises. The cost of issued patents is capitalized and amortized over the life of the patents which is 20 years. The costs of patents in development are expensed as incurred. Any unamortized costs previously capitalized associated with patents that have expired or have been abandoned are written off as an impairment loss. The company has also capitalized certain software development costs which are regularly reviewed to ensure that if development has been abandoned, costs are written off as an impairment loss.

fair value tables above.

Share-Based PaymentsInflation

The Company measures the cost of services received in exchange for an award of equity instrumentsdoes not believe that inflation has had a material effect on its operations to employees and nonemployees baseddate, other than its impact on the grant date fair value of the award, whichgeneral economy. However, there is recognized as compensation expense over the vesting term.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recognizes deferred tax assets to the extent that management believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determinerisk that the Company would be ableCompany’s operating costs could become subject to realize deferred tax assetsinflationary and interest rate pressures in the future, which would have the effect of increasing the Company’s operating costs (including, specifically, clinical trial costs in excess of their net recorded amount,countries where the Company would make an adjustmentis applying to the deferred tax asset valuation allowance,sell its products), and which would reduceput additional stress on the provision for income taxes.Company’s working capital resources.

(c) Recently adoptedRecent accounting pronouncements

Accounting standard updatesManagement believes that any recently issued, but not yet added were assessed and determined to be eithereffective, accounting pronouncements, if currently adopted, would not applicable or not expected to have a material impacteffect on ourthe Company’s unaudited condensed consolidated financial statements.

NOTE 3 – LICENSING AGREEMENTS

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

In March 2014, the Company entered into an Exclusive Marketing Rights Agreement (the “Marketing Rights Agreement”) with an unrelated third party (the “Licensee”), that granted to the Licensee the exclusive right to market and promote the sugarBEAT® device and related patches under its own brand in the UK 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 $1.20 million and $1.31 million as of December 31, 2022 and March 31, 2022, respectively), upon signing the Marketing Rights Agreement. The upfront payment received from the Marketing Rights Agreement has been deferred and will be recorded as income over the term of the Marketing Rights Agreement, which commenced upon the first delivery of the sugarBEAT® device to the Licensee in December 2021. Consequently, approximately $70,000, and $259,000 is included in deferred revenue classified as a current liability as of December 31, 2022 and March 31, 2022, respectively, with the remainder being shown in the non-current portion of deferred revenue.

NOTE 42 – RELATED PARTY TRANSACTIONS

DDL has a service agreement with Nemaura Pharma Limited (“Pharma”), an entity controlled by the Company’s President and Chief Executive officer, to provide development, manufacture, and regulatory approval process under Pharma’s ISO13485 accreditation. Pharma invoices DDL for these services on a cost-plus basis.

The table below provides a summary of activity between the Company and Pharma for the nine months ended December 31, 2023 and 2022.

NOTE 3 – DERIVATIVE LIABILITIES

Warrant liability

In January 2023, the Company completed an equity offering, which included the issuance of 4,796,206 warrants. Upon the occurrence of certain transactions (“Fundamental Transactions,” as defined), the warrants provide for a value determined using a Black Scholes model with inputs calculated as described in the warrant agreement which includes a 100% floor on the volatility input to be utilized. The Company has determined that this provision introduces leverage to the holders of the warrants that could result in a value that would be greater than the settlement amount of a fixed-for-fixed option on the Company’s own equity shares. Accordingly, pursuant to ASC 815, the Company has classified the fair value of the warrants as a liability to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

The warrant liability was valued at the following dates using a Black-Scholes model with the following assumptions:

The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of measurement commensurate with expected life of the warrants. Expected volatility was determined based on the historical volatility data of the Company, and the expected term of the warrants granted are determined based on the duration of time the warrants are expected to be outstanding. The dividend yield on the Company’s warrants is assumed to be zero as the Company has not historically paid dividends.

Foreign exchange contract liability

The Company is exposed to the impact of foreign currency exchange fluctuations as a significant proportion of its expenses are denominated in GBP, and the Company’s cash is in USD and GBP. In February 2021, the Company entered into a forward contract to sell USD and buy GBP. The contract meets the definition of a derivative subject to the guidance of ASC 815, does not qualify for hedge accounting, and accordingly is recognized at fair value, with changes in fair value recognized in earnings.

The term of the contract is 25 months, beginning July, 2022, and 2021,ending August, 2024. The contract initially had a maximum notional amount of $6,250,000 (and a maximum leveraged amount equal to two times the notional amount, or $12,500,000). $250,000 of the contractual notional amount is settled (expires) each month through August 2024. On each monthly settlement date, if the USD/GBP spot rate is above $1.359, the Company has the right to convert $250,000 USD into GBP at a fixed rate of $1.359. If the spot rate is between $1.359 and $1.319 on the settlement date, the Company has no obligations, but can convert $250,000 USD into GBP at the spot rate. Finally, if the spot rate is below $1.319 on the monthly settlement date, the Company is obligated to convert $500,000 USD (the settlement date leveraged amount) into GBP at the fixed rate of $1.359. Alternatively, instead of selling $500,000 USD, the Company can pay the difference in the spot rate and the year ended$1.359 exchange rate for $500,000 USD (net settle) to the counterparty. 

At December 31, 2023 and March 31, 2022.2023, the fair value of the foreign currency contract liability was valued as follows:

The Company’s foreign currency forward contracts are measured at fair value on a recurring basis and are classified as Level 2 fair value measurement. As of December 31, 2023, and March 31, 2023, the Company has deposited $146,434, and $909,666, respectively, as collateral with the counterparty related to the foreign currency forward contract and recorded as part of prepaid expenses and other receivables in the accompanying balance sheet. 

NOTE 54 – NOTES PAYABLE

At October 5, 2023, the Company had four note payable agreements (Notes #2, #3, #4, and #5) outstanding. Effective October 5, 2023, the Company entered into standstill agreements for Notes #2 and #3, pursuant to which the investors would not seek repayment of any portion of the notes during the period from October 5, 2023 to October 31, 2023. In consideration, the Company agreed to pay a standstill fee of $1,300,000, that was added to the note principal of Notes #2 and #3.

On October 5, 2023, the Company entered into termination agreements to terminate and cancel Notes #4 and #5, which had an aggregate balance of principal and accrued interest of $7,940,657. In consideration, a principal payment of $3,000,000 was made, and $4,940,657 was added to the principal of Notes #2 and #3.

NOTE PURCHASEPAYABLE AGREEMENT 12

On April 15, 2020,February 8, 2021, the Company entered intoissued a note purchase agreement (the “Note Purchase Agreement 1”payable (“Note 2”) to a third-party investor.  The note was for $24,015,000, originally matured on February 9, 2023 (see below), and is secured by and amongall the assets of the Company. Beginning in March 2023, the monthly principal payments are $1,000,000 per month. In addition, the Company DDL, TCL andis required to accrue a third-party investor (the “Investor”).

Pursuantmonthly PIK fee equal to 0.833% of the outstanding balance, which is in substance interest at an annual rate of approximately 10%, that is added to the terms ofnote principal each month. In October 2022 Note Purchase Agreement2 was amended to extend the maturity from February 9, 2023 to July 1, 2024. In consideration, the Company agreed to issue and sellpay aggregate fees of $2,304,539 to the Investor,investor which were added to the principal balance of Note 2.

As of March 31, 2023, outstanding balance of note payable amounted to $14,772,293. On October 5, 2023, $3,143,134 was added to the principal of Note 2 related to the termination of Notes 4 and 5 and addition of the Investor agreedstandstill fee (see above). During the nine months ended December 31, 2023, principal payments of $4,364,081 were made. As of December 31, 2023, outstanding balance of note payable amounted to purchase from$13,551,346.

NOTE PAYABLE AGREEMENT 3

On May 20, 2022, the Company issued a secured promissory note (the “2020 Secured Note”) in the original principal amount ofpayable (“Note 3) to a third-party investor. The note was for $6,015,000. In consideration thereof,, matures on April 15, 2020, (i) the Investor (a) paid $1,000,000 in cash, (b) issued to the Company (1) Investor Note #1 in the principal amount of $2,000,000 (“Investor Note #1”),May 20, 2024, and (2) Investor Note #2 in the principal amount of $2,000,000 (“Investor Note #2” and together with Investor Note #1, the “2020 Investor Notes”), and (ii) the Company delivered the 2020 Secured Note on behalf of the Company, to the Investor, against delivery of the 2020 Purchase Price. For these purposes, the “2020 Purchase Price” means the Investor’s initial cash purchase price, together with the sum of the initial principal amounts of the Investor Notes.

The 2020 Secured Note is secured by all the Collateral (as hereinafter defined).assets of the Company. The 2020 Secured Note carriesCompany received cash proceeds of $4,700,000, resulting in a discount of $1,315,000 made up of an original issue discount (“OID”) of $1,000,000 (, commission of $16.7300,000%). that was paid from proceeds, and $15,000 to cover transaction expenses. In addition, the Company agreedis required to pay $15,000 to the Investor to cover the Investor’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of the 2020 Secured Note (the “Transaction Expense Amount”). In addition to this,accrue a payment of $325,000 was made to Ascendiant Capital Markets, LLC (“Ascendiant”) for structuring the agreement between both parties. The 2020 Purchase Price for the 2020 Secured Note is $4,675,000, computed as follows: $6,015,000 original principal balance, less: OID, Transaction Expense Amount, and commission paid.

The borrowing period is 24 months, and the Company shall pay the outstanding balance and all fees on maturity. A monitoringmonthly PIK fee equal to 0.833%0.833% of the outstanding balance, will automatically bewhich is in substance interest at an annual rate of approximately 10%, that is added to the outstanding balance on the first day of each month. The debt less the discount and transaction expenses will be accreted over the term of the 2020 Secured Note using the effective interest method.

Security Agreement

On April 15, 2020, the Company entered into the Security Agreement by the Company, DDL and TCL, in favor of the Investor (the “2020 Security Agreement”). Pursuant to the terms of the 2020 Security Agreement, the Company granted the Investor a first-priority security interest in all rights, title, interest, claims and demands of the Company in and to all of the Company’s patents and all other proprietary rights, and all rights corresponding to the Company’s patents throughout the world, now owned and existing, and all replacements, proceeds, products, and accessions thereof (the “Collateral”).

Note Purchase Agreement 1 was settled in full on April 22, 2022.

NOTE PURCHASE AGREEMENT 2

On February 8, 2021, the Company entered into an additional note purchase agreement (“Note Purchase Agreement 2”) with the Investor.  Pursuant to the terms of Note Purchase Agreement 2, the Company agreed to issue and sell to the Investor, and the Investor agreed to purchase from the Company, a secured promissory note (the “Secured Note 2”) in the original principal amount of $24,015,000. The Secured Note 2 carries an OID of $4,000,000 (16.7%), and the Company agreed to pay $15,000 to the Investor to cover the Investor’s transaction expenses. In addition to this, a commission of $1,200,000 was also payable to Ascendiant.

In consideration thereof, on February 9, 2021, (i) the Investor paid $20,000,000 in cash to the Company, and (ii) the Company delivered Secured Note 2 on behalf of the Company, to the Investor, against the delivery of the 2021 Purchase Price.  For these purposes, the “2021 Purchase Price” means the Investor’s initial cash purchase price. After adjusting for transaction expenses of $1,200,000, cash proceeds received were $18,800,000.

The borrowing terms for Note Purchase Agreement 2 were originally consistent with those of Note Purchase Agreement 1, with the borrowing period being 24 months from the date of the agreement, the Company being required to pay the outstanding balance and all fees on maturity, and a monitoring fee equal to 0.833% of the outstanding balance being automatically added to the outstanding balance on the first day of each month. The debt less discount and transaction expenses will be accreted over the term of the Secured Note 2note using the effective interest rate method.

On October 21, 2022, the Company entered into an amendment to Note Purchase Agreement 2. Pursuant to the terms of the amendment, the Company and Investor agreed to extend the maturity date of Note Purchase Agreement 2 to July 1, 2024. In consideration thereof, the Company agreed to pay to the Investor an extension fee in the amount of 5% ofAt March 31, 2023, the outstanding balance of Note Purchase Agreement 2, which resulted in $813,834 being added onto the liability due to the Investor.

The Company and the Investor previously agreed to reduce the maximum monthly redemption amount from $2,000,000 to $500,000 from June 2022 to February 2023, which reduction remains in force. Pursuant to the terms of the amendment, the Company and Investor agreed to reduce the maximum monthly redemption amount during the period beginning March 2023 until Note Purchase Agreement 2 is paid in full from $2,000,000 to $1,000,000; provided, however, that upon the occurrence of an event of default under the Note Purchase Agreement 2, the maximum monthly redemption amount will automatically be increased back to $2,000,000.

Security Agreement

On February 8, 2021, the 2020 Security Agreement3 was extended to include Note Purchase Agreement 2, which is also secured against all of the Company’s assets owned as of February 9, 2021 and extends to any assets acquired at any time that the Company’s obligations under Secured Note 2 are outstanding.

NOTE PURCHASE AGREEMENT 3

On May 20, 2022, the Company entered into a new note purchase agreement (“Note Purchase Agreement 3”) by and among the Company, DDL, TCL and a third-party investor.

Pursuant to the terms of the Note Purchase Agreement 3, the Company agreed to issue and sell to the Investor and the Investor agreed to purchase from the Company a secured promissory note (the “Secured Note”) in the original principal amount of $6,015,000. In consideration thereof, on May 20, 2022 (the closing date), (i) the Investor paidOn October 5, 2023, $5,000,000 in cash, and (ii) the Company delivered the Secured Note on behalf of the Company, to the Investor, against delivery of the Purchase Price. For these purposes, the “Purchase Price” means the Investor’s initial cash purchase price.

The Secured Note is secured by the Collateral (as hereinafter defined). The Secured Note carries an original issue discount (“OID”) of $1,000,000 (16.7%). In addition, the Company agreed to pay $15,000 to the Investor to cover the Investor’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of the Secured Note (the “Transaction Expense Amount”). In addition to this, a payment of $300,0002,164,829 was made to Ascendiant Capital Markets, LLC, (the “Commission”) for structuring the agreement between both parties. The Purchase Price for the Secured Note is $4,700,000, computed as follows: $6,015,000 original principal balance, less: OID, Transaction Expense Amount, and commission paid.

The borrowing period is 24 months, and the Company shall pay the outstanding balance and all fees on maturity. A monitoring fee equal to 0.833% of the outstanding balance will automatically be added to the outstanding balance onprincipal of Note 3 related to the first daytermination of each month. The debt less the discountNotes 4 and transaction expenses will be accreted over the term5 and addition of the Note usingstandstill fee (see above). During the effective interest method.

Security Agreement

On May 20, 2022, the Company entered into the Security Agreement by the Company, DDL and TCL, in favornine months ended December 31, 2023, principal payments of the Investor (the “Security Agreement”). Pursuant to the terms of the Security Agreement, the Company granted the Investor a first-priority security interest in all rights, title, interest, claims and demands of the Company in and to all of the Company’s patents and all other proprietary rights, and all rights corresponding to the Company’s patents throughout the world, now owned and existing, and all replacements, proceeds, products, and accessions thereof.$1,814,180 were made. As of December 31, 2022, long-term debt matures as follows:

NOTE 6 – STOCKHOLDERS’ (DEFICIT) EQUITY

During2023, the three month period ended December 31, 2022, shares were sold under the ATM Equity Distribution Agreement in place with H.C. Wainwright & Co., for total gross proceedsoutstanding balance of Note 3 was $696, with associated costs of $2736,365,649.No other shares were issued during the nine month period ended December 31, 2022.

During the nine month period ended December 31, 2021, 366,892 warrants were exercised generating gross proceeds2023, debt discount amortization of $2,963,658. There were a total of 1,573,098493,125 warrants outstanding at this date. During the three month period endedwas recorded. At December 31, 2021, 22,524 shares were sold under the ATM Equity Distribution Agreement in place with H.C. Wainwright & Co., for total gross proceeds of $118,791, with associated costs of $4,382. No other shares were issued during the three and nine month periods ended December 31, 2021.

Loss per share

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

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

Basic loss per share is computed by dividing loss available to common stockholders by the weighted-average number of common shares outstanding during the period. For the three and nine month periods ended December 31, 2022, warrants to purchase 1,573,098 shares of common stock and a unit purchase option to purchase 9,710 shares of common stock, as well as warrants to purchase 9,710 shares of common stock, were considered anti-dilutive and were excluded from the calculation of diluted loss per share. For the three and nine month periods ended December 31, 2021, warrants to purchase 1,573,098 shares of common stock and a unit purchase option to purchase 9,710 shares of common stock, as well as warrants to purchase 9,710 shares of common stock, were considered anti-dilutive and were also excluded from the calculation of diluted loss per share.

NOTE 7 – OTHER ITEMS

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

NOTE 8 – SUBSEQUENT EVENTS

Management has evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements through February 23, 2023, the date these financial statements were available to be issued.

The Company commenced a Registered Direct Offering and concurrent Private Placement on January 27, 2023 with two healthcare-focused U.S. institutional investors to sell 4,796,206 shares of its common stock, pursuant to a registered direct offering and warrants to purchase up to 4,796,206 shares in a concurrent private placement. The combined purchase price for one share and one warrant was $1.75. The warrants have an exercise price of $2.00 per share and are initially exercisable at the later of shareholder approval or six months following the date of issuance and will expire 5.5 five and a half years from January 31, 2023, the closing date.unamortized debt discount was $273,958.

NOTE PAYABLE AGREEMENTS 4 and 5

In August 2023, the Company issued two notes payable to two third party investors (“Notes 4 and 5”) , with a face value of $7,810,000 in exchange for cash of $6,500,000 or an original issue discount of $1,310,000. The aggregate gross proceeds fromnotes were secured by all tangible and intangible assets of the Registered Direct OfferingCompany and will mature in 24 months or in August 2025. The notes did not bear any interest; however, the implied annual interest rate is 9.5% based upon the OID rate of 19% and annual monitoring fee of 9.9%. As a result, the Company recorded a debt discount of $1,310,000 to account the note's original issue discount, commission and direct costs computed which is being amortized over interest expense over the term of the note payable.

On October 2023, the Company and the concurrent Private Placement werenoteholders amended the two notes payable. As part of the amendment, the Company paid the noteholder $8.43 million before deducting placement agentin principal and the remaining balance of $4,810,000 and accrued interest of $130,657, was transferred and added to the outstanding principal balance of Note 2 for $2,775,828 and Note 3 for $2,164,829, issued in May 2022 and October 2022, respectively. In addition, the Company also incurred additional fees of $367,306 as part of the amendment of notes payable 4 and other estimated offering expenses.5, which was added to Note 2. In addition, the Company also expensed the entire debt discount of $1,310,000. As of result of these amendments, notes payable 4 and 5 were extinguished and cancelled by the noteholder.

LINE OF CREDIT

In November 2023, the Company executed a line of credit (LOC) with a third party financing company, Streeterville Capital LLC. Pursuant to the LOC agreement, the Company can loan up to $10 million at a rate of 10% per annum and a 20% original issue discount for a period of one year. The LOC is secured by all tangible and intangible assets of the Company. The Company received net proceeds of $7,655,974 after costs.has not yet made advances or drawdowns against the LOC.

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

You should read the following discussion in conjunction with the Unaudited Condensed Consolidated Financial Statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those made, projected, or implied in the forward-looking statements. See "Cautionary Statement Concerning Forward-Looking Statements" below, and "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022,2023, as filed with the Securities and Exchange Commission, as the same may be updated from time to time, for a discussion of the uncertainties, risks and assumptions associated with these statements.

Overview

Business Review and Outlook

WeIt is management’s view that the Company made good progress during the nine month period ended December 31, 2023, and some of the key developments are a medical technologylisted as follows:

Management is working towards fulfilling the remainder of the UK licensees’ initial orders and supporting MSW’s UK launch plans, and for potential supplies to fulfill the provisional purchase order for the KSA from TPMENA. The company developing sugarBEAT®, a non-invasive, affordable,continues to also develop capabilities to develop and flexible continuous glucose monitoring system for adjunctiveservice new channels of business across other geographic markets via the use by persons with diabetes, as well as for consumersof our BEAT platform. To this end the company is now actively planning product launch in other territories that accept the CE mark registration. In addition, the company is seeking to exploit its product platform in the non-diabetes space for monitoring metabolic health and general health and wellness. sugarBEAT® consists of a disposable adhesive skin-patch connected to a rechargeable wireless transmitter that displays glucose readings at regular five-minute intervals via a mobile app. sugarBEAT® works by extracting glucose from the skin into a chamber in the patch that is in direct contact with an electrode-based sensor. The transmitter sends the raw data to a mobile app where it is processed by an algorithm and displayed as a glucose reading after calibration, with the ability to track and trend the data over 14 hours for each sensor wear period. Sensors can be worn as frequently as a user chooses. 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. In the consumer application, or non-medical applications, the relative glucose fluctuations are used and therefore finger-prick calibrations are not required.space.

CE approval was granted by the European Notified Body BSI in May 2019, allowing the product to be made available for commercial sale. This approval is subject to an annual review of the underlying ISO 13485 accredited Quality Management System. The accreditation was successfully renewed in November 2021 and 2022. In conjunction with the UK Licensee, the Company commenced a phase 1 launch whereby devices were made available to limited cohorts of users to gauge their feedback so that any fine-tuning could be completed prior to a mass market launch. The UK Licensee has also confirmed that it will undertake two Key Opinion Leader (“KOL”) studies in the UK for its white-labelled service offering that is supported by sugarBEAT®. The KOL studies are intended to provide additional support for the UK Licensee’s broader ongoing marketing plans and more specifically to support potential reimbursement for the device and the licensees overall diabetes management offering(s)

The UK Licensee placed an initial order for sugarBEAT® in April 2021 and provided a forecast for its post-launch volume expectations, which the Company has used to establish both a short and medium term view to inform the Company’s commercial operational requirements. In line with this view, the Company has taken the following actions sinceduring and after the initial order was received:

nine month period ended December 31, 2023:

In July 2020, Nemaura filed a PMA application with the FDA to use sugarBEAT® as an adjunct to finger prick testing for blood glucose trending. We, along with other applicants, were then informed by the FDA that the approval process was currently subject to delays as a result of the FDA’s Center for Devices and Radiological Health (“CDRH”) being actively engaged in responding to the current pandemic caused by COVID-19 which resulted in staff being reallocated to other approval requests associated with COVID-19. During April 2021 the FDA confirmed that they would recommence their review of the PMA application and this is now ongoing and in-progress. In December 2021 the FDA’s Bio-monitoring research division conducted an audit of the clinical program submitted in support of the PMA application. A single 483 observation was raised, and the Company submitted a full response in January 2022. The FDA subsequently scheduled a pre-market inspection for during the second calendar quarter of 2022, intended to cover the FDA’s Quality System/Current Good Manufacturing Practice regulations for Medical Devices (21 CFR Part 820). This audit was conducted in the first quarter of the fiscal year ending March 31, 2023. The Company reported that a single 483 observation was raised to which the Company responded in a timely manner, and Dialogue with the FDA continues with respect to the PMA application. 

In addition to this, Nemaura established that proBEAT™, which is based on the sugarBEAT® platform, can be classified under the Wellness guidance when it is used according to the FDA Wellness guidance notes, to provide prompts and educate users on factors affecting their blood sugar profiles. Nemaura launched proBEAT™ in the U.S. in December 2020, as part of a diabetes prevention and reversal program branded BEATdiabetes.life, in the form of pilot studies. During the quarter ended December 31, 2020, Nemaura licensed a clinically validated weight loss program for the management of diabetes from Healthimation, LLC, which was originally developed at the Joslin Diabetes Center, an affiliate of Harvard Medical School. This program, together with proBEAT™, originally formed the basis of the BEATdiabetes.life program that is currently being developed for commercialization in the U.S. The program is under further refinement based on feedback gathered to date. Further KOL studies are planned to provide additional marketing support of the program in preparation for a broader U.S.-wide roll-out. While still in the relatively early stages, we are pleased with initial results and feedback received from these user-groups and one key outcome has been that the company is now looking to provide proBEAT as a standalone plug-in for existing diabetes management programs therefore potentially allowing the company to accelerate commercialization as well as reduce the cost burden that could be associated with running its own program.

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

During this period of product development, the Company has experienced recurring losses and negative cash flows from operations. As of December 31, 2022, the Company had cash balances of $7,340,840, a working capital deficit of ($2,309,666), an accumulated deficit of $47,192,364 and a deficiency in total stockholders' equity of $9,858,709.

While 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, the Company reached a significant milestone during the three month period ended December 31, 2021, as the Company commenced commercial delivery of its sugarBEAT® device to its UK Licensee, allowing the UK Licensee to continue studies dedicated to developing user based feedback and evidence that could potentially support reimbursement in the UK .