What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-02-14 compared with 2021-11-12 · 130 added, 142 removed, 85 unchanged (76% of the section changed)

Management’s Discussion

and Analysis of Financial Condition and Results of Operations

This Management’s

Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying condensed

consolidated financial statements and notes included in this Quarterly Report on Form 10-Q (this Report).

This Report contains

forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange

Act of 1934, which include, without limitation, statements about the market for our technology, our strategy, competition, expected

financial performance and capital raising efforts, and other aspects of our business identified in our most recent annual report

on Form 10-K and in other reports that we file from time to time with the Securities and Exchange Commission.

Any statements about

our business, financial results, financial condition and operations contained in this Report that are not statements of historical

fact may be deemed to be forward-looking statements.

Without limiting the foregoing, the words “believes,” “anticipates,”

“expects,” “intends,” “plans,” “projects,” or similar expressions are intended

to identify forward-looking statements.

Our actual results could differ materially from those expressed or implied by these forward-looking

statements as a result of various factors, including the risk factors described under Item 1A of our Annual Report on Form 10-K

for the year ended March 31, 2021.

These forward-looking statements represent our intentions, plans, expectations, assumptions

and beliefs about future events and are subject to risks, uncertainties and other factors including, without limitation, the direct

and indirect effects of coronavirus disease 2019, or COVID-19, and related issues that may arise therefrom.

Many of those factors

are outside of our control and could cause actual results to differ materially from those expressed or implied by those forward-looking

In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might

not occur or might occur to a different extent or at a different time than we have described.

You are cautioned not to place undue

reliance on these forward-looking statements, which speak only as of the date of this Report.

All subsequent written and oral

forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our

behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change

in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

Our fiscal year

ends on March 31 of each calendar year.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with

the accompanying condensed consolidated financial statements and notes included in this Quarterly Report on Form 10-Q (this Report).

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E

of the Securities Exchange Act of 1934, which include, without limitation, statements about the market for our technology, our

strategy, competition, expected financial performance and capital raising efforts, and other aspects of our business identified

in our most recent annual report on Form 10-K and in other reports that we file from time to time with the Securities and Exchange

Any statements about our business, financial results, financial condition and operations contained in this Report

that are not statements of historical fact may be deemed to be forward-looking statements.

Without limiting the foregoing, the

words “believes,” “anticipates,” “expects,” “intends,” “plans,” “projects,”

or similar expressions are intended to identify forward-looking statements.

Our actual results could differ materially from those

expressed or implied by these forward-looking statements as a result of various factors, including the risk factors described

under Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2021.

These forward-looking statements represent

our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other

factors including, without limitation, the direct and indirect effects of coronavirus disease 2019, or COVID-19, and related issues

that may arise therefrom.

Many of those factors are outside of our control and could cause actual results to differ materially

from those expressed or implied by those forward-looking statements.

In light of these risks, uncertainties and assumptions, the

events described in the forward-looking statements might not occur or might occur to a different extent or at a different time

than we have described.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as

of the date of this Report.

All subsequent written and oral forward-looking statements concerning other matters addressed in this

Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements

contained or referred to in this Report.

We undertake no obligation to update or revise any forward-looking statements, whether

as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements,

or otherwise.

year ends on March 31 of each calendar year.

Each reference to a fiscal year in this Report, refers to the fiscal year ended March

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and its consolidated subsidiary.

Company Overview

a development stage medical device company focused on the design, development, and commercialization of an innovative insulin

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financial statements in Item 1 of this Report and under Liquidity below.

Impacts of COVID-19

The global outbreak

of the coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization and a national emergency by

outbreak of the coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization and a national emergency

government in March 2020.

This has negatively affected the U.S.

and global economy, disrupted global supply chains, significantly

restricted travel and transportation, resulted in mandated closures and orders to “shelter-in-place” and created significant

disruption of the financial markets.

The full extent of the COVID-19 impact on our operational and financial performance will

depend on future developments, including, without limitation, the duration and spread of the pandemic and related actions taken

and foreign government agencies to prevent disease spread, all of which are uncertain, out of our control, and cannot

be predicted.

In March 2020,

Santa Diego County in California, where we are based, and the state of California issued “shelter-in-place” orders

(the Orders).

We complied with the Orders and minimized business activities at our San Diego facility from March 2020 until May

During that time, we implemented a teleworking policy for our employees and contractors to reduce on-site activity at our

and global economy, disrupted global supply chains,

significantly restricted travel and transportation, resulted in mandated closures and orders to “shelter-in-place”

and created significant disruption of the financial markets.

The full extent of the COVID-19 impact on our operational and financial

performance will depend on future developments, including, without limitation, the duration and spread of the pandemic and related

actions taken by U.S.

and foreign government agencies to prevent disease spread, all of which are uncertain, out of our control,

and cannot be predicted.

2020, Santa Diego County in California, where we are based, and the state of California issued “shelter-in-place”

orders (the Orders).

We complied with the Orders and minimized business activities at our San Diego facility from March 2020 until

During that time, we implemented a teleworking policy for our employees and contractors to reduce on-site activity at

our facility.

In May 2021, our employees and certain contractors returned to work in our office.

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longer lead times for certain components used to manufacture initial quantities of our products for our submission to the FDA.

We remain diligent in continuing to identify and manage risks

to our business given the changing uncertainties related to COVID-19.

While we believe that our operations personnel are currently

in a position to build an adequate supply of products for our FDA submission, we recognize that unpredictable events could create

difficulties in the months ahead.

We may not be able to address these difficulties in a timely manner, which could delay our submission

to the FDA and negatively impact our business, results of operations, financial condition and cash flows.

We remain diligent in continuing to identify and manage risks to our business given the changing uncertainties related to COVID-19.

While we believe that our operations personnel are currently in a position to build an adequate supply of products for our FDA

submission, we recognize that unpredictable events could create difficulties in the months ahead.

We may not be able to address

these difficulties in a timely manner, which could delay our submission to the FDA and negatively impact our business, results

of operations, financial condition and cash flows.

The continued

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Annual Report on Form 10-K for the year ended March 31, 2021.

As of September 30, 2021, there have been no material changes to

As of December 31, 2021, there have been no material changes to

our significant accounting policies and estimates.

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and Development

Research and development –

Three months ended

Research and development

– Six months ended

Research and development – Three months ended

Research and development – Nine months ended

and development expenses include personnel, consulting, materials and other costs associated with the development of our insulin

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We expense research and development costs as they are incurred.

development, or R&D, expenses increased for the three months ended September 30, 2021 as compared with the prior period of

fiscal 2021 primarily due to increased engineering and manufacturing consulting costs, as we have increased our development and

manufacturing activities.

R&D expenses increased for the six months ended September 30, 2021 as compared with the prior period

of fiscal 2021 primarily due to increased engineering and manufacturing personnel and consulting costs, protype and production

and development, or R&D, expenses increased for the three months ended December 31, 2021 as compared with the prior period

of fiscal 2021 primarily due to increased engineering and manufacturing consulting costs, as we have increased our development

and manufacturing activities.

R&D expenses increased for the nine months ended December 31, 2021 as compared with the prior

period of fiscal 2021 primarily due to increased engineering and manufacturing personnel and consulting costs, protype and production

component and material costs and stock-based compensation expenses.

R&D expenses included non-cash, stock-based compensation

expenses of $116,742 and $101,915 for the three months ended September 30, 2021 and 2020, respectively, and $255,027 and $205,640

for the six months ended September 30, 2021 and 2020, respectively.

We expect R&D expenses to remain flat to slightly

decrease for the remainder of fiscal 2022, as we continue to advance the development of our pump product and develop an initial

low-volume manufacturing process.

Administrative

September 30,

expenses of $204,962 and $96,127 for the three months ended December 31, 2021 and 2020, respectively, and $459,989 and $301,767

for the nine months ended December 31, 2021 and 2020, respectively.

We expect R&D expenses to remain flat for the remainder

of fiscal 2022, as we continue to advance the development of our pump product and develop an initial low-volume manufacturing

and Administrative

General and administrative – Three months ended

General and administrative – Six months ended

administrative expenses consist primarily of personnel and related overhead costs for facilities, marketing, finance, human resources

and general management.

administrative, or G&A, expenses, increased for the three and six months ended September 30, 2021 as compared with the prior

periods of fiscal 2021 primarily as a result of increased stock-based compensation expense and increased consulting and legal

G&A expenses included stock-based compensation expenses of $745,689 and $198,689 for the three months ended September

30, 2021 and 2020, respectively, and $1,263,324 and $439,680 for the six months ended September 30, 2021 and 2020, respectively.

General and administrative – Nine months ended

and administrative expenses consist primarily of personnel and related overhead costs for facilities, marketing, finance, human

resources and general management.

and administrative, or G&A, expenses, increased for the three and nine months ended December 31, 2021 as compared with the

prior periods of fiscal 2021 primarily as a result of increased stock-based compensation expense and increased consulting and

G&A expenses included stock-based compensation expenses of $1,016,774 and $198,926 for the three months ended

December 31, 2021 and 2020, respectively, and $2,280,098 and $638,607 for the nine months ended December 31, 2021 and 2020, respectively.

We expect G&A expenses to increase for the remainder of fiscal 2022, as we pursue a public offering of our common stock.

Interest Expense

September 30,

Interest expense – Three months ended

Interest expense – Six months ended

$ (1,010,225 )

Interest expense consisted of interest

expense on our convertible promissory notes, including amortization of debt issuance cost.

To date, we have accrued all interest

on the Notes.

See Note 4 to the condensed consolidated financial statements included in Item 1 of this Report for additional disclosure.

Interest expense – Nine months ended

$ (2,204,791 )

expense consisted of interest expense incurred from our convertible promissory notes, including amortization of debt issuance

costs, and our promissory (bridge) note.

See Notes 4 and 5 to the condensed consolidated financial statements included in Item

1 of this Report for additional disclosure.

and Capital Resources

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G&A expenses associated with our operations.

For the six months ended September 30, 2020, we incurred a net loss of approximately

$9.2 million.

For the years ended March 31, 2020 and 2019, we incurred net losses of approximately $5.3 million and $2.5 million,

respectively.

At September 30, 2021, we had a cash balance of approximately $0.8 million and an accumulated deficit of approximately

For the nine months ended December 31, 2021, we incurred a net loss of approximately

$14.1 million.

When considered with our current operating plan and the requirement to repay all of the Notes by May 2022, these

conditions raise substantial doubt about our ability to continue as a going concern for a period of at least one year from the

date that of issuance of the consolidated financial statements included in Item 1 of this Report.

Our consolidated financial statements

do not include adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable

to continue as a going concern.

Our ability to continue as a going concern depends on our ability to raise additional capital

through the sale of equity or debt securities to support our future operations, and we are currently seeking such additional financing.

As discussed in Note 3 to our condensed consolidated financial statements in Item 1 of this Report, we obtained forgiveness of

the $368,000 principal balance and interest on the PPP Note we received from Silicon Valley Bank in April 2020 under the U.S.

Small Business Administration Paycheck Protection Program.

As discussed in Note 4 to our condensed consolidated financial statements

in Item 1 of this Report, in May 2021, we completed a private placement of $6,610,500 aggregate principal amount of our convertible

promissory notes (the Notes).

The Notes are unsecured obligations of ours with each Note having a stated maturity date of 12 months

from its issue date (the Issue Date).

The Notes bear interest at a rate of 12% per annum, payable on maturity, provided that,

if we fail to pay any amounts when due under a Note, the interest rate increases to the greater of 16% or the maximum amount permitted

Each Note may be prepaid at our option during the first 270 calendar days following its Issue Date (the 270 th day,

the Trigger Date), subject to a 110% prepayment penalty on all principal and accrued interest then outstanding.

No Notes may be

prepaid in whole or in part after the Trigger Date.

As discussed in Note 9 to our condensed consolidated financial statements

in Item 1 of this Report, on October 28, 2021, we issued $250,000 of common stock in a private placement, and we issued a secured

promissory note (the Bridge Note) to an investor.

The Bridge Note provides us with a $3,000,000 revolving credit facility with

all amounts being drawn down by the Company thereunder being due and payable, subject to acceleration in the event of a default,

on March 15, 2022.

On November 9, 2021, we drew down $500,000 under the Bridge Note.

For the years ended March 31, 2021 and 2020, we incurred net losses of approximately $7.4 million and $5.3

million, respectively.

At December 31, 2021, we had a cash balance of approximately $0.2 million and an accumulated deficit of

approximately $29.9 million.

When considered with our current operating plan and the requirement to repay the Notes (as defined

below) and the draws under the Bridge Note (as defined below) by May 2022, these conditions raise substantial doubt about our

ability to continue as a going concern for a period of at least one year from the date that of issuance of the consolidated financial

statements included in Item 1 of this Report.

Our consolidated financial statements do not include adjustments to the amounts

and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

to continue as a going concern depends on our ability to raise additional capital through the sale of equity or debt securities

to support our future operations, and we are currently seeking such additional financing.

As discussed in Note 3 to our condensed

consolidated financial statements in Item 1 of this Report, we obtained forgiveness of the $368,000 principal balance and interest

on the PPP Note we received from Silicon Valley Bank in April 2020 under the U.S.

Small Business Administration Paycheck Protection

As discussed in Note 4 to our condensed consolidated financial statements in Item 1 of this Report, in May 2021, we completed

a private placement of $6,610,500 aggregate principal amount of our convertible promissory notes (the Notes).

The Notes are unsecured

obligations of ours with each Note having a stated maturity date of 12 months from its issue date (the Issue Date).

bear interest at a rate of 12% per annum, payable on maturity, provided that, if we fail to pay any amounts when due under a Note,

the interest rate increases to the greater of 16% or the maximum amount permitted by law.

Each Note may be prepaid at our option

during the first 270 calendar days following its Issue Date (the 270 th day, the Trigger Date), subject to a 110% prepayment

penalty on all principal and accrued interest then outstanding.

No Notes may be prepaid in whole or in part after the Trigger

As discussed in Note 9 to our condensed consolidated financial statements in Item 1 of this Report, on October 28, 2021,

we sold $250,000 of shares of our common stock to officers, and we issued a secured promissory note (the Bridge Note) to an investor.

The Bridge Note provides us with a $3,000,000 revolving credit facility with all amounts being drawn down by the Company thereunder

being due and payable, subject to acceleration in the event of a default, on March 15, 2022.

For the three months ended December

31, 2021, we drew down $1,500,000 under the Bridge Note.

Our operating

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research and development initiatives and take additional measures to reduce costs in order to conserve our cash.

months ended September 30, 2021, we used $4,784,725 in operating activities, which primarily

resulted from our net loss of $9,216,848, increased for a non-cash gain on the PPP Note extinguishment of $368,780 and net changes

in operating lease assets and liabilities of $22,947, as adjusted for changes to operating assets and liabilities of $791,746,

a loss on debt extinguishment of $1,321,450 stock-based compensation expenses of $1,518,351, $314,265 for issuances of shares

of common stock in exchange for services, depreciation and amortization expenses of $53,599, interest expense of $824,439 for

amortization of debt discount, and other immaterial adjustments.

For the six months ended September 30, 2020, we used $3,029,671

in operating activities, which primarily resulted from our net loss of $3,734,886 and changes to operating assets and liabilities

of $122,860, as adjusted for stock-based compensation expenses of $645,320, depreciation and amortization expenses of $52,314,

net changes in lease assets and liabilities of $130,441.

For the six months ended September

30, 2021 and 2020, cash used in investing activities of $22,779 and $93,303, respectively was due to the purchase of property

and equipment.

Cash provided

by financing activities of $4,137,200 for the six months ended September 30, 2021 was attributable to net proceeds from the issuance

of our Notes.

Cash provided by financing activities of $1,487,414 for the six months ended

September 30, 2020 was attributable to net proceeds of $1,118,634 from the sale of shares of our common stock in a private placement

nine months ended December 30, 2021, we used $7,128,787 in operating activities, which primarily

resulted from our net loss of $14,058,155 increased for a non-cash gain on the PPP Note extinguishment of $368,780 and

net changes in operating lease assets and liabilities of $34,422, as adjusted for changes to operating assets and liabilities

of $1,197,989, a loss on debt extinguishment of $1,321,450 stock-based compensation expenses of $2,740,086, $388,021

for issuances of shares of common stock in exchange for services, $149,994 for issuable shares of common stock in exchange

for services, depreciation and amortization expenses of $80,268, and interest expense of $1,454,762 for amortization of

debt discount.

For the nine months ended December 31, 2020, we used $4,570,713 in operating

activities, which primarily resulted from our net loss of $5,605,431 and changes to operating assets and liabilities of $107,758,

as adjusted for stock-based compensation expenses of $940,374, depreciation and amortization expenses of $82,016, net changes

in lease assets and liabilities of $120,085.

nine months ended December 31, 2021 and 2020, cash used in investing activities of $22,779 and $109,541, respectively was due

to the purchase of property and equipment.

provided by financing activities of $6,037,199 for the nine months ended December 31, 2021 primarily attributable to net proceeds

from the issuance of our Notes of $5,637,199 and net proceeds of $250,000 from the sale of shares of common stock to officers

of the Company.

Cash provided by financing activities of $2,154,662 for the nine months ended

December 31, 2020 was attributable to net proceeds of $1,785,882 from the sale of shares of our common stock in a private placement

that was initiated in March 2020 and $368,780 in proceeds from the PPP Note.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis