Sec Form 13D Filing - MANCHESTER MANAGEMENT CO LLC filing for Modular Medical Inc. (MODD) - 2022-02-14

James E. Besser

c/o Manchester Management Company, LLC

2 Calle Candina, #1701

San Juan, Puerto Rico, 00907

Telephone Number: (617) 399-1741

(Name, Address and Telephone Number of Person Authorized to Receive

Notices and Communications)

(1) As a result of options granted to the Reporting Person, the Reporting Person currently has aggregate options to purchase a total of 67,896 shares of the Issuer.

The Reporting Persons have acquired their Shares of the Issuer for investment. The Reporting Persons have no plans or proposals as of the date of this filing which, other than as expressly set forth below, would relate to or would result in: (a) any extraordinary corporate transaction involving the Issuer; (b) any change in the present Board of Directors or management of the Issuer; (c) any material change in the present capitalization or dividend policy of the Issuer; (d) any material change in the operating policies or corporate structure of the Issuer; (e) any change in the Issuer's charter or by-laws; (f) the Shares of the Issuer ceasing to be listed from a national securities exchange or to ceasing to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; or (g) causing the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934.

The Reporting Persons, however, reserve the right, at a later date, to effect one or more of such changes and may dispose of or enter into other transactions in the shares they may be deemed to beneficially own.

Frank is a director of the Issuer.

The Reporting Persons have been and may continue to be in contact with members of the Issuer's management, the Issuer's Board of Directors, other significant shareholders and others regarding alternatives that the Issuer could employ to maximize shareholder value.

The Reporting Persons further reserve the right to act in concert with any other shareholders of the Issuer, or other persons, for a common purpose should it determine to do so, and/or to recommend courses of action to management and the shareholders of the Issuer.

Besser:

As of the date hereof, Besser may be deemed to be the beneficial owner of 2,852,417 Shares, constituting 30.6% of the Shares*.

Besser has the sole power to vote or direct the vote of 124,750 Shares; has the shared power to vote or direct the vote of 2,727,667 Shares; has the sole power to dispose or direct the disposition of 124,750 Shares; and has the shared power to dispose or direct the disposition of 2,727,667 Shares.

Frank:

As of the date hereof, Frank may be deemed to be the beneficial owner of 2,538,367 Shares, constituting 27.1% of the Shares*.

Frank has the sole power to vote or direct the vote of 128,173 Shares; has the shared power to vote or direct the vote of 2,410,194 Shares; has the sole power to dispose or direct the disposition of 128,173 Shares; and has the shared power to dispose or direct the disposition of 2,410,194 Shares.

Manchester and GP:

As of the date hereof, Manchester and the GP may be deemed to be the beneficial owner of 2,727,667 Shares, constituting 29.3% of the Shares*.

Manchester and the GP have the sole power to vote or direct the vote of 0 Shares; have the shared power to vote or direct the vote of 2,727,667 Shares; have the sole power to dispose or direct the disposition of 0 Shares; and have the shared power to dispose or direct the disposition of 2,727,667 Shares.

Explorer:

As of the date hereof, Explorer may be deemed to be the beneficial owner of 2,410,194 Shares, constituting 25.9% of the Shares*.

Explorer has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 2,410,194 Shares; has the sole power to dispose or direct the disposition of 0 Shares; and has the shared power to dispose or direct the disposition of 2,410,194 Shares.

Jeb Partners:

As of the date hereof, Jeb Partners may be deemed to be the beneficial owner of 317,473 Shares, constituting 3.6% of the Shares*.

Jeb Partners has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 317,473 Shares; has the sole power to dispose or direct the disposition of 0 Shares; and has the shared power to dispose or direct the disposition of 317,473 Shares.

The transactions by the Reporting Persons in the Shares during the past sixty days are set forth in Exhibit B. All such transactions were carried out in open market transactions.

*The outstanding Shares figure reflects 8,890,372 Shares outstanding as reported in the Issuer’s 424B4 filed by the Issuer on February 11, 2022.

On February 8, 2021, the Issuer completed an initial offering of a Convertible Promissory Note (the "Note"). The Note was convertible upon an equity financing with total proceeds to the Issuer of not less than $5,000,000. The Note was convertible into shares of Common Stock, par value $0.001 per share at a conversion price equal to the lowest cash price paid per share for equity securities by the investors in the equity financing multiplied by 0.80. The foregoing description of the Note does not purport to be complete and is subject to and qualified in its entirety by reference to the Form of Convertible Promissory Note included as Exhibit 10.21 of the Issuer's 10-Q filed on February 12, 2021, which is incorporated by reference.

On May 11, 2021, the Note was converted into the May 2021 Convertible Promissory Note ("May Note"). The May Note is convertible upon (i) an offering of common stock or other securities ("Qualified Capital Raise") with total proceeds to the Issuer of not less than $12,000,000, or (ii) at any time following the day 271 days after the issue date. The May Note is convertible into shares of Common Stock, par value $0.001 per share at a conversion price equal to the sum of principal and accrued interest shall be multiplied by 1.25; e.g., $1,000 of principal which had accrued $60 of interest would be treated as if it were ($1,000 + $60) = $1,060 X 1.25 = $1,325 of capital invested in the Qualified Capital Raise for the purposes of determining the number of securities issued.

On October 28, 2021, the Issuer issued a secured promissory note (the “October Note”) to certain Reporting Persons that provides the Issuer with a $3,000,000 revolving credit facility with all amounts being drawn down by the Issuer thereunder being due and payable, subject to acceleration in the event of a default, on March 15, 2022 (the “Maturity Date”). Interest at the rate of 12% is payable on each drawn down without regard to the draw down date or the date when interest is paid.

The principal amount of the October Note and interest due thereon is payable to the Reporting Persons no later than the earlier of: (i) the Maturity Date and (ii) the date on which the Issuer has received proceeds in excess of $12,000,000 from a transaction or series of related transactions occurring prior to the Maturity Date, which such transactions constitute equity financings or other issuances of the Issuer's equity securities. Provided that no Event of Default (as such term is defined in the Note) has occurred, on any date prior to the Maturity Date, upon no less than three days written notice by the Issuer specifying the draw amount, the Reporting Persons will advance the draw amount to the Issuer. No draw amount can be in an amount less than $100,000 or exceed an amount equal to $3,000,000 minus the aggregate principal amount outstanding under the October Note at the time of such draw request. If an Event of Default occurs and is continuing, certain Reporting Persons may declare all of the October Note, including any interest and other amounts due, to be due and payable immediately.

In connection with the issuance of the October Note, on October 28, 2021, the Issuer entered into a Security Agreement with certain Reporting Persons (the “Security Agreement”) under which the Issuer granted certain Reporting Persons a continuing and unconditional first priority security interest in and to any and all of the Issuer’s property of any kind or description, tangible or intangible, wheresoever located and whether now existing or hereafter arising or acquired.

Exhibit A: Joint Filing Agreement

Exhibit B: Schedule of Transactions in Shares

(Date)

MANCHESTER EXPLORER, L.P.*

/s/ James E. Besser

Manchester Management Company, LLC*

/s/ James E. Besser

Manchester Management PR, LLC*

/s/ James E. Besser

(Name/Title)

(Signature)

MORGAN C. FRANK

/s/ Morgan C. Frank

MANCHESTER EXPLORER, L.P.*

/s/ James E. Besser

Manchester Management Company, LLC*

/s/ James E. Besser

Manchester Management PR, LLC*

/s/ James E. Besser

(Name/Title)

(Signature)

MORGAN C. FRANK

/s/ Morgan C. Frank

Date of Transaction

Title of Class

Price Per

Share