Modular Medical, Inc. 10-Q

Item 5. Other Information On February 8, 2021, we 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 our equity securities to investors or a strategic corporate investor resulting in aggregate gross proceeds to us 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 us, 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 we 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 our 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 our common stock at a conversion price equal to $2.87 per share or (ii) having us 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 us 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 our capital stock 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 we are a party in which in excess of 50% of our voting power is transferred; (iii) the sale or transfer of all or substantially all of our assets, or the exclusive license of all or substantially all of the our material intellectual property; or (iv) the dissolution and winding up of us. Our chairman and chief executive officer and an existing investor, which is represented by a member of our board of directors, purchased the $1,100,000 aggregate principal amount of the Notes. The private placement of the Notes was approved by our disinterested directors. Item 6. Exhibits Exhibit No. Description of Document 10.21 Form of Convertible Promissory Note dated February 8, 2021 31.1 Certification of Paul M. DiPerna pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Paul M. DiPerna pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema 101.CAL XBRL Taxonomy Extension Calculation Linkbase 101.DEF XBRL Taxonomy Extension Definition Linkbase 101.LAB XBRL Taxonomy Extension Label Linkbase 101.PRE XBRL Taxonomy Extension Presentation Linkbase 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MODULAR MEDICAL, INC. Date: February 12, 2021 By: /s/ Paul M. DiPerna Paul M. DiPerna Chairman, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer (principal executive, financial and accounting officer) 18