Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Modular Medical, Inc. | |
Entity Central Index Key | 1,074,871 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 15,983,273 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Mar. 31, 2017 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 4,767,502 | $ 392,007 |
Other current assets | 2,909 | 306 |
TOTAL CURRENT ASSETS | 4,770,411 | 392,313 |
Intangible assets, net | 230 | 0 |
Property and equipment, net | 2,399 | 0 |
Security deposit | 7,500 | 0 |
TOTAL NON-CURRENT ASSETS | 10,129 | 0 |
TOTAL ASSETS | 4,780,540 | 392,313 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 21,404 | 8,425 |
Payable to related party | 0 | 21,256 |
TOTAL LIABILITIES | 21,404 | 29,681 |
STOCKHOLDERS’ EQUITY | ||
Preferred Stock, $0.001 par value, 5,000,000 shares authorized, none issued and outstanding | 0 | 0 |
Common Stock, $0.001 par value, 50,000,000 shares authorized, 15,983,273 and 7,582,000 shares issued and outstanding, respectively as of September 30, 2017 and March 31, 2017 | 15,983 | 7,582 |
Additional Paid-in Capital | 5,037,394 | 430,200 |
Accumulated Deficit | (294,241) | (75,150) |
TOTAL STOCKHOLDERS’ EQUITY | 4,759,136 | 362,632 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 4,780,540 | $ 392,313 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Mar. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 15,983,273 | 7,582,000 |
Common stock, shares outstanding | 15,983,273 | 7,582,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Net Revenues | $ 0 | $ 0 | $ 0 | $ 0 |
Operating Expenses: | ||||
Consulting fee | 134,188 | 0 | 134,188 | 0 |
Professional expenses | 24,504 | 1,710 | 66,495 | 1,710 |
General and Administrative Expenses | 17,611 | 0 | 19,428 | 45 |
Total Operating Expenses | 176,303 | 1,710 | 220,111 | 1,755 |
Loss From Operations | (176,303) | (1,710) | (220,111) | (1,755) |
Other Income (Expenses): | ||||
Interest income | 301 | 237 | 1,020 | 614 |
Loss Before Income Taxes | (176,002) | (1,473) | (219,091) | (1,141) |
Provision for Income Taxes | 0 | 0 | 0 | 0 |
Net Loss | $ (176,002) | $ (1,473) | $ (219,091) | $ (1,141) |
Net Loss Per Share: | ||||
Basic and Diluted | $ (0.016) | $ 0 | $ (0.020) | $ 0 |
Weighted average number of shares used in computing basic and diluted net loss per share: | ||||
Basic | 11,144,565 | 7,582,060 | 7,802,447 | 7,582,060 |
Diluted | 11,144,565 | 7,582,060 | 7,802,447 | 7,582,060 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Loss | $ (219,091) | $ (1,141) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 300 | 0 |
Increase/Decrease in current assets: | ||
Accounts receivable | (2,603) | 0 |
Security deposits | (7,500) | 0 |
Accounts payable and accrued expenses | (103,298) | 0 |
Net cash used in operating activities | (332,192) | (1,141) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Cash acquired upon reorganization | 4,697,400 | 0 |
Purchase of property, plant and equipment | (2,699) | 0 |
Purchase of intangible assets | (230) | 0 |
Net cash provided by investing activities | 4,694,471 | 0 |
Cash Flows from Financing Activities | ||
Repurchase of common stock | 0 | (187,951) |
Proceeds from private placement | 34,472 | 0 |
Repayment to related party, net | (21,256) | (12,252) |
Net cash provided by (used in) financing activities | 13,216 | (200,203) |
Net increase (decrease) in cash and cash equivalents | 4,375,495 | (201,344) |
Cash and cash equivalents, at the beginning of the period | 392,007 | 389,623 |
Cash and cash equivalents, at the end of the period | 4,767,502 | 188,279 |
SUPPLEMENTAL DISCLOSURES: | ||
Cash paid during the year for: Income tax payments | 2,297 | 0 |
Cash paid during the year for: Interest payments | 0 | 786 |
Non-cash investing and financing activities: | ||
Warrants granted on notes payable | $ 0 | $ 12,500 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Stockholders’ Equity - 6 months ended Sep. 30, 2017 - USD ($) | Preferred Stock | Common Stock | Additional Paid In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Mar. 31, 2017 | 0 | 7,582,000 | |||
Beginning balance, amount at Mar. 31, 2017 | $ 0 | $ 7,582 | $ 430,200 | $ (75,150) | $ 362,632 |
Reorganization adjustment, shares | 8,401,273 | ||||
Reorganization adjustment, amount | $ 8,401 | 4,607,194 | 4,615,595 | ||
Net loss | (219,091) | (219,091) | |||
Ending balance, shares at Sep. 30, 2017 | 0 | 15,983,273 | |||
Ending balance, amount at Sep. 30, 2017 | $ 0 | $ 15,983 | $ 5,037,394 | $ (294,241) | $ 4,759,136 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Sep. 30, 2017 | |
Organization And Summary Of Significant Accounting Policies | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Modular Medical, Inc. (the “Company” or “Modular” or “we”) was organized under the laws of the State of Nevada on October 22, 1998, to engage in any lawful purpose. 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 at 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 becoming a wholly-owned subsidiary of the Company. Since 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, at their historical carrying amounts. Pursuant to the reorganization, the Company changed the fiscal year end from June 30 to March 31, to coincide with the year end for Quasuras, Inc. The financial statements of the Company have been 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 have been condensed or omitted pursuant to U.S. GAAP 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 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 year ended June 30, 2017 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending June 30, 2018. Principles of Consolidation 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 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reportable Segment The Company has one reportable segment. The Company’s activities are interrelated and each activity is dependent upon and supportive of the other. Accordingly, all significant operating decisions are based on analysis of financial products provided as a single global business. Operating Overhead Expense Operating overhead expense consists primarily of consulting expense, professional services, rent, depreciation and amortization, and meetings and travel. 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 September 30, 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 concentrations of credit risk is cash. The Company places its cash in what it believes to be credit-worthy financial institutions. 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 customer requirements, limited operating history and the volatility of public markets. Contingencies Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to 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, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount 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 amount 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 but 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. Cash and Cash Equivalents Cash and cash equivalents include cash in hand and cash in demand deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. At September 30, 2017 and March 31, 2017, the Company had $4,767,502 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 $4,267,501 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. Property, Plant & Equipment Property and equipment is stated at cost and depreciated 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 property and equipment are generally as follows: computer software developed or acquired for internal use, 3 to 10 years; computer equipment, 2 to 3 years; buildings and improvements, 5 to 15 years; leasehold improvements, 2 to 10 years; and furniture and equipment, 1 to 5 years. As of September 30, 2017 and March 31, 2017, property, plant and equipment amounted to: September 30, March 31, Computers and equipment $ 2,699 $ — Less: accumulated depreciation (300 ) — Property and equipment, net $ 2,399 $ — Depreciation expense for the six months ended September 30, 2017 and 2016 was $300 and $0, respectively. Fair Value of Financial Instrument 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 of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of 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. The three levels of valuation hierarchy are defined as follows: 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. 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 September 30, 2017 and 2016, 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 EPS is computed by dividing income available to common shareholders by the weighted average number of 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. Under 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 years ended September 30, 2017 and 2016: Three Month Periods Ended September 30, Six Month Periods Ended September 30, 2017 2016 2017 2016 Net Loss $ (176,002 ) $ (1,473 ) $ (219,091 ) $ (1,141 ) Net Loss Per Share Basic and Diluted: $ (0.016 ) $ (0.000 ) $ (0.020 ) $ (0.000 ) Weighted average number of shares used in computing basic and diluted net loss per share: Basic 11,144,565 7,582,060 7,802,447 7,582,060 Diluted 11,144,565 7,582,060 7,802,447 7,582,060 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. |
REORGANIZATION AND PRIVATE PLAC
REORGANIZATION AND PRIVATE PLACEMENT | 6 Months Ended |
Sep. 30, 2017 | |
Reorganization And Private Placement | |
REORGANIZATION AND PRIVATE PLACEMENT | On April 26, 2017, Modular, issued 2,900,000 shares (the “ Control Block On July 24, 2017, pursuant to a Reorganization and Share Exchange Agreement, by and among, Modular, and 3 Quasuras Shareholders Acquisition Agreement Acquisition Simultaneously with the closing of the Acquisition and as a condition thereto, we sold (the “ Private Placement Share Cancellation Following the Acquisition, the Private Placement and the Share Cancellation, we had issued and outstanding 15,983,272 shares 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 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 Mr. DiPerna (the “ IP Transfer Agreement Royalty Agreement |
ACCRUED EXPENSES
ACCRUED EXPENSES | 6 Months Ended |
Sep. 30, 2017 | |
Accrued Expenses | |
ACCRUED EXPENSES | As of September 30, 2017 and March 31, 2017, accrued expenses amounted to $21,404 and $8,425, respectively. Accrued expenses comprised of accrued legal and professional charges as of September 30, 2017 and March 31, 2017. September 30, March 31, Legal and professional charges $ 21,404 $ 8,425 $ 21,404 $ 8,425 |
PAYABLE TO RELATED PARTY
PAYABLE TO RELATED PARTY | 6 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
PAYABLE TO RELATED PARTY | Payable to related party comprises of the amounts paid by the major shareholder on behalf of the Company. The payable is unsecured, non- interest bearing and due on demand. As of September 30, 2017 and March 31, 2017, respectively, the payable to related party amounted to $0 and $21,256. |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 6 Months Ended |
Sep. 30, 2017 | |
STOCKHOLDERS’ EQUITY | |
STOCKHOLDERS' EQUITY | Common stock On July 24, 2017, pursuant to a Reorganization and Share Exchange Agreement, by and among, the Company and Quasuras Inc., the Company acquired 100% of the issued and outstanding shares of Quasuras for 7,582,000 shares of the Company, resulting in Quasuras becoming a wholly-owned subsidiary of the Company. The historical equity for Quasuras was restated pursuant to the reorganization. The Company 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 closing of the Acquisition and as a condition thereto. Simultaneously with the Acquisition and Private Placement, the Company cancelled all 2,900,000 Control Block shares it acquired pursuant to the Stock Purchase Agreement (See Note 2). In connection with the Private Placement, we paid $41,928 as compensation in connection with sales of our shares therein. The Company has 50,000,000 shares of common stock authorized. The par value of the shares is $0.001. As of September 30, 2017, 15,983,000 shares of common stock of the Company were issued and outstanding. Preferred Stock The Company has 5,000,000 shares of preferred stock authorized. The par value of the shares is $0.001. As of September 30, 2017, none of the shares of preferred stock of the Company were issued. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Sep. 30, 2017 | |
Income Taxes | |
INCOME TAXES | Based on the available information and other factors, management believes it is more likely than not that the net deferred tax assets at, September 30, 2017 and 2016, will not be fully realizable. Accordingly, management has recorded a full valuation allowance against its net deferred tax assets at, September 30, 2017 and 2016. At September 30, 2017 and March 31, 2017, the Company had federal net operating loss carry-forwards of approximately $290,000 and $75,000, respectively, expiring beginning in 2036. Deferred tax assets consist of the following components: September 30, March 31, 2017 2017 Net loss carryforward $ 290,000 $ 75,000 Valuation allowance (290,000 ) (75,000 ) Total deferred tax assets $ — $ — |
ROYALTY AGREEMENT
ROYALTY AGREEMENT | 6 Months Ended |
Sep. 30, 2017 | |
Royalty Agreement | |
ROYALTY AGREEMENT | On July 12, 2017, the Company entered into a royalty agreement with the founder and major shareholder. Pursuant 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 royalty to the founder on any sales of the royalty product sold or otherwise commercialized by the Company, equal to (a) US$0.75 on each sale of a royalty product, or (b) 5% of the gross sale price of the royalty product, whichever is less. The royalty payments shall cease 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 made by the Company within thirty days after the calendar quarter. |
LEASE AGREEMENT
LEASE AGREEMENT | 6 Months Ended |
Sep. 30, 2017 | |
Lease Agreement | |
LEASE AGREEMENT | On August 21, 2017, the Company entered into a sublease agreement to rent office space. The term 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: Year September 30, 2018 $ 36,000 2019 36,000 2020 6,000 Total minimum lease payment $ 78,000 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Management has evaluated subsequent events or transactions occurring through the date the financial statements were issued, November 10, 2017. Management concluded that no additional subsequent events required disclosure in these financial statements. |
ORGANIZATION AND SUMMARY OF S16
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
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 becoming a wholly-owned subsidiary of the Company. Since 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, at their historical carrying amounts. Pursuant to the reorganization, the Company changed the fiscal year end from June 30 to March 31, to coincide with the year end for Quasuras, Inc. The financial statements of the Company have been 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 have been condensed or omitted pursuant to U.S. GAAP 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 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 year ended June 30, 2017 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending June 30, 2018. |
Principles of Consolidation | 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 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Reportable Segment | The Company has one reportable segment. The Company’s activities are interrelated and each activity is dependent upon and supportive of the other. Accordingly, all significant operating decisions are based on analysis of financial products provided as a single global business. |
Operating Overhead Expense | Operating overhead expense consists primarily of consulting expense, professional services, rent, depreciation and amortization, and meetings and travel. |
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 September 30, 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 concentrations of credit risk is cash. The Company places its cash in what it believes to be credit-worthy financial institutions. |
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 customer requirements, limited operating history and the volatility of public markets. |
Contingencies | Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to 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, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount 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 amount 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 but 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. |
Cash and Cash Equivalents | Cash and cash equivalents include cash in hand and cash in demand deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. At September 30, 2017 and March 31, 2017, the Company had $4,767,502 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 $4,267,501 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. |
Property, Plant & Equipment | Property and equipment is stated at cost and depreciated 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 property and equipment are generally as follows: computer software developed or acquired for internal use, 3 to 10 years; computer equipment, 2 to 3 years; buildings and improvements, 5 to 15 years; leasehold improvements, 2 to 10 years; and furniture and equipment, 1 to 5 years. As of September 30, 2017 and March 31, 2017, property, plant and equipment amounted to: September 30, March 31, Computers and equipment $ 2,699 $ — Less: accumulated depreciation (300 ) — Property and equipment, net $ 2,399 $ — Depreciation expense for the six months ended September 30, 2017 and 2016 was $300 and $0, respectively. |
Fair Value of Financial Instrument | 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 of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of 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. The three levels of valuation hierarchy are defined as follows: 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. 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 September 30, 2017 and 2016, 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 EPS is computed by dividing income available to common shareholders by the weighted average number of 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. Under 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 years ended September 30, 2017 and 2016: Three Month Periods Ended September 30, Six Month Periods Ended September 30, 2017 2016 2017 2016 Net Loss $ (176,002 ) $ (1,473 ) $ (219,091 ) $ (1,141 ) Net Loss Per Share Basic and Diluted: $ (0.016 ) $ (0.000 ) $ (0.020 ) $ (0.000 ) Weighted average number of shares used in computing basic and diluted net loss per share: Basic 11,144,565 7,582,060 7,802,447 7,582,060 Diluted 11,144,565 7,582,060 7,802,447 7,582,060 |
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. |
ORGANIZATION AND SUMMARY OF S17
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Sep. 30, 2017 | |
Organization And Summary Of Significant Accounting Policies Tables | |
Schedule of property, plant and equipment | September 30, March 31, Computers and equipment $ 2,699 $ — Less: accumulated depreciation (300 ) — Property and equipment, net $ 2,399 $ — |
Schedule of earnings per share | Three Month Periods Ended September 30, Six Month Periods Ended September 30, 2017 2016 2017 2016 Net Loss $ (176,002 ) $ (1,473 ) $ (219,091 ) $ (1,141 ) Net Loss Per Share Basic and Diluted: $ (0.016 ) $ (0.000 ) $ (0.020 ) $ (0.000 ) Weighted average number of shares used in computing basic and diluted net loss per share: Basic 11,144,565 7,582,060 7,802,447 7,582,060 Diluted 11,144,565 7,582,060 7,802,447 7,582,060 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 6 Months Ended |
Sep. 30, 2017 | |
Accrued Expenses Tables | |
Summary of accrued expenses | September 30, March 31, Legal and professional charges $ 21,404 $ 8,425 $ 21,404 $ 8,425 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 6 Months Ended |
Sep. 30, 2017 | |
Income Taxes Tables | |
Summary of deferred tax assets | September 30, March 31, 2017 2017 Net loss carryforward $ 290,000 $ 75,000 Valuation allowance (290,000 ) (75,000 ) Total deferred tax assets $ — $ — |
LEASE AGREEMENT (Tables)
LEASE AGREEMENT (Tables) | 6 Months Ended |
Sep. 30, 2017 | |
Lease Agreement Tables | |
Schedule of future minimum lease payments | Year September 30, 2018 $ 36,000 2019 36,000 2020 6,000 Total minimum lease payment $ 78,000 |
ORGANIZATION AND SUMMARY OF S21
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Sep. 30, 2017 | Mar. 31, 2017 |
Property and equipment, gross | $ 2,699 | $ 0 |
Accumulated depreciation | (300) | 0 |
Property and equipment, net | 2,399 | 0 |
Computers and equipment | ||
Property and equipment, gross | $ 0 | $ 2,699 |
ORGANIZATION AND SUMMARY OF S22
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Organization And Summary Of Significant Accounting Policies Details 1 | ||||
Net Loss | $ (176,002) | $ (1,473) | $ (219,091) | $ (1,141) |
Net Loss Per Share: | ||||
Basic and Diluted | $ (0.016) | $ 0 | $ (0.020) | $ 0 |
Weighted average number of shares used in computing basic and diluted net loss per share: | ||||
Basic | 11,144,565 | 7,582,060 | 7,802,447 | 7,582,060 |
Diluted | 11,144,565 | 7,582,060 | 7,802,447 | 7,582,060 |
ORGANIZATION AND SUMMARY OF S23
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 6 Months Ended | |||
Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Mar. 31, 2016 | |
Cash and cash equivalents | $ 4,767,502 | $ 392,007 | $ 188,279 | $ 389,623 |
Uninsured cash and cash equivalents | $ 4,267,501 | $ 142,007 | ||
Computer software developed or acquired for internal use | Minimum | ||||
Estimated useful life | 3 years | |||
Computer software developed or acquired for internal use | Maximum | ||||
Estimated useful life | 10 years | |||
Computers and equipment | Minimum | ||||
Estimated useful life | 2 years | |||
Computers and equipment | Maximum | ||||
Estimated useful life | 3 years | |||
Buildings and improvements | Minimum | ||||
Estimated useful life | 5 years | |||
Buildings and improvements | Maximum | ||||
Estimated useful life | 15 years | |||
Leasehold improvements | Minimum | ||||
Estimated useful life | 2 years | |||
Leasehold improvements | Maximum | ||||
Estimated useful life | 10 years | |||
Furniture and equipment | Minimum | ||||
Estimated useful life | 1 year | |||
Furniture and equipment | Maximum | ||||
Estimated useful life | 5 years |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) | Sep. 30, 2017 | Mar. 31, 2017 |
Accrued expenses | $ 21,404 | $ 8,425 |
Legal and professional charges | ||
Accrued expenses | $ 21,404 | $ 8,425 |
PAYABLE TO RELATED PARTY (Detai
PAYABLE TO RELATED PARTY (Details Narrative) - USD ($) | Sep. 30, 2017 | Mar. 31, 2017 |
Payable To Related Party Details Narrative | ||
Payable to related party | $ 0 | $ 21,256 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - $ / shares | Sep. 30, 2017 | Mar. 31, 2017 |
Stockholders Equity Details Narrative | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 15,983,273 | 7,582,000 |
Common stock, shares outstanding | 15,983,273 | 7,582,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | Sep. 30, 2017 | Mar. 31, 2017 |
Income Taxes Details | ||
Net loss carryforward | $ 290,000 | $ 75,000 |
Valuation allowance | (290,000) | (75,000) |
Total deferred tax assets | $ 0 | $ 0 |
LEASE AGREEMENT (Details)
LEASE AGREEMENT (Details) | Sep. 30, 2017USD ($) |
Lease Agreement Details | |
2,018 | $ 36,000 |
2,019 | 36,000 |
2,020 | 6,000 |
Total minimum lease payment | $ 78,000 |