UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

Washington, D.C. 20549

FORM 10-Q

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2017

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to____________

Commission File Number: 000-49671

MODULAR MEDICAL, INC.

(Exact name of registrant as specified in its charter)

17995 Bear Valley LaneSecurities registered pursuant to Section 12(b) of the Act:

Escondido, CA 92027

(Address of Principal Executive Offices)

949 370 9062

(Registrant’s Telephone Number, Including Area Code)

N/A

(former name or former address, if changed since last report)

Indicate by check mark whether the Registrantregistrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrantregistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx Noo

xYeso No

Indicate by check mark whether the Registrantregistrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrantregistrant was required to submit and post such files).  Yesx Noo (The Registrant does not have a corporate Web site.)

xYeso No

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

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

Indicate by check mark whether the Registrantregistrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o YesoxNox

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate theThe number of shares outstanding of eachshares of the Registrant’s classes ofregistrant’s common stock, par value $0.001 per share, was 6,390,372as of the latest practicable date.February 10, 2022.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the Financial Statements and Notes to Financial Statements contained herein may contain forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial conditions. All forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended.

PARTPart I -– FINANCIAL STATEMENTSINFORMATION

Item 1. Financial Statements.Statements

Modular Medical, Inc.
Condensed Consolidated Balance Sheets

The accompanying notes are an integral part of these condensed consolidated financial statements.

Modular Medical, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Modular Medical, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Modular Medical, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

MODULAR MEDICAL, INC.

FKA -BEAR
F/K/A BEAR LAKE RECREATION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

DECEMBER 31, 2017

(UNAUDITED)

NOTE 1 - ORGANIZATION– THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Modular Medical, Inc. (the Company) was organizedincorporated in Nevada in October 1998 under the laws of the State of Nevada on October 22, 1998, to engage in any lawful purpose.name Bear Lake Recreation, Inc. The Company has at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors.

Through the year ended June 30, 2001 the Company was seeking to rent out snowmobiles and all-terrain vehicles (ATV’s).  In June of 2000, the Company also purchased the rights to manufacture, use, market, and sell the Net Caddy, a backpack style bag used to transport fishing gear. The Company abandoned both the snowmobile and ATV’s plans, and the Net Caddy plans.

Quasuras, Inc. (Quauras) was incorporated in Delaware on April 20, 2015.

Quasuras has developed a hardware technology allowing people with diabetes to receive their daily insulin in two ways, through a continuous “basal” delivery allowing a small amount of insulin to be in the blood athad no material business operations from 2002 until approximately 2017 when it acquired all times and a “bolus” delivery to address meal time glucose input and to address when the blood glucose level becomes too high. By addressing the time and effort required to effectively treat their condition, Quasuras believes it can address the less technically savvy, less motivated part of the market.

Reorganization

On July 24, 2017, pursuant to a Reorganization and Share Exchange Agreement, by and among, the Company and Quasuras, the Company acquired 100% of the issued and outstanding shares of Quasuras, for 7,582,000 shares of the Company, resulting in Quasuras becomingInc., a wholly-owned subsidiary of the Company. SinceDelaware corporation (Quasuras). As the major shareholder of Quasuras retained control of both the Company and Quasuras, the share exchange was accounted for as a reverse merger. As such, the Company recognized the assets and liabilities of Quasuras acquired in the Reorganization,merger, at their historical carrying amounts.

Pursuant Prior to the reorganization,acquisition of Quasuras and since at least 2002, the Company was a shell company, as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934 (the Exchange Act). In June 2017, the Company changed its name from Bear Lake Recreation, Inc. to Modular Medical, Inc.

The Company is a development-stage, medical-device company focused on the design, development, and commercialization of an innovative insulin pump using modernized technology to increase pump adoption in the diabetes marketplace. Through the creation of a novel two-part, patch pump product, the Company seeks to fundamentally alter the trade-offs between cost and complexity and access to the higher standards of care that presently available insulin pumps provide. By simplifying and streamlining the user experience from introduction, prescription, reimbursement, training and day-to-day use, the Company seeks to expand the wearable insulin delivery device market beyond the highly motivated “super users” and expand the category into the mass market. The Company’s pump product seeks to serve both the type 1 and type 2 diabetes markets.

Liquidity

Financial Accounting Standards Board (FASB) Accounting Standard Update (ASU) No. 2014-15 (ASU 2014-15), Going Concern, requires management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. If management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management must consider if there are plans that are probable to be implemented, and whether it is probable that the plans will mitigate the conditions or events raising the substantial doubt about the entity’s ability to continue as a going concern. If the substantial doubt is not alleviated after consideration of management’s plans, the entity must include a statement in the notes to the financial statements indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued including: 1) the principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern, 2) management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations, and 3) management’s plans to attempt to mitigate the conditions or events causing the substantial doubt about the entity’s ability to continue as a going concern.

The Company expects to continue to incur operating losses for the foreseeable future and incur cash outflows from operations as it continues to invest in the development and subsequent commercialization of its product. The Company expects that its research and development and general and administrative expenses will continue to increase, and, as a result, it will eventually need to generate significant product revenues to achieve profitability. The Company’s expected operating losses and cash burn and the need to repay the convertible promissory notes and accrued interest in the first half of 2022 raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these financial statements are issued. Implementation of the Company’s plans and its ability to continue as a going concern will depend upon the Company’s ability to raise additional capital, through the sale of additional equity or debt securities, to support its future operations. There can be no assurance that such additional capital, whether in the form of debt or equity financing, will be sufficient or available and, if available, that such capital will be offered on terms and conditions acceptable to the Company. As disclosed in note 9, the Company recently sold shares of its common stock to two of its officers, obtained access to a credit facility and filed a registration statement to offer shares of its common stock. The Company’s operating needs include the planned costs to operate its business, including amounts required to repay its convertible promissory notes (if not converted), fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully commercialize its product, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement its product offering. If the Company is unable to secure additional capital, it may be required to curtail its research and development initiatives and take additional measures to reduce costs in order to conserve its cash. These condensed consolidated financial statements do not include any adjustments that might result from this uncertainty.

Basis of Presentation

The Company’s fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in these notes to the condensed consolidated financial statements refers to the fiscal year end from June 30 toended March 31 of the calendar year indicated (for example, fiscal 2022 refers to coincide with the fiscal year end for Quasuras, Inc.ending March 31, 2022). The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Quasuras. All significant intercompany transactions and balances have been eliminated in consolidation.

The accompanying condensed consolidated financial statements of the Company have been prepared without audit. The condensed consolidated balance sheet as of March 31, 2021 has been derived from the audited consolidated financial statements at that date. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America.  The following summarizes the more significant of such policies:

Basis of Presentation

The accompanying condensed consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States (“US GAAP”) and with the instructions to Form 10-Q.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP(GAAP) have been condensed or omitted pursuant to U.S. GAAPin accordance with these rules and regulations for presentation of interim financial information. Therefore, the unaudited condensed interim consolidated financial statements should be read in conjunction with the financial statements and the notes thereto, included in the Company’s Annual Report on the Form 10-K for the fiscal year ended June 30, 2017 and the Form 8-K filed on July 28, 2017. Current and future financial statements may not be directly comparable to the Company’s historical financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the fiscal year ended June 30, 2017 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. Commission (SEC).

In the opinion of Management,management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments considered necessary for a fair presentation, consisting solely(consisting only of normal recurring adjustments, have been made. Operatingadjustments) necessary to summarize fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. The operating results for the ninethree months ended December 31, 20172021 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2018.

2022 or for any other future period.

PrinciplesReverse Stock Split

On November 24, 2021, the Company filed a certificate of Consolidationamendment to its amended and restated certificate of incorporation with the Secretary of State of the State of Nevada to effect a 1-for-3 reverse stock split of the Company’s shares of common stock. Such amendment and ratio were previously approved by a majority of the Company’s stockholders and the board of directors. As a result of the reverse stock split, which was effective November 29, 2021, every three shares of the Company’s pre-reverse split outstanding common stock were combined and reclassified into one share of common stock. Proportionate voting rights and other rights of common stock holders were not affected by the reverse stock split. Any fractional shares of common stock resulting from the Reverse Split were rounded up to the nearest whole share. All stock options outstanding and common stock reserved for issuance under the Company’s equity incentive plans and warrants outstanding immediately prior to the reverse stock split were adjusted by dividing the number of affected shares of common stock by three (3) and, as applicable, multiplying the exercise price by three (3), as a result of the reverse stock split.

The consolidated financial statements include the accounts of Modular Medical, Inc. and its wholly owned subsidiary Quasuras, Inc., collectively referred to as the Company. All material intercompany accounts, transactions and profits were eliminated in consolidation.

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amountsamount of revenues and expenses during the reporting period. Estimates may include those pertaining to accruals, stock-based compensation and income taxes. Actual results could differ from those estimates. Significant estimates include collectability of accounts receivable, accounts payable, sales returns and recoverability of long-term assets.

Reportable Segment

The Company hasoperates in 1 business segment and uses one reportable segment. The Company’s activities are interrelated and each activity is dependent upon and supportivemeasurement of the other. Accordingly, all significant operating decisions are based on analysis of financial products provided as a single globalprofitability for its business.

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities.

Cost of Sales 

Cost of sales consists primarily of inventory costs, as well as warehousing costs (including the cost of warehouse labor), shipping, importation duties and charges, third party royalties, and product sampling.

Research and Development

The Company expenses the cost of research and development expenditures as incurred. Research and development costs charged to operations were approximately $259,000 and $0 for the nine months ended December 31, 2017 and 2016, respectively, and approximately $171,045 and $0 for the three months ended December 31, 2017 and 2016, respectively.

General and AdministrationAdministrative

General and administration expense consistsadministrative expenses consist primarily of payroll and benefit related costs, rent, stock-based compensation, legal and accounting fees, and office expenses, and meetings and travel.other administrative expenses.

Income Taxes

The Company utilizes FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that were included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company follows FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (codified in FASB ASC Topic 740). When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income.

At December 31, 2017 and 2016, the Company had not taken any significant uncertain tax positions on its tax returns for periods ended March 31, 2017 and prior years or in computing its tax provision for 2017. Management has considered its tax positions and believes that all of the positions taken by the Company in its Federal and State tax returns are more likely than not to be sustained upon examination. The Company is subject to examination by U.S. Federal and State tax authorities for the period ended March 31, 2017 to the present, generally for three years after they are filed.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrationsconcentration of credit risk are cash, accounts receivable and other receivables arising from its normal business activities.consist primarily of cash. The Company placesmaintains its cash balances at high-quality financial institutions within the United States, which are insured by the Federal Deposit Insurance Corporation up to limits of approximately $250,000. No reserve has been made in what it believesthe financial statements for any possible loss due to be credit-worthy financial institutions.  institution failure.

Risks and Uncertainties

The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing technology and customer requirements, limited operating history and the volatility of public markets.

ContingenciesCOVID-19

Certain conditions may exist asThe global outbreak of the datecoronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization and a national emergency by the U.S. 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 statements are issued, which may result in a loss tomarkets. The full extent of the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings,COVID-19 impact on the Company’s legal counsel evaluatesoperational and financial performance will depend on future developments, including the perceived merits of any legal proceedings or unasserted claims as well as the perceived meritsduration and spread of the amountpandemic and related actions taken by U.S. and foreign government agencies to prevent disease spread, all of relief sought or expected to be sought.

If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amountwhich are uncertain, out of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable butcontrol, and cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.predicted.

Cash and Cash Equivalents

Cash and cash equivalents include cash inon hand and cash in demand deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. At December 31, 2017 and March 31, 2017, the Company had $4,510,052 and $392,007, respectively, in cash. Deposits at the bank are insured up to $250,000 by the Federal Deposit Insurance Corporation. The Company’s uninsured portion of the balances held at the bank aggregated to approximately $4,010,052 and $142,007, respectively. No reserve has been made in the financial statements for any possible loss due to any financial institution failure.  The Company has not experienced any losses in such accounts and believes we are not exposed to any significant risk on cash and cash equivalents.

Inventory

Inventories are valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of inventories with the market value and allowance is made to write down inventories to market value, if lower. As of December 31, 2017 and March 31, 2017, the Company had no inventory.

Property Plant & Equipment

Property and equipment are originally recorded at cost. Depreciation is stated at cost and depreciatedcomputed using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of our propertythe assets, generally three to five years. Depreciation is recorded in operating expenses in the condensed consolidated statements of operations. Leasehold improvements and equipmentassets acquired through capital leases are generally as follows: computer software developedamortized over the shorter of their estimated useful life or acquired for internal use, three to 10 years; computer equipment, two to three years; buildingsthe lease term, and improvements, five to 15 years; leasehold improvements, two to 10 years; and furniture and equipment, one to five years.amortization is recorded in operating expenses in the condensed consolidated statements of operations.

As of December 31, 2017 and March 31, 2017, property, plant and equipment amounted to:

Depreciation expenses for the nine months ended December 31, 2017 and 2016 was $758 and $0, respectively.

Fair Value of Financial InstrumentInstruments

For certain of the Company’s financial instruments, including cash and equivalents, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure ofThe Company measures the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” definesusing a fair value and establishes a three-levelhierarchy that prioritizes the inputs to valuation hierarchy for disclosures oftechniques used to measure fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. Theinto three levels of valuation hierarchy are defined as follows:broad levels:

Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

·

Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

·

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

·

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Due to their short-term nature, the carrying values of cash equivalents, accounts payable and accrued expenses approximate fair value.

Per-Share Amounts

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

As of December 31, 2017 and March 31, 2017, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.

Earnings Per Share (EPS)

Basic EPSnet loss per share is computed by dividing income available to common shareholdersloss for the period by the weighted averageweighted-average number of shares of common stock outstanding during the period. Diluted net loss per share gives effect to all potentially dilutive common shares outstanding for the period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common shares were dilutive. Diluted EPS is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted method for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. UnderFor the if-converted method, convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later).

The following table sets for the computation of basic and diluted earnings per share for the three and nine months ended December 31, 20172021 and 2016:2020, outstanding options to purchase 1,967,188 and 1,170,863 shares of common stock, respectively, were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive.

Reclassification

Recently Issued Accounting Pronouncements

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update addresses a diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We adopted this ASU in 2016 and the implementation did not have a material impact on our financial position or statement of operations.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

Reclassification

Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations or cash flow.flows.

NOTE 2- REORGANIZATION AND PRIVATE PLACEMENTComprehensive Loss

On April 26, 2017, Modular,Comprehensive loss represents the changes in equity of an enterprise, other than those resulting from stockholder transactions. Accordingly, comprehensive loss may include certain changes in equity that are excluded from net loss. For the three and nine months ended December 31, 2021 and 2020, the Company’s comprehensive loss was the same as its net loss.

Recently Adopted Accounting Pronouncement

In August 2020, the FASB issued 2,900,000 shares (the “Control Block”), of newly issued, restricted common stock, par value, $0.001,ASU No. 2020-06, Debtwith Conversion and Other Options(Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)-Accounting For Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06). ASU 2020-06 simplifies the accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. ASU 2020-06 also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for a purchase priceannual and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company early adopted ASU 2020-06 effective April 1, 2021, and the impact of $375,000, resulting in a change in control of Modular.the adoption was not material to the Company’s consolidated financial statements.

On July 24, 2017, pursuant to a Reorganization and Share Exchange Agreement, by and among, Modular, and3 Quasuras Shareholdersand Quasuras (the “Acquisition Agreement”),NOTE 2 – LEASES

Effective April 1, 2019, the Company acquired all 4,400,000 shares of Quasuras’ common stockadopted ASU No. 2016-02, Leases (ASC 842),and related ASUs, as amended, using the alternative transition method, which represented 100% of the issued and outstanding shares of Quasuras for 7,582,060 shares of our common stock, resulting in Quasuras becoming our wholly-owned subsidiary (the “Acquisition”).

Simultaneously with the closing of the Acquisition and as a condition thereto, we sold (the “Private Placement”), in a private placement an aggregate of 7,801,212 shares of our common stock pursuant to one or more exemptions from the registration requirements of the Securities Act, at a purchase price of $0.66 per share resulting in gross proceeds to us of approximately $5,100,000. Simultaneously with the Acquisition and Private Placement,allowed the Company cancelled all 2,900,000 Control Block shares it had issued into initially apply the Control Block Acquisitionnew lease standard at the adoption date (the “Share Cancellation”“effective date method”). In connection withJanuary 2020, the Private Placement, weCompany executed a lease for a new, larger corporate facility in San Diego, California and paid $41,928 as compensation in connection with sales of our shares therein.

Following the Acquisition, the Private Placementa $100,000 security deposit. The 39-month lease term commenced April 1, 2020, and the Share Cancellation, we had issued and outstanding 15,983,272 shareslease provides for an initial monthly rent of our common stock.

The cash received in the private placement was recorded as the cash received in reorganization in the accompanying financial statements.

Simultaneously with and as a conditionapproximately $12,400 annual rent increases of approximately 3%. In addition to the closingminimum lease payments, the Company is responsible for property taxes, insurance and certain other operating costs. The right-to-use asset and corresponding liability for the facility lease have been measured at the present value of the Acquisitionfuture minimum lease payments. A discount rate of 11%, which approximated the Company’s incremental borrowing rate, was used to measure the lease asset and liability. Lease expense is recognized on a straight line basis over the Private Placement, pursuantlease term.

The Company obtained a right-of-use asset of $270,950 in exchange for its obligations under the operating lease. The landlord also provided a lease incentive of approximately $139,000, which was paid to an intellectual property transfer agreement dated as of July 24, 2017, by and among, us, Quasuras and Mr. DiPerna (the “IP Transfer Agreement”), Mr. DiPerna transferredthe Company in June 2020, for the Company to us all intellectual property rights owned directly and/or indirectly by him relatedmake improvements to our proposed business. Separately, we agreed to pay Mr. DiPerna as part of his compensation for services to be performed for us pursuant to a royalty agreement (the “Royalty Agreement”) certain fees based upon future sales, if any, of our proposed product subject to a maximum $10,000,000 cap on the aggregate amount of fees that Mr. DiPerna could earn from such arrangement.leased space.

NOTE 3 – ACCRUED EXPENSES

As of December 31, 2017 and March 31, 2017, accrued expenses amounted to $32,601 and $8,425, respectively. Accrued expenses comprised of accrued legal and professional chargesFuture minimum payments under the facility operating lease, as of December 31, 2017 and March 31, 2017.2021, are listed in the table below.

NOTE 4 – PAYABLE TO RELATED PARTY

Payable to related party comprisesCash paid for amounts included in the measurement of lease liabilities was $115,073 for the amounts paid by the major shareholder on behalf of the Company. The payable is unsecured, non- interest bearing and due on demand. As ofnine months ended December 31, 20172021. Rent expense was $80,698 and March$80,654 for the nine months ended December 31, 2017,2021 and 2020, respectively, and $26,930 and $26,844 for the payable to related party amounted to $0three months ended December 31, 2021 and $21,256.2020, respectively.

NOTE 3 – PPP NOTE

On April 24, 2020, the Company received a $368,780 unsecured loan (the PPP Note) under the Paycheck Protection Program (the PPP), which was established under the U.S. government’s Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). The PPP Note to the Company was made through Silicon Valley Bank (the Lender), and the Company entered into a U.S. Small Business Administration Paycheck Protection Program Note with the Lender evidencing the PPP Note. The full amount of the PPP Note was due in April 2022 and interest accrued on the outstanding principal balance of the PPP Note at a fixed rate of 1.0% per annum, which was deferred for 10 months after the covered period during which the Company used the proceeds.

The Company applied to the Lender for forgiveness of the PPP Note in October 2020, and, in May 2021, the Company was notified by the Lender and the U.S. Small Business Administration that the outstanding principal and accrued interest for the PPP Note was forgiven in full. The Company accounted for the forgiveness of the PPP Note in accordance with Accounting Standards Codification Topic 470: Debt (ASC 470), and the amount forgiven was recorded as a gain on extinguishment and recognized in the other income line of the condensed consolidated statement of operations.

NOTE 54 – STOCKHOLDERS’ EQUITYCONVERTIBLE PROMISSORY NOTES

Common stock

On July 24, 2017,From February through April 2021, the Company sold $2,310,000 of convertible promissory notes (each an Original Notes and, collectively, the Original Notes), at par in a private placement transaction effected pursuant to an exemption from the registration requirements under the Securities Act of 1933, as amended. Effective April 30, 2021, pursuant to a Reorganizationrevocation and Share Exchangereplacement agreement between each holder of an Original Note and the Company (the Revocation Agreement), the $2,310,000 of Original Notes and accrued interest thereon as of April 30, 2021 were replaced with $2,360,550 aggregate principal amount of new Notes (as defined below). The Company accounted for the replacement of the Original Notes in accordance with ASC 470 and recorded a loss on extinguishment of $1,321,450 and interest expense of $70,647 for unamortized debt issuance costs as of April 30, 2021.

In April and May 2021, pursuant to a Securities Purchase Agreement by and among,between the Company and Quasuras Inc.each investor (the SPA), the Company acquired 100%sold to investors $4,250,000 aggregate principal amount of convertible promissory notes (the Notes) and warrants to purchase shares of its common stock (the Warrants). The Notes are unsecured obligations of the issuedCompany 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 the Company fails 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 the Company’s 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 outstanding principal and accrued interest then outstanding. No Note may be prepaid in whole or in part after the Trigger Date.

Notes outstanding shares of Quasuras for 7,582,000after the Trigger Date may be converted into shares of the Company, resultingCompany’s common stock at an initial conversion price of $8.61 per share; provided that a Note holder may not convert any portion of its Note that would cause it to beneficially own in Quasuras becoming a wholly-owned subsidiaryexcess of 4.99% of the Company.Company’s outstanding common stock. The historical equityconversion price and number of shares of Company common stock issuable upon conversion of the Notes are subject to adjustment from time to time for Quasuras was restated pursuantsubdivisions and consolidations of shares and other standard dilutive and corporate events, as provided in the Notes. Subject to certain Exempt Issuances (as defined in the reorganization.

TheNotes), if while a Note is outstanding, the Company has 50,000,000sells, issues or grants any shares of its common stock or other securities to acquire shares of common stock authorized. The par valueat a price per share less than the then conversion price, such conversion price shall be reduced to such lesser price, and the number of conversion shares issuable upon conversion of the Notes shall be increased, as provided in the Notes.

If the Company completes an offering of its common stock or other securities in excess of $12,000,000 of gross proceeds (a Qualified Capital Raise, as defined in the Notes), each Note holder will be required to convert its Adjusted Note Amount (as defined below) into the securities of such Qualified Capital Raise. Adjusted Note Amount equals the product of (i) the sum of all outstanding principal plus accrued interest on a Note, multiplied by (ii) 1.25.

The Notes contain a number of Company events of default (Events of Default) including, without limitation (i) failure to pay any principal or interest thereon when due, (ii) failure to timely deliver shares upon conversions, (iii) failure to comply with SEC reporting requirements under the Exchange Act, (iv) certain breaches of the SPA, the Notes, the Warrants, and the Registration Rights Agreement, (v) material restatements of the Company’s consolidated financial statements filed with the SEC, (vi) a holder’s inability to rely on Rule 144 for sales of shares underlying the Notes, (vii) the Company’s common stock is $0.001. Assuspended or halted from trading and/or fails to be quoted or listed (as applicable) on the OTCQB, OTCQX, any tier of December 31, 2017, 15,983,000the NASDAQ Stock Market, the New York Stock Exchange, or the NYSE American within 10 days thereafter, (viii) failure to file with the SEC a registration statement covering the resale of shares of common stock underlying the Notes and Warrants within 60 calendar days following the Issue Date, (ix) failure to cause such registration statement to become effective within 120 calendar days following the Issue Date, or (x) certain mergers consolidations, business combinations and sales of all or substantially all of the Company’s assets in the event the Company wereis not the survivor of such transaction.

Upon an Event of Default, a Note holder may declare all amounts under its Note(s) due and payable, in which event the Company will be required to pay such Note holder the sum of (i) the product of (a) all then outstanding principal amount and accrued interest thereon, multiplied by (b) 125%; and (ii) all collection costs including legal fees and expenses in connection therewith. At the option of a Note holder, in the event the Company receives cash proceeds as a result of certain events, including, but not limited to, payments from customers, issuances of debt or equity securities, exercise of warrants or asset sales, the Company will be required to use such proceeds to repay all or any lesser outstanding amounts due under such holder’s Note.

The Notes include covenants, representations, warranties, other payment obligations and agreements by the Company including, without limitation, most-favored nation rights, rights of participation and first refusal and exchange rights.

In connection with the issuance of the Notes, the Company issued and outstanding.

Preferred Stock

The Company has 5,000,000Warrants to purchase in the aggregate 767,796 shares of preferredits common stock authorized.at an initial exercise price of $24.00 per share. The parWarrants may be exercised for a period of five years from the Trigger Date, provided that, if prior to the Trigger Date, the Company (i) completes a Qualified Capital Raise, the outstanding Warrants shall be cancelled or (ii) prepays a holder’s Note(s) in whole or in part, such holder’s pro-rata number of Warrants shall be cancelled. The fair value of the Warrants was $3,700,632, of which $2,379,182 was recorded as a debt discount, which is being amortized to interest expense over the term of the Warrants, and $1,321,450 was recorded as a loss on debt extinguishment. The Company calculated the fair value of the Warrants utilizing the Black-Scholes valuation model with the following assumptions: volatility of 88.98%, risk-free interest rate of 0.86%, a term of 5.75 years and a dividend yield of zero.

In connection with the April and May 2021 sales of the $4,250,000 aggregate principal amount of the Notes, the Company incurred debt issuance costs of $116,000, which were recorded as a debt discount and are being amortized to interest expense over the term of the Notes using the effective interest rate method. The interest expense attributable to the debt discount, comprising the debt issuance costs and Warrants, during the three and nine months ended December 31, 2021 was $630,323 and $1,454,762, respectively.

The $6,610,550 aggregate principal amount of Notes are due and payable in full in the first quarter of fiscal 2023. Subsequent to the Trigger Date, the Notes can be converted into 767,783shares of common stock at a conversion price of $8.61 per share.

NOTE 5 – PROMISSORY NOTE

On October 28, 2021, the Company issued a secured promissory note (the Bridge Note) to Manchester Explorer, L.P. (“Manchester”) that provides the Company 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 (the “Maturity Date”). Interest at the rate of 12%is $0.001. Aspayable on each drawn down without regard to the draw down date or the date when interest is paid.

The principal amount of the Bridge Note and interest due thereon is payable to Manchester no later than the earlier of: (i) the Maturity Date and (ii) the date on which the Company has received proceeds in excess of $12,000,000 from a transaction or series of related transactions occurring prior to the Maturity Date, which such transactions constitute equity financings or other issuances of the Company’s equity securities. Provided that no Event of Default (as such term is defined in the Bridge Note) has occurred, on any date prior to the Maturity Date, upon no less than three days written notice by the Company specifying the draw amount, Manchester will advance the draw amount to the Company. No draw amount can be in an amount less than $100,000 or exceed an amount equal to $3,000,000 minus the aggregate principal amount outstanding under the Bridge Note at the time of such draw request. If an Event of Default occurs and is continuing, Manchester may declare all of the Bridge Note, including any interest and other amounts due, to be due and payable immediately.

In connection with the issuance of the Note, on October 28, 2021, the Company entered into a Security Agreement with Manchester (the “Security Agreement”) under which the Company granted Manchester a continuing and unconditional first priority security interest in and to any and all of the Company’s property of any kind or description, tangible or intangible, wheresoever located and whether now existing or hereafter arising or acquired.

During the quarter ended December 31, 2021, the Company made draws on the Bridge Note of $1,500,000 and incurred interest charges of $180,000.

NOTE 6 – STOCKHOLDERS’ DEFICIT AND STOCK-BASED COMPENSATION

During the three months ended December 31, 2021, the Company sold 30,865 shares of common stock to its chief executive officer and its chairman of the board of directors, president, chief financial officer and treasurer, issued 8,334 shares of common stock to a service provider and issued 5,775 shares to its non-employee directors under the Company’s outside director compensation plan. At December 31, 2021, the Company had an obligation to issue 16,666 shares of common stock to service providers, and the value of these shares was recorded as common stock issuable in the condensed consolidated balance sheet.

Amended 2017 Equity Incentive Plan

In October 2017, the Company’s board of directors (the Board) approved the 2017 Equity Incentive Plan (the Plan) with 1,000,000 shares of common stock reserved for issuance. In January 2020 and August 2021, the Board approved increases in the number of shares reserved for issuance under the Plan by 333,334 and 1,333,334 shares, respectively. Under the Plan, eligible employees, directors and consultants may be granted a broad range of awards, including stock options, stock appreciation rights, restricted stock, performance-based awards and restricted stock units. The Plan is administered by the Board or, in the alternative, a committee designated by the Board.

Stock-Based Compensation Expense

The expense relating to stock options is recognized on a straight-line basis over the requisite service period, usually the vesting period, based on the grant date fair value. The unamortized compensation cost, as of December 31, 2017, none2021, was $7,419,022 related to stock options and is expected to be recognized as expense over a weighted-average period of approximately two years.

During the nine months ended December 31, 2021, the Company granted options to purchase 723,269 shares of its common stock to employees, directors and consultants. The options had 10-year terms, and 85,484 options vested immediately when granted. The fair value of the sharesoptions was determined to be $8,108,043 of preferred stockwhich $1,769,805 was recorded as stock-based compensation expense and included in the condensed consolidated statement of operations for the nine months ended December 31, 2021.

The following assumptions were used in the fair value method calculations:

Schedule of Fair Value Assumptions

The fair values of options at the grant date were estimated utilizing the Black-Scholes valuation model, which includes simplified methods to establish the fair term of options as well as average volatility of three comparable organizations. The risk-free interest rate was derived from the Daily Treasury Yield Curve Rates, as published by the U.S. Department of the Treasury as of the grant date for terms equal to the expected terms of the options. A dividend yield of zero was applied because the Company were issued.has never paid dividends and has no intention to pay dividends in the foreseeable future. In accordance with ASU No. 2016-09, the Company accounts for forfeitures as they occur.

A summary of stock option activity under the Plan is presented below:

Schedule of Stock Option activity

Stock Options

On October 19, 2017,There were no stock options exercised during the board approved an Employee Stock Option Program (“ESOP”) that reserves 3,000,000 shares to be issued. Asnine months ended December 31, 2021 and 2020.

The following table summarizes the range of outstanding and exercisable options as of December 31, 2017,2021:

Schedule of Outstanding and Exercisable Option, Range

The intrinsic value per share is calculated as the excess of the closing price of the common stock on the Company’s principal trading market over the exercise price of the option at December 31, 2021.

The Company is required to present the tax benefits resulting from tax deductions in excess of the compensation cost recognized from the exercise of stock options as financing cash flows in the consolidated statements of cash flows. For the nine months ended December 31, 2021 and 2020, there were no options has been granted.such tax benefits associated with the exercise of stock options.

NOTE 6 - 7 – INCOME TAXES

The Company determines deferred tax assets and liabilities based upon the differences between the financial statement and tax bases of the Company’s assets and liabilities using tax rates in effect for the year in which the Company expects the differences to affect taxable income. A valuation allowance is established for any deferred tax assets for which it is more likely than not that all or a portion of the deferred tax assets will not be realized. Based on the available information and other factors, management believes it is more likely than not that theits federal and state net deferred tax assets at, December 31, 2017 and 2016, will not be fully realizable. Accordingly, managementrealized, and the Company has recorded a full valuation allowance against its net deferredallowance.

The Company files U.S. federal and state income tax assets at,returns in jurisdictions with varying statutes of limitations. All tax returns for fiscal 2016 to fiscal 2021 may be subject to examination by the U.S. federal and state tax authorities. As of December 31, 20172021, the Company has not recorded any liability for unrecognized tax benefits related to uncertain tax positions.

NOTE 8 – RELATED PARTY TRANSACTIONS

In February 2021, the Company’s chairman of the board of directors and 2016.president and an existing investor, who is represented by a member of the Company’s board of directors, purchased $100,000 and $1,000,000, aggregate principal amount of the Original Notes, respectively. Effective April 30, 2021, the related party holders entered into revocation agreements with the Company pursuant to which their collective $1,100,000 aggregate principal amount of Original Notes and accrued interest of $50,091 were replaced with Notes. At December 31, 20172021, the investor and Marchexecutive officer held Notes in an aggregate principal amount of $1,026,630 and $102,663, respectively, with $82,693 and $8,269 of interest payable thereon. For the three months ended December 31, 2017,2021, the Company had federal net operating loss carry-forwardsincurred interest expense of approximately $290,000$31,052 and $75,000,$3,105, respectively, expiring beginning in 2037.and for the nine months ended December 31, 2021, the Company incurred interest expense of approximately $82,693 and $8,269, respectively, on the related party holder Notes.

Deferred tax assets consistIn May 2021, a member of the following components:Board purchased $200,000 aggregate principal amount of Notes (the Director Note). For the three and nine months ended December 31, 2021, the Company incurred expense of approximately $6,049 and $16,110, respectively, on the Director Note. At December 31, 2021, approximately $16,110 of interest was payable by the Company on the Director Note.

In October 2021, the Company entered into purchase agreements with Ellen O’Connor (Lynn) Vos, the Company’s chief executive officer, and Paul DiPerna, the chairman of the Company’s board of directors and its president, chief financial officer and treasurer, providing for the sale and issuance by the Company of 30,864 shares of the Company’s common stock, par value $0.001 per share at the closing market price on October 28, 2021 of $8.10 per share. The Company received proceeds of approximately $250,000 from the sale of the shares, comprising $150,000 from Ms. Vos and $100,000 from Mr. DiPerna.

NOTE 79 – ROYALTY AGREEMENTCOMMITMENTS AND CONTINGENCIES

Litigations, Claims and Assessments

In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements.

Indemnification

In the ordinary course of business, the Company enters into contractual arrangements under which it may agree to indemnify the counterparties from any losses incurred relating to breach of representations and warranties, failure to perform certain covenants, or claims and losses arising from certain events as outlined within the particular contract, which may include, for example, losses arising from litigation or claims relating to past performance. Such indemnification clauses may not be subject to maximum loss clauses. The Company has also entered into indemnification agreements with its officers and directors. No amounts were reflected in the Company’s consolidated financial statements for the nine months ended December 31, 2021 and 2020 related to these indemnifications. The Company has not estimated the maximum potential amount of indemnification liability under these agreements due to the limited history of prior claims and the unique facts and circumstances applicable to each particular agreement. To date, the Company has not made any payments related to these indemnification agreements, and no claims for payment have been made under such agreements.

NOTE 10 – SUBSEQUENT EVENTS

Bridge Note

Subsequent to December 31, 2021, the Company made additional draws totaling $600,000 under the Bridge Note.

Public Offering

On July 12, 2017,February 9, 2022, the Company entered into an underwriting agreement (the Underwriting Agreement), with Oppenheimer & Co. Inc., which acted as the representative of the several underwriters (the “Representative”), in a royalty agreementfirm commitment underwritten public offering (the Offering) pursuant to which the Company agreed to sell to the Representative an aggregate of 2,500,000 shares of the Company’s common stock, par value $0.001 per share (the Common Stock), and 2,500,000 warrants (Warrants and, collectively with the founderCommon Stock, the Units), each to purchase one share of Common Stock, at a public offering price of $6.00 per Unit. The Warrants included in the Units are exercisable immediately, have an exercise price of $6.60 per share and major shareholder. Pursuantexpire five years from the date of issuance. The Common Stock was approved to list on the Nasdaq Capital Market under the symbol “MODD” and began trading there on February 10, 2022. The gross proceeds from the Offering were $15 million, before deducting underwriting discounts and commissions and other offering expenses.

The Units were offered and sold to the agreement, the founder and major shareholder is assigning and transferring all of his rights in the intellectual property in return for royalty payments. The Company shall pay royaltypublic pursuant to the founderCompany’s registration statement on any sales of the royalty product sold or otherwise commercializedForm S-1 (File No. 333-260682), initially filed by the Company equal to (a) US$0.75with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the Securities Act), on each sale of a royalty product, or (b) 5% of the gross sale price of the royalty product, whichever is less. November 2, 2021, and declared effective on February 9, 2022.

The royalty payments shall ceaseUnderwriting Agreement contains customary representations, warranties and this agreement shall terminate, at such time as the total sum of royalty payments actually paid to the founder, pursuant to this agreement, reaches $10,000,000. The Company shall have the option to terminate this agreement at any time upon payment, to the founder, of the difference between total royalty payments actually made to him to date and the sum of $10,000,000. All payments of the royalties, if due, for the preceding quarter, shall be madeagreements by the Company, within thirtycustomary conditions to closing, indemnification obligations of the Company and the Representative, including for liabilities under the Securities Act of 1933, as amended, other obligations of the parties and termination provisions. In addition, pursuant to the terms of the Underwriting Agreement and related “lock-up” agreements, the Company, each director and executive officer of the Company, and certain stockholders have agreed with the Representative not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of our Common Stock or securities convertible into Common Stock for a period of 180 days after February 9, 2022, the calendar quarter.

NOTE 8 – LEASE AGREEMENT

On August 21, 2017, the Company entered into a sublease agreement to rent office space. The termdate of the lease commences on September 1, 2017 and expires on December 14, 2019. The monthly rent for the lease is $3,000. The Company paid a deposit of $7,500 upon execution of the lease which has been recorded as a security deposit in the accompanying financial statements. The amounts of minimum lease payments and periods during which they become due are as follows:final prospectus.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.Operations

Forward-looking Statements

When usedThis 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 AnnualQuarterly 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 “may,“believes,” “will,“anticipates,” “expect,“expects,” “anticipate,“intends,” “continue,“plans,” “estimate,“projects,” “project,” “intend,” andor similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act of 1933, as amended (“Securities Act”) and Section 21e of the Securities Exchange Act of 1934, as amended (“Exchange Act”) regarding events, conditions, and financial trends that may affect our future plans of operations, business strategy, operating results, and financial position.

Persons reviewing this Quarterly Report are cautioned that these statements reflect our current expectations regarding our possible future results of operations, performance, and achievements and any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties andstatements. Our actual results maycould differ materially from those included within theexpressed or implied by these forward-looking statements as a result of various factors.

Such factors, are discussed further belowincluding the risk factors described under “Trends and Uncertainties,” and also include general economic factors and conditions that may directly or indirectly impactItem 1A of our financial condition or results of operations.

Overview

The Company was organized under the laws of the State of Nevada on October 22, 1998 under the name Bear Lake Recreation Inc. Our initial operations consisted of renting snowmobiles and all-terrain vehicles (ATV’s). We had also planned on organizing snowmobile rental packages, which would have included lodging at Ideal Beach Resort at Bear Lake, Utah. On or about October 1999, we abandoned the snowmobile, ATV and lodging plans. On June 27, 2000, we entered into a licensing agreement with AlCORP, an Oregon limited liability company, to purchase the right to manufacture, use, market and sell the “NetCaddy,” a backpack style bag used to transport fishing gear. By the end of the first quarter of 2002, we had also abandoned the “Net Caddy” operations.

We had no material business operations from 2002 through June 2017 and we were a shell company as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”). As a shell company, we did not have material operations and had assets consisting solely of cash and cash equivalents. On April 26, 2017, there was a change of control of the Company. See our CurrentAnnual Report on Form 8-K dated April 5, 2017 filed with10-K for the Securitiesyear ended March 31, 2021. These forward-looking statements represent our intentions, plans, expectations, assumptions and Exchange Commission on April 5, 2017beliefs 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 Current Report on Form 8-K dated April 26, 2017 filed withcontrol 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 Securities and Exchange Commission on May 1, 2017

On July 24, 2017, pursuantevents described in the forward-looking statements might not occur or might occur to a Reorganizationdifferent 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 Share Exchange Agreement,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 and among, the Company, Paul M. DiPerna,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.

Our fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in this Report, refers to the sole officer and directorfiscal year ended March 31 of the calendar year indicated (for example, fiscal 2022 refers to the fiscal year ending March 31, 2022). Unless the context requires otherwise, references to “we,” “us,” “our,” and the controlling stockholder of Quasuras“Company” refer to Modular Medical, Inc., a Delaware company (“Quasuras”), Messrs. Besser and Frank (Messrs. Besser, Frank and Mr. DiPerna, shall sometimes be collectively referred to as the “3 Quasuras Shareholders”) and Quasuras (the “Acquisition Agreement”), the its consolidated subsidiary.

Company acquired all 4,400,000 issued and outstanding shares of Quasuras’ common stock owned by the 3 Quasuras Shareholders (which represented 100% of the issued and outstanding shares of Quasuras) in exchange for 7,582,060 shares of our common stock, resulting in Quasuras becoming our wholly-owned subsidiary (the “Acquisition”) and Mr. DiPerna owning approximately 47% of our issued and outstanding common stock.Overview

Simultaneously with the closing of the Acquisition and pursuant to the Acquisition Agreement (i) Mr. Besser resigned as president and a director and Mr. Frank resigned as chief executive officer, chief financial officer, secretary, and treasurer but remained a director of the Company, and (ii) Mr. DiPerna was appointed our chairman, chief executive officer, chief financial officer, secretary and treasurer.

We are now a development stage medical device company focused on designing, developingthe design, development, and commercializingcommercialization of an innovative insulin pump using modernized technology to better serveincrease pump adoption in the diabeticdiabetes marketplace. Through the creation of a novel two-part patch pump, our MODD1 product, the Company seeks to fundamentally alter the trade-offs between cost and complexity and access to the higher standards of care that presently-available insulin pumps provide. By simplifying and streamlining the user experience from introduction, prescription, reimbursement, training and day-to-day use, we seek to expand the wearable insulin delivery device market beyond the highly motivated “super users” and expand the category into the mass market. The product seeks to serve both the type 1 and the rapidly growing, especially in terms of device adoption, type 2 diabetes markets.

Historically, we have financed our operations principally through private placements of our common stock and convertible promissory notes. Based on our current operating plan, substantial doubt about our ability to continue as a going concern for a period of at least one year from the date that the financial statements included in Item 1 of this Report are issued exists. 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. If we are unable to secure additional capital, we will be required to curtail our research and development initiatives and take additional measures to reduce costs. We have provided additional disclosure in Note 1 to the condensed consolidated 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 the U.S. 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 by U.S. 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 2021. 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. We have and continue to experience 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.

The continued spread of COVID-19 has also led to disruption and volatility in the global capital markets. We were recently able to raise additional capital in a private placement of convertible promissory notes (see discussion below under Liquidity). However, we need to raise additional capital to support our operations in the future. We may be unable to access the capital markets or additional capital may only be available to us on terms that could be significantly detrimental to our existing stockholders and holders of the convertible promissory notes and to our business.

For additional information on risks that could impact our future results, please refer to “Risk Factors” in Part II, Item 1A of this Report.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make certain estimates and judgments that affect the reported amounts of assets, liabilities, and expenses. On an ongoing basis, we make these estimates based on our historical experience and on assumptions that we believe will substantially improveconsider reasonable under the qualitycircumstances. Actual results may differ from these estimates and reported results could differ under different assumptions or conditions. Our significant accounting policies and estimates are disclosed in Note 1 of lifethe Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended March 31, 2021. As of persons requiring daily administrationDecember 31, 2021, there have been no material changes to our significant accounting policies and estimates.

Results of fast acing insulin. Diabetes is a chronic, life-threatening disease for which there is no known cure. Type 1 diabetes is an auto immune disease whereby the immune system attacksOperations

Research and destroys beta cells in the pancreas leaving it unable to produce insulin. Type 2 diabetes is most commonly caused byDevelopment

Our research and development expenses include personnel, consulting, materials and other costs associated with the development of our insulin resistance that prevents the body from properly using insulin. Insulin is a life sustaining hormone that allows cells in the body to absorb glucosepump product. We expense research and store itdevelopment costs as they are incurred.

Research and development, or covert it to energy, those with diabetes are left unable to properly process sugars resulting in excessive sugar in their bloodstream.

Our developed hardware technology, we believe, allows people with diabetes to receive their daily insulin in two ways, through a continuous “basal” delivery allowing a small amount of insulin to be in the blood at all times and a “bolus” delivery to address meal time glucose input and to address when the blood glucose level elevates beyond an acceptable level. See Part II – Other Information – Item 2.

For additional information regarding the Acquisition, see our Current Report on Form 8-K that was filed with the Securities and Exchange Commission (the “SEC”) on July 28, 2017.

Results of Operations –R&D, expenses increased for the Nine Months Ended December 31, 2017 and Compared to the Nine Monthsthree months ended December 31, 2016

Overview:

We reported a net loss2021 as compared with the prior period of $477,863fiscal 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, 20172021 as compared with the prior period of fiscal 2021 primarily due to increased engineering and $7,568manufacturing 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 $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, 2016. The increase in2021 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 net loss from December 31, 2016 to December 31, 2017, is due topump product and develop an increase in Consulting fee, Professional fee and General and Administrative Expenses.initial low-volume manufacturing process.

Revenues:General and Administrative

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

RevenueGeneral and administrative, or G&A, expenses, increased for the nine month period ended December 31, 2017three and for the nine month period ended December 31, 2016 respectively was $0.

Operating Expenses:

Operating expenses were $480,971 for the nine month period ended December 31, 2017 and $7,567 for the nine month period ended December 31, 2016, which increase was largely attributed to the consulting fee paid to outside consultants, professional fee paid for the quarterly filings and the general and administrative expenses. The Company had minimal operations during the nine months ended December 31, 2016 hence2021 as compared with the operatingprior periods of fiscal 2021 primarily as a result of increased stock-based compensation expense and increased consulting and legal fees. G&A expenses were also low.

Interest Income:

Interest incomeincluded 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, 20172021 and 2016 was $3,908 and $799,2020, respectively.

Assets and Liabilities:

As of December 31, 2017, we had total current assets of $4,532,965 of which $4,510,052 were cash and cash equivalents, and current liabilities of $32,601. As of December 31, 2016, we had total current assets of $392,313 and current liabilities of $29,681.

Results of Operations – We expect G&A expenses to increase for the Three Months Ended December 31, 2017remainder of fiscal 2022, as we pursue a public offering of our common stock.

Interest Expense

As a development-stage enterprise, we do not currently have revenues to generate cash flows to cover operating expenses. Since our inception, we have incurred operating losses and negative cash flows in each year due to costs incurred in connection with R&D activities and G&A expenses associated with our operations. For the nine months ended December 31, 2016

Overview:

We reported2021, we incurred a net loss of $258,772approximately $14.1 million. 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. 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 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 Date. 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, 2017 and $6,427 for2021, we drew down $1,500,000 under the three months ended December 31, 2016. The increase in our net loss from December 31, 2016 to December 31, 2017, is due to an increase in Consulting fee, Professional fee and General and Administrative Expenses.

Revenues:

Revenue for the three month period ended December 31, 2017 and for the three month period ended December 31, 2016 respectively was $0.

Operating Expenses:

Operating expenses were $260,860 for the three month period ended December 31, 2017 and $5,812 for the three month period ended December 31, 2016, which increase was largely attributed to the consulting fee paid to outside consultants, professional fee paid for the quarterly filings and the general and administrative expenses. The Company had minimal operations during the three months ended December 31, 2016 hence the operating expenses were also low.Bridge Note.

Our operating needs include the planned costs to operate our business, including amounts required to fund research and development activities, including clinical studies, working capital and capital expenditures. Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our product, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product offering. If we are unable to secure additional capital, we will be required to curtail our research and development initiatives and take additional measures to reduce costs in order to conserve our cash.

Interest Income:For the 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.

Interest incomeFor the 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.

Cash provided by financing activities of $6,037,199 for the nine months ended December 31, 20172021 primarily attributable to net proceeds from the issuance of our Notes of $5,637,199 and 2016 was $2,888 and $185, respectively.

Liquidity and Capital Resources

Netnet proceeds of $250,000 from the sale of shares of common stock to officers of the Company. Cash Used In Operating Activities

We used $544,837provided by financing activities of cash to fund operating activities during$2,154,662 for the nine months ended December 31, 2017, compared2020 was attributable to $7,874net proceeds of $1,785,882 from the sale of shares of our common stock in the nine months ended December 31, 2016.  More cash was used to fund operating activities during the first nine months of 2017 due to increased losses generated by our Company and the increase in accounts receivables security deposit.

Net Cash Used In Investing Activities

Investing activities provided $4,684,138 cash in the nine months ended December 31, 2017, compared to no cash generated by investing and financing activities in the comparable prior year period.  The main source of the cash was the reverse acquisition completed in July 2017. The subsidiary issued shares pursuant to a private placement completed simultaneously withthat was initiated in March 2020 and $368,780 in proceeds from the reverse acquisition. The cash collected in the private placement was acquired by the Company at the time of the reverse acquisition.PPP Note.

Net Cash Provided By Financing Activities

We used $21,256 of cash from financing activities in the nine months ended December 31, 2017, compared to using $380,284 of cash from financing activities in the comparable prior year period.  The decrease in cash from financing activities was attributable the repayment of $21,256 to the related party. For the same period in the prior year, the Company paid $187,951 pursuant to a repurchase of common stock and repaid $192,333 to the related party.

Critical Accounting Policies and Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us 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 reporting periods. Estimates may include those pertaining to accruals, stock-based compensation and income taxes. Actual results could materially differ from those estimates.

Off-Balance Sheet Arrangements

As of December 31, 2017 and December 31, 2016, we had not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Recent Accounting Pronouncements.

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update addresses a diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. We adopted this ASU in 2016 and the implementation did not have a material impact on our financial position or statement of operations.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

Additional Information.

We file reports and other materials with the Securities and Exchange Commission.  These documents may be inspected and copied at the Securities and Exchange Commission, Judiciary Plaza, 100 F Street, N.E., Room 1580, and Washington, D.C. 20549.  You can obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.  You can also get copies of documents that the Company files with the Commission through the Commission’s Internet site atwww.sec.gov.  

Item 3. Quantitative and Qualitative Disclosures Aboutabout Market Risk.Risk

Not required.

Item 4. Controls and Procedures.Procedures

Evaluation of Disclosure Controls and ProceduresProcedures.

DisclosureOur management is responsible for establishing and maintaining adequate internal control over our financial reporting. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls andmay become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including the President and Secretary, to allow timely decisions regarding required disclosures.may deteriorate.

Under the supervision and with the participation of our management, including our Chief Executive Officer/ Chief Financial Officer, we evaluatedconducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, (asas defined in RuleRules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) asAct of the end of the period covered by this Quarterly Report.1934. Based on this evaluation, our Chief Executive Officer -Chief Financial Officermanagement concluded that, as of December 31, 2017, that2021, our disclosure controls and procedures were not effective due to the material weaknesses material weaknesses of: (i) lack of segregation of incompatible duties, and (ii) insufficient Board of Directors representation.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were not effective.

Changes in Internal Control over Financial ReportingReporting.

During the fiscal quarter covered by this Quarterly Report,nine months ended December 31, 2021, there has beenwas no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PARTPart II - OTHER INFORMATION

Item 1. Legal Proceedings.Proceedings

None.

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

Item 1A. Risk Factors.Factors

We face many significant risks in our business, some of which are unknown to us and not presently foreseen. These risks could have a material adverse impact on our business, financial condition and results of operations in the future. We disclosed a number of material risks under Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2021, which we filed with the SEC on June 29, 2021.

No reportThe full effects of COVID-19 and other potential future public health crises, epidemics, pandemics or similar events are uncertain and could have a material and adverse effect on our business, financial condition, operating results and cash flows.

The global outbreak of the coronavirus disease 2019, or COVID-19, was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020. This has negatively affected the world 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 extent of the impact on our operational and financial performance will depend on future developments, including 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.

We have been complying with county and state orders and, until May 2021, had implemented a teleworking policy for our employees and contractors and significantly minimized the number of employees who visit our office. However, a facility closure, work slowdowns or temporary stoppage at one of our manufacturing suppliers could occur, which could have a longer-term impact and could delay our prototype production and ability to conduct business. If our workforce is required.unable to work effectively, including because of illness, quarantines, absenteeism, government actions, facility closures, travel restrictions or other restrictions in connection with the COVID-19 pandemic, our operations will be negatively impacted. We may be unable to develop our product, and our costs may increase as a result of the COVID-19 outbreak. The impacts could worsen if there is an extended duration of any COVID-19 outbreak or a resurgence of COVID-19 infection in affected regions after they have begun to experience improvement.

We rely on other companies to provide components and to perform services for us. An extended period of supply chain disruption caused by the response to COVID-19 could impact our ability to produce our initial product quantities, and, if we are not able to implement alternatives or other mitigations, product deliveries would be adversely impacted and negatively impact our business, financial condition, operating results and cash flows. Limitations on government operations can also impact regulatory approvals that are necessary for us to operate our business.

The continued spread of COVID-19 has also led to disruption and volatility in the global capital markets. We were recently able to raise additional capital in a private placement of convertible promissory notes, however, we will need to raise additional capital to support our operations in the future. We may be unable to access the capital markets, and additional capital may only be available to us on terms that could be significantly detrimental to our existing stockholders and to our business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.Proceeds

Recent Sales of Unregistered Securities

ChangeOn December 31, 2021, we issued a total of Control.

On April 26, 2017, pursuant to a Common Stock Purchase Agreement dated as5,775 shares of April 5, 2017 by and among Manchester Explorer, LP, a Delaware limited partnership (“Manchester”), Bear Lake and certain person named therein (the “SPA”)Manchester purchased from Bear Lake (the “Control Block Acquisition”) 2,900,000 shares (the “Control Block”), of newly issued, restrictedour common stock par value, $0.001, per share, for a purchase price of $375,000 (approximately $0.13 per share), resulting in a change in control of Bear Lake, Manchester owning approximately 83%to three of our thennon-employee directors in accordance with our outside director compensation plan.

On October 22, 2021 we issued and outstanding8,834 shares of our common stock and James E. Besser (“Besser”) being appointed president and a director and Morgan C. Frank (“Frank”) being appointed the chief executive officer, chief financial officer, secretary, treasurer and a director of Bear Lake. Messrs. Besser and Frank may be deemed affiliates (as defined in the Securities Act) of Manchester. The foregoing description of the Control Block Acquisition and the SPA does not purport to be complete and is qualified in its entirety to the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 5, 2017.service providers.

The Acquisition.

On July 24, 2017, pursuantOctober 28, 2021, we sold to the Acquisition Agreement, the Company acquired all 4,400,000 sharestwo of Quasuras’ common stock (which represented 100%our executive officers a total of the issued and outstanding shares of Quasuras) for 7,582,06030,864 shares of our common stock resulting in Quasuras becoming our wholly-owned subsidiary and Mr. DiPerna owning approximately 47% of our issued and outstanding common stock, after giving effect to the Private Placement (as described below) and the Share Cancellation (as described below). Simultaneously with the closing of the Acquisition and pursuant to the Acquisition Agreement (i) Besser resigned as president and a director and Frank resigned as chief executive officer, chief financial officer, secretary, and treasurer but remained a director of the Company, and (ii) DiPerna was appointed our Chairman, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer.

In anticipation of the closing of the Acquisition, on June 27, 2017, Bear Lake changed its name from “Bear Lake Recreation, Inc.” to “Modular Medical, Inc.” and we changed our trading symbol from “BLKE” to “MODD,” effective on June 29, 2017.

The Private Placement and the Share Cancellation.

Simultaneously with the closing of the Acquisition and as a condition thereto, we sold and issued in a private placement an aggregate of 7,801,212 shares of our common stock pursuant to one or more exemptions from the registration requirements of the Securities Act at a purchase price of $0.66$8.10 per share, resultingwhich resulted in gross proceeds to us of approximately $5,100,000. Manchester and JEB Partners, L.P. (“JEBP”), an affiliate fund of Manchester (together with Manchester, collectively, the “Purchasing Funds”) purchased in the Private Placement in the aggregate 5,303,030 shares for $3,500,000; and DiPerna, in addition to his prior investment of approximately $600,000 of his personal funds into Quasuras prior to the Acquisition, purchased in the Private Placement 303,030 shares for approximately $200,000. Simultaneously with the Acquisition and Private Placement, Manchester cancelled all 2,900,000 Control Block shares it acquired in the Control Block Acquisition. In connection with the Private Placement, we paid $41,928 as compensation in connection with sales of our shares therein.$250,000.

Following the Acquisition, the private placement and the share cancellation, we had issued and outstanding 15,983,272 shares of our common stock of which DiPerna owned 7,523,430 shares, Manchester, JEBP, Besser and Frank owned in the aggregate 5,664,690 shares and the other purchasers in the private placement owned 2,195,151 shares. Simultaneously with and as a condition to the closing of the Acquisition and the private placement, pursuant to an intellectual property transfer agreement dated as of July 24, 2017, by and among, us, Quasuras and DiPerna, DiPerna transferred to us all intellectual property rights owned directly and/or indirectly by him related to our proposed business. Separately, we agreed to pay DiPerna as part of his compensation for services to be performed for us pursuant to a royalty agreement certain fees based upon future sales, if any, of our proposed product subject to a maximum $10,000,000 cap on the aggregate amount of fees that DiPerna could earn from such arrangement.

DiPerna is subject to confidentiality, non-compete and invention agreements with us.

The foregoing descriptions of The Acquisition and The Private Placement and Share Cancellation not purport to be complete and are qualified in their entirety by reference to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 28, 2017.

Item 3. Defaults Upon Senior Securities.Securities

None.

No report is required.

Item 4. Mine Safety Disclosure.Disclosures

Not Applicable.applicable.

Item 5. Other Information.Information

None.

None.

Item 6. Exhibits

(a) Exhibits furnished as Exhibits hereto:

SIGNATURES

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