Filed
Pursuant to Rule 424(b)(1)
File
No. 333-232377
PROSPECTUS
MODULAR
MEDICAL, INC.
9,658,201
SHARES OF COMMON STOCK
This prospectus
relates to the offer and sale of up to 9,658,201 shares of our common stock, par value $0.001 per share, by the selling stockholders
identified in this prospectus. The shares being offered consist exclusively of:
|
|
·
|
7,801,213
shares issued to selling stockholders in the private placement completed on July 24,
2017 (the 2017 Placement); and
|
|
|
·
|
1,856,988
shares issued to selling stockholders in a private placement conducted between November
2018 through March 29, 2019 (the 2018 Placement).
|
The selling
stockholders will sell all or a portion of these shares from time to time, at a fixed price of $3.00 per share until our common
stock is quoted on the OTC Bulletin Board, OTCQX or OTCQB, and, thereafter, at prevailing market prices or privately negotiated
prices. We will pay the expenses relating to the registration under the Securities Act of 1933, as amended, of the offer and sale
by the selling stockholders of the shares covered by this prospectus including legal and accounting fees. Each selling stockholder,
however, will pay and be responsible for all brokerage commissions and similar charges, if any, incurred by such person in connection
with sales of such person’s shares.
We will
not receive any proceeds from the sale of these shares.
Our common
stock is quoted on the OTC Pink Open Market under the trading symbol “MODD.” On October 9, 2020, the closing price
of our common stock was $3.80 per share.
We
are an “emerging growth company” under the federal securities laws and are subject to reduced public company reporting
requirements for this prospectus and future filings.
Investing
in our securities involves risks. You should read and carefully consider the “Risk Factors” beginning on page 5 of
this prospectus and in Item 1A “Risk Factors” of our fiscal 2020 Annual Report on Form 10-K for the year ended March
31, 2020, as filed with the SEC on June 29, 2020 (the 2020 10-K), which are incorporated herein by reference.
Neither
the Securities and Exchange Commission nor any state regulatory agency has approved or disapproved of these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date
of this prospectus is October 22, 2020
TABLE
OF CONTENTS
Page
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the documents incorporated by reference herein contain certain forward-looking statements that involve risks, uncertainties
and assumptions that are difficult to predict. Words and expressions reflecting optimism, satisfaction or disappointment with
current prospects, as well as words such as “believes,” “hopes,” “intends,” “estimates,”
“expects,” “projects,” “plans,” “anticipates” and variations thereof, or the use
of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking.
Our forward-looking statements are not guarantees of performance and actual results could differ materially from those contained
in or expressed by such statements. In evaluating all such statements we urge you to specifically consider the risk factors identified
in this prospectus and the documents incorporated by reference herein, including beginning on page 10 of our 2020 10-K under the
heading “Risk Factors,” any of which could cause actual results to differ materially from those indicated by our forward-looking
statements.
Our
forward-looking statements reflect our current views with respect to future events and are based on currently available financial,
economic, scientific, regulatory, industry and competitive data and information on our business plans. You should not place undue
reliance on our forward-looking statements, which are subject to risks and uncertainties relating to, among other things: (i)
the widespread outbreak of contagious diseases, including the recent outbreak of a respiratory illness caused by a novel coronavirus
known as COVID-19, (ii) our ability to achieve a marketable product (i.e., our insulin pump), (iii) the timely and costs of obtaining
all regulatory approvals and clearances relating to our insulin pump including those of the FDA, (iv) the sufficiency of our cash
position, (v) our ability to raise additional financing when needed and the terms and timing thereof, (vi) that we have accurately
analyzed our target market for our insulin pump, (vii) market acceptance of our product by our target market, (viii) the existence
or development of products for diabetes that are viewed by medical professionals, third party payors and insulin dependent people
with diabetes as superior and/or more preferable to, or more affordable or cost efficient than our product, (ix) regulatory initiatives,
compliance with governmental regulations and the regulatory approval process, (x) general economic and business conditions, (xi)
our ability and the timing of us to successfully commercialize our product, (xii) changes in United States economic, political
and social conditions, (xiii) our ability to recruit and retain (and replace if necessary on a timely basis) competent professionals
including third party consultants and advisors and their ability to timely and competently perform their services for us, (xiv)
litigation, including related to our intellectual property rights and patents and claims against us for infringement on such rights
of others as well as potential product liability claims against us, (xv) issues relating to the thinly traded market for our shares
of common stock, (xvi) our ability to compete in the diabetes marketplace with larger and more substantial medical device companies,
(xvii) the specific risk factors discussed under the heading “Risk Factors” set forth in this prospectus and beginning
on page 10 of our 2020 10-K, and (xviii) various other matters, many of which are beyond our control. Should one or more of these
risks or uncertainties develop, or should underlying assumptions prove to be incorrect, actual results may vary materially and
adversely from those anticipated, believed, estimated, or otherwise indicated by our forward-looking statements.
We
intend that all forward-looking statements made in this prospectus and the documents incorporated by reference herein will be
subject to the safe harbor protection of the federal securities laws pursuant to Section 27A of the Securities Act of 1933, as
amended (the Securities Act), to the extent applicable. Except as required by law, we do not undertake any responsibility to update
these forward-looking statements to take into account events or circumstances that occur after the date of this prospectus. Additionally,
we do not undertake any responsibility to update you on the occurrence of any unanticipated events which may cause actual results
to differ from those expressed or implied by these forward-looking statements.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The SEC
allows us to incorporate by reference the information that we file with it, which means that we can disclose important information
to you by reference to another document that we have filed separately with the SEC rather than by including such information in
this prospectus. You should read the information incorporated by reference herein because it is an important part of this prospectus.
Because we are incorporating by reference our future filings with the SEC, this prospectus is continually updated and those
future filings may supersede, supplement or modify some of the information included or incorporated in this prospectus. This means
that you must look at all of the SEC filings that we incorporate by reference into this prospectus and the registration statement
on Form S-1 (Registration No. 333-232377) (the Registration Statement) of which this prospectus is a part to determine if any
of the statements in this prospectus or in any document previously incorporated by reference have been superseded, supplemented
or modified. We incorporate by reference into this prospectus, and the Registration Statement of which this prospectus is a part,
the filed documents listed below, except as superseded, supplemented or modified by this prospectus.
|
|
·
|
our Annual
Report on Form 10-K for the fiscal year ended March 31, 2020; and
|
|
|
·
|
our
Quarterly Report on Form 10-Q for the three months ended June 30, 2020.
|
We also incorporate
by reference herein any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended (the Exchange Act), subsequent to the date hereof until the termination of the offering of the securities
made under this prospectus; provided, however, that we are not incorporating by reference any documents or information, including
parts of documents that are deemed to be furnished and not filed with the SEC. Unless specifically stated to the contrary, none
of the information that we disclose under Items 2.02 or 7.01 of any Current Report on Form 8-K, including in any exhibits to such
Form 8-K that are related to such items, that we may from time to time furnish to the SEC will be incorporated by reference into,
or otherwise included in, this prospectus.
We will provide, without charge,
to each person to whom a copy of this prospectus is delivered, including any beneficial owner, upon the written or oral request
of such person, a copy of any or all of the documents incorporated by reference above, including exhibits. Requests should be
directed to:
Modular Medical,
Inc.
16772 W. Bernardo
Drive
San Diego, California
92127
858-800-3500
Attention: Chief
Executive Officer
The documents
incorporated by reference may be accessed at our website: www.modular-medical.com.
PROSPECTUS
SUMMARY
This
summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider
before investing in shares of our common stock. You should read this entire prospectus and the documents incorporated by reference
herein carefully before you decide to invest in shares of our common stock. Unless otherwise expressly stated or the context otherwise
requires, references in this prospectus and the documents incorporated by reference herein to “Modular Medical,” the
“Company,” “we,” “our,” or “us” are to Modular Medical, Inc. and its subsidiary.
Overview
We
are 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-requiring people with diabetes.
Diabetes
is typically classified as either type 1 or type 2:
|
|
·
|
Type
1 diabetes is characterized by the body’s nearly complete inability to produce
insulin. It is frequently diagnosed during childhood or adolescence. Individuals with
type 1 diabetes require daily insulin therapy to survive.
|
|
|
·
|
Type
2 diabetes represents over 90% of all individuals diagnosed with diabetes and is characterized
by the body’s inability to either properly utilize insulin or produce enough insulin.
Initially, many people with type 2 diabetes attempt to manage their diabetes with improvements
in diet and exercise and/or the use of oral medications and/or injection of glucagon-like
peptide-1, or GLP-1, drugs. However, as their diabetes advances, patients progress to
requiring insulin therapies, such as once-daily long-acting insulin, and, ultimately,
mealtime rapid-acting insulin therapy.
|
Glucose,
the primary source of energy for cells, must be maintained at certain levels in the blood in order to permit optimal cell function
and health. In people with diabetes, blood glucose levels fluctuate between very high, a condition known as hyperglycemia, and
very low, a condition called hypoglycemia. Hyperglycemia can lead to serious long-term complications, including blindness, kidney
disease, nervous system disease, occlusive vascular diseases, lower-limb amputation, stroke and cardiovascular disease, or death.
Hypoglycemia can lead to confusion or loss of consciousness, often requiring a visit to the emergency room or in certain cases
result in death.
The
International Diabetes Federation, or IDF, estimates that, in 2019, approximately 460 million people had diabetes worldwide, and,
that by 2045, this number will increase to 700 million people. According to the U.S. Centers for Disease Control and Prevention,
or CDC, 2020 National Diabetes Statistics Report, approximately 27 million people in the United States have diagnosed diabetes,
of which type 1 diabetes accounts for approximately 5%, or approximately 1.4 million people. All people with type 1 diabetes,
which is our primary market, require daily insulin. According to the CDC, approximately 14% of people with type 2 diabetes in
the United States, or 3.2 million people, require insulin to manage their diabetes. In this prospectus, we refer to people with
type 1 diabetes and people with type 2 diabetes who require mealtime insulin as “insulin-requiring people with diabetes.”
Currently,
there are two primary therapies available for insulin-requiring people with diabetes: multiple daily insulin injections directly
into the body through syringes or insulin pens, referred to as Multiple Daily Injection, or MDI, therapy, or the use of an insulin
pump to deliver a continuous subcutaneous insulin infusion, or CSII, into the body. Generally, CSII therapy is considered to provide
a number of advantages over MDI therapy, primarily an improvement in glycemic control, as measured by certain diabetes management
tests. Use of CSII has proven to improve clinical outcomes while, importantly, reducing emergency room visits associated with
low glucose.
Notwithstanding
these advantages, the difficulty in use resulting from the complexity and cumbersome design of available insulin pumps, as well
as high and often prohibitive costs for both the patient and insurance provider, has resulted not only in dissatisfaction among
many existing pump users, but also has severely limited the adoption rate of insulin pumps by a segment of the diabetes population,
who we refer to in this prospectus as “almost pumpers.”
We
generally define almost pumpers as persons with insulin-requiring diabetes who are aware of pumps and the potential benefits,
but because of the shortcomings, cost and complexity of use problems prevalent in available insulin pumps, continue to receive
their daily insulin through MDI.
Our
initial target market for our insulin pump is the almost pumper population located in the United States.
Based
upon our knowledge of the diabetes industry and information available and/or obtained by us, we believe that an estimated 32%
of Americans with type 1 diabetes use insulin pump therapy and an estimated 30% of Americans with type 1 diabetes are whom we
classify as almost pumpers. The remainder of the population treat their diabetes via MDI.
Our
design and development team is led by Paul DiPerna, our chairman, chief executive officer and a 40% stockholder. Mr. DiPerna has
over 30 years of high-level experience in developing, designing and obtaining U.S. Food and Drug Administration, or FDA, approval
for and managing the commercialization of medical devices, including consumer and hospital-based insulin pumps, while working
for such industry leading medical device companies as Baxter Healthcare, Inc., a supplier of drug therapies and associated pumping
technologies, and Tandem Diabetes Care, Inc., or Tandem, a leading supplier of pumping technology to the existing insulin pumping
marketplace, Mr. DiPerna was the founder of Tandem and designer of its initial product.
Our
Insulin Pump Prototype
Over
the past five years, we have designed and developed working prototypes of our low-cost insulin pump that are now undergoing the
testing required to submit for FDA approval. During this period, we have and continue to devote substantial time and resources
to better understand the needs and preferences of almost pumpers to enable us to modify and refine our insulin pump to the needs
and preferences of this target market. To help us better understand their needs and preferences, we obtained information about
our target market and their care givers through one on one interviews, human factors testing, on-line and in person surveys, and
focus groups at industry related tradeshows and conferences.
Pre-Commercialization
Steps
While we have substantially
completed the general engineering and mechanical aspects of our current insulin pump prototype, prior to commercializing, we still
must successfully complete a number of material steps including:
|
|
·
|
Continue to modify,
refine and finalize our prototype so that it meets:
|
|
|
·
|
the general needs and
preferences of our almost-pumper target market based upon our knowledge of the diabetes industry and information available and/or
obtained by us from almost pumpers and their caregivers; and
|
|
|
·
|
the general guidelines
of third-party payors, private and public insurance companies, preferred provider organizations and other managed care providers
with particular focus on the guidelines established by the Center for Medicare and Medicaid Services, or CMS which administrates
the United States Medicare program, or Medicare. To assist us in making such modifications and refinements, we have retained independent
consultants to focus on ensuring that our product satisfies the existing coverage and reimbursement criteria of such third-party
payors;
|
|
|
·
|
Continue
to work closely with our regulatory consultants to complete, finalize and file our submission
to the FDA for 510(k) clearance and all other documentation necessary to obtain approval
of our insulin pump. This will include:
|
|
|
o
|
engaging the FDA in
a pre-submission conference to ensure that we understand and meet the FDA’s requirements, expectations and standards with
regard to approval of our product. At this meeting, our team, including our FDA regulatory consultant, will receive FDA comments
and guidance regarding our proposed submission during the pre-market notification period for 510(k) clearance (including any suggested
modifications to the device description, indications for use or summary of supporting data contained in the notification);
|
|
|
o
|
preparing and ensuring
that our pre-market notification, which will be part of our FDA submission, demonstrates that our insulin pump, which is substantially
equivalent to an insulin pump previously cleared by the FDA and legally marketed to the public; and
|
|
|
o
|
preparing our submission
to the FDA, to include all of the appropriate results of tests (relating to, among other things, user effectiveness, sterility,
pump efficiency and shipping compatibility) demonstrating safety and efficacy of our insulin pump in satisfaction of the mandates
of the Federal Food, Drug and Cosmetics Act, or the FDCA, including requirements with regard to registration and listing, labeling,
medical device reporting and good manufacturing practices. We currently expect to make this submission in the first half of 2021.
|
|
|
·
|
Refining
our manufacturing process during the submission process to identify and select a manufacturer
of our insulin pump through a competitive bidding process, as we prepare for our product
introduction;
|
|
|
·
|
Take
such actions, if any, as may be required by the FDA as a condition to granting approval
and providing 510(k) clearance for our insulin pump; and
|
|
|
·
|
Retain
appropriate sales and marketing personnel to develop, implement and launch a promotional
campaign for our insulin pump substantially focused on our target market.
|
As
with any medical device attempting to enter and successfully compete with existing products in an established and competitive
marketplace, we will face significant hurdles to accomplish the above steps to commercialization including:
|
|
·
|
Obtaining FDA 510(k)
clearance to market and sell our insulin pump to the public;
|
|
|
·
|
Obtaining any other
FDA-required approvals with regard to our product, as required by the FDCA;
|
|
|
·
|
Educating endocrinologists,
physician’s assistants, nurse practitioners and nurse educators, who typically prescribe pump usage, and certified diabetes
educators and dieticians, who provide education and guidance to diabetes patients, as to what we believe to be the superior qualities
of our product;
|
|
|
·
|
Demonstrating to general
practitioners, who have historically been skeptical of the heightened support inherent in insulin pumps, our product’s ease
of use and convenience;
|
|
|
·
|
Ensuring that our final
product does, in fact, meet the needs of almost-pumpers;
|
|
|
·
|
Overcoming the historic
obstacles and reluctance of almost-pumpers to using insulin pumps to treat their diabetes; and
|
|
|
·
|
Ensuring that third
party payors agree to cover all or a substantial portion of the purchase price and recurring costs of the use of our insulin pump.
|
The
Private Placement Transactions
The
shares of our common stock being offered for resale by selling stockholders named herein pursuant to this prospectus were
issued in connection with two private placement transactions described below.
2017
Placement
On
July 24, 2017, we sold to accredited investors in a private placement (the 2017 Placement) an aggregate 7,801,213 shares
of our common stock at a purchase price of $0.66 per share, resulting in gross proceeds to us of $4,731,872. We are registering
for resale by the selling stockholders named herein the 7,801,213 shares of our common stock issued to such persons in
the 2017 Placement.
2018
Placement
Between
November 2018 and March 29, 2019, we sold to accredited investors in a private placement (the 2018 Placement) 1,856,988
shares of our common stock at a purchase price of $2.25 per share, resulting in gross proceeds to us of $4,142,666. We
are registering for resale by the selling stockholders named herein the 1,856,988 shares of our common stock issued in
the 2018 Placement.
All
of the 9,658,201 shares of our common stock purchased in the 2017 Placement and the 2018 Placement were issued for cash
except for 568,182 shares issued in the 2017 Placement to Manchester Explorer L.P., at the same $0.66 per share purchase
price paid by other investors, in exchange for the cancellation of the 2,900,000 shares Manchester purchased in April
2017 for $375,000 (or $0.13 per share).
Our
offer and sale of all of the foregoing shares in connection with the 2017 Placement and the 2018 Placement were intended
to be exempt from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) of the Securities Act
and the safe harbor provisions of Rule 506(b) of Regulation D thereunder, as applicable to sales of securities exclusively
to accredited investors, as that term is defined in Rule 501(a) of Regulation D.
The
Offering
The
following summary contains certain terms regarding this offering. This summary is not and is not intended to be complete. It may
not contain all of the information that is important to you. You should read the more detailed information contained elsewhere
in this prospectus and in the filings that we have made, and will make with the SEC that are incorporated herein by reference
herein.
|
Securities being offered
|
Up to 9,658,201 shares of our common stock, consisting of (i) 7,801,213 shares issued in the 2017 Placement and (ii) 1,856,988 shares issued in the 2018 Placement. See “Selling Stockholders,” below.
|
|
|
|
|
Use of proceeds
|
We will not receive any of the proceeds from the sale or other disposition of shares of our common stock by the selling stockholders.
|
|
|
|
Market symbol for
common stock
|
Our common stock is quoted on the OTC Pink Open Market under the trading symbol “MODD.”
|
RISK
FACTORS
Investing
in our common stock involves a high degree of risk. Before deciding to invest in our common stock, you should carefully consider
all the information in this prospectus, the documents incorporated by reference into this prospectus and the risks and uncertainties
discussed under the heading “Risk Factors” contained in this prospectus and in Item 1A “Risk Factors”
of our 2020 10-K, incorporated by reference in this prospectus, as the same may be amended, supplemented or superseded by the
risks and uncertainties described under similar headings in the other documents that are filed after the date hereof and incorporated
by reference into this prospectus. Our business, operating results or financial condition could be adversely affected by any of
these risks. The risks described this prospectus and in our 2020 10-K are not the only ones we face. The occurrence of any of
the risks described in this prospectus and in our 2020 10-K or future or additional risks and uncertainties not presently known
to us or that we currently believe to be immaterial could materially and adversely affect, among other things, our business, financial
position, results of operations or cash flows. Any then market price of our common stock could also decline significantly due
to any of these risks, and, as a result, you may lose all or part of your investment. Before deciding whether to invest in our
common stock, you should also refer to the other information included in this prospectus and in the documents incorporated by
reference herein, including our 2020 10-K. Please also read carefully the section above entitled “Cautionary Note Regarding
Forward Looking Statements.”
Risks Relating
to Our Common Stock
The
sale of shares by the selling stockholders may cause our stock price to decline.
The selling
stockholders may sell, in accordance with the limitations set forth in this prospectus, up to the 9,658,201 shares of common stock
covered by this prospectus, in the public markets. Because of the lack of any active trading market for our shares, any such sales
that are able to be made will likely cause our stock price to decline.
Purchasers
in this offering may experience immediate and substantial dilution.
The current
trading price of our common stock that may be offered for resale pursuant to this prospectus is higher than the current net tangible
book value per share of our common stock. Therefore, if you purchase shares of common stock in this offering, you may incur immediate
and substantial dilution in the pro forma net tangible book value per share of common stock from the price per share that you
pay for the common stock. In addition, you may experience dilution if we issue additional shares of common stock including shares
issuable under outstanding options and under our equity incentive plan or other compensation plans that may be implemented in
the future.
We
have not held regular annual meetings of stockholders in the past, and if we are required by the Nevada District Court to hold
an annual meeting pursuant to Nevada Revised Statutes §78.345(1), it could result in the unanticipated expenditure of funds,
time and other Company resources.
Section
2.01 of our Amended Bylaws provides that an annual meeting of stockholders shall be held each year on a date and at a time designated
by our board of directors. Section 78.345(1) of the Nevada Revised Statutes provides that, if there is a failure to hold the annual
meeting for a period of 18 months after the last election of directors, stockholders owning at least 15% of the voting power of
the outstanding common stock may apply to the Nevada district court to order the election of directors. We have not held regular
annual meetings of stockholders in the past because approximately 75% of our voting stock is owned by our largest stockholders,
thereby making it easy to obtain written consent in lieu of a meeting when necessary. Moreover, handling matters by written consent
allows us to save on financial and administrative resources required to prepare for and hold such annual meetings. To our knowledge,
no stockholder or director has requested our management to hold such an annual meeting and no stockholder or director has applied
to the Nevada district court seeking an order directing us to hold such annual meeting of stockholders. However, if one or more
stockholders or directors were to apply to the Nevada district court seeking such an order, and if the Nevada district court were
to order an annual meeting before we were prepared to hold one, the preparation for an annual meeting of stockholders and the
meeting itself could result in the unanticipated expenditure of funds, time, and other Company resources.
DESCRIPTION
OF COMMON STOCK
We are
authorized to issue up to 50,000,000 shares of common stock, par value $0.001 per share. As of September 30, 2020, we had 18,600,158
common shares issued and outstanding, which were held by 103 holders of record.
Common
Stock
Each
holder of our common stock is entitled to a pro rata share of any cash distributions made to stockholders, including any dividend
payments. The holders of our common stock are entitled to one vote for each share of record on all matters to be voted on by stockholders.
There is no cumulative voting with respect to the election of our directors or any other matter. Therefore, under our governing
documents, the holders of more than 50% of the shares voted for the election of those directors can elect all of the directors.
Until July 24, 2022, our board of directors shall consist of no more than five and no less than two directors of which (i) Manchester
has the right to appoint two directors, pursuant to which Manchester Explorer L.P. appointed Morgan Frank and Carmen Volkart and
(ii) Mr. DiPerna, in addition to being our chairman of the board, has the right to appoint 2 additional directors, pursuant to
which he appointed Liam Burns and William Febbo. Our board of directors is elected as a single class.
The holders
of our common stock are entitled to receive dividends when and if declared by our board of directors from funds legally available
therefore. Cash dividends are at the sole discretion of our board of directors. In the event of our liquidation, dissolution or
winding up, the holders of common stock are entitled to share ratably in all assets remaining available for distribution to them
after payment of our liabilities and after provision has been made for each class of stock, if any, having any preference in relation
to our common stock. Holders of shares of our common stock have no conversion, preemptive or other subscription rights, and there
are no redemption provisions applicable to our common stock.
Dividend
Policy
We have
never paid dividends and have no current plans to do so. We currently anticipate that we will retain all of our future earnings,
if any, for use in the development and expansion of our business and for general corporate purposes. Any determination to pay
dividends in the future will be at the discretion of our board of directors and will depend upon our results of operations, financial
condition, and other factors that the board of directors, in its discretion, may deem relevant. There are no restrictions, other
than applicable law, on the ability of the board of directors to declare and pay dividends.
Stock
Options
In October
2017, our board of directors (the Board) approved the 2017 Equity Incentive Plan (the 2017 Plan) with 3,000,000 shares of common
stock reserved for issuance. In January 2020, the Board approved an amendment to the 2017 Plan to increase the number of shares
reserved for issuance by 1,000,000 shares. Under the 2017 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 2017 Plan is administered by the Board or, in the alternative, a committee designated by the Board. As of September
30, 2020, stock options to purchase 3,480,088 shares have been granted under the 2017 Plan.
Dilution
The current
trading price of the common stock that may be offered for resale pursuant to this prospectus is higher than the current net tangible
book value per share of our common stock. Therefore, if you purchase shares of common stock in this offering, you may incur immediate
and substantial dilution in the pro forma net tangible book value per share of common stock from the price per share that you
pay for the common stock.
This offering is for sales
of common stock by the selling stockholders on a continuous or delayed basis in the future. Neither sales of common stock by the
selling stockholders nor cash payments made by the purchasers of the common stock will result in a change to the net tangible
book value per share before and after the sale of the shares by the selling stockholders. Prospective investors should be aware,
however, that the price of shares of common stock may not bear any rational relationship to the net tangible book value per share
of the common stock.
PLAN
OF DISTRIBUTION
We are
not offering any of the selling stockholders’ shares. We will not receive any of the proceeds from any sale by the selling
stockholders.
The selling
stockholders, which for this purpose includes donees, pledgees, transferees or other successors-in-interest selling shares of
common stock or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a
gift, pledge, dividend, distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or
all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on
which the shares are traded, or in private transactions. The selling stockholders will sell all or a portion of these shares,
from time to time, at a fixed price of $3.00 per share until our common stock is quoted on the OTC Bulletin Board, OTCQX or OTCQB,
and, thereafter, at prevailing market prices or privately negotiated prices.
The selling
stockholders may use any one or more of the following methods when selling our shares or interests in our shares:
|
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers;
|
|
|
·
|
block
trades in which a broker-dealer will attempt to sell the shares as agent, but may position
and resell a portion of the block as principal to facilitate the transaction;
|
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its account;
|
|
|
·
|
on
any national securities exchange or quotation service on which the shares may be listed
or quoted at the time of sale;
|
|
|
·
|
privately
negotiated transactions;
|
|
|
·
|
short
sales effected after the date the Registration Statement of which this prospectus is
a part is declared effective by the SEC;
|
|
|
·
|
through
the writing or settlement of options or other hedging transactions, whether through an
options exchange or otherwise;
|
|
|
·
|
broker-dealers
may agree with the selling stockholders to sell a specified number of such shares at
a stipulated price per share;
|
|
|
·
|
a
combination of any such methods of sale; and
|
|
|
·
|
any other method permitted
by applicable law.
|
The selling
stockholders may, from time to time, pledge or grant a security interest in some or all of our shares owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common
stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors
in interest as selling stockholders under this prospectus. The selling stockholders may also transfer our shares in other circumstances,
in which case the transferees, pledgees or other successors will be the selling beneficial owners for purposes of this prospectus.
In connection
with the sale of our common shares or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of our shares in the course of hedging the positions
they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out
their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation
of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus
(as supplemented or amended to reflect such transaction).
The aggregate
proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common
stock less discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with
their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through
agents. We will not receive any of the proceeds from sales of shares by the selling stockholders.
The selling
stockholders may also resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities
Act, provided that they meet the criteria and conform to the requirements of that rule, or under Section 4(1) of the Securities
Act, if available, rather than by means of this prospectus.
In
connection with the sale of shares of common stock covered by this prospectus, broker-dealers may receive commissions or
other compensation from a selling stockholder in the form of commissions, discounts or concessions. Broker-dealers may also
receive compensation from purchasers of the shares of common stock for whom they act as agents or to whom they sell as
principals or both. Compensation as to a particular broker-dealer may be in excess of customary commissions or in amounts to
be negotiated. In connection with any underwritten offering, underwriters may receive compensation in the form of discounts,
concessions or commissions from a selling stockholder or from purchasers of the shares for whom they act as agents.
Underwriters may sell the shares of common stock to or through dealers, and such dealers may receive compensation in the form
of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act
as agents. Any underwriters, broker-dealers, agents or other persons acting on behalf of a selling stockholder that
participate in the distribution of the shares of common stock may be deemed to be “underwriters” within the
meaning of the Securities Act, and any profit on the sale of the shares of common stock by them and any discounts,
commissions or concessions received by any of those underwriters, broker-dealers, agents or other persons may be deemed to be
underwriting discounts and commissions under the Securities Act. The aggregate amount of compensation in the form of
underwriting discounts, concessions, commissions or fees and any profit on the resale of shares by the selling stockholders
that may be deemed to be underwriting compensation pursuant to Financial Industry Regulatory Authority, Inc., rules and
regulations will not exceed applicable limits.
The selling
stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein
may be “underwriters” within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions
or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling
stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the
prospectus delivery requirements of the Securities Act and may be subject to certain statutory liabilities, including but not
limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act.
To the
extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices
and public offering prices, the names of any agent, dealer or underwriter, and any applicable commissions or discounts with respect
to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment
to the Registration Statement that includes this prospectus.
In order
to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered
or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.
We have
advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of
shares in the market and to the activities of the selling stockholders and their affiliates. In addition, to the extent applicable,
we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders
for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify
any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities
arising under the Securities Act. All of the foregoing may affect the marketability of the common stock and the ability of any
person or entity to engage in market-making activities with respect to our common stock.
Penny
Stock Rules / Section 15(g) of the Exchange Act
Our shares
may be considered penny stock covered by Section 15(g) of the Exchange Act and Rules 15g-1 through 15g-6 promulgated thereunder.
They impose additional sales practice requirements on broker/dealers who sell our securities to persons other than established
customers and accredited investors who are generally institutions with assets in excess of $5,000,000 or individuals with net
worth in excess of $1,000,000 (including spouse’s net worth and may include the fair market value of home furnishings and
automobiles, but excluding from the calculation the value any primary residence and the related amount of any indebtedness on
primary residence up to the fair market value of the primary residence (any indebtedness that exceeds the fair market value of
the primary residence must be deducted from net worth calculation)) or annual income exceeding $200,000 or $300,000 jointly with
their spouses.
Rule 15g-1
exempts a number of specific transactions from the scope of the penny stock rules. Rule 15g-2 declares unlawful broker/dealer
transactions in penny stocks unless the broker/dealer has first provided to the customer a standardized disclosure document.
Rule 15g-3
provides that it is unlawful for a broker/dealer to engage in a penny stock transaction unless the broker/dealer first discloses
and subsequently confirms to the customer current quotation prices or similar market information concerning the penny stock in
question.
Rule 15g-4
prohibits broker/dealers from completing penny stock transactions for a customer unless the broker/dealer first discloses to the
customer the amount of compensation or other remuneration received as a result of the penny stock transaction.
Rule 15g-5
requires that a broker/dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer,
at the time of or prior to the transaction, information about the sales person’s compensation.
Rule 15g-6
requires broker/dealers selling penny stocks to provide their customers with monthly account statements.
Rule 15g-9
requires broker/dealers to approved the transaction for the customer’s account; obtain a written agreement from the customer
setting forth the identity and quantity of the stock being purchased; obtain from the customer information regarding his investment
experience; make a determination that the investment is suitable for the investor; deliver to the customer a written statement
for the basis for the suitability determination and that it is unlawful to effect the transaction without written authorization
for the transaction from the customer.
The application
of the penny stock rules may affect your ability to resell your shares due to broker-dealer reluctance to undertake the above-described
regulatory burdens.
SELLING
STOCKHOLDERS
The table
below sets forth information concerning the resale of our shares by the selling stockholders. The selling stockholders acquired
our shares in private placement transactions. The total number of common shares sold under this prospectus may be adjusted to
reflect adjustments due to stock dividends, stock distributions, splits, combinations or recapitalizations with regard to the
common stock. Unless otherwise stated below in the footnotes, to our knowledge, no selling stockholder: (i) has held any position
or office with us during the three years prior to the date of this prospectus or (ii) is a broker-dealer, or an affiliate of a
broker-dealer.
Set forth
below is the name of each selling stockholder and the amount and percentage of common stock owned by each prior to the offering,
the shares to be sold in the offering, and the amount and percentage of common stock to be owned by each after the offering assuming
all shares are sold. The footnotes provide information about persons who have voting and dispositive power with respect to shares
held by the selling stockholders.
We have
registered up to 9,658,201 shares of common stock, consisting of (i) 7,801,213 shares issued in the 2017 Placement and (ii) 1,856,988
shares issued in the 2018 Placement. For a more complete summary of the foregoing transactions, refer to the disclosure under
the heading “Prospectus Summary—The Private Placement Transactions.”
The amounts
and percentages of shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial
ownership of securities. Under SEC rules, a person is deemed a “beneficial owner” of a security if that person has
or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of the security.
A person is also deemed a beneficial owner of any securities of which that person has a right to acquire beneficial ownership
within 60 days. Securities that can be acquired this way are deemed to be outstanding for purposes of computing a person’s
ownership percentage, but not for purposes of computing any other person’s percentage. Under these rules, more than one
person may be deemed a beneficial owner of the same securities, and a person may be deemed a beneficial owner of securities to
which that person has no economic interest.
The following
table is based on information provided to us by the selling stockholders and is as of September 30, 2020. The selling stockholders
may sell all or some of the shares of common stock they are offering and may sell unless indicated otherwise in the footnotes
below shares of our common stock otherwise pursuant to this prospectus. The tables below assume that each selling stockholder
sells all of the shares offered by it in offerings pursuant to this prospectus, and does not acquire any additional shares. We
are unable to determine the exact number of shares that will actually be sold or when or if these sales will occur.
Name of Selling
Stockholder
|
|
Shares of
Common
Stock
Beneficially
Owned Pre-
Offering (1)
|
|
|
% Owned
Beneficially
Pre-
Offering (1)(2)
|
|
|
Shares of
Common
Stock to be
offered for
selling
stockholder’s
account (3)
|
|
|
Shares of
Common
Stock
Beneficially
Owned
Post-
Offering (1)
|
|
|
% Beneficially
Owned
Post-
Offering (1)(2)
|
|
|
Atwood P. Collins (4)
|
|
|
79,287
|
|
|
|
*
|
|
|
|
44,444
|
|
|
|
34,843
|
|
|
|
*
|
|
|
Blackwell Partners LLC – Series A (5)(6)
|
|
|
213,334
|
|
|
|
1.15
|
%
|
|
|
156,000
|
|
|
|
—
|
|
|
|
*
|
|
|
Christopher Davis (7)
|
|
|
500,000
|
|
|
|
2.69
|
%
|
|
|
400,000
|
|
|
|
100,000
|
|
|
|
*
|
|
|
Christopher B. Davis Guardianship Dated 1/25/2007 (8)
|
|
|
222,667
|
|
|
|
*
|
|
|
|
122,667
|
|
|
|
100,000
|
|
|
|
*
|
|
|
Clive Anthony Caunter (9)
|
|
|
250,000
|
|
|
|
1.34
|
%
|
|
|
227,273
|
|
|
|
22,727
|
|
|
|
*
|
|
|
Dick Horn (10)
|
|
|
76,000
|
|
|
|
*
|
|
|
|
76,000
|
|
|
|
—
|
|
|
|
*
|
|
|
Dogma Holdings Inc. (5)
|
|
|
22,002
|
|
|
|
*
|
|
|
|
22,002
|
|
|
|
—
|
|
|
|
*
|
|
|
Frank Family 1996 Trust
|
|
|
489,999
|
|
|
|
2.63
|
%
|
|
|
489,899
|
(11)
|
|
|
—
|
|
|
|
*
|
|
|
Harry Charles Mills Scio (10)
|
|
|
40,000
|
|
|
|
*
|
|
|
|
40,000
|
|
|
|
—
|
|
|
|
*
|
|
|
James E. Besser
|
|
|
6,454,377
|
(12)
|
|
|
34.70
|
%
|
|
|
88,889
|
(5)
|
|
|
6,365,488
|
|
|
|
34.22
|
%
|
|
Jason Pickett (10)
|
|
|
151,515
|
|
|
|
*
|
|
|
|
151,515
|
|
|
|
—
|
|
|
|
*
|
|
|
JEB Partners, LP
|
|
|
6,454,377
|
(12)
|
|
|
34.70
|
%
|
|
|
917,576
|
(13)
|
|
|
5,536,801
|
|
|
|
29.77
|
%
|
|
JOJ Holdings, LLC (10)
|
|
|
75,758
|
|
|
|
*
|
|
|
|
75,758
|
|
|
|
—
|
|
|
|
*
|
|
|
Lawrence Groo (10)
|
|
|
38,000
|
|
|
|
*
|
|
|
|
38,000
|
|
|
|
—
|
|
|
|
*
|
|
|
Manchester Explorer, L.P.
|
|
|
6,454,377
|
(12)
|
|
|
34.70
|
%
|
|
|
5,016,566
|
(14)
|
|
|
1,437,811
|
|
|
|
7.73
|
%
|
|
Michael Malouf (10)
|
|
|
151,515
|
|
|
|
*
|
|
|
|
151,515
|
|
|
|
—
|
|
|
|
*
|
|
|
Paul DiPerna Trust
|
|
|
7,735,040
|
(15)
|
|
|
41.59
|
%
|
|
|
303,030
|
(10)
|
|
|
7,432,010
|
|
|
|
38.95
|
%
|
|
Pepper Grove Holdings Limited (16)
|
|
|
238,615
|
|
|
|
*
|
|
|
|
151,515
|
|
|
|
87,100
|
|
|
|
*
|
|
|
Peter Karabatos (5)
|
|
|
13,333
|
|
|
|
*
|
|
|
|
13,333
|
|
|
|
—
|
|
|
|
*
|
|
|
Ray Gallo (17)
|
|
|
79,444
|
|
|
|
*
|
|
|
|
44,444
|
|
|
|
35,000
|
|
|
|
*
|
|
|
Robert Andrade (5)
|
|
|
11,111
|
|
|
|
*
|
|
|
|
11,111
|
|
|
|
—
|
|
|
|
*
|
|
|
Robert Gambi (10)
|
|
|
50,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
*
|
|
|
Robin Russell (10)
|
|
|
76,000
|
|
|
|
*
|
|
|
|
76,000
|
|
|
|
—
|
|
|
|
*
|
|
|
Rostilav Raykov (18)
|
|
|
89,092
|
|
|
|
*
|
|
|
|
89,092
|
|
|
|
—
|
|
|
|
*
|
|
|
Samuel Davis Trust FBO Alma Davis David (5)
|
|
|
44,000
|
|
|
|
*
|
|
|
|
44,000
|
|
|
|
—
|
|
|
|
*
|
|
|
Sarah Ball (5)
|
|
|
8,882
|
|
|
|
*
|
|
|
|
8,882
|
|
|
|
—
|
|
|
|
*
|
|
|
Simon Ball (5)
|
|
|
8,882
|
|
|
|
*
|
|
|
|
8,882
|
|
|
|
—
|
|
|
|
*
|
|
|
683 Capital Partners, LP (5)
|
|
|
444,444
|
|
|
|
2.39
|
%
|
|
|
444,444
|
|
|
|
—
|
|
|
|
*
|
|
|
Solas Capital Partners, LP (5)(6)
|
|
|
213,334
|
|
|
|
1.15
|
%
|
|
|
21,778
|
|
|
|
—
|
|
|
|
*
|
|
|
Solas Capital Partners II, LP (5)(6)
|
|
|
213,334
|
|
|
|
1.15
|
%
|
|
|
35,556
|
|
|
|
—
|
|
|
|
*
|
|
|
The Entrust Group FBO William Meehan IRA 7230006842 (5)
|
|
|
35,000
|
|
|
|
*
|
|
|
|
35,000
|
|
|
|
—
|
|
|
|
*
|
|
|
Varana Capital Focused, LP (10)
|
|
|
303,030
|
|
|
|
1.63
|
|
|
|
303,030
|
|
|
|
—
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Represents
less than 1%
|
|
(1)
|
Beneficial
ownership includes shares of common stock as to which a person or group has sole or shared
voting power or investment power. Shares of common stock subject to options, warrants
or other convertible securities that are exercisable or convertible currently or within
60 days, are deemed outstanding for purposes of computing the number of shares beneficially
owned and percentage ownership of the person or group holding such options, warrants
or convertible securities, but are not deemed outstanding for computing the percentage
of any other person.
|
|
|
(2)
|
Percentages
are based on 18,600,158 shares of common stock outstanding as of September 30, 2020.
|
|
|
(3)
|
Represents
shares of our common stock issued exclusively in the 2017 Placement and the 2018 Placement.
|
|
|
(4)
|
Includes (i) 44,444 shares
purchased in the 2018 Placement and (ii) 34,843 shares purchased in a private placement in 2020.
|
|
|
(5)
|
Includes shares purchased
in the 2018 Placement.
|
|
|
(6)
|
Includes
(i) 156,000 shares directly held, which shares constitute a portion of the assets of
Blackwell Partners, LLC-Series A for which Solas Capital Management, LLC (Solas Capital
Management) acts as its investment manager and has voting and dispositive power; (ii)
21,778 shares held directly by Solas Capital Partners, LP, for which Solas Capital Management
is the investment manager and has voting and dispositive power; and (iii) 35,556 shares
held directly by Solas Capital Partners II, LP, for which Solas Capital Management is
the investment manager and has voting and dispositive power. Such person disclaims beneficial
ownership of all shares not held directly by such person and this prospectus shall not
be deemed an admission that such person is the beneficial owner of such shares, except
to the extent of such persons pecuniary interest therein.
|
|
|
(7)
|
Includes (i) 400,000 shares
purchased in the 2017 Placement and (ii) 100,000 shares purchased in a private placement in 2020.
|
|
|
(8)
|
Includes (i) 122,667 shares
purchased in the 2018 Placement and (ii) 100,000 shares purchased in a private placement in 2020.
|
|
|
(9)
|
Includes (i) 227,273 shares
purchased in the 2017 Placement and (ii) 22,727 shares purchased in a private placement in 2020.
|
|
|
(10)
|
Includes shares purchased
in the 2017 Placement.
|
|
|
(11)
|
Includes
(i) 378,788 shares purchased in the 2017 Placement and (ii) 111,111 shares purchased
in the 2018 Placement. The address for the Frank Family Trust is c/o Manchester Management,
LLC, 2 Calle Candina, No. 1701, San Juan, Puerto Rico 00907. Such person disclaims beneficial
ownership of all shares not held directly by such person and this prospectus shall not
be deemed an admission that such person is the beneficial owner of such shares, except
to the extent of such persons pecuniary interest therein.
|
|
|
(12)
|
Includes (i) 180,830 shares
directly held by Mr. Besser, which shares were received in connection with our acquisition of Quasuras, Inc. (Quasuras) in 2017
(the Acquisition) in exchange for Mr. Besser’s shares of Quasuras; (ii) 88,889 shares directly held by Mr. Besser who purchased
such shares in the 2018 Placement; (iii) 4,545,455 shares purchased by Manchester in the 2017 Placement; (iv) 471,111 shares held
by Manchester Explorer, L.P. (Manchester) who purchased such shares in the 2018 Placement; (v) 757,576 shares held by JEB Partners,
LP (JEB Partners) who purchased such shares in the 2017 Placement; (vi) 160,000 shares held by JEB Partners who purchased such
shares in the 2018 Placement; and (vii) 180,830 shares held by Mr. Frank, which shares were received in the Acquisition in exchange
for Mr. Frank’s shares of Quasuras, and (viii) 69,686 shares purchased in a private placement in 2020. Mr. Besser, as the
managing member, and Mr. Frank, as the portfolio manager and consultant of Manchester Management, LLC (MMC), the general partner
of Manchester and JEB Partners, have shared voting and dispositive power over shares held by Manchester and JEB Partners. The
address for Mr. Besser is c/o Manchester Management, LLC, 2 Calle Candina, No. 1701, San Juan, Puerto Rico 00907. Such person
disclaims beneficial ownership of all shares not held directly by such person and this prospectus shall not be deemed an admission
that such person is the beneficial owner of such shares, except to the extent of such persons pecuniary interest therein.
|
|
|
(13)
|
Includes
(i) 757,576 shares directly held and purchased in the 2017 Placement and (ii) 160,000
shares directly held and purchased in the 2018 Placement. The address for JEB Partners
is c/o Manchester Management, LLC, 2 Calle Candina, No. 1701, San Juan, Puerto Rico 00907.
Such person disclaims beneficial ownership of all shares not held directly by such person
and this prospectus shall not be deemed an admission that such person is the beneficial
owner of such shares, except to the extent of such persons pecuniary interest therein.
|
|
|
(14)
|
Includes
(i) 4,545,455 shares purchased by Manchester in the 2017 Placement and (ii) 471,111 shares
purchased by Manchester in the 2018 Placement. Such person disclaims beneficial ownership
of all shares not held directly by such person and this prospectus shall not be deemed
an admission that such person is the beneficial owner of such shares, except to the extent
of such persons pecuniary interest therein.
|
|
|
(15)
|
Includes
(i) 303,030 shares held directly by the Paul DiPerna Trust, which shares were purchased
by the Paul DiPerna Trust in the 2017 Placement; (ii) 7,220,400 shares acquired by Mr.
DiPerna in the Acquisition in exchange for his shares of Quasuras; and (iii) 211,610
shares issuable upon exercise of vested stock options issued to Mr. DiPerna under the
2017 Plan. Mr. DiPerna is our Chairman, Chief Executive Officer, Chief Financial Officer,
Secretary and Director. Such person disclaims beneficial ownership of all shares not
held directly by such person and this prospectus shall not be deemed an admission that
such person is the beneficial owner of such shares, except to the extent of such persons
pecuniary interest therein.
|
|
|
(16)
|
Includes (i) 151,515 shares
purchased in the 2017 Placement and (ii) 87,100 shares purchased in a private placement in 2020.
|
|
|
(17)
|
Includes (i) 44,444 shares
purchased in the 2018 Placement and (ii) 35,000 shares purchased in a private placement in 2020.
|
|
|
(18)
|
Includes
(i) 75,758 shares purchased in the 2017 Placement; and (ii) 13,334 shares purchased in
the 2018 Placement. Such person disclaims beneficial ownership of all shares not held
directly by such person and this prospectus shall not be deemed an admission that such
person is the beneficial owner of such shares, except to the extent of such persons pecuniary
interest therein.
|
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
file annual, quarterly and current reports and other information with the SEC, as required by the Exchange Act. The SEC maintains
a site on the internet at www.sec.gov which contains reports and other information that we file electronically with the
SEC. Our website address is www.modular-medical.com. The information in our website is not incorporated by reference into this
report. Through a link on our website, we make available our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d)
of the Exchange Act, as soon as reasonably practicable after they are filed with, or furnished to, the SEC.
This
prospectus is part of our Registration Statement on Form S-1 that we filed with the SEC, of which this prospectus is a part, under
the Securities Act, with respect to the shares of our common stock offered hereby. This prospectus does not contain all of the
information set forth in the Registration Statement because parts of the Registration Statement have been omitted, as permitted
by SEC rules and regulations. You should review the information and exhibits in the Registration Statement for further information
about us and the securities being offered hereby. Statements contained in this prospectus regarding the contents of any agreement,
contract or other document referred to herein are not necessarily complete and reference is made in each instance to the copy
of the contract or document filed as an exhibit to the Registration Statement. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to be superseded, supplemented or modified for purposes
hereof to the extent that a statement contained herein or in any other subsequently filed document which is also incorporated
or deemed to be incorporated herein modifies or supersedes such statement. Any such statement so superseded, supplemented or modified
shall not be deemed, except as so superseded, supplemented or modified, to constitute a part of this prospectus or the Registration
Statement to which this prospectus is a part. We have not authorized anyone to provide you with any additional information or
any information that is different from that contained in or incorporated by reference into this prospectus or the Registration
Statement. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others
may give you. You should not assume that the information contained in or incorporated by reference into this prospectus is
accurate as of any date other than that date, unless we otherwise note in this prospectus. You should review the complete document
to evaluate these statements. You can obtain a copy of the Registration Statement from the SEC’s website referenced above.
MARKET FOR
OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Our common stock
is currently quoted on the OTC Pink Markets under the trading symbol “MODD.” As is typical for stocks quoted on the
OTC Pink Markets, trading in shares of our common stock is limited and sporadic. There is no established trading market for shares
of our common stock and no assurances can be given that any such trading market will develop or be maintained.
On October
9, 2020, the closing price of our common stock was $3.80 per share, and we had 103 holders of record of our common stock.
LEGAL
MATTERS
The
validity of the securities offered in this prospectus is being passed upon for us by Gusrae Kaplan Nusbaum PLLC, New York, New
York.
EXPERTS
The consolidated
balance sheets of Modular Medical, Inc. as of March 31, 2020 and March 31, 2019, and the related consolidated statements of operations,
changes in stockholders’ equity and cash flows for the years then ended have been audited by Farber Hass Harley LLP, an
independent registered public accounting firm, as stated in their report which is incorporated herein. Such consolidated financial
statements have been incorporated herein in reliance on the report of such firm given upon their authority as experts in accounting
and auditing.