What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-06-29 compared with 2020-06-29 · 178 added, 190 removed, 156 unchanged (70% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is currently quoted

on the OTC Pink Open Market under the trading symbol “MODD.”

Trading in shares of our common stock is limited and

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.

31, 2020, we had 99 holders of record of our common stock.

This does not include beneficial owners holding common stock in street

As such, the number of beneficial holders of our shares could be substantially larger than the number of shareholders of

We have never declared or paid any

dividends on our capital stock.

We currently expect to retain future earnings, if any, for use in the operation and expansion

of our business and do not anticipate paying any cash dividends in the foreseeable future.

Our common stock

is currently quoted on the OTCQB Venture Market under the trading symbol “MODD.”

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.

31, 2021, we had approximately 100 holders of record of our common stock.

This does not include beneficial owners holding common

stock in street name.

As such, the number of beneficial holders of our shares could be substantially larger than the number of

shareholders of record.

We have never

declared or paid any dividends on our capital stock.

We currently expect to retain future earnings, if any, for use in the operation

and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

Securities Authorized for Issuance

under Equity Compensation Plan

In October 2017, our board of directors

approved the Amended 2017 Equity Incentive Plan (the 2017 Plan) and reserved 3,000,000 shares of our common stock to be issued

In January 2020, our board of directors approved an amendment to the 2017 Plan to increase the number of shares reserved

for issuance by 1,000,000 shares.

The following table shows shares of our common stock authorized for issuance under our 2017

Plan as of March 31, 2020:

In October 2017,

our board of directors approved the Amended 2017 Equity Incentive Plan (the 2017 Plan) and reserved 3,000,000 shares of our common

stock to be issued thereunder.

In January 2020, our board of directors approved an amendment to the 2017 Plan to increase the

number of shares reserved for issuance by 1,000,000 shares.

The following table shows shares of our common stock authorized for

issuance under our 2017 Plan as of March 31, 2021:

Plan Category

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in Column (a))

Equity compensation plans

approved by security holders(1)

2017 Plan allows for grants in the form of incentive stock options, nonqualified stock

options, stock units, stock awards, stock appreciation rights, and other stock-based

All of our officers, directors, employees, consultants and advisors are eligible

to receive grants under the Plan.

The maximum number of shares reserved for issuance

under the Plan is 4,000,000.

Options to purchase shares of common stock are granted at

exercise prices not less than 100% of fair value on the dates of grant.

Sales of Unregistered Securities

a private placement for shares of our common stock in March 2020 (the 2020 Placement).

From March 2020 through June 15, 2020,

we sold 584,198 shares of our common stock at a purchase price of $2.87 per share resulting in gross proceeds to us of $1,676,648 from

the 2020 Placement.

In June 2019,

we issued 30,000 shares of common stock to a consultant.

The offer, sale and issuance of these securities were deemed to be exempt

from registration either under the Securities Act, in reliance on Rule 701 promulgated under the Securities Act, as a transaction

under compensatory benefit plans, or Section 4(a)(2) and Rule 506 of Regulation D of the Securities Act, as a transaction not

involving a public offering.

Appropriate legends were affixed to the securities issued in this transaction.

From November

2018 through March 29, 2019, in a private placement, we sold 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 (the 2018 Placement).

In the 2018 Private Placement, Mr.

Besser purchased 88,889 shares for $200,000, JEB Partners purchased 160,000 shares for $360,000, and Manchester Explorer purchased

471,111 shares for $1,060,000.

The 2020 Placement

and the 2018 Placement were made pursuant to exemptions from registration pursuant to Section 4(2) and/or Rule 506 of Regulation

D of the Securities Act of 1933 (the Securities Act).

We made such determinations based upon representations by the purchasers

of such shares including, without limitation, that such purchasers were “accredited investors,”

as defined in the

Securities Act.

Appropriate legends were affixed to the securities issued in this transaction.

Equity compensation plans approved by

security holders(1)

(1) The 2017 Plan allows for

grants in the form of incentive stock options, nonqualified stock options, stock units, stock awards, stock appreciation rights,

and other stock-based awards.

All of our officers, directors, employees, consultants and advisors are eligible to receive grants

under the Plan.

Options to purchase shares of common stock are granted at exercise prices not less than 100% of fair value on

the dates of grant.

of Unregistered Securities

2021 Placement

Between February

and May 2021, we issued to accredited investors in the 2021 Placement, $6,610,550

aggregate principal amount of our 12% unsecured convertible promissory notes, due 12 months

from each respective issuance date, at par and warrants to purchase in the aggregate 2,285,736 shares of our common stock at an

exercise price of $8.00 per share, exercisable for a 5-year period, as provided in such warrants.

We intend to use net

proceeds from the 2021 Placement for business development, including, without limitation, working capital and general corporate

Other Transactions

issued a total of 133,500 shares of common stock to three service providers in exchange for services rendered, and, in 2019, we

sold 30,000 shares of our common stock to a service provider.

2020 Placement

Between March

and December 2020, we sold to accredited investors in a private placement (the 2020 Placement) a total of 962,387 shares of our

common stock at a purchase price of $2.87 per share.

The 2020 Placement resulted in gross proceeds to us of $2,762,054.

2018 Placement

Between November

2018 and March 2019, we sold to accredited investors in a private placement (the 2018 Placement) a total of 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.

sales of our securities were made pursuant to exemptions from registration pursuant to Section 4(2) and/or Rule 506 of Regulation

D of the Securities Act.

We made such determinations based upon representations by the purchasers of such securities including,

without limitation, that such purchasers were “accredited investors”

as defined in the Securities Act.

of Equity Securities

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These risks and uncertainties may cause actual results to differ materially from those discussed in the forward-looking statements.

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.

We have 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, we believe we

can address the less technically savvy, less motivated part of the market.

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 dependent people

with diabetes.

We have 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, we believe we can address the

less technically savvy, less motivated part of the market.

We have completed

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therefore not generated any revenues from product sales.

Our net losses were $5.3 million and $2.5 million for the years ended

March 31, 2020 and 2019, respectively.

As of March 31, 2020, we had working capital of $2.5 million and an accumulated deficit

of $8.6 million.

Historically,

we have financed our operations principally through private placements of our common stock.

Based on our current operating plan,

substantial doubt about our ability to continue as a going concern for a period of at least one year from the date that the financial

statements included in Item 8 of this Report are issued exists.

Our ability to continue as a going concern depends on our ability

to raise additional capital, through the sale of equity or debt securities, to support our future operations.

If we are unable

to secure additional capital, we will be required to curtail our research and development initiatives and take additional measures

to reduce costs.

Our net losses were approximately $7.4 million and $5.3 million for the

years ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, we had negative working capital of approximately $1.6

million and an accumulated deficit of approximately $15.9 million.

Historically, we have financed our

operations principally through private placements of our common stock, and, more recently, of convertible promissory notes.

May 2021, we completed the 2021 Placement and issued $6,610,550 aggregate principal amount of our convertible promissory notes

(the 2021 Notes), at par, and warrants to purchase shares of our common stock.

For further discussion of the 2021 Placement and

the 2021 Notes, see Notes 3 and 12 to the consolidated financial statements in Item 8 of this Report and below under Liquidity .

current operating plan, substantial doubt about our ability to continue as a going concern for a period of at least one year from

the date that the financial statements included in Item 8 of this Report are issued exists.

Our ability to continue as a going

concern depends on our ability to raise additional capital, through the sale of equity or debt securities, to support our future

If we are unable to secure additional capital, we will be required to curtail our research and development initiatives

and take additional measures to reduce costs.

Impacts of COVID-19

outbreak of the coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization and a national emergency

The global outbreak

of the coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization and a national emergency by

government in March 2020.

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and cannot be predicted.

In March 2020,

Santa Diego County in California, where we are based, and the state of California issued “shelter-in-place”

orders (the Orders).

We have been complying with the Orders and have minimized business activities at our San Diego facility effective

March 20, 2020.

We have implemented a teleworking policy for our employees and contractors to reduce on-site activity at our facility.

We have experienced longer lead times for certain components used to manufacture initial quantities of our products for our submission

to the FDA, which is expected to occur in the quarter ending December 31, 2020.

In addition, our teleworking policy, which was

required to comply with the Orders, has required us to minimize the number of our employees and contractors that are working on

site at our facility at any one time.

We remain diligent in continuing to identify and manage risks to our business given the

changing uncertainties related to COVID-19.

While we believe that our operations personnel are currently in a position to build

an adequate supply of products for our FDA submission, we recognize that unpredictable events could create difficulties in the

months ahead.

We may not be able to address these difficulties in a timely manner, which could delay our submission to the FDA

and negatively impact our business, results of operations, financial condition and cash flows.

(the Orders).

We have been complying with the Orders and, until May 2021, had minimized business activities at our San Diego facility

since March 2020.

During that time, we implemented a teleworking policy for our employees and contractors to reduce on-site activity

at our facility.

We have and continue to experience longer lead times for certain components used to manufacture initial quantities

of our products for our submission to the FDA, which is expected to occur in the quarter ending December 31, 2021.

We remain diligent

in continuing to identify and manage risks to our business given the changing uncertainties related to COVID-19.

While we believe

that our operations personnel are currently in a position to build an adequate supply of products for our FDA submission, we recognize

that unpredictable events could create difficulties in the months ahead.

We may not be able to address these difficulties in a

timely manner, which could delay our submission to the FDA and negatively impact our business, results of operations, financial

condition and cash flows.

The continued

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We were recently able to raise additional

capital in a private placement (see discussion below under Liquidity ), however, we need to raise additional capital to

support our operations in the future.

capital in a private placement (see discussion below under Liquidity ), however, we need to raise additional capital

to support our operations in the future.

We may be unable to access the capital markets or additional capital may only be available

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2020, respectively.

We expect research and development expenses to continue to increase in fiscal 2021, as we continue to

advance the development of our pump product and develop a low-volume manufacturing process.

We expect R&D expenses to continue to increase in fiscal 2022, as we continue to advance the development

of our pump product and develop a low-volume manufacturing process.

Administrative

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and consulting costs, stock-based compensation expenses and professional services fees related to our financing activities.

full-time G&A headcount increased to two at March 31, 2020 from none at March 31, 2019.

full-time G&A headcount increased to four at March 31, 2021 from two at March 31, 2020.

G&A expenses included stock-based

compensation expenses of $837,533 and $378,619 for fiscal 2021 and fiscal 2020, respectively.

We expect G&A expenses to continue

to increase in fiscal 2022, as we commence the commercialization of our product and increase headcount.

Interest Income

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Interest income

Interest expense

Interest income

consists of interest earned on our cash deposits.

consisted of interest earned on our cash deposits.

The decrease in interest income for fiscal 2021 compared with fiscal 2020 was

primarily attributable to lower average cash balances during fiscal 2021.

Interest expense represents interest

on our 2021 Notes.

and Going Concern

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future operations, and we are currently seeking such additional financing.

As discussed in the Notes to our consolidated financial

statements in Item 8 of this Report, we are currently pursuing additional equity financing through a private placement of our

common stock and a public offering of our preferred units.

In addition, we obtained a $368,000 loan from Silicon Valley Bank in

April 2020 under the U.S.

Small Business Administration Paycheck Protection Program, and we currently expect the loan to be forgiven.

Our operating needs include the planned costs to operate our business, including amounts required to fund research and development

activities, including clinical studies, working capital and capital expenditures.

Our future capital requirements and the adequacy

of our available funds will depend on many factors, including our ability to successfully commercialize our 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 our product offerings.

If we are unable to secure additional capital, we will be required

to curtail our research and development initiatives and take additional measures to reduce costs in order to conserve our cash.

In fiscal 2021, we completed the 2021 Placement of

our 2021 Notes for gross proceeds of $6,560,000, we sold shares of our common stock for gross proceeds of $1,838,056 as part of

the 2020 Placement and obtained a $368,000 loan from Silicon Valley Bank in April 2020 under the U.S.

Small Business Administration

Paycheck Protection Program, which loan was forgiven in May 2021.

Our operating needs include the planned costs to operate our

business, including amounts required to fund research and development activities, including clinical studies, working capital

and capital expenditures.

Our future capital requirements and the adequacy of our available funds will depend on many factors,

including, without limitation, our ability to successfully commercialize our 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

our product offerings.

If we are unable to secure additional capital timely, we will be required to curtail our research and development

initiatives and take additional measures to reduce costs in order to conserve our cash.

In fiscal 2021,

we used $4,094,839 in operating activities, which primarily resulted from our net loss of $ 5,320,873, partially offset by changes

to operating assets and liabilities of $389,359, and adjusted for non-cash charges and gains, which included stock-based compensation

expenses of $801,244, depreciation and amortization expenses of $35,431.

The changes in assets and liabilities primarily related

to the timing of payments to vendors, offset by an increase in security deposits.

We used $1,807,934 of cash to fund operating

activities during fiscal 2019, compared with $791,131 in fiscal 2018.

Increased cash usage during fiscal 2020 and 2019

was due to increased operating activities related to the development and subsequent commercialization of our product.

we used $5,908,662 in operating activities, which primarily resulted from our net loss of $7,377,976 and changes to operating

assets and liabilities of $61,147, as adjusted for non-cash charges and gains, which included stock-based compensation expenses

of $1,227,578, $68,880 for issuances of shares of common stock in exchange for services, $109,731 related to the lease right-of-use

asset and liability and depreciation and amortization expenses of $111,015.

Such changes in assets and liabilities primarily related

to the timing of payments to vendors.

In fiscal 2020, we used $4,094,839 in operating activities, which primarily resulted from

our net loss of $ 5,320,873, partially offset by changes to operating assets and liabilities of $389,359, and adjusted for non-cash

charges and gains, which included stock-based compensation expenses of $801,244, depreciation and amortization expenses of $35,431.

Such changes in assets and liabilities primarily related to the timing of payments to vendors, offset by an increase in security

Increased cash usage during fiscal 2021 was due to increased operating activities related to the development and

eventual commercialization of our product.

In fiscal 2021,

cash used in investing activities of $260,789 was due to the purchase of property and equipment.

We used $77,124 of cash

to purchase property and equipment and intangible assets during fiscal 2019.

cash used in investing activities of $109,669 was for the purchase of property and equipment.

We used $260,789 of cash to purchase

property and equipment in fiscal 2020.

Cash provided

by financing activities for fiscal 2020 totaled $923,994 and was attributable to the sale of shares of our common stock in a private

placement that was initiated in March 2020.

A private placement of shares of our common stock accounted for $4,142,150 of cash

from financing activities during fiscal 2019.

we commenced our best-efforts public offering of up to 2,000,000 of our preferred units at a public offering price of $25.00 per

preferred unit.

Each preferred unit consists of (i) one share of our 13% Series A Cumulative Redeemable Perpetual Preferred Stock,

which has a $25.00 liquidation preference amount (the Series A Preferred Stock), and (ii) three common stock purchase warrants

with each warrant entitling the holder to purchase for a period of 5 years from the date of issuance one share of our common stock

at an exercise price of $11.00 per share, subject to adjustment.

The preferred units, the Series A Preferred Stock, the common

stock purchase warrants and the shares of common stock issuable upon exercise of the warrants are registered on our registration

statement on Form S-1 (SEC No.:

333-237615) declared effective by the SEC on May 11, 2020.

As of June 22, 2020, we had not sold

any preferred units.

At each closing of the preferred unit public offering, an amount equal to the first three years of dividend

payments, or $9.75 per share of Series A Preferred Stock sold, will be retained by a dividend payment agent from the proceeds

from such offering and will be used to pay dividends to the holders thereof for a three year period.

The shares of Series A Preferred

Stock are perpetual, have no maturity date, will not be subject to any sinking fund or other mandatory redemption, and will not

be convertible into or exchangeable for any of our other securities.

Commencing three years from the date of issuance of Series

A Preferred Stock, we may redeem, at our option, the Series A Preferred Stock, in whole or in part, at a cash redemption price

equal to $25.00 per share, plus all accrued and unpaid dividends.

No holder of Series A Preferred Stock shall have any right to

require as to redeem or repurchase the Series A Preferred Stock.

The terms and conditions of the Series A Preferred Stock are

set forth in the Certificate of Designation of Preferences, Rights and Limitations, which is Exhibit 3.1.1 to this Report.

The terms and conditions of the warrants are set forth in the Form of Common Stock Purchase Warrant, which is Exhibit 4.2

to this Report.

by financing activities for fiscal 2021 totaled $4,364,662 and was attributable to $1,785,882 of net proceeds from the sale of

shares of our common stock in the 2020 Placement, $368,760 of proceeds from the PPP Note and $2,210,000 of gross proceeds from

the issuance of our 2021 Notes in the quarter ended March 31, 2021.

Our financing activities for fiscal 2020 included $923,994

of proceeds from the 2020 Placement.

Accounting Policies and Estimates

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were to prevail, the results could be materially different from our reported results.

Use of estimates

The preparation

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our federal and state net deferred tax assets will not be fully realized, and we have recorded a full valuation allowance.

for uncertain tax positions in accordance with FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes .

We account for

uncertain tax positions in accordance with FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes .

tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while

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as interest expense and penalties are classified in selling, general and administrative expenses in the consolidated statements

Accounting Standards Update (ASU) No.

2016-02, Leases (ASC 842), and related ASUs, which provide supplementary

guidance and clarifications on April 1, 2019.

We elected the practical expedient approach and did not reassess whether any contracts

that existed prior to adoption have or contain leases or the classification of our existing leases .

Under ASC 842,

all significant lease arrangements are generally recognized at lease commencement.

Operating lease right-of-use (ROU) assets and

lease liabilities are recognized at the commencement date.

A ROU asset and corresponding lease liability is not recorded for leases

with an initial term of 12 months or less (short-term leases), and we recognize lease expense for these leases as incurred over

the lease term.

represent our right to use an underlying asset during the reasonably certain lease terms, and lease liabilities represent our

obligation to make lease payments arising from the lease.

Our lease terms may include options to extend or terminate the lease

when it is reasonably certain that we will exercise that option.

Operating lease ROU assets and liabilities are recognized at

the lease commencement date based on the present value of lease payments over the lease term.

We use our incremental borrowing

rate, based on the information available at commencement date in determining the present value of lease payments.

The operating

lease ROU asset also includes any lease payments related to initial direct cost and prepayments and excludes lease incentives.

Lease expense is recognized on a straight-line basis over the lease term.

We account for

our leases under Accounting Standards Update (ASU) No.

2016-02, Leases (ASC 842), and related ASUs,

which provide supplementary guidance and clarifications.

Under ASC 842, all significant lease arrangements are generally

recognized at lease commencement.

Operating lease right-of-use (ROU) assets and lease liabilities are recognized at the commencement

A ROU asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less (short-term

leases), and we recognize lease expense for these leases as incurred over the lease term.

ROU assets represent

our right to use an underlying asset during the reasonably certain lease terms, and lease liabilities represent our obligation

to make lease payments arising from the lease.

Our lease terms may include options to extend or terminate the lease when it is

reasonably certain that we will exercise that option.

Operating lease ROU assets and liabilities are recognized at the lease commencement

date based on the present value of lease payments over the lease term.

We use our incremental borrowing rate, based on the information

available at commencement date in determining the present value of lease payments.

The operating lease ROU asset also includes

any lease payments related to initial direct cost and prepayments and excludes lease incentives.

Lease expense is recognized on

a straight-line basis over the lease term.

Sheet Arrangements

We do not maintain any off-balance

sheet arrangements or obligations that are reasonably likely to have a material current or future effect on our financial condition,

results of operations, liquidity or capital resources.

Adopted Accounting Pronouncements

Recently Adopted

Accounting Pronouncements are detailed in Note 1 in the Notes to the Consolidated Financial Statements included in Part II, Item

8 of this Report.

We do not maintain

any off-balance sheet arrangements or obligations that are reasonably likely to have a material current or future effect on our

financial condition, results of operations, liquidity or capital resources.

Recent Accounting

Pronouncements

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity