SecProbe.io

CORRESP
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filename1.htm

    September 9, 2019

VIA EDGAR

Securities and
Exchange Commission

Division of
Corporation Finance

100 F Street,
N.E.

Washington,
D.C. 20549

Attn: Thomas Jones

Re: Modular
                                         Medical, Inc.

 Registration
                                         Statement on Form S-1

 Filed
                                         on June 27, 2019

  File
                                         No. 333-232377

Dear
Mr. Jones:

Modular
Medical, Inc. (the “Company”) hereby submits this letter in response to comments from the staff (the “Staff”)
of the Securities and Exchange Commission (the “Commission”) set forth in its letter dated July 23, 2019 (the
“Comment Letter”) relating to the above-referenced Registration Statement on Form S-1 (the “Registration
Statement”).

Set
forth below in bold are the Staff’s comments from the Comment Letter. For your convenience, each of the numbered paragraphs
below corresponds to the numbered comment in the Comment Letter and includes the caption used in the Comment Letter. Immediately
following each comment is the Company’s response to that comment. Defined terms used but not otherwise defined herein have
the meanings ascribed to such terms in the Registration Statement.

Cover
Page

 1. Please
                                         disclose the fixed price at which the securities will be sold in this offering. See Item
                                         501(b)(3) of Regulation S-K. Depending on your responses to the other comments in this
                                         letter, you may disclose, if true, that the selling shareholders will sell at the disclosed
                                         fixed price per share until your shares are quoted on the OTC Bulletin Board or in the
                                         OTCQX or OTCQB marketplace of OTC Link and thereafter at prevailing market prices or
                                         at privately negotiated prices.*
                                         Please
                                         also make corresponding changes elsewhere in the prospectus.

To
comply with the Staff’s comment, we have made the requested change on the Prospectus cover page and Plan of Distribution
section of the Prospectus and have added the following risk factor which incorporates such disclosure in the “Risk Factor”
section of the Prospectus.

*
As requested by the Staff the last 4 words of such sentence replaced
the words “in privately negotiated transactions”

800
West Valley Parkway, Suite 203, Escondido, CA 92025 - 760.392.1343 - modular-medical.com

“Our shares
of common stock are quoted on the OTC Pink Open Market; and there currently is no active trading market for our shares.

Our
shares of common stock are traded on the OTC Pink Open Market. There is currently no active trading market and for at least the
prior 3 years there has been no active trading market for our common stock. There can be no assurance that an active trading market
for our common stock will ever develop or if one develops it will be sustained. Furthermore, because our shares of common stock
are traded on the OTC Pink Open Market, the Selling Shareholders will only offer and sell their shares at a fixed price of
$3.00 per share until our shares are quoted on the OTC Bulletin Board or in the OTCQX or OTCQB marketplace of the OTC Link, and
, thereafter, at prevailing market prices or previously negotiated prices.”

 2. Given
                                         the nature and size of the transaction being registered, advise the staff of the company’s
                                         basis for determining that the transaction is appropriately characterized as a transaction
                                         that is eligible to be made on a shelf basis under Rule 415(a)(1)(i).

The
Company acknowledges the Staff’s comment. We have considered the factors set forth in Securities Act Rule Compliance and
Disclosure Interpretations (“C&DI”) 612.09, regarding whether a purported secondary offering is really
a primary offering in which selling shareholders are acting as underwriters selling on behalf of an issuer as the basis for determining
that the transaction is appropriately characterized as a transaction that is eligible to be made on a shelf basis under Rule 415(a)(1)(i).
Based on the factors set forth in C&DI 612.09, the Company respectfully submits that the Selling Shareholders
(as defined below), are not acting as underwriters or otherwise as a conduit for the Company and that the resale
of the 9,658,201 shares of the Company’s common stock to be registered by the Registration Statement is not
an indirect primary offering being conducted by or on behalf of the Company. The Company respectfully submits that
the transaction set forth in the Registration Statement relates to the offering of securities solely by or on behalf of a person
other than the registrant, a subsidiary of the registrant or a person of which the registrant is a subsidiary, as discussed in
greater detail below, and therefore, is appropriately characterized as a transaction that is eligible to be made on a continuous
or delayed basis under Rule 415(a)(1)(i) promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

 I. Background.

On
July 24, 2017, pursuant to a Common Stock Purchase Agreement, dated as of July 24, 2017, by and among, the purchasers named therein
and the Company (the “2017 SPA”), the Company sold to such purchasers in a private placement (the “2017
Placement”) an aggregate 7,801,213 shares of its common stock at a purchase price of $0.66 per share, resulting in gross
proceeds to the Company of $4,731,872. Between November 2018 and March 29, 2019, pursuant to a Common Stock Purchase Agreement,
dated as of November 19, 2018, by and among, the purchasers named therein and the Company (the “2018 SPA” and
together with the 2017 SPA, collectively, the “SPAs”), the Company sold to such purchasers in a private placement
(the “2018 Placement” and together with the 2017 Private Placement, collectively, the “Private Placements”)
an aggregate of 1,856,988 shares at a purchase price of $2.25 per share, resulting in gross proceeds to the Company of $4,142,666.
At each closing of the 2 Private Placements, the purchasers paid the full purchase price for their Shares.

800
West Valley Parkway, Suite 203, Escondido, CA 92025 - 760.392.1343 - modular-medical.com

Substantially
all of the 9,658,201 shares (each a “Share”), sold to purchasers (each a “Selling Shareholder”),
in the 2 Private Placements are included for resale in the Registration Statement. The Registration Statement was filed with the
Commission on June 27, 2019.

Section
2(a)(11) of the Securities Act defines an underwriter as “any person who has purchased from an issuer with a view to,
or offers or sells for an issuer in connection with, the distribution of any security, or participates or has a direct or indirect
participation in any such undertaking, or participates or has a participation in the direct or indirect underwriting of any such
undertaking.”  The definition’s phrase “with a view to … distribution” creates a subjective
standard regarding an investor’s intent.  As such, it is fact-specific.  In determining intent, courts and the Commission
often look to evidence based on objective criteria.

In
prior no-action letters, the Staff has noted that the determination of “underwriter” status depends on all of the
facts and circumstances surrounding a particular transaction.

The
Staff also has stated that institutional investors generally should not be deemed to be underwriters with regard to the acquisition
of large amounts of securities, provided such securities are acquired in the ordinary course of the investor’s business and that
the investor has no arrangement with any person to participate in the distribution of such securities.

 II. Staff Guidance

Rule
415(a)(1)(i) of the Securities Act provides that securities may be registered for an offering to be made on a continuous or delayed
basis in the future, provided that the registration statement pertains only to securities which are to be offered or sold solely
by or on behalf of a person or persons other than the registrant, a subsidiary of the registrant or a person of which the registrant
is a subsidiary. As stated in the Registration Statement, the Shares are being registered for resale or other disposition by each
of the Selling Shareholders only and no Shares or other securities are being registered for the Company. Proceeds from the sale
of any Share are solely for the account of the Selling Shareholders.

With
regard to the Staff’s comment, we note that C&DI 612.09 indicates that the issue of whether an offering is by or on
behalf of the issuer involves an analysis of facts beyond the entity that will receive the proceeds of the sale of securities
that are being registered. Specifically, C&DI 612.09 states that consideration should be given to the following factors:

 1. how
                                         long the selling shareholders have held the shares;

 2. the
                                         circumstances under which they have received them;

 3. their
                                         relationship to the issuer;

 4. the
                                         amount of shares involved;

 5. whether
                                         the selling shareholders are in the business of underwriting securities; and

 6. whether
                                         under all the circumstances it appears that the seller is acting as a conduit for the
                                         issuer.

800
West Valley Parkway, Suite 203, Escondido, CA 92025 - 760.392.1343 - modular-medical.com

 III. Analysis

We
have analyzed the factors set forth in C&DI 612.09 and believe that this analysis provides confirmation that the resale of
the Shares being registered for the Selling Shareholders in the Registration Statement is appropriately characterized as a transaction
that is eligible to be made on a shelf basis under Rule 415(a)(1)(i). The following is a summary of our analysis of these factors.

              A.          	How
Long the Selling Shareholders Have Held the Shares. The longer the Shares have been held, the less likely it is that the
Selling Shareholders are acting as conduits (underwriters) for the Company and the more likely it is that the Selling Shareholders
acquired the Shares as long-term investors. All of the Selling Shareholders who purchased their respective Shares (7,801,213 in
the aggregate), in the 2017 Private Placement have held their Shares since July 24, 2017 (in excess of 2 years). All of the Selling
Shareholders who purchased their respective Shares (1,856,988 in the aggregate), in the 2018 Private Placement, have held their
Shares since November 19, 2018 (in excess of 8 months), except for 2 small Selling Shareholders, Solas Capital Partners II, LP
and William Meehan IRA, who purchased their 70,556 aggregate amount of Shares on approximately March 29, 2019. During the time
commencing on the July 24, 2017 closing date of the 2017 Placement through and including the date of this letter, to the Company’s
knowledge, no Selling Shareholder has sold or otherwise transferred any of its Shares.

In
addition, the Selling Shareholders acquired the Shares knowing that there was no active trading market for the Shares and that
they could not liquidate their Shares. In fact, for at least the 3 year period prior to the date of this letter, to the Company’s
knowledge, there has been no active trading market for the Shares and virtually no existing trading market in the Company’s
shares of common stock on the OTC Pink Open Market. In short, no Selling Shareholder could have any reasonable expectation that
the market could absorb even a small amount of Shares, let alone 9,658,201 Shares, which provides further evidence that none of
the Selling Shareholders intended to act and/or are acting as conduits (underwriters) for the Company.

Substantially
all of the Shares included in the Registration Statement have been held by the Selling Shareholders for approximately 2 years
or 8 months (as applicable). The Selling Shareholders held their Shares for 13 months or 3 months (as applicable) prior to the
filing of the Registration Statement. These lengthy holding periods are substantially longer than the periods required by the
Staff for valid “PIPE” (private-investment, public-equity) transactions.

In
a prior C&DI, the Staff codified its “PIPEs” interpretation (the “PIPEs Interpretation”)
by providing in relevant part that:

800
West Valley Parkway, Suite 203, Escondido, CA 92025 - 760.392.1343 - modular-medical.com

“In
a PIPE transaction (private-investment, public-equity), the staff will not object if a company registers the resale of securities
prior to their issuance if the company has completed a Section 4(2)-exempt sale of the securities (or in the case of
convertible securities, of the convertible security itself) to the investor, and the investor is at marketrisk at the time of
filing of the resale registration statement….The closing of the private placement of the unissued securities must occur
within a short time after the effectiveness of the resale registration statement.”

The
PIPEs Interpretation contemplates that a valid secondary offering could occur immediately following the closing of the placement.
Since no holding period is required for a PIPE transaction to be a valid secondary offering, by definition a holding period of
2 years or 8 months as indicated above should be sufficient for a valid secondary offering.

The
above lengthy holding periods and the non-liquid market for the Shares indicates that the Shares were not acquired by the Selling
Shareholders with a “view to distribution.” The Selling Shareholders have borne market risk associated with
owning the Shares since they purchased their Shares at a fixed price without the ability to influence the consummation of the
transaction or the purchase price per Share. It is our understanding that the Staff has become increasingly concerned with transactions
that include significant price adjustments and ratchet provisions, which was not the case here. This was a sale of common stock
only, whereas the transactions that have historically concerned the Staff have involved convertible securities containing price
adjustment mechanisms. These circumstances distinguish potential resales of Shares by the Selling Shareholders from a primary
offering by the Company or an underwriter acting on its behalf. Although it should be noted that in the SPA for the 2018 Placement,
the purchasers negotiated for a limited anti-dilution provision, such provision terminated by its terms prior to the filing of
the Registration Statement and no additional securities of the Company were issued to any Selling Shareholder or any other person
pursuant to such provision.

	             B.          	The
Circumstances Under Which the Selling Shareholders Received the Shares. All of the Selling Shareholders purchased their
Shares in a bona fide, arms-length private placement transactions pursuant to Section 4(a)(2) of the Securities Act and/or Rule
506 of Regulation D promulgated thereunder. The Selling Shareholders who purchased their Shares in the 2017 Placement received
no registration rights with respect to their Shares. With regard to the Selling Shareholders who purchased their Shares in the
2018 Placement, the Company agreed to use its commercially best efforts to file a registration statement with the SEC within 90
days after the final closing of the 2018 Placement, which date was June 29, 2019, two days after the date that the Company filed
the Registration Statement with the Commission. The registration rights were a condition sub