Modular Medical (MODD) 10-Q 12 Feb 21 2021 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Dec. 31, 2020	Feb. 11, 2021
Cover [Abstract]
Entity Registrant Name	Modular Medical, Inc.
Entity Central Index Key	0001074871
Document Type	10-Q
Document Period End Date	Dec. 31, 2020
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Small Business	true
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity Incorporation State Country Code	NV
Entity File Number	333-237615
Entity Common Stock, Shares Outstanding		18,832,648
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2021

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Dec. 31, 2020	Mar. 31, 2020
CURRENT ASSETS
Cash and cash equivalents	$ 596,542	$ 3,122,134
Other current assets	48,196	64,159
Total current assets	644,738	3,186,293
Property and equipment, net	328,832	301,308
Right of use asset, net	217,956	270,950
Security deposit	100,000	100,000
Total non-current assets	646,788	672,258
Total assets	1,291,526	3,858,551
CURRENT LIABILITIES
Accounts payable	207,308	367,019
Accrued expenses	308,149	202,160
Short-term lease liability	121,012	92,214
PPP note payable, current	184,390	0
Total current liabilities	820,859	661,393
LONG-TERM LIABILITIES
Long-term lease liability	217,030	178,736
Bonus payable	70,000	140,000
PPP note payable	184,390	0
Total long-term liabilities	471,420	318,736
Total liabilities	1,292,279	980,129
Commitments and contingencies
STOCKHOLDERS' EQUITY (DEFICIT)
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, 18,832,648 shares issued and outstanding as of December 31, 2020 and 17,870,261 as of March 31, 2020	18,832	17,870
Additional paid-in capital	14,154,880	10,505,592
Common stock issuable	0	(923,994)
Accumulated deficit	(14,174,465)	(8,569,034)
Total stockholders' (deficit) equity	(753)	2,878,422
Total liabilities and stockholders' (deficit) equity	$ 1,291,526	$ 3,858,551

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2020	Mar. 31, 2020
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	18,832,648	17,870,261
Common stock, shares outstanding	18,832,648	17,870,261

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 30, 2019	Dec. 31, 2020	Dec. 31, 2019
Operating Expenses:
Research and development	$ 1,086,669	$ 608,019	$ 3,150,149	$ 1,945,043
General and administration expenses	783,898	527,829	2,453,808	1,486,386
Total operating expenses	1,870,567	1,135,848	5,603,957	3,431,429
Loss from operations	(1,870,567)	(1,135,848)	(5,603,957)	(3,431,429)
Other Income:
Interest income	22	2,331	126	28,148
Loss before income taxes	(1,870,545)	(1,133,517)	(5,603,831)	(3,403,281)
Provision for income taxes	0	0	1,600	0
Net loss	$ (1,870,545)	$ (1,133,517)	$ (5,605,431)	$ (3,403,281)
Net Loss Per Share:
Basic and diluted	$ (0.10)	$ (0.06)	$ (0.30)	$ (0.19)
Weighted Average Number of Shares Outstanding:
Basic and diluted	18,747,112	17,870,261	18,562,577	17,862,625

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Stockholders' Equity - USD ($)	Common Stock	Additional Paid In Capital	Common Stock Issuable	Accumulated Deficit	Total
Beginning balance, shares at Mar. 31, 2019	17,840,261
Beginning balance, amount at Mar. 31, 2019	$ 17,840	$ 9,684,578	$ 19,800	$ (3,248,161)	$ 6,474,057
Shares issued for services, shares	30,000
Shares issued for services, amount	$ 30	19,770	(19,800)
Stock-based compensation		194,428			194,428
Net loss				(1,122,198)	(1,122,198)
Ending balance, shares at Jun. 30, 2019	17,870,261
Ending balance, amount at Jun. 30, 2019	$ 17,870	9,898,776	0	(4,370,359)	5,546,287
Beginning balance, shares at Mar. 31, 2019	17,840,261
Beginning balance, amount at Mar. 31, 2019	$ 17,840	9,684,578	19,800	(3,248,161)	6,474,057
Stock-based compensation					537,528
Net loss					(3,403,281)
Ending balance, shares at Dec. 31, 2019	17,870,261
Ending balance, amount at Dec. 31, 2019	$ 17,870	10,241,876	0	(6,651,442)	3,608,304
Beginning balance, shares at Jun. 30, 2019	17,870,261
Beginning balance, amount at Jun. 30, 2019	$ 17,870	9,898,776	0	(4,370,359)	5,546,287
Stock-based compensation		156,355			156,355
Net loss				(1,147,566)	(1,147,566)
Ending balance, shares at Sep. 30, 2019	17,870,261
Ending balance, amount at Sep. 30, 2019	$ 17,870	10,055,131	0	(5,517,925)	4,555,076
Stock-based compensation		186,745			186,745
Net loss				(1,133,517)	(1,133,517)
Ending balance, shares at Dec. 31, 2019	17,870,261
Ending balance, amount at Dec. 31, 2019	$ 17,870	10,241,876	0	(6,651,442)	3,608,304
Beginning balance, shares at Mar. 31, 2020	17,870,261
Beginning balance, amount at Mar. 31, 2020	$ 17,870	10,505,592	923,994	(8,569,034)	2,878,422
Private placement of common stock, shares	729,897
Private placement of common stock, amount	$ 730	2,041,898	(923,994)		1,118,634
Stock-based compensation		344,716			344,716
Net loss				(1,874,157)	(1,874,157)
Ending balance, shares at Jun. 30, 2020	18,600,158
Ending balance, amount at Jun. 30, 2020	$ 18,600	12,892,206	0	(10,443,191)	2,467,615
Beginning balance, shares at Mar. 31, 2020	17,870,261
Beginning balance, amount at Mar. 31, 2020	$ 17,870	10,505,592	923,994	(8,569,034)	$ 2,878,422
Private placement of common stock, shares					962,387
Private placement of common stock, amount					$ 2,762,054
Stock-based compensation					940,374
Net loss					(5,605,431)
Ending balance, shares at Dec. 31, 2020	18,832,648
Ending balance, amount at Dec. 31, 2020	$ 18,832	14,154,880	0	(14,174,465)	(753)
Beginning balance, shares at Jun. 30, 2020	18,600,158
Beginning balance, amount at Jun. 30, 2020	$ 18,600	12,892,206	0	(10,443,191)	2,467,615
Stock-based compensation		300,604			300,604
Net loss				(1,860,729)	(1,860,729)
Ending balance, shares at Sep. 30, 2020	18,600,158
Ending balance, amount at Sep. 30, 2020	$ 18,600	13,192,810	0	(12,303,920)	907,490
Private placement of common stock, shares	232,490
Private placement of common stock, amount	$ 232	667,016			667,248
Stock-based compensation		295,054			295,054
Net loss				(1,870,545)	(1,870,545)
Ending balance, shares at Dec. 31, 2020	18,832,648
Ending balance, amount at Dec. 31, 2020	$ 18,832	$ 14,154,880	$ 0	$ (14,174,465)	$ (753)

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (5,605,431)	$ (3,403,281)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	940,374	537,528
Depreciation and amortization	82,016	23,840
Amortization of lease right-of-use asset	52,994	0
Change in lease liability	67,092	0
Changes in assets and liabilities:
Other assets and prepaid expenses	15,964	(34,257)
Security deposit	0	3,394
Accounts payable and accrued expenses	(123,722)	95,778
Net cash used in operating activities	(4,570,713)	(2,776,998)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(109,541)	(58,278)
Net cash used in investing activities	(109,541)	(58,278)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from private placement of stock, net of issuance costs	1,785,882	0
Proceeds from issuance of PPP note payable	368,780	0
Net cash provided by financing activities	2,154,662	0
Net decrease in cash and cash equivalents	(2,525,592)	(2,835,276)
Cash and cash equivalents, at the beginning of the period	3,122,134	6,553,768
Cash and cash equivalents, at the end of the period	$ 596,542	$ 3,718,492

THE COMPANY AND SUMMARY OF SIGN

THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Modular Medical, Inc. (the Company) was incorporated in Nevada in October 1998 under the name Bear Lake Recreation, Inc. The Company had no material business operations from 2002 until approximately 2017, when it acquired all of the issued and outstanding shares of Quasuras, Inc. (Quasuras), a Delaware corporation. 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 reverse merger at their historical carrying amounts. Prior to the 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 eventual commercialization of an innovative insulin pump to address shortcomings and problems represented by the relatively limited adoption of currently available pumps for insulin-dependent people with diabetes. The Company has developed a hardware technology allowing people with insulin-dependent 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 excessively high. By addressing the time and effort required to effectively treat their condition, the Company believes it can address the less technically savvy, less motivated part of the market. Liquidity Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2014-15, 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. These circumstances 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 discussed in note 9, in February 2021, the Company issued convertible promissory notes to investors to fund its operations. In addition, during 2020, the Company obtained additional equity financing through a private placement of its common stock (see note 4), and the Company obtained a loan from Silicon Valley Bank in April 2020 (see note 3). The Company’s operating needs include the planned costs to operate its business, including amounts required to 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 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 ended March 31 of the calendar year indicated (for example, fiscal 2021 refers to the fiscal year ending March 31, 2021). The 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, 2020 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 (GAAP) have been condensed or omitted in accordance with these rules and regulations of the Securities and Exchange Commission (SEC). The information in this report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in its most recent annual report on Form 10-K filed with the SEC. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) 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 three months and nine months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the year ending March 31, 2021 or for any other future period. Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount 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. Reportable Segment The Company operates in one business segment and uses one measurement of profitability for its business. Research and Development The Company expenses research and development expenditures as incurred. General and Administrative General and administrative expenses consist primarily of payroll and benefit costs, rent, stock-based compensation, legal and accounting fees, and office and other administrative expenses. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash. The Company maintains 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 the financial statements for any possible loss due to financial 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. 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 the Company’s 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 the Company’s control, and cannot be predicted. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and cash in demand deposits, certificates of deposit and highly liquid debt instruments with original maturities of three months or less. Property & Equipment Property and equipment are originally recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three to seven years. Depreciation is recorded in operating expenses in the condensed consolidated statements of operations. Leasehold improvements and assets acquired through capital leases are amortized over the shorter of their estimated useful life or the lease term, and amortization is recorded in operating expenses in the condensed consolidated statements of operations. Fair Value of Financial Instruments The Company measures the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three 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 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 Basic net loss per share is computed by dividing loss for the period by the weighted-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 during the period. For the nine months ended December 31, 2020 and 2019, outstanding options to purchase 3,512,588 and 2,526,443 shares of common stock, respectively, were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive. 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 flows. Comprehensive Loss 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, 2020 and 2019, the Company’s comprehensive loss was the same as its net loss.

LEASES

LEASES	9 Months Ended
	Dec. 31, 2020
Leases [Abstract]
LEASES	Effective April 1, 2019, the Company adopted ASU No. 2016-02, Leases and paid a $100,000 security deposit. with annual rent increases of approximately 3%. 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 the Company in June 2020, for the Company to make improvements to the leased space. Future minimum payments under the facility operating lease, as of December 31, 2020, are listed in the table below. Annual Fiscal Years Operating 2021 $ 37,239 2022 153,432 2023 158,028 2024 40,692 Less: Imputed interest (51,349 ) Present value of lease liabilities $ 338,042 Cash paid for amounts included in the measurement of lease liabilities was $86,891 for the nine months ended December 31, 2020. Rent expense was $26,884 and $7,500 for the three months ended December 31, 2020 and 2019, respectively, and $80,654 and $25,500 for the nine months ended December 31, 2020 and 2019, respectively.

NOTE PAYABLE

NOTE PAYABLE	9 Months Ended
	Dec. 31, 2020
Debt Disclosure [Abstract]
NOTE PAYABLE	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 PPP Note to the Company was made through Silicon Valley Bank (the Lender), and the Company entered into a U.S. Small Business Administration (SBA) Paycheck Protection Program Note (the Agreement) with the Lender evidencing the PPP Note. The full amount of the PPP Note is due in April 2022. Interest accrues on the outstanding principal balance of the PPP Note at a fixed rate of 1.0% per annum. Monthly payments will be due and payable beginning in September 2021 and continue each month thereafter until maturity of the PPP Note. The Company may prepay principal of the PPP Note at any time in any amount without penalty. The Agreement contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties or provisions of the PPP Note. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or filing suit and obtaining judgment against the Company. In October 2020, the Company applied to the Lender for forgiveness of the PPP Note, and the Lender submitted the Company’s forgiveness application to the SBA to be processed. No assurance is provided that the Company will obtain forgiveness of the PPP Note in whole or in part.

STOCKHOLDERS' EQUITY (DEFICIT)

STOCKHOLDERS' EQUITY (DEFICIT)	9 Months Ended
	Dec. 31, 2020
Equity [Abstract]
STOCKHOLDERS' EQUITY (DEFICIT)	Private Placement In March 2020, the Company initiated a private placement of shares of its common stock (the 2020 Placement). As of December 31, 2020, the Company had sold 962,387 shares of common stock, at a purchase price of $2.87 per share, for gross proceeds of $2,762,054. Under the terms of the common stock purchase agreements between the Company and the investors, the Company must use commercially reasonable efforts to file a registration statement with the SEC within 90 days of the closing of the 2020 Placement to register for resale the shares of common stock sold.

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	9 Months Ended
	Dec. 31, 2020
STOCKHOLDERS' EQUITY (DEFICIT)
STOCK-BASED COMPENSATION	2017 Equity Incentive Plan In October 2017, the Company’s board of directors (the Board) approved the 2017 Equity Incentive Plan (the Plan) with 3,000,000 shares of common stock reserved for issuance. In January 2020, the Board approved an increase in the number of shares reserved for issuance under the Plan by 1,000,000 shares. 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 at December 31, 2020, was $2,354,079 related to stock options and is expected to be recognized as expense over a weighted-average period of approximately 2.06 years. During the nine months ended December 31, 2020, the Company granted options to purchase 355,476 shares of its common stock to employees, directors and consultants. The options had 10-year terms, and 10,476 options vested immediately when granted. The fair value of the options was determined to be $825,838 of which $223,878 was recorded as stock-based compensation expense and included in the condensed consolidated statement of operations for the nine months ended December 31, 2020. The following assumptions were used in the fair value method calculations: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Risk-free interest rates .38 % 1.51% - 1.69 % .28% - .38 % 1.34% - 2.41 % Volatility 87 % 87% - 96 % 87% - 127 % 87% - 102 % Expected life (years) 5.2 - 5.7 5.0 - 6.0 5.0 - 6.0 5.0 - 6.0 Dividend yield — — — — 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 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: Options Outstanding Weighted Shares Average Available Number of Exercise for Grant Shares Prices Balance at March 31, 2020 822,055 3,177,945 $ 1.58 Options granted (230,476 ) 230,476 2.88 Options cancelled and returned to the Plan 833 (833 ) 2.25 Balance at June 30, 2020 592,412 3,407,588 1.67 Options granted (72,500 ) 72,500 2.87 Balance at September 30, 2020 519,912 3,480,088 1.70 Options granted (52,500 ) 52,500 2.87 Options cancelled and returned to the Plan 20,000 (20,000 ) 2.25 Balance at December 31, 2020 487,412 3,512,588 1.71 There were no stock options exercised during the nine months ended December 31, 2020 and 2019. The following table summarizes the range of outstanding and exercisable options at December 31, 2020: Options Outstanding Options Exercisable Range of Exercise Price Number Weighted Weighted Number Weighted Aggregate $0.66 - $3.16 3,512,588 8.44 $ 1.71 1,927,052 $ 1.16 $ 4,036,117 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, 2020. The Company’s common stock has minimal trading volume, and the closing price is not necessarily representative of the fair value. 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 30, 2020 and 2019, there were no such tax benefits associated with the exercise of stock options.

INCOME TAXES

INCOME TAXES	9 Months Ended
	Dec. 31, 2020
Income Tax Disclosure [Abstract]
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 its federal and state net deferred tax assets will not be fully realized, and the Company has recorded a full valuation allowance. The Company files U.S. federal and state income tax returns in jurisdictions with varying statutes of limitations. All tax returns from 2016 to 2019 may be subject to examination by the U.S. federal and state tax authorities. As of December 31, 2020, the Company has not recorded any liability for unrecognized tax benefits related to uncertain tax positions.

RELATED PARTY TRANSACTION

RELATED PARTY TRANSACTION	9 Months Ended
	Dec. 31, 2020
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTION	During fiscal 2020, the Company entered into consulting agreements with a member of its board of directors. The most recent consulting agreement was terminated in March 2020. At December 31, 2020, the Company had an outstanding payable to the director of $5,585, which was included in accounts payable in the condensed consolidated balance sheet.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Dec. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS 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, 2020 and 2019 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.

SUBSEQUENT EVENT

SUBSEQUENT EVENT	9 Months Ended
	Dec. 31, 2020
Subsequent Events [Abstract]
SUBSEQUENT EVENT	On February 8, 2021, the Company sold $1,100,000 of convertible promissory notes (the Notes) in a private placement transaction effected pursuant to an exemption from the registration requirements under the Securities Act of 1933, as amended. The Notes bear interest at an annual rate of 12%, and interest is accrued or payable monthly in cash. The Notes mature on September 30, 2021 (the Maturity Date) and may not be prepaid prior to the Maturity Date. The aggregate principal amount of the Notes plus accrued but unpaid interest thereon shall automatically convert upon the closing of an offering of the Company’s equity securities to investors or a strategic corporate investor resulting in aggregate gross proceeds to the Company of at least $5,000,000 (excluding conversion of the Notes or other convertible securities issued for capital raising purposes) (a Qualified Financing). In the event of a Qualified Financing, all such outstanding principal and accrued interest shall convert into the same equity securities purchased by and on the same terms and conditions as the other investors in such Qualified Financing at a conversion price equal to 80% (a 20% discount) of the lowest price paid per unit or share by investors in the Qualified Financing. In the event that additional bridge financing is obtained by the Company, the Notes shall convert into the same securities and on the same terms and conditions as the other investors therein and all such purchases will be treated as one, single round of financing going forward. At any time on or following the Maturity Date, the holders of the Notes may demand repayment of the Notes, and the Company shall repay the outstanding aggregate principal amount plus accrued but unpaid interest thereon. The holders of the Notes, however, retain the right for 30 days after the Maturity Date to convert all or part of the aggregate principal amount plus accrued but unpaid interest on the Notes into the Company’s common stock at the conversion price of $2.87 per share or at a 20% discount to any financing consummated during the 30-day period following the Maturity Date. If a Qualified Financing has not occurred immediately prior to the consummation of a Change of Control (as defined below), the Note holders shall have the option of either (i) converting all or any portion of the aggregate principal amount of the Notes plus accrued but unpaid interest thereon into common stock of the Company at a conversion price equal to $2.87 per share or (ii) having the Company repay the aggregate principal amount of the Notes and accrued but unpaid interest. The term “Change of Control” means (i) a consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, other than any such consolidation, merger or reorganization in which the shares of capital stock of the Company immediately prior to such consolidation, merger or reorganization continue to represent a majority of the voting power of the surviving entity immediately after such consolidation, merger or reorganization; (ii) any transaction or series of related transactions to which the Company is a party in which in excess of 50% of the Company’s voting power is transferred; (iii) the sale or transfer of all or substantially all of the Company’s assets, or the exclusive license of all or substantially all of the Company’s material intellectual property; or (iv) the dissolution and winding up of the Company. The Company’s chairman and chief executive officer and an existing investor, which is represented by a member of the Company’s board of directors, purchased the $1,100,000 aggregate principal amount of the Notes. The private placement of the Notes was approved by the Company’s disinterested directors.

THE COMPANY AND SUMMARY OF SI_2

THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
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 ended March 31 of the calendar year indicated (for example, fiscal 2021 refers to the fiscal year ending March 31, 2021). The 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, 2020 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 (GAAP) have been condensed or omitted in accordance with these rules and regulations of the Securities and Exchange Commission (SEC). The information in this report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in its most recent annual report on Form 10-K filed with the SEC. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) 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 three months and nine months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the year ending March 31, 2021 or for any other future period.
Use of Estimates	The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount 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.
Reportable Segment	The Company operates in one business segment and uses one measurement of profitability for its business.
Research and Development	The Company expenses research and development expenditures as incurred.
General and Administrative	General and administrative expenses consist primarily of payroll and benefit costs, rent, stock-based compensation, legal and accounting fees, and office and other administrative expenses.
Concentration of Credit Risk	Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash. The Company maintains 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 the financial statements for any possible loss due to financial 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. 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 the Company’s 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 the Company’s control, and cannot be predicted.
Cash and Cash Equivalents	Cash and cash equivalents include cash on hand and cash in demand deposits, certificates of deposit and highly liquid debt instruments with original maturities of three months or less.
Property & Equipment	Property and equipment are originally recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three to seven years. Depreciation is recorded in operating expenses in the condensed consolidated statements of operations. Leasehold improvements and assets acquired through capital leases are amortized over the shorter of their estimated useful life or the lease term, and amortization is recorded in operating expenses in the condensed consolidated statements of operations.
Fair Value of Financial Instrument	The Company measures the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three 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 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	Basic net loss per share is computed by dividing loss for the period by the weighted-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 during the period. For the nine months ended December 31, 2020 and 2019, outstanding options to purchase 3,512,588 and 2,526,443 shares of common stock, respectively, were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive.
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 flows.
Comprehensive Loss	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, 2020 and 2019, the Company’s comprehensive loss was the same as its net loss.

LEASES (Tables)

LEASES (Tables)	9 Months Ended
	Dec. 31, 2020
Leases [Abstract]
Future minimum payments under operating lease	Annual Fiscal Years Operating 2021 $ 37,239 2022 153,432 2023 158,028 2024 40,692 Less: Imputed interest (51,349 ) Present value of lease liabilities $ 338,042

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	9 Months Ended
	Dec. 31, 2020
STOCKHOLDERS' EQUITY (DEFICIT)
Assumptions used in fair value method	Three Months Ended Nine Months Ended 2020 2019 2020 2019 Risk-free interest rates .38 % 1.51% - 1.69 % .28% - .38 % 1.34% - 2.41 % Volatility 87 % 87% - 96 % 87% - 127 % 87% - 102 % Expected life (years) 5.2 - 5.7 5.0 - 6.0 5.0 - 6.0 5.0 - 6.0 Dividend yield — — — —
Stock option activity	Options Outstanding Weighted Shares Average Available Number of Exercise for Grant Shares Prices Balance at March 31, 2020 822,055 3,177,945 $ 1.58 Options granted (230,476 ) 230,476 2.88 Options cancelled and returned to the Plan 833 (833 ) 2.25 Balance at June 30, 2020 592,412 3,407,588 1.67 Options granted (72,500 ) 72,500 2.87 Balance at September 30, 2020 519,912 3,480,088 1.70 Options granted (52,500 ) 52,500 2.87 Options cancelled and returned to the Plan 20,000 (20,000 ) 2.25 Balance at December 31, 2020 487,412 3,512,588 1.71
Range of outstanding and exercisable options	Options Outstanding Options Exercisable Range of Exercise Price Number Weighted Weighted Number Weighted Aggregate $0.66 - $3.16 3,512,588 8.44 $ 1.71 1,927,052 $ 1.16 $ 4,036,117

THE COMPANY AND SUMMARY OF SI_3

THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - shares	9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Anti-dilutive outstanding options excluded	3,512,588	2,526,443
Minimum
Estimated useful life	3 years
Maximum
Estimated useful life	7 years

LEASES (Details)

LEASES (Details)	Dec. 31, 2020USD ($)
Leases [Abstract]
2021	$ 37,239
2022	153,432
2023	158,028
2024	40,692
Less: imputed interest	(51,349)
Present value of lease liabilities	$ 338,042

LEASES (Details Narrative)

LEASES (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Mar. 31, 2020
Leases [Abstract]
Right of use asset, net	$ 217,956		$ 217,956		$ 270,950
Cash paid for amounts included in the measurement of lease liabilities			86,891
Rent expense	$ 26,884	$ 7,500	$ 80,654	$ 25,500

STOCKHOLDERS' EQUITY (DEFICIT)

STOCKHOLDERS' EQUITY (DEFICIT) (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2020
Equity [Abstract]
Private placement of common stock, shares			962,387
Private placement of common stock, amount	$ 667,248	$ 1,118,634	$ 2,762,054

STOCK-BASED COMPENSATION (Detai

STOCK-BASED COMPENSATION (Details)	3 Months Ended		9 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
Risk-free interest rates	0.38%
Volatility	87.00%
Dividend yield	0.00%	0.00%	0.00%	0.00%
Minimum
Risk-free interest rates		1.51%	0.28%	1.34%
Volatility		87.00%	87.00%	87.00%
Expected life (years)	5 years 2 months 12 days	5 years	5 years	5 years
Maximum
Risk-free interest rates		1.69%	0.38%	2.41%
Volatility		96.00%	127.00%	102.00%
Expected life (years)	5 years 8 months 12 days	6 years	6 years	6 years

STOCK-BASED COMPENSATION (Det_2

STOCK-BASED COMPENSATION (Details 1) - $ / shares	3 Months Ended			9 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2020
Granted				355,476
Equity Incentive Plan
Shares available for grant, beginning	519,912	592,412	592,412	592,412
Granted	(52,500)	(72,500)	(230,476)
Options cancelled and returned to the Plan	20,000	0	833
Shares available for grant, ending	487,412	519,912	592,412	487,412
Number of options outstanding, beginning	3,480,088	3,407,588	3,177,945	3,177,945
Number of options granted	52,500	72,500	230,476
Options outstanding options cancelled and returned to the Plan	(20,000)	0	(833)
Number of options outstanding, ending	3,512,588	3,480,088	3,407,588	3,512,588
Weighted average exercise price outstanding, beginning	$ 1.70	$ 1.67	$ 1.58	$ 1.58
Weighted average exercise price granted	2.87	2.87	2.88
Weighted average exercise price options cancelled and returned to the Plan	2.25	0	2.25
Weighted average exercise price outstanding, ending	$ 1.71	$ 1.70	$ 1.67	$ 1.71

STOCK-BASED COMPENSATION (Det_3

STOCK-BASED COMPENSATION (Details 2) - Option 1	9 Months Ended
	Dec. 31, 2020USD ($)$ / sharesshares
Exercise price range	$0.66 - $3.16
Number outstanding | shares	3,512,588
Weighted average remaining contractual life (in years)	8 years 5 months 8 days
Weighted average exercise price, outstanding | $ / shares	$ 1.71
Number exercisable | shares	1,927,052
Weighted average exercise price, exercisable | $ / shares	$ 1.16
Aggregate intrinsic value, exercisable | $	$ 4,036,117

STOCK-BASED COMPENSATION (Det_4

STOCK-BASED COMPENSATION (Details Narrative)	9 Months Ended
	Dec. 31, 2020USD ($)shares
STOCKHOLDERS' EQUITY (DEFICIT)
Unamortized compensation cost related to stock options | $	$ 2,354,079
Weighted-average period	2 years 22 days
Options granted | shares	355,476
Options vested | shares	10,476
Stock based compensation expense | $	$ 223,878

RELATED PARTY TRANSACTION (Deta

RELATED PARTY TRANSACTION (Details Narrative)	Dec. 31, 2020USD ($)
Related Party Transactions [Abstract]
Payable to director	$ 5,585