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 |