What changed in this filing

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Item 1. Financial Statements

2024-02-13 compared with 2023-11-13 · 245 added, 215 removed, 329 unchanged (58% of the section changed)

Financial Statements

Modular Medical, Inc.

Condensed Consolidated Balance Sheets

Medical, Inc.

Consolidated Balance Sheets

(In thousands, except par value)

September 30,

and cash equivalents

expenses and other

CURRENT ASSETS

Cash and cash equivalents

Prepaid expenses and other

Security deposit

TOTAL CURRENT ASSETS

Property and equipment, net

Right of use asset, net

TOTAL NON-CURRENT ASSETS

LIABILITIES AND STOCKHOLDERS’ EQUITY

and equipment, net

of use asset, net

NON-CURRENT ASSETS

AND STOCKHOLDERS’ EQUITY

lease liabilities

CURRENT LIABILITIES

Accounts payable

Accrued expenses

Short-term lease liabilities

TOTAL CURRENT LIABILITIES

LONG-TERM LIABILITIES

Long-term lease liabilities

TOTAL LIABILITIES

Commitments and Contingencies (Note 7)

STOCKHOLDERS’ EQUITY

lease liabilities

and Contingencies (Note 7)

STOCKHOLDERS’

Preferred Stock, $ 0.001 par value, 5,000 shares authorized, none issued and outstanding

Common Stock, $ 0.001 par value, 50,000 shares authorized;

21,124 and 10,949 shares issued and outstanding as of September 30, 2023 and March 31, 2023, respectively

Additional paid-in capital

Accumulated deficit

TOTAL STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

The accompanying notes are an integral part of these condensed

consolidated financial statements.

Modular Medical, Inc.

Condensed Consolidated Statements

of Operations

(In thousands, except per share

21,299 and 10,949 shares issued and outstanding as of December 31, 2023 and March 31, 2023, respectively

paid-in capital

STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY

accompanying notes are an integral part of these condensed consolidated financial statements.

Medical, Inc.

Consolidated Statements of Operations

thousands, except per share data)

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

Operating expenses

9 unchanged sentences

Basic and diluted

The accompanying notes are an integral

part of these condensed consolidated financial statements.

Modular Medical, Inc.

Condensed Consolidated Statements

of Stockholders’ Equity

(In thousands)

accompanying notes are an integral part of these condensed consolidated financial statements.

Medical, Inc.

Consolidated Statements of Stockholders’ Equity

Stockholders’

Balance as of March 31, 2023

Issuance of common stock and warrants in equity offering, net

Issuance of common stock under equity incentive plan

Stock-based compensation

of March 31, 2023

of common stock and warrants in equity offering, net

of common stock under equity incentive plan

Balance as of June 30,

Shares issued for services

Issuance of common stock under equity incentive plan

Stock-based compensation

issued for services

of common stock under equity incentive plan

Balance as of September 30,

Exercise of warrants

of common stock under equity incentive plan

as of December 31, 2023

Stockholders’

8 unchanged sentences

Balance as of September 30, 2022

The accompanying notes are an integral

part of these condensed consolidated financial statements.

Modular Medical, Inc.

Condensed Consolidated Statements

of Cash Flows

(In thousands)

Six Months Ended

September 30,

Issuance of common stock under equity incentive plan

Stock-based compensation

Balance as of December 31, 2022

accompanying notes are an integral part of these condensed consolidated financial statements.

Medical, Inc.

Consolidated Statements of Cash Flows

Nine Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

1 unchanged sentence

Stock-based compensation expense

Loss on asset disposal

Depreciation and amortization

11 unchanged sentences

Proceeds from issuance of common stock and warrants, net

Exercise of common stock warrants

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements.

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

MODULAR MEDICAL, INC.

72 unchanged sentences

necessary to summarize fairly the Company’s financial position, results of operations and cash flows for the interim periods presented.

The operating results for the six months ended September 30, 2023 are not necessarily indicative of the results that may be expected for

The operating results for the nine months ended December 31, 2023 are not necessarily indicative of the results that may be expected for

the year ending March 31, 2024 or for any other future period.

77 unchanged sentences

carrying values of cash equivalents, accounts payable and accrued expenses, approximate fair value.

The Company’s

right-of-use assets consist of leased assets recognized in accordance with FASB ASC No.

842, Leases ,

which requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and the lease liability

represents the Company’s obligation to make lease payments arising from the lease, both of which are recognized based on the

present value of the future minimum lease payments over the lease term at the commencement date.

Leases with a lease term of 12

months or less at inception are not recorded on the consolidated balance sheets and are expensed on a straight-line basis over the

lease term in the consolidated statement of operations and comprehensive loss.

The Company determines the lease term by agreement

with the lessor.

In cases where the lease does not provide an implicit interest rate, the Company uses the Company’s

incremental borrowing rate based on the information available at commencement date in determining the present value of future

The Company’s right-of-use assets consist

of leased assets recognized in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 842,

Leases , which requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and the lease liability represents

the Company’s obligation to make lease payments arising from the lease, both of which are recognized based on the present value

of the future minimum lease payments over the lease term at the commencement date.

Leases with a lease term of 12 months or less at inception

are not recorded on the consolidated balance sheets and are expensed on a straight-line basis over the lease term in the consolidated

statement of operations and comprehensive loss.

The Company determines the lease term by agreement with the lessor.

In cases where the

lease does not provide an implicit interest rate, the Company uses the Company’s incremental borrowing rate based on the information

available at commencement date in determining the present value of future payments.

Stock-Based Compensation

The Company recognizes stock-based compensation

for equity awards granted to employees and non-employees on a straight-line basis over the requisite service period, usually the vesting

period, based on the grant-date fair value.

The Company estimates the value of stock options on the date of grant using the Black-Scholes

pricing model.

The determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected

by the option price, as well as assumptions regarding a number of highly complex and subjective variables.

These variables include, but

are not limited to, the expected stock price volatility over the term of the awards, and projected stock option exercise behaviors.

The Company issues stock awards, stock options and restricted stock

units to employees and non-employees.

The Company accounts for such awards based on FASB ASC 505 and ASC 718, whereby the value of the

award is measured on the date of award.

The Company recognizes stock-based compensation for equity awards on a straight-line basis over

the requisite service period, usually the vesting period, after assessing the probability of achieving the requisite performance criteria

with respect to performance-based awards.

The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton

Option Pricing (Black Scholes) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected

life of the options, and future dividends.

Compensation expense is recorded based upon the value derived from the Black-Scholes model.

The assumptions used in the Black-Scholes model could materially affect compensation expense recorded in future periods.

Per-Share Amounts

Basic net loss per share is computed by

dividing loss for the period by the weighted-average number of shares of common stock outstanding (WASO) during the period.

the Company includes the number of shares of common stock issuable under pre-funded warrants as outstanding.

Diluted net loss per share

gives effect to all potentially dilutive common shares outstanding during the period.

Potentially dilutive common shares consist of incremental

shares of common stock issuable upon the exercise of stock options and exercise of warrants.

Basic net loss per share is computed by dividing

loss for the period by the weighted-average number of shares of common stock outstanding (WASO) during the period.

In addition, the Company

includes the number of shares of common stock issuable under pre-funded warrants as outstanding.

Diluted net loss per share gives effect

to all potentially dilutive common shares outstanding during the period.

Potentially dilutive common shares consist of incremental shares

of common stock issuable upon the exercise of stock options and exercise of warrants.

Prior to April 1, 2023, the Company excluded

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The impact of the change reduced the previously reported loss per share by $ 0.04

and $ 0.06 , respectively, and increased WASO by approximately 1,348,000 and 1,098,000 shares, respectively, for the three and six months

ended September 30, 2022.

The reclassification had no impact on the Company’s net loss or cash flows for the three or six months ended

September 30, 2022.

For the six months ended September 30,

and $ 0.09 , respectively, and increased WASO by approximately 1,348,000 and 1,182,000 shares, respectively, for the three and nine months

ended December 31, 2022.

The reclassification had no impact on the Company’s net loss or cash flows for the three or nine months

ended December 31, 2022.

For the nine months ended December 31,

2023 and 2022, the following table sets forth securities outstanding which were excluded from the computation of diluted net loss per

share as their inclusion would be anti-dilutive (in thousands).

Six Months Ended

September 30,

Nine Months Ended

Options to purchase common stock

2 unchanged sentences

Reclassifications

Certain prior year amounts have been reclassified

for consistency with the current period presentation.

These reclassifications had no effect on the reported results of operations or cash

Certain prior year amounts have been reclassified for consistency

with the current period presentation.

These reclassifications had no effect on the reported results of operations or cash flows.

Comprehensive Loss

Comprehensive loss represents the changes

in equity of an enterprise, other than those resulting from stockholder transactions.

Accordingly, comprehensive loss may include certain

changes in equity that are excluded from net loss.

For the three and six months ended September 30, 2023 and 2022, the Company’s

comprehensive loss was the same as its net loss.

Recently Issued Accounting Pronouncement

Comprehensive loss represents the changes in equity

of an enterprise, other than those resulting from stockholder transactions.

Accordingly, comprehensive loss may include certain changes

in equity that are excluded from net loss.

For the three and nine months ended December 31, 2023 and 2022, the Company’s comprehensive

loss was the same as its net loss.

Recently Adopted Accounting Pronouncement

In June 2016, the FASB issued Accounting

1 unchanged sentence

2016-13, Financial Instruments— Credit Losses .

This ASU added a new impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather

than incurred losses.

Under the new guidance, an entity recognizes an allowance for its estimate of expected credit losses and applies

to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments.

The CECL model

does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets

that have a low risk of loss.

This update is effective for fiscal years beginning after December 15, 2022, including interim periods within

those fiscal years for smaller reporting companies.

This ASU added a new impairment model (known as

the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses.

Under the new guidance, an

entity recognizes an allowance for its estimate of expected credit losses and applies to most debt instruments, trade receivables, lease

receivables, financial guarantee contracts, and other loan commitments.

The CECL model does not have a minimum threshold for recognition

of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss.

This update is effective

for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies.

The Company adopted ASU No.

2016-13 effective April 1, 2023, and the adoption had

no impact on the Company’s results of operations and financial position.

2016-13 effective April 1, 2023, and the adoption had no impact on the Company’s results of operations

and financial position.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU No.

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires disclosure of incremental segment

information on an annual and interim basis.

2023-07 is effective for fiscal years beginning after December 15, 2023, and interim

periods within fiscal years beginning after December 15, 2024, and it requires retrospective application to all prior periods presented

in the financial statements.

The Company is currently evaluating the impact that this ASU will have on the presentation of its consolidated

financial statements.

In December 2023, the FASB issued ASU No.

Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which expands disclosures in an entity’s income tax rate

reconciliation table and disclosures regarding cash taxes paid both in the U.S.

and foreign jurisdictions.

The update will be effective

for annual periods beginning after December 15, 2024.

The Company is currently evaluating the impact that this ASU will have on the presentation

of its consolidated financial statements.

NOTE 2 – CONSOLIDATED BALANCE SHEET DETAIL

September 30,

Property and equipment, net

7 unchanged sentences

Total property and equipment, net

September 30,

Accrued expenses

5 unchanged sentences

30, 2023, and, upon expiration, the Company had a $ 100,000 security deposit receivable from the landlord, which was refunded to the Company

during the three months ended September 30, 2023.

during the nine months ended December 31, 2023.

Thornmint Road, San Diego, CA

5 unchanged sentences

Future minimum payments under the facility

operating lease, as of September 30, 2023, are listed in the table below (in thousands).

operating lease, as of December 31, 2023, are listed in the table below (in thousands).

Annual Fiscal Years

Operating Lease

Total future lease payments

2 unchanged sentences

Cash paid for amounts included in the measurement of lease

liabilities was approximately $ 257,000 and $ 79,000 for the six months ended September 30, 2023 and 2022, respectively.

liabilities was approximately $ 365,000 and $ 119,000 for the nine months ended December 31, 2023 and 2022, respectively.

Rent expense was

approximately $ 225,000 and $ 54,000 for the six months ended September 30, 2023 and 2022, respectively and $ 113,000 and $ 27,000 for the

three months ended September 30, 2023 and 2022, respectively.

approximately $ 337,000 and $ 81,000 for the nine months ended December 31, 2023 and 2022, respectively and $ 112,000 and $ 27,000 for the

three months ended December 31, 2023 and 2022, respectively.

NOTE 4 – STOCKHOLDERS’ EQUITY

ATM Agreement

On November 22, 2023, the Company entered into

a Sales Agreement (the ATM Agreement) with Leerink Partners LLC (Leerink) under which the Company may offer and sell, from time to time

at its sole discretion, shares of its 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.

The Company has

no obligation to sell any shares under the ATM Agreement and may, at any time, suspend solicitation and offers under the ATM Agreement.

As of December 31, 2023, no shares had been sold under the ATM Agreement.

May 2023 Public Offering

On May 15, 2023, the Company entered into

an underwriting agreement (the Underwriting Agreement) with Newbridge Securities Corporation (the Underwriter), with respect to the issuance

and sale in a firm commitment underwritten offering (the 2023 Offering) by the Company of units of its securities for aggregate gross

proceeds of approximately $ 9,390,000 , before deducting underwriting discounts and commissions and other offering expenses.

sold 8,816,900 shares of its common stock and warrants to purchase 4,408,450 shares of its common stock.

The securities were sold as a

unit, with each unit consisting of two shares of common stock of the Company and one warrant (the 2023 Warrant) to purchase one share

of common stock, at a public offering price of $ 2.13 per unit.

The 2023 Warrants were immediately separable and exercisable, had a per

share exercise price of $ 1.22 and expire five years from the date of issuance.

On May 15, 2023, the Company entered into an underwriting

agreement (the Underwriting Agreement) with Newbridge Securities Corporation (the Underwriter), with respect to the issuance and sale

in a firm commitment underwritten offering (the 2023 Offering) by the Company of units of its securities for aggregate gross proceeds

of approximately $ 9,390,000 , before deducting underwriting discounts and commissions and other offering expenses.

The Company sold 8,816,900

shares of its common stock and warrants to purchase 4,408,450 shares of its common stock.

The securities were sold as a unit, with each

unit consisting of two shares of common stock of the Company and one warrant (the 2023 Warrants) to purchase one share of common stock,

at a public offering price of $ 2.13 per unit.

The 2023 Warrants were immediately separable and exercisable, had a per share exercise price

of $ 1.22 and expire five years from the date of issuance.

The 2023 Offering closed on May 18, 2023.

Pursuant to the Underwriting Agreement,

the Company granted the Underwriter a 30-day option to purchase up to an additional 1,322,534 shares of common stock and an additional

Pursuant to the Underwriting Agreement, the

Company granted the Underwriter a 30-day option to purchase up to an additional 1,322,534 shares of common stock and an additional

661,267 of the 2023 Warrants to cover over-allotments, if any.

On May 25, 2023, the Underwriter exercised in full this option and purchased

the additional securities for aggregate gross proceeds to the Company of approximately $ 1,408,000 , before deducting underwriting discounts

and commissions and other offering expenses.

The Underwriter was paid a cash fee of

7.0 % of the aggregate gross proceeds of the 2023 Offering (including the over-allotment option) and reimbursed certain out-of-pocket expenses

On May 25, 2023, the Underwriter exercised in full this option and

purchased the additional securities for aggregate gross proceeds to the Company of approximately $ 1,408,000 , before deducting

underwriting discounts and commissions and other offering expenses.

The Underwriter was paid a cash fee of 7.0 % of

the aggregate gross proceeds of the 2023 Offering (including the over-allotment option) and reimbursed certain out-of-pocket expenses

of approximately $ 125,000 .

In addition, pursuant to the Underwriting Agreement, the Company initially issued to the Underwriter common

stock purchase warrants (the UW Warrants) for a total of 709,760 shares.

In addition, pursuant to the Underwriting Agreement, the Company initially issued to the Underwriter

common stock purchase warrants (the UW Warrants) for a total of 709,760 shares.

Subsequently, the UW Warrants were reissued to the Underwriter

and its agents for a total of 604,623 shares.

The UW warrants are exercisable six months from the respective issuance dates and have a

four-year term and a per share exercise price of $ 1.32 .

The UW warrants are exercisable six months from the respective issuance dates and have

a four- year term and a per share exercise price of $ 1.32 .

The Underwriting Agreement contains customary

1 unchanged sentence

and the Underwriter, including for liabilities under the Securities Act of 1933, as amended, other obligations of the parties and termination

In addition, pursuant to the terms of the Underwriting Agreement and related “lock-up” agreements, the Company,

each director and executive officer of the Company, and certain stockholders have agreed with the Underwriter not to offer for sale, issue,

sell, contract to sell, pledge or otherwise dispose of any of our common stock or securities convertible into common stock for a period

of 90 days after May 17, 2023.

As of September 30, 2023, the Company had the following warrants

As of December 31, 2023, the Company had the following warrants

outstanding (share amounts in thousands):

Number of Shares

Exercise Price

January 2027 - February 2027

February 2027

November 2027

Balance as of March 31, 2023

Issuance of common stock warrants

Balance as of June 30, 2023

Balance as of September 30, 2023

Warrants exercised

Balance as of December 31, 2023

As of March 31, 2023, the Company had the following warrants

outstanding (share amounts in thousands):

Number of Shares

Exercise Price

January 2027 – February 2027

1 unchanged sentence

November 2027

During the six months ended September 30, 2023 and 2022, the Company

During the nine months ended December 31, 2023 and 2022, the Company

issued 1,429 and 348 shares of common stock with fair values of approximately $ 1,400 and $ 1,000 , respectively, to a service provider.

1 unchanged sentence

Amended 2017 Equity Incentive Plan

In October 2017, the Company’s board

of directors (the Board) approved the 2017 Equity Incentive Plan (the Plan), as amended, with 1,000,000 shares of common stock reserved

In October 2017, the Company’s

board of directors (the Board) approved the 2017 Equity Incentive Plan (the Plan), as amended, with 1,000,000 shares of common stock reserved

for issuance.

8 unchanged sentences

Stock-Based Compensation Expense

The expense relating to stock options is recognized

on a straight-line basis over the requisite service period, usually the vesting period, based on the grant date fair value.

As of September

30, 2023, the unamortized compensation cost was approximately $ 2,645,000 related to stock options and is expected to be recognized as

expense over a weighted-average period of approximately 1.7 years.

During the three months ended September 30, 2023,

the Company issued 6,265 shares to members of the Board in accordance with its outside director compensation plan and recorded approximately

$ 7,000 of stock-based compensation expense for these share awards.

The weighted-average grant date fair value of

options granted was $ 1.00 and $ 4.17 per share for the six months ended September 30, 2023 and 2022, respectively, and $ 1.02 and $ 4.06

for the three months ended September 30, 2023 and 2022, respectively.

As of December 31, 2023, the unamortized compensation cost was approximately

$ 2,512,000 related to stock options and is expected to be recognized as expense over a weighted-average period of approximately 1.4 years.

During the three months ended December

31, 2023, under its Two-Part FDA Submission and Clearance Milestone Bonus Program, the Company granted stock options for 909,533 shares,

which are subject to vesting upon the achievement of certain performance milestones by the Company.

As of December 31, 2023, the Company

had not commenced expense recognition of 251,567 of these option shares based on its assessment of the probability of achievement of the

applicable performance requirements.

During the three months ended December

31, 2023, the Company issued 6,375 shares to members of the Board in accordance with its outside director compensation plan and recorded

approximately $ 11,000 of stock-based compensation expense for these share awards.

The weighted-average grant date fair value of options granted was $ 0.98

and $ 3.58 per share for the nine months ended December 31, 2023 and 2022, respectively, and $ 0.97 and $ 1.86 for the three months ended

December 31, 2023 and 2022, respectively.

The following assumptions were used in the fair-value method calculations:

September 30,

Six Months Ended

September 30,

Three Months Ended

Nine Months Ended

Risk-free interest rates

4 unchanged sentences

123.4 % - 127.6 %

82.5 % - 152.2 %

149 % - 223 %

Expected life (years)

The fair values of options at the grant

date were estimated utilizing the Black-Scholes valuation model, which includes simplified methods to establish the fair term of options,

The fair value of options at the grant

date was estimated utilizing the Black-Scholes valuation model, which includes simplified methods to establish the fair term of options,

as well as average volatility.

5 unchanged sentences

for forfeitures as they occur.

The following table summarizes the activity in

the shares available for grant under the Plan during the six months ended September 30, 2023:

The following table summarizes the activity

in the shares available for grant under the Plan during the nine months ended December 31, 2023:

Options Outstanding

Exercise Prices

Balance at March 31, 2023

5 unchanged sentences

Balance at September 30, 2023

There were no stock options exercised during the six months

ended September 30, 2023 and 2022.

A summary of RSU activity under the Plan is presented below.

Balance at March 31, 2023

Non-vested shares as of September 30, 2023

Options granted

Options cancelled and returned to the Plan

Balance at December 31, 2023

No stock options were exercised during

the nine months ended December 31, 2023 and 2022.

A summary of RSU activity under the Plan is presented

Balance at June 30, 2023

Non-vested shares at September 30, 2023

Non-vested shares at December 31, 2023

The total intrinsic value of the RSUs

outstanding as of September 30, 2023 was approximately $ 266,000 .

The unamortized compensation cost at September 30, 2023 was

approximately $ 209,000 related to RSUs and is expected to be recognized as expense over a period of approximately 2.75 years.

outstanding as of December 31, 2023 was approximately $ 379,000 .

The unamortized compensation cost at December 31, 2023 was approximately

$ 190,000 related to RSUs and is expected to be recognized as expense over a period of approximately 2.50 years.

The following table summarizes the range of outstanding and

exercisable options as of September 30, 2023:

exercisable options as of December 31, 2023:

Options Outstanding

Options Exercisable

of Exercise Price

Range of Exercise Price

$0.93 - $2.00

5 unchanged sentences

NOTE 6 – INCOME TAXES

The Company determines deferred tax assets

and liabilities based upon the differences between the financial statement and tax bases of the Company’s assets and liabilities

using tax rates in effect for the year in which the Company expects the differences to affect taxable income.

A valuation allowance is

established for any deferred tax assets for which it is more likely than not that all or a portion of the deferred tax assets will not

Based on the available information and other factors, management believes it is more likely than not that its federal and

state net deferred tax assets will not be fully realized, and the Company has recorded a full valuation allowance.

The Company determines deferred tax

assets and liabilities based upon the differences between the financial statement and tax bases of the Company’s assets

and liabilities using tax rates in effect for the year in which the Company expects the differences to affect taxable income.

A valuation allowance is established for any deferred tax assets for which it is more likely than not that all or a portion of the deferred

tax assets will not be realized.

Based on the available information and other factors, management believes it is more likely than not

that its federal and state net deferred tax assets will not be fully realized, and the Company has recorded a full valuation allowance.

The Company files U.S.

federal and state

income tax returns in jurisdictions with varying statutes of limitations.

All tax returns for fiscal 2016 to fiscal 2023 may be subject

to examination by the U.S.

and state income tax returns in jurisdictions with varying statutes of limitations.

All tax returns for fiscal 2016 to fiscal

2023 may be subject to examination by the U.S.

federal and state tax authorities.

As of September 30, 2023, the Company has not recorded any liability for

unrecognized tax benefits related to uncertain tax positions.

As of December 31, 2023, the Company has not recorded

any liability for unrecognized tax benefits related to uncertain tax positions.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

5 unchanged sentences

Indemnification

In the ordinary course of business, the

Company enters into contractual arrangements under which it may agree to indemnify the counterparties from any losses incurred relating

to breach of representations and warranties, failure to perform certain covenants, or claims and losses arising from certain events as

outlined within the particular contract, which may include, for example, losses arising from litigation or claims relating to past performance.

In the ordinary course of business,

the Company enters into contractual arrangements under which it may agree to indemnify the counterparties from any losses incurred

relating to breach of representations and warranties, failure to perform certain covenants, or claims and losses arising from

certain events as outlined within the particular contract, which may include, for example, losses arising from litigation or claims

relating to past performance.

Such indemnification clauses may not be subject to maximum loss clauses.

The Company has also entered into indemnification agreements

with its officers and directors.

No amounts were reflected in the Company’s consolidated financial statements for the six months

ended September 30, 2023 and 2022 related to these indemnifications.

The Company has not estimated the maximum potential amount of indemnification

liability under these agreements due to the limited history of prior claims and the unique facts and circumstances applicable to each

particular agreement.

The Company has also

entered into indemnification agreements with its officers and directors.

No amounts were reflected in the

Company’s consolidated financial statements for the nine months ended December 31, 2023 and 2022 related to these

indemnifications.

The Company has not estimated the maximum potential amount of indemnification liability under these

agreements due to the limited history of prior claims and the unique facts and circumstances applicable to each particular

To date, the Company has not made any payments related to these indemnification agreements.

2 unchanged sentences

include purchase orders for machinery and equipment.

At September 30, 2023, the Company had outstanding purchase orders for machinery

and equipment and related expenditures of approximately $ 996,000 .

At December 31, 2023, the Company had outstanding purchase orders for machinery and

equipment and related expenditures of approximately $ 592,000 .

In December 2023, the Company signed a device integration agreement with

a provider of connected-care and remote monitoring diabetes technology solutions for an obligation of approximately $ 575,000 over three

years for technology integration and license fees.

NOTE 8 – SUBSEQUENT EVENTS

In January 2024, under the ATM Agreement,

the Company sold 153,879 shares of common stock for net proceeds of approximately $ 278,000 .

In January 2024, the Company received

proceeds of approximately $ 550,000 from the exercise of warrants to purchase 445,744 shares of common stock.

On February 13, 2024, the Company’s stockholders approved increases in:

i) the number of shares reserved for issuance under the

Plan by 3,000,000 shares and ii) the authorized shares of common stock to 100,000,000 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements