Modular Medical Inc
For the period ended Jun 30, 2024. Filed Aug 13, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 13, 2024
MODD$1.33+3.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-13.
0001213900-24-013348
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0001213900-24-068407
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 32 previous paragraphs and 26 current paragraphs.
9 unchanged; 10 reworded; 5 added; 12 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
received comments from the FDA, and we submitted a response to the FDA’s comments in August 2024.
Current report
Research and development, or R&D, expenses increased for fiscal 2025 compared with the same period of fiscal 2024, primarily due to increased employee-related costs of approximately $0.2 million, an increase of approximately $0.2 million in consulting costs, an increase in travel-related costs of approximately $0.1 million and an increase in depreciation expense of approximately $0.1 million. These increases were partially offset by an approximately $0.2 million decrease in material and supplies costs. Our full-time R&D employee headcount increased to 36 at June 30, 2024 from 34 at June 30, 2023. R&D expenses included stock-based compensation expenses of approximately $0.4 million for each of the three-month periods ended June 30, 2024 and June 30, 2023, respectively. We expect research and development expenses to remain consistent and then increase in the second half of fiscal 2025.
Current report
G&A expenses increased for the three months ended June 30, 2024 compared with the same period of 2023, primarily as a result of an increase in legal and professional services expenses of approximately $0.1 million, partially offset by decreases in facility-related costs of and other administrative expenses. G&A expenses included stock-based compensation expenses of approximately $0.2 million and $0.1 million for the three months ended June 30, 2024 and June 30, 2023, respectively. We expect G&A expenses to remain consistent and then begin to increase in the second half of fiscal 2025.
Current report
Liquidity and Capital Resources; Changes in Financial Condition
Current report
Recently Issued Accounting Pronouncements
Removed paragraphs (12)
Previous report
Economic Disruptions
Previous report
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 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. While the U.S. national emergency expired in May 2023 and substantially all closures and “shelter-in-place” orders have ended, there can be no assurance that the COVID-19 pandemic will not impact our operational and financial performance in the future, as the duration and spread of the pandemic and related actions taken by U.S. and foreign government agencies to prevent disease spread are uncertain, out of our control, and cannot be predicted.
Previous report
Wars and acts of terrorism have led to further economic disruptions. Mounting inflationary cost pressures and recessionary fears have negatively impacted the global economy. Since mid-2022, the U.S. Federal Reserve has addressed elevated inflation by increasing interest rates, as inflation remains elevated. While we were able to access the capital markets in May 2023 and 2022, in the future, we may be unable to access the capital markets, and additional capital may only be available to us on terms that could be significantly detrimental to our existing stockholders and to our business.
Previous report
For additional information on risks that could impact our future results, please refer to “Risk Factors” in Part I, Item 1A of this Report.
Previous report
Research and development, or R&D, expenses increased for the three months ended December 31, 2023 compared with the same period of 2022, primarily due to increases in employee-related costs of approximately $348,000, stock-based compensation of approximately $324,000 and consulting costs of approximately $766,000. The increase in consulting costs was primarily attributable to pre-submission testing and related activities performed during the third quarter of fiscal 2024 in preparation for our 510(k) submission to the FDA, which was completed in January 2024.
Previous report
R&D expenses increased for the nine months ended December 31, 2023 compared with the same period of 2022, primarily due to increases in employee-related costs of approximately $1,134,000, consulting costs of $580,000, stock-based compensation expense of $385,000 and materials costs of approximately $300,000. The increase in material costs was primarily attributable to pre-submission activities, as we began producing units of our MODD1 pump product during fiscal 2024 in anticipation of our 510(k) submission to the FDA. The increase in consulting costs was primarily attributable to third-party testing costs incurred in fiscal 2024 in anticipation of our 510(k) submission to the FDA, which was completed in January 2024.
Previous report
Our R&D employee headcount increased to 36 at December 31, 2023 from 32 at December 31, 2022. R&D expenses included stock-based compensation expenses of approximately $681,000 and $357,000 for the three-months ended December 31, 2023 and 2022, respectively, and $1,420,000 and $1,035,000 for the nine months ended December 31, 2023 and 2022, respectively. We expect research and development expenses to decrease for the remainder of fiscal 2024, as we made our 510(k) submission of our MODD-1 insulin pump to the FDA in January 2024.
Previous report
General and administrative, or G&A, expenses increased for the three months ended December 31, 2023 compared with the same period of the prior year, primarily as a result of increases in legal and other professional services fees of $143,000, rent and other facility-related expenses of approximately $130,000, marketing-related expenses of approximately $113,000, employee-related costs of approximately $112,000, depreciation and amortization expense of approximately $97,000, stock-based compensation of approximately $30,000, accounting costs of approximately $22,000 and other expense increases, as partially offset by a decrease in consulting expenses of approximately $169,000.
Previous report
G&A expenses increased for the nine months ended December 31, 2023 compared with the same period of the prior year, primarily as a result of increases in facility-related costs of approximately $383,000, employee-related costs of approximately $272,000, depreciation expense of approximately $190,000, marketing-related expenses of approximately $193,000, legal and other professional services fees of $147,000, and other expenses, as partially offset by decreases in stock-based compensation expenses of approximately $464,000 and consulting services expenses of approximately $415,000.
Previous report
Our G&A employee headcount increased to four at December 31, 2023 from three at December 31, 2022. G&A expenses included stock-based compensation expenses of approximately $313,000 and $283,000 for the three months ended December 31, 2023 and 2022, respectively, and approximately $622,000 and $1,086,000 for the nine months ended December 31, 2023 and 2022, respectively. We expect G&A expenses to decrease for the remainder of fiscal 2024.
Previous report
Liquidity and Going Concern
Previous report
Recently Adopted and Issued Accounting Pronouncements
Reworded paragraphs (10)
Previous wording
We are a development-stage medical device company focused on the design, development and commercialization of an innovative insulin pump using modernized technology to increase pump adoption in the diabetes marketplace. Through the creation of a novel two-part patch pump, our MODD1 product, we seek to fundamentally alter the trade-offs between cost and complexity and access to the higher standards of care that presently-available insulin pumps provide. By simplifying and streamlining the user experience from introduction, prescription, reimbursement, training and day-to-day use, we seek to expand the wearable insulin delivery device market beyond the highly motivated “super users” and expand the category into the mass market. The product seeks to serve both the type 1 and the rapidly growing, especially in terms of device adoption, type 2 diabetes markets. In January 2024, we made the premarket submission of our MODD1 next-generation insulin pump to the U.S. Food and Drug Administration (the FDA) for 510(k) clearance. We expect the FDA to provide initial feedback on our submission during the quarter ending June 30, 2024.
Current wording
We are a pre-revenue medical device company focused on the design, development and commercialization of innovative insulin pumps using modernized technology to increase pump adoption in the diabetes marketplace. Through the creation of a novel two-part patch pump, our initial product, the MODD1, we seek to fundamentally alter the trade-offs between cost and complexity and access to the higher standards of care that presently-available insulin pumps provide. By simplifying and streamlining the user experience from introduction, prescription, reimbursement, training and day-to-day use, we seek to expand the wearable insulin delivery device market beyond the highly motivated “super users” and expand the category into the mass market. The product seeks to serve both the type 1 and the rapidly growing, especially in terms of device adoption, type 2 diabetes markets. In January 2024, we submitted a 510(k) premarket notification to the United States Food and Drug Administration (“FDA”) for our MODD1 insulin pump. In March 2024, we
Previous wording
Historically, we have financed our operations principally through private placements and public offerings of our common stock and sales of convertible promissory notes. 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 this Report are issued exists. Our ability to continue as a going concern depends on our ability to raise additional capital, likely 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. We have provided additional disclosure in Note 1 to the consolidated financial statements in Item 1 of this Report and underLiquiditybelow.
Current wording
In February 2024, we completed a firm commitment underwritten offering and sold to the underwriter 9,090,910 shares of our common stock at a price of $1.10 per share (the 2024 Offering). We received aggregate proceeds of approximately $10.0 million before deducting underwriting discounts and commissions and other offering expenses. We also granted the underwriter a 30-day option to purchase up to an additional 1,321,989 shares of common stock to cover over allotments, if any. In March 2024, the underwriter exercised this option in full and purchased the additional securities for additional aggregate proceeds to us of approximately $1.5 million, before deducting underwriting discounts and commissions and other offering expenses. Historically, we have financed our operations principally through private placements and public offerings of our common stock and sales of convertible promissory notes. 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 1 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. We have provided additional disclosure in Note 1 to the consolidated financial statements in Item 1 of this Report and under Liquidity below.
Previous wording
Our research and development expenses include personnel and related costs, materials and other costs associated with the development and initial production of our insulin pump products. We expense research and development costs as they are incurred.
Current wording
Our research and development, or R&D, expenses include personnel, consulting, testing, materials and supplies, depreciation and amortization and other operational costs associated with the pre-FDA clearance production of our insulin pump product. We expense R&D costs as they are incurred.
Previous wording
General and administrative expenses consist primarily of costs for personnel, finance, human resources, marketing, and general management.
Current wording
General and administrative, or G&A, expenses consist primarily of personnel and related overhead costs for facilities, finance, human resources, legal, marketing and general management.
Previous wording
As a development-stage enterprise, we do not currently have revenues to generate cash flows to cover operating expenses. Since our inception, we have incurred operating losses and negative cash flows from operations in each year due to costs incurred in connection with R&D activities and G&A expenses associated with our operations. For the nine months ended December 31, 2023 and year ended March 31, 2023, we incurred net losses of $13.2 million and $13.9 million, respectively. At December 31, 2023, we had a cash balance of approximately $2.0 million and an accumulated deficit of $61.4 million. When considered with our current operating plan, these conditions raise 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 this Report are issued. Our financial statements do not include adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. 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 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. In May 2023, we completed a public offering of units, comprising shares of our common stock and warrants to purchase shares of our common stock, for net proceeds of $9.7 million. On November 22, 2023, we entered into a Sales Agreement (the ATM Agreement) with Leerink Partners LLC (Leerink) under which we may offer and sell, from time to time at our sole discretion, shares of our common stock, for aggregate gross proceeds of up to $6,500,000 through an “at the market offering” program under which Leerink will act as sales agent or principal. The ATM Agreement provides that Leerink will be entitled to compensation for its services equal to 3.0% of the gross proceeds from sales of any shares of common stock under the ATM Agreement. In January 2024, we sold 153,879 shares of common stock for net proceeds of approximately $278,000 under the ATM Agreement. In addition, in January 2024, we received a total of approximately $550,000 of proceeds from the exercise of warrants to purchase 445,744 shares of our common stock.
Current wording
We do not currently have revenues to generate cash flows to cover operating expenses. Since our inception, we have incurred operating losses and negative cash flows in each year due to costs incurred in connection with R&D activities and G&A expenses associated with our operations. For the three months ended June 30, 2024 and year ended March 31, 2024, we incurred net losses of approximately $4.1 million and $17.5 million, respectively. At June 30, 2024, we had a cash balance of $5.1 million and an accumulated deficit of approximately $70 million. When considered with our current operating plan, these conditions raise 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 1 of this Report are issued. Our financial statements do not include adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. Our operating needs include the planned costs to operate our business, including amounts required to fund continued research and development activities, working capital and capital expenditures. 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. Recently, during the three months ended March 31, 2024, we completed an offering of shares of common stock for net proceeds of approximately $10.3 million, which includes the proceeds from the underwriter’s exercise of the overallotment. In November 2023, we entered into a Sales Agreement (the “ATM Agreement”) with Leerink Partners LLC (“Leerink”) under which we may offer and sell, from time to time at our sole discretion, shares of our common stock, for aggregate gross proceeds of up to $6.5 million (subject to availability on our shelf registration statement) through an “at the market offering” program under which Leerink will act as sales agent or principal. In January 2024, we sold 153,879 shares of common stock for net proceeds of approximately $0.3 million under the ATM Agreement. Subject to market conditions, we expect to resume sales under the ATM during the remainder of fiscal 2025, subject to market conditions. In addition, since December 2023, we received a total of approximately $1.0 million of proceeds from the exercise of common stock purchase warrants issued in a public offering we completed in May 2023. 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 may be required to curtail R&D initiatives,…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
For the nine months ended December 31, 2023, we used approximately $10.5 million in operating activities, which primarily resulted from our net loss of approximately $13.2 million, as adjusted for net changes in operating assets and liabilities of approximately $0.4 million and non-cash items, including stock-based compensation expenses of approximately $2.0 million, depreciation and amortization expenses of approximately $0.3 million and other immaterial adjustments. For the nine months ended December 31, 2022, we used approximately $8.2 million in operating activities, which primarily resulted from our net loss of $10.3 million, as adjusted for changes to operating assets and liabilities of approximately $0.2 million and non-cash items, including stock-based compensation expenses of approximately $2.1 million, issuances of shares of common stock in exchange for services of approximately $0.1 million and depreciation and amortization expenses of approximately $0.1 million.
Current wording
For the three months ended June 30, 2024, we used approximately $3.5 million of cash in operating activities, which primarily resulted from our net loss of approximately $4.1 million and net changes in operating assets and liabilities of approximately $0.1 million, as adjusted forstock-based compensation expenses of approximately $0.5 million, depreciation and amortization expenses of approximately $0.2 million and other immaterial adjustments. For the three months ended June 30, 2023, we used approximately $3.2 million in operating activities, which primarily resulted from our net loss of approximately $3.7 million, as adjusted forstock-based compensation expenses of approximately $0.5 million anddepreciation and amortization expenses of approximately $0.1 million, which was partially offset by other immaterial adjustments.
Previous wording
For the nine months ended December 31, 2023 and 2022, cash used in investing activities of approximately $1.2 million and $0.6 million, respectively, was for the purchase of property and equipment.
Current wording
For the three months ended June 30, 2024 and 2023, cash used in investing activities of approximately $0.8 million and$0.4 million, respectively, was for the purchase of property and equipment.
Previous wording
Cash provided by financing activities for the nine months ended December 31, 2023 was attributable to $9.7 million of net proceeds from the issuance of common stock and warrants in a public offering, which closed in May 2023, and approximately $0.2 million of proceeds from the exercise of common stock warrants. Cash provided by financing activities of $7.4 million for the nine months ended December 31, 2022 was attributable to net proceeds from the issuance of common stock and warrants in a registered direct offering, which closed in May 2022.
Current wording
Cash provided by financing activities of approximately $0.2 million for the three months ended June 30, 2024 was attributable to proceeds from the exercise of common stock purchase warrants. Cash provided by financing activities of $9.7 million for the three months ended June 30, 2023 was attributable to net proceeds from the issuance of common stock and common stock purchase warrants in a public offering, net of underwriting fees and issuance costs.
Previous wording
Our primary purchase obligations include purchase orders for machinery and equipment and software. At December 31, 2023, we had outstanding purchase orders for machinery and equipment and related expenditures of approximately $0.6 million. In December 2023, we signed a device integration agreement with a provider of connected-care and remote monitoring diabetes technology solutions for an obligation of approximately $0.6 million for technology integration and license fees over three years.
Current wording
In December 2023, we signed a device integration agreement with a provider of connected-care and remote monitoring diabetes technology solutions. As of June 30, 2024, we had a remaining obligation under the device integration agreement of approximately $0.4 million over three years for technology license fees.
Previous wording
Recently Adopted and Issued Accounting Pronouncements are detailed in Note 1 in the Notes to the Condensed Consolidated Financial Statements included in Item 1 of this Report.
Current wording
Recently issued accounting pronouncements are detailed in Note 1 in the Notes to the Condensed Consolidated Financial Statements included in Item 1 of this Report.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Current report — wording carried from elsewhere
Our primary purchase obligations include purchase orders for machinery and equipment. At June 30, 2024, we had outstanding purchase orders for machinery and equipment and related expenditures of approximately $0.8 million.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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 may be required to curtail R&D initiatives, reduce headcount and take additional measures to reduce costs in order to conserve our cash.