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 received comments from the FDA, and we are in the process of responding to those comments.

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 (the “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. We are actively working to i) commercialize our MODD1 product and commence initial shipments in the quarter ending September 30, 2025, ii) obtain regulatory clearance to market and sell our Pivot Product in 2026, iii) obtain regulatory clearance to market and sell our pump products in foreign jurisdictions, iv) improve the manufacturability and usability of our pump products and v) develop new pump products.

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 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. We have provided additional disclosure in Note 1 to the consolidated financial statements in Item 1 of this Report and underLiquiditybelow.

Current wording

Historically, we have financed our operations principally through private placements and public offerings of our common stock and warrants 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 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. We have provided additional disclosure in Note 1 to the consolidated financial statements in Item 1 of this Report and underLiquiditybelow.

Previous wording

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, at times, the U.S. Federal Reserve has addressed elevated inflation by increasing interest rates, as inflation remains elevated. While we were recently able to access the capital markets, 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.

Current wording

World unrest due to wars and terrorist attacks have led to economic disruptions. Mounting inflationary cost pressures and recessionary fears have negatively impacted the global economy. Since mid-2022, at times, the U.S. Federal Reserve has addressed elevated inflation by increasing interest rates. Market conditions may prevent us from accessing 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 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.

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 production of our insulin pump products. We expense R&D costs as they are incurred.

Previous wording

R&D expenses increased in fiscal 2024 compared with fiscal 2023 primarily due to increases in engineering and operations personnel costs of $1.6 million, consulting costs of $0.8 million, stock-based compensation expenses of $0.5 million and materials, supplies expenditures of $0.5 million and depreciation and amortization of $0.4 million. The increase in personnel costs was attributable to increased average headcount year over year, salary increases effected during fiscal 2024, payment of a bonus implemented in fiscal 2024 related to our 510(k) submission and higher payroll taxes. Our R&D employee headcount increased to 36 at March 31, 2024 from 34 at March 31, 2023. The increase in consulting costs was primarily driven by the utilization of consultants and outside testing and other firms in support of our FDA submission in January 2024. R&D expenses included stock-based compensation expenses of approximately $1.9 million and $1.4 million for fiscal 2024 and fiscal 2023, respectively. The increase in stock-based compensation costs was primarily attributable to the granting of stock options under our bonus program for our FDA submission; these options were granted in October 2023 and expensed over an expected term of four months. We expect R&D expenses will increase in fiscal 2025, as we continue to engage third parties to support our responses to the FDA on our MODD1 510(k) submission, hire additional engineering, quality assurance, and operations personnel, bring-up our manufacturing process at our medical device contract manufacturer and commence the commercialization of our product in late fiscal 2025.

Current wording

R&D expenses increased in fiscal 2025 compared with fiscal 2024 primarily due to increases in engineering and operations personnel costs of $1.6 million, depreciation and amortization of $0.7 million and travel-related and other costs of approximately $0.3 million. The increase in personnel costs was attributable to increased average headcount year over year, salary increases effected during fiscal 2025, payment of bonuses in fiscal 2025 and higher payroll taxes. Our R&D employee headcount increased to 48 at March 31, 2025 from 36 at March 31, 2024. The increase in depreciation and amortization expenses was primarily due to an increase in machinery and equipment purchased and placed in service to further develop and expand our manufacturing capabilities. The increases in R&D expense were partially offset by decreases in consulting costs of $0.6, materials and supplies expenditures of $0.1 million and stock-based compensation of $0.1 million. The decrease in consulting expenditures was primarily due to a reduction in utilization of consultants, as we increased our employee headcount, and a decrease in utilization of outside testing and other third parties in support of our FDA submission in the fourth quarter of 2024. R&D expenses included stock-based compensation expenses of approximately $1.8 million and $1.9 million for fiscal 2025 and fiscal 2024, respectively.

Previous wording

General and administrative, or G&A, expenses consist primarily of personnel and related overhead costs for marketing, finance, human resources, facilities 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, general management and marketing.

Previous wording

G&A expenses decreased in fiscal 2024 compared with fiscal 2023 primarily as a result of reductions in stock-based compensation expense of $0.5 million, consulting fees of $0.4 million and reduced personnel costs of $0.2 million. The decreases were partially offset by increased professional services expenses of $0.4 million, which was primarily attributable to higher investor relations and financing-related costs, facilities-related expenses of $0.3 million due to our move to a larger facility in the fourth quarter of fiscal 2023, marketing expense of $0.2 million for a participant study for our product and costs incurred for initial trade show activities. G&A expenses included stock-based compensation expenses of approximately $0.8 million and $1.3 million for fiscal 2024 and fiscal 2023, respectively. We expect G&A expenses to increase in fiscal 2025, as we expect to increase headcount, as we expand our organization and implement systems to support our anticipated growth and prepare for the commercialization of our product in late fiscal 2025.

Current wording

G&A expenses decreased in fiscal 2025 compared with fiscal 2024 primarily as a result of reductions in stock-based compensation expense of $0.2 million, marketing expense of $0.1 million (due to a participant study for our product performed in fiscal 2024), travel-related expenses of $0.1 million and shipping expenses of $0.1 million. The decreases were partially offset by increased consulting fees of $0.1 million and personnel costs of $0.1 million. G&A expenses included stock-based compensation expenses of approximately $0.6 million and $0.8 million for fiscal 2025 and fiscal 2024, respectively. We expect G&A expenses to increase in fiscal 2026, as we expect to increase headcount, as we develop a limited sales and marketing organization, add finance and administration personnel and implement systems to support our anticipated growth and commercialization of our product during fiscal 2026.

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 in each year due to costs incurred in connection with R&D activities and G&A expenses associated with our operations. For the years ended March 31, 2024 and 2023, we incurred net losses of approximately $17.5 million and $13.9 million, respectively. At March 31, 2024, we had a cash balance of $9.2 million and an accumulated deficit of approximately $66 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 8 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 the 2024 Offering for net proceeds of approximately $10.3 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 $6.5 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. We suspended sales under the ATM Agreement due to the 2024 Offering, and we may resume sales under the ATM during fiscal 2025. In addition, from December 2023 to April 2024, we received a total of approximately $0.9 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, reduce headcount and take additional measures to reduce costs in order to conserve ou…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Recently, in March 2025, we entered into securities purchase agreements with investors, with respect to the issuance and sale in a firm commitment underwritten offering for the private placement (the “2025 Private Placement”) of 6,508,073 units of its securities. Upon closing of the 2025 Placement, we sold 13,016,146 shares of common stock and warrants to purchase 6,508,073 shares of its common stock for net proceeds of approximately $11.4 million. The securities were sold as a unit with each unit consisting of two shares of common stock and one warrant (the “2025 Private Placement Warrants”) to purchase one share of common stock, at a public offering price of $1.92 per unit. In November 2024, we completed a firm commitment underwritten offering for net proceeds of $7.3 million. 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 and based on current availability on our shelf registration statement) through an “at the market offering” program under which Leerink will act as sales agent or principal. Currently, we have approximately $7.2 million available for issuance under the ATM Agreement. In fiscal 2025, we received gross proceeds of approximately $2.2 million from sales under the ATM Agreement. Further, in fiscal year 2025, we received a total of approximately $1.1 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, reduce headcount and take additional measures to reduce costs in order to conserve our cash.

Previous wording

Our primary purchase obligations include purchase orders for machinery and equipment. At March 31, 2024, we had outstanding purchase orders for machinery and equipment and related expenditures of approximately $1.1 million. In December 2023, we signed a device integration agreement with a provider of connected-care and remote monitoring diabetes technology solutions. As of March 31, 2024, we had a remaining obligation under the device integration agreement of approximately $400,000 over three years for technology license fees.

Current wording

Our primary purchase obligations include purchase orders for machinery and equipment. At March 31, 2025, we had outstanding purchase orders for machinery and equipment and related expenditures of approximately $1.5 million. In December 2023, we signed a device integration agreement with a provider of connected-care and remote monitoring diabetes technology solutions. As of March 31, 2025, we had a remaining obligation under the device integration agreement of approximately $400,000 over three years for technology license fees.

Previous wording

In fiscal 2024, we used approximately $14.0 million in operating activities, which primarily resulted from our net loss of approximately $17.5 million less changes to operating assets and liabilities of approximately $0.4 million, and as adjusted for non-cash charges and gains, which included approximately $2.7 million of stock-based compensation expenses, depreciation and amortization expenses of approximately $0.4 million, and other immaterial adjustments. The changes in operating assets and liabilities primarily related to the timing of payments to vendors. In fiscal 2023, we used approximately $11.0 million in operating activities, which primarily resulted from our net loss of approximately $13.9 million plus changes to operating assets and liabilities of approximately $0.2 million, as adjusted for non-cash charges and gains, which included stock-based compensation expenses of approximately $2.7 million, approximately $0.2 million for issuance of shares of our common stock in exchange for services, depreciation and amortization expense of approximately $0.2 million and other immaterial adjustments. The changes in operating assets and liabilities primarily related to the timing of payments to vendors.

Current wording

In fiscal 2024, we used approximately $14.0 million in operating activities, which primarily resulted from our net loss of approximately $17.5 million, less changes to operating assets and liabilities of approximately $0.4 million, as adjusted for non-cash charges and gains, which included stock-based compensation expenses of approximately $2.7 million, depreciation and amortization of approximately $0.4 million and other immaterial adjustments. The changes in operating assets and liabilities primarily related to the timing of payments to vendors.

Previous wording

For fiscal 2024 and fiscal 2023, cash used in investing activities of approximately $1.7 million and $1.6 million, respectively, was for the purchase of property and equipment.

Current wording

For fiscal 2025 and fiscal 2024, cash used in investing activities of approximately $2.5 million and $1.7 million, respectively, was for the purchase of property and equipment.

Previous wording

Cash provided by financing activities for fiscal 2024 totaled approximately $21.1 million and was primarily attributable to proceeds of approximately $20.1 million from the sale of shares of common stock in a registered direct offering and issuance of warrants to purchase common stock in private placements that closed in May 2023 and February 2024, net of underwriter fees and issuance costs, proceeds of approximately $0.7 million for the exercise of common stock purchase warrants and proceeds of approximately $0.3 from the sale of shares under the ATM agreement. Cash provided by financing activities for fiscal 2023 totaled approximately $7.4 million and was attributable to approximately $7.4 million of net proceeds from a registered direct offering of our common stock and common stock purchase warrants in May 2022, net of placement agent fees and issuance costs.

Current wording

Cash provided by financing activities for fiscal 2024 totaled approximately $21.1 million and was primarily attributable to proceeds of approximately $20.1 million from the sale of shares of common stock in a registered direct offering and issuance of warrants to purchase common stock in private placements that closed in May 2023 and February 2024, net of underwriter fees and issuance costs, proceeds of approximately $0.7 million for the exercise of common stock purchase warrants and proceeds of approximately $0.3 from the sale of shares under the ATM Agreement.

Previous wording

We account for our leases under ASC 842,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 date. 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.

Current wording

We account for our leases under ASC 842,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 date. ROU assets and corresponding lease liabilities 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.