Modular Medical Inc

Previous 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

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, and, in September 2024, we received FDA clearance to market and sell our MODD1 pump in the United States.

Previous 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.

Current 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 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

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 wording

R&D expenses increased for the six months ended September 30, 2024 compared with the same period of 2023, primarily due to increased stock-based compensation costs of approximately $0.5 million, increased employee-related costs of approximately $0.4 million, an increase in depreciation expense of approximately $0.3 million and an increase in travel-related and other costs of approximately $0.1 million. These increases were partially offset by an approximately $0.3 million decrease in material and supplies costs. Our full-time R&D employee headcount increased to 42 at September 30, 2024 from 39 at September 30, 2023. R&D expenses included stock-based compensation expenses of approximately $0.8 million and $0.4 million for the three-months ended September 30, 2024 and 2023, respectively, and $1.2 million and $0.7 million for the six-month periods ended September 30, 2024 and 2023, respectively. We expect research and development expenses to increase in the second half of fiscal 2025, as we commence initial activities in support of commercialization of our MODD1 product.

Previous wording

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 wording

G&A expenses increased for the six months ended September 30, 2024 compared with the same period of 2023, primarily as a result of an increase in legal and professional services expenses of approximately $0.3 million and stock-based compensation expense of approximately $0.1 million, partially offset by decreases in travel-related and other costs of $0.1 million. G&A expenses included stock-based compensation expenses of approximately $0.2 million for each of the three-month periods ended September 30, 2024 and 2023, and $0.4 million and $0.3 million for the six months ended September 30, 2024 and 2023, respectively. We expect G&A expenses to increase in the second half of fiscal 2025, as we commence initial activities in support of commercialization of our MODD1 product.

Previous 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.

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 our operations. For the six months ended September 30, 2024 and year ended March 31, 2024, we incurred net losses of approximately $9.1 million and $17.5 million, respectively. At September 30, 2024, we had a cash balance of $3.9 million and an accumulated deficit of approximately $75 million. We expect to continue to incur operating losses for the foreseeable future and incur cash outflows from operations, as we continue to invest in the development and commercialization of our products. We expect that our expenses will continue to increase, and, as a result, we will eventually need to generate significant revenue to achieve profitability. 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. 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 (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. During the three months ended September 30, 2024, we sold 824,514 shares of common stock for net proceeds of approximately $1.9 million under the ATM Agreement. Subject to market conditions, we expect to resume sales under the ATM during the remainder of fiscal 2025, however, the potential net proceeds from such future sales are unknown. In addition, during the three months ended September 30, 2024, we received a total of approximately $0.8 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, ou…

Excerpt shortened here; the source contains the full paragraph.

Previous 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.

Current wording

For the six months ended September 30, 2024, we used approximately $7.3 million of cash in operating activities, which primarily resulted from our net loss of approximately $9.1 million and net changes in operating assets and liabilities of approximately $0.3 million, as adjusted forstock-based compensation expenses of approximately $1.6 million, depreciation and amortization expenses of approximately $0.5 million and other immaterial adjustments. For the six months ended six September 30, 2023, we used approximately $6.5 million in operating activities, which primarily resulted from our net loss of approximately $7.9 million and net changes in operating assets and liabilities of approximately $0.2 million, as adjusted forstock-based compensation expenses of approximately $1.0 million, net changes in operating assets and liabilities of approximately $0.2 million anddepreciation and amortization expenses of approximately $0.2 million.

Previous 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.

Current wording

For the six months ended September 30, 2024 and 2023, cash used in investing activities of approximately $1.0 million and$0.7 million, respectively, was for the purchase of property and equipment.

Previous 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.

Current wording

Cash provided by financing activities of approximately $3.0 million for the six months ended September 30, 2024 was attributable to proceeds from the at-the-market sales of stock and exercise of common stock purchase warrants. Cash provided by financing activities of $9.7 million for the six months ended September 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. At June 30, 2024, we had outstanding purchase orders for machinery and equipment and related expenditures of approximately $0.8 million.

Current wording

Our primary purchase obligations include purchase orders for machinery and equipment. At September 30, 2024, we had outstanding purchase orders for machinery and equipment and related expenditures of approximately $1.0 million.