What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-06-20 compared with 2024-06-21 · 740 added, 602 removed, 132 unchanged (91% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

TO CONSOLIDATED FINANCIAL STATEMENTS

of Independent Registered Accounting Firm – Farber Hass Hurley LLP

Consolidated Balance

Consolidated Statements

of Operations

Consolidated Statements

of Stockholders’ Equity

Consolidated Statements

of Cash Flows

Notes to Consolidated

Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - OPEN

Committee and

Stockholders of Modular Medical, Inc.

on the Financial Statements

have audited the accompanying consolidated balance sheets of Modular Medical, Inc.

(the “Company”) as of March 31, 2024 and

2023, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended, and

the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated

financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024 and 2023, and

the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted

in the United States of America.

Doubt about the Company’s Ability to Continue as a Going Concern

accompanying consolidated financial statements have been prepared to assume the Company will continue as a going concern.

in Note 1 to the consolidated financial statements, the Company has incurred losses from operations and needs to raise additional funds

to meet its obligations and sustain its future operations until profitability is achieved.

These circumstances raise substantial doubt

about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

FINANCIAL STATEMENTS AND SUPPLEMENTARY

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Accounting Firm – Farber Hass Hurley LLP

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Audit Committee and

Stockholders of Modular Medical,

Opinion on the Financial Statements

We have audited the accompanying

consolidated balance sheets of Modular Medical, Inc.

(the “Company”) as of March 31, 2025 and 2024, and the related

consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended

March 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of

March 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended

March 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company's Ability

to Continue as a Going Concern

The accompanying consolidated financial statements

have been prepared to assume the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements,

the Company has incurred losses from operations and will need to raise additional funds to sustain its operations and meet future obligations

until profitability is achieved.

These circumstances raise substantial doubt about its ability to continue as a going concern.

plans in regard to these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that

might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the

responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial

statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and

the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we

engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding

of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements

that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are

material to the consolidated financial statements and (ii) involved especially challenging, subjective, or complex judgments.

The communication

of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are

not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts

or disclosures to which they relate.

described further in Note 1, the Company has incurred losses since inception, and expects to continue to incur operating losses for the

foreseeable future and incur cash outflows from operations as it continues to invest in the development and subsequent commercialization

of its product.

The Company expects that its research and development and general and administrative expenses will continue to increase,

and, as a result, the Company will need to generate significant product revenues to achieve profitability.

These circumstances raise

substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these consolidated

financial statements are issued.

identified management’s assessment of the Company’s ability to continue as a going concern as a critical audit matter due

to the inherent complexities and uncertainties related to the Company’s projections of operations.

primary procedures we performed to address this critical audit matter included:

evaluated the reasonableness of key assumptions underlying management’s conclusion.

evaluated that the disclosures included in the Form 10-K were complete and accurate and in

accordance with accounting principles generally accepted in the United States of America.

evaluated the impact of the Company’s existing financing arrangements and future capital

needs over the next 12 months on its ability to continue as a going concern.

discussed in Note 5, during the year ended March 31, 2024, the Company granted options to purchase shares of its common stock to employees,

directors and consultants.

Management is required to analyze the fair value of each option granted and amortize it over its vesting period.

We identified the valuation of stock-based compensation as a critical

audit matter due to the significant judgments made by management when developing underlying assumptions regarding the fair value of the

primary procedures we performed to address this critical audit matter included:

gained an understanding of Company’s processes and controls in place for determining

the fair value of each granted option.

- We evaluated the option price model management selected to determine

the fair value, and analyzed the underlying data and assumptions used in the calculations.

also recalculated the fair value of each option granted.

Farber Hass Hurley LLP

have served as the Company’s auditor since 2018.

Our audits included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide

a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters

communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or

required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated

financial statements and (ii) involved especially challenging, subjective, or complex judgments.

The communication of critical audit matters

does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the

critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they

Going Concern

As described further in Note 1, the Company has

incurred losses since inception, and expects to continue to incur operating losses for the foreseeable future and incur cash outflows

from operations as it continues to invest in the development and future commercialization of its product.

The Company expects that its

research and development and general and administrative expenses will continue to increase, and, as a result, the Company will need to

generate significant product revenues to achieve profitability.

These circumstances raise substantial doubt about the Company’s

ability to continue as a going concern within one year after the date that these consolidated financial statements are issued.

We identified management’s assessment of

the Company’s ability to continue as a going concern as a critical audit matter due to the inherent complexities and uncertainties

related to the Company’s projections of operations.

The primary procedures we performed to address

this critical audit matter included:

- We evaluated the reasonableness of key assumptions underlying management’s conclusion.

- We evaluated that the disclosures included in the Form 10-K were complete and accurate and in accordance

with accounting principles generally accepted in the United States of America.

- We evaluated the impact of the Company’s existing financing arrangements and future capital needs

over the next 12 months on its ability to continue as a going concern.

Stock Based Compensation

As discussed in Note 5, during the year ended

March 31, 2025, the Company granted options to purchase shares of its common stock to employees, directors and consultants.

is required to analyze the fair value of each option granted and amortize the expense over the vesting period.

We identified the valuation recognition of stock-based

compensation of granted stock options as a critical audit matter due to the significant judgments and assumptions required by management

when developing the fair value of the options and the potential for material impact.

The fair value includes subjective assumptions including

the expected stock price volatility, expected term of the granted options, and the risk-free interest rate.

The primary procedures we performed to address

this critical audit matter included:

- We gained an understanding of Company’s processes and controls in place for determining the fair

value of options granted.

- We evaluated the option price model management selected to determine the fair value, and analyzed the

underlying data and assumptions used in the calculations.

- We performed independent recalculations of the fair value of granted stock options using our own assumptions

and compared the results to the Company’s estimates.

/s/ Farber Hass Hurley LLP

PCAOB Firm ID 223

We have served as the Company’s auditor

Chatsworth, California

June 20, 2025

Medical, Inc.

Modular Medical, Inc.

Balance Sheets

thousands, except par value)

CURRENT ASSETS

cash equivalents

Prepaid expenses and

Security deposit

(In thousands, except par value)

CURRENT ASSETS

Property and equipment,

Right of use assets,

NON-CURRENT ASSETS

LIABILITIES AND STOCKHOLDERS’

Cash and cash equivalents

Prepaid expenses and other

TOTAL CURRENT ASSETS

Property and equipment, net

Right of use assets, net

TOTAL NON-CURRENT ASSETS

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

2 unchanged sentences

Short-term lease liabilities

CURRENT LIABILITIES

TOTAL CURRENT LIABILITIES

Long-term lease liabilities

and Contingencies (Note 8)

TOTAL LIABILITIES

Commitments and Contingencies (Note 7)

STOCKHOLDERS’ EQUITY

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

Common Stock, $ 0.001 par value, 100,000 and 50,000 shares authorized

as of March 31, 2024 and 2023, respectively;

Common Stock, $ 0.001 par value, 100,000 shares authorized as of March 31, 2025 and 2024;

53,706 and 32,464 shares issued and outstanding as of March 31, 2025 and 2024, respectively

1 unchanged sentence

Accumulated deficit

STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY

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

Medical, Inc.

Statements of Operations

thousands, except per-share data)

TOTAL STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

The accompanying notes are an integral

part of these audited consolidated financial statements.

Modular Medical, Inc.

Consolidated Statements of Operations

(In thousands, except per-share data)

Year Ended March 31,

Operating expenses

and development

Research and development

General and administrative

operating expenses

Total operating expenses

Loss from operations

5 unchanged sentences

Basic and diluted

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

Medical, Inc.

Statements of Stockholders’ Equity

The accompanying notes are an integral

part of these audited consolidated financial statements.

Modular Medical, Inc.

Consolidated Statements of Stockholders’

(In thousands)

Stockholders’

Balance as of March 31, 2022

of common stock in registered direct offering, net of fees and issuance costs

Shares issued for services

Issuances under equity incentive plan

Stock-based compensation

Balance as of March 31, 2023

of common stock in public offerings, net of fees and issuance costs

At-the-market sales of stock, net

Exercise of warrants

Shares issued for services

Issuances under equity incentive plan

Stock-based compensation

Balance as of March 31, 2024

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

Medical, Inc.

Statements of Cash Flows

ended March 31,

as of March 31, 2023

Issuance of common stock in public offerings, net of fees and issuance costs

At-the-market

sales of stock, net

issued for services

under equity incentive plan

as of March 31, 2024

of common stock and warrants in private placements, net of fees and issuance costs

of common stock and warrants in public offering, net of fees and issuance costs

At-the-market

sales of stock, net

issued for services

under equity incentive plan

as of March 31, 2025

The accompanying notes are an integral

part of these audited consolidated financial statements.

Modular Medical, Inc.

Consolidated Statements of Cash

(In thousands)

Year ended March 31,

Cash Flows from operating activities

Adjustments to reconcile net loss to net cash

used in operating activities:

Stock-based compensation

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation expense

Loss on asset disposal

2 unchanged sentences

Changes in assets and liabilities:

Prepaid expenses and

Prepaid expenses and other assets

Lease right-of-use assets

Accounts payable and

accrued expenses

Change in lease liabilities

Net cash used in operating

Cash flows from investing

Purchases of property

and equipment

Net cash used in investing

Cash flows from financing

Proceeds from at-the-market

sales of common stock, net

Proceeds from exercise

of common stock warrants

Proceeds from public

and registered direct offerings, net

Net cash provided by financing

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, at beginning of

Cash and cash equivalents,

at end of year

Accounts payable and accrued expenses

Lease liabilities

Net cash used in operating activities

Cash flows from investing activities

Purchases of property and equipment

Net cash used in investing activities

Cash flows from financing activities

Proceeds from at-the-market sales of common stock, net

Proceeds from exercise of common stock warrants

Proceeds from public offering of common stock and warrants, net

Proceeds from private placements of common stock and warrants, net

Net cash provided by financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents, at beginning of year

Cash and cash equivalents, at end of year

Supplemental disclosure:

Noncash investing and financing activities:

Right-of-use asset obtained

in exchange for lease liability

Receivable from transfer

agent for warrant exercise proceeds

Receivable from transfer agent for warrant exercise proceeds

Cash paid for:

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

MEDICAL, INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

– THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Medical, Inc.

(the Company) was incorporated in Nevada in October 1998 under the name Bear Lake Recreation, Inc.

The Company had no material

business operations from 2002 until approximately 2017 when it acquired all of the issued and outstanding shares of Quasuras, Inc., a

Delaware corporation (Quasuras).

As the major shareholder of Quasuras retained control of both the Company and Quasuras, the share exchange

was accounted for as a reverse merger.

As such, the Company recognized the assets and liabilities of Quasuras, acquired in the merger,

at their historical carrying amounts.

Prior to the acquisition of Quasuras and, since at least 2002, the Company was a shell company,

as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934 (the Exchange Act).

In June 2017, the Company changed

its name from Bear Lake Recreation, Inc.

The accompanying notes are an integral part of these

audited consolidated financial statements.

MODULAR MEDICAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Modular Medical, Inc.

(the “Company”) was incorporated

in Nevada in October 1998 under the name Bear Lake Recreation, Inc.

The Company had no material business operations until approximately

2017 when it acquired all of the issued and outstanding shares of Quasuras, Inc., a Delaware corporation (“Quasuras”), and

changed its name from Bear Lake Recreation, Inc.

to Modular Medical, Inc.

Company is a pre-revenue, medical device company focused on the design, development and eventual commercialization of innovative insulin

pumps using modernized technology to increase pump adoption in the diabetes marketplace.

Through the creation of an innovative two-part

patch pump, its initial product, the MODD1, the Company seeks to fundamentally alter the trade-offs between cost and complexity and access

to the higher standards of care requiring considerable motivation that presently available insulin pumps provide.

By simplifying and

streamlining the user experience from introduction, prescription, reimbursement, training and day-to-day use, the Company seeks to expand

the wearable insulin delivery device market beyond the highly motivated “super users” and expand the category into the mass

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, the Company submitted a 510(k) premarket notification to the United States Food and Drug Administration (FDA) for the

In March 2024, the Company received comments from the FDA on its submission, and the Company is in the process of responding to

those comments.

and Going Concern

Company expects to continue to incur operating losses for the foreseeable future and incur cash outflows from operations as it continues

to invest in the development and subsequent commercialization of its product.

The Company expects that its research and development and

general and administrative expenses will continue to increase, and, as a result, it will eventually need to generate significant revenue

The Company is 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 an innovative two-part patch pump, its initial product, the MODD1, the Company seeks

to fundamentally alter the trade-offs between cost and complexity and access to the higher standards of care requiring considerable motivation

that presently available insulin pumps provide.

By simplifying and streamlining the user experience from introduction, prescription, reimbursement,

training and day-to-day use, the Company seeks 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, the Company submitted a 510(k) premarket notification to the United

States Food and Drug Administration (FDA) for the MODD1, and, in September 2024, the Company received FDA clearance to market and sell

its MODD1 pump in the United States.

Liquidity and Going Concern

The Company does not currently have revenues to generate cash flows

to cover operating expenses.

Since its inception, the Company has incurred operating losses and negative cash flows in each year due to

costs incurred in connection with its operations.

The Company expects to continue to incur operating losses for the foreseeable future

and incur cash outflows from operations as it continues to invest in the development and commercialization of its products.

expects that its operating expenses will continue to increase, and, as a result, it will eventually need to generate significant revenue

to achieve profitability.

The Company’s expected operating losses and cash burn raise substantial doubt about the Company’s

When considered with its current operating plan, these conditions raise substantial doubt about the Company’s

ability to continue as a going concern within one year after the date that these financial statements are issued.

In addition, the Company’s

independent registered public accounting firm, in its report on these consolidated financial statements for the year ended March 31,

independent registered public accounting firm, in its report on the consolidated financial statements as of and for the year ended March

31, 2025, expressed substantial doubt about the Company’s ability to continue as a going concern.

2 unchanged sentences

Implementation of the Company’s plans and its ability to

continue as a going concern will depend upon the Company’s ability to raise additional capital, through the sale of additional

equity or debt securities, to support its future operations.

There can be no assurance that such additional capital, whether in the form

of debt or equity financing, will be sufficient or available and, if available, that such capital will be offered on terms and conditions

acceptable to the Company.

In, May 2023 and February 2024, the Company completed public offerings of its common stock and warrants.

Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital

and capital expenditures.

The Company’s future capital requirements and the adequacy of its available funds will depend on many

factors, including the Company’s ability to successfully commercialize its 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 its

product offering.

If the Company is unable to secure additional capital, it may be required to curtail its research and development initiatives

and take additional measures to reduce costs in order to conserve its cash.

of Presentation

consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the

United States of America.

The Company’s fiscal year ends on March 31 of each calendar year.

Each reference to a fiscal year in

these notes to the consolidated financial statements refers to the fiscal year ended March 31 of the calendar year indicated (for example,

fiscal 2024 refers to the fiscal year ending March 31, 2024).

The consolidated financial statements include the accounts of the Company

and its wholly-owned subsidiary, Quasuras.

All significant intercompany transactions and balances have been eliminated in consolidation.

preparation of the accompanying consolidated financial statements in conformity with U.S.

generally accepted accounting principles (GAAP)

requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the

reporting period.

Estimates may include those pertaining to accruals, stock-based compensation and income taxes.

Actual results could

differ from those estimates.

operates in one business segment and uses one measurement of profitability for its business.

and Development

expenses research and development expenditures as incurred.

and Administrative

General and administrative expenses consist primarily of payroll and

benefit costs, rent, stock-based compensation, legal and accounting fees, and facility and other administrative expenses.

Concentration

of Credit Risk

Financial instruments that potentially subject

the Company to concentration of credit risk consist primarily of cash held in demand deposit accounts.

The Company maintains its cash

at high credit quality financial institutions within the United States, which are insured by the Federal Deposit Insurance Corporation

(FDIC) up to limits of approximately $ 250,000 .

No reserve has been made in the financial statements for any possible loss due to financial

institution failure.

and Uncertainties

Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with

financing, liquidity requirements, rapidly changing customer requirements, limited operating history and the volatility of public markets.

global outbreak of the coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization and a national emergency

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 the Company’s 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.

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 the Company was recently able to access the capital markets, in the future, the Company may

be unable to access the capital markets, and additional capital may only be available to the Company on terms that could be significantly

detrimental to its existing stockholders and to its business.

Cash Equivalents

Cash and cash equivalents include cash held in

demand deposit and money market accounts, certificates of deposit and all highly liquid debt instruments with original maturities of

three months or less.

and Equipment

Property and equipment are recorded at historical

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three to five

continue as a going concern will depend upon the Company’s ability to raise additional capital, through the sale of additional equity

or debt securities, to support its future operations.

There can be no assurance that such additional capital, whether in the form of debt

or equity financing, will be sufficient or available and, if available, that such capital will be offered on terms and conditions acceptable

to the Company.

The Company’s operating needs include the planned costs to operate its business, including amounts required to fund

working capital and capital expenditures.

The Company’s future capital requirements and the adequacy of its available funds will

depend on many factors, including the Company’s ability to successfully commercialize its pump products, 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 its product offering.

If the Company is unable to secure additional capital, it may be required to curtail its product

commercialization and research and development initiatives and take additional measures to reduce costs in order to conserve its cash.

In November 2024, the Company completed a public offering of its common stock for net proceeds of approximately $ 7.3 million.

2025, the Company completed private placements of its common stock and warrants for net proceeds of approximately $ 11.4 million.

Basis of Presentation

The consolidated financial statements

of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America.

The Company’s

fiscal year ends on March 31 of each calendar year.

Each reference to a fiscal year in these notes to the consolidated financial statements

refers to the fiscal year ended March 31 of the calendar year indicated (for example, fiscal 2025 refers to the fiscal year ending March

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Quasuras.

All significant

intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of the accompanying consolidated financial statements

in conformity with U.S.

generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated

financial statements and the reported amount of revenues and expenses during the reporting period.

Estimates may include those pertaining

to accruals, stock-based compensation and income taxes.

Actual results could differ from those estimates.

Research and Development

The Company expenses research and development expenditures

General and Administrative

General and administrative expenses consist

primarily of payroll and benefit costs, rent, stock-based compensation, legal and accounting fees, and facility and other finance and

administrative expenses.

Risks and Uncertainties

The Company is subject to risks from, among other

things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing

customer requirements, limited operating history and the volatility of public markets.

Cash and Cash Equivalents

Cash and cash equivalents include cash

held in demand deposit and money market accounts, certificates of deposit and all highly liquid debt instruments with original maturities

of three months or less.

Property and Equipment

Property and equipment are recorded at

historical cost.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three

to five years .

Depreciation is recorded in operating expenses in the consolidated statements of operations.

Leasehold improvements and assets

acquired through finance leases are amortized over the shorter of their estimated useful life or the lease term, and amortization is

recorded in operating expenses in the consolidated statements of operations.

Leasehold improvements and

assets acquired through finance leases are amortized over the shorter of their estimated useful life or the lease term, and amortization

is recorded in operating expenses in the consolidated statements of operations.

Construction-in-process includes machinery and equipment

2 unchanged sentences

use and placed into service.

of Financial Instruments

Company measures the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques

used to measure fair value into three broad levels:

1 inputs to the valuation methodology are quoted prices for identical assets or liabilities

in active markets.

2 inputs to the valuation methodology include quoted prices for similar assets and liabilities

in active markets, and inputs that are observable for the asset or liability, either directly

Fair Value of Financial Instruments

The Company measures the fair value of

financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into

three broad levels:

● Level 1 inputs to the valuation methodology are quoted prices

for identical assets or liabilities in active markets.

● Level 2 inputs to the valuation methodology include quoted

prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly

or indirectly, for substantially the full term of the financial instrument.

3 inputs to the valuation methodology are unobservable and significant to the fair value

to their short-term nature, the carrying values of cash equivalents, accounts payable and accrued expenses, approximate fair value.

Company’s right-of-use assets consist of leased assets recognized in accordance with Financial Accounting Standards Board (FASB)

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

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.

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.

Company periodically issues stock options, restricted stock units and stock awards to employees and non-employees.

We account for such

awards based on Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 718, whereby the value of the award

is measured on the date of grant and recognized as compensation expense on a straight-line basis over the requisite service period, usually

the vesting period.

With respect to performance-based awards, the Company assesses the probability of achieving the requisite performance

criteria before recognizing compensation expense.

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.

● Level 3 inputs to the valuation methodology are unobservable

and significant to the fair value measurement.

Due to their short-term nature, the 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 Financial Accounting Standards Board (“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.

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 periodically issues stock options, restricted stock units

and stock awards to employees and non-employees.

We account for such awards based on Financial Accounting Standards Board Accounting Standards

Codification (“ASC”) Topic 718, whereby the value of the award is measured on the date of grant and recognized as compensation

expense on a straight-line basis over the requisite service period, usually the vesting period.

With respect to performance-based awards,

the Company assesses the probability of achieving the requisite performance criteria before recognizing compensation expense.

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.

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

for purposes of the WASO calculation.

Diluted net loss per share gives effect to all potentially dilutive common shares outstanding during

Potentially dilutive common shares consist of incremental shares of common stock issuable upon the exercise of stock options

and exercise of warrants.

to April 1, 2023, the Company excluded pre-funded warrants from the computation of WASO.

The pre-funded warrants are now included in

the computation of WASO.

Prior period amounts have been conformed to the current-period presentation.

The impact of the change reduced

the previously reported loss per share by $ 0.13 and increased WASO by approximately 1,223,000 shares for the year ended March 31, 2023.

The reclassification had no impact on the Company’s net loss or cash flows for the year ended March 31, 2023.

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):

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.

In addition, the Company

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

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.

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):

Options to purchase common stock

2 unchanged sentences

Reclassifications

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.

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

Company accounts for uncertain tax positions in accordance with FASB ASC Topic 740, Income Taxes .

When tax returns are filed,

it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty

about the merits of the position taken or the amount of the position that would be ultimately sustained.

The benefit of a tax position

is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes

it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes,

Tax positions taken are not offset or aggregated with other positions.

Tax positions that meet the more-likely-than-not recognition

threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with

the applicable taxing authority.

The portion of the benefits associated with tax positions taken that exceeds the amount measured as

described above is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with

any associated interest and penalties that would be payable to the taxing authorities upon examination.

Interest associated with unrecognized

tax benefits is classified as interest expense and penalties are classified in general and administrative expenses in the consolidated

statements of operations.

Company files U.S.

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

The Company’s historical

net operating loss and credit carryforwards may be adjusted by the federal and state tax authorities until the statute closes on the

year in which such tax attributes are utilized.

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 years ended March 31, 2024 and 2023, the Company’s

comprehensive loss was the same as its net loss.

Issued Accounting Pronouncements

November 2023, the FASB issued ASU No.

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

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 accounts for uncertain tax

positions in accordance with FASB ASC Topic 740, Income Taxes .

When tax returns are filed, it is likely that some positions taken

would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position

taken or the amount of the position that would be ultimately sustained.

The benefit of a tax position is recognized in the consolidated

financial statements in the period during which, based on all available evidence, management believes it is more likely than not that

the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.

Tax positions taken

are not offset or aggregated with other positions.

Tax positions that meet the more-likely-than-not recognition threshold are measured

as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing

The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected

as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties

that would be payable to the taxing authorities upon examination.

Interest associated with unrecognized tax benefits is classified as

interest expense and penalties are classified in general and administrative expenses in the consolidated statements of operations.

The Company files U.S.

federal and state

income tax returns in jurisdictions with varying statutes of limitations.

The Company’s historical net operating loss and credit

carryforwards may be adjusted by the federal and state tax authorities until the statute closes on the year in which such tax attributes

are utilized.

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 years ended March 31, 2025 and 2024, the Company’s comprehensive loss

was the same as its net loss.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU

2023-07, 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.

December 2023, the FASB issued ASU No.

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 adoption of this standard did not have a material impact on the Company’s consolidated

financial statements, but it has resulted in additional disclosures within the footnotes to the consolidated financial statements (see

In December 2023, the FASB issued ASU

2023-09, 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.

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.

2 – CONSOLIDATED BALANCE SHEET DETAIL

The update will be

effective for annual periods beginning after December 15, 2024.

The Company does not expect that the adoption of this ASU will have a

material impact on the presentation of its consolidated financial statements.

In November 2024, the FASB issued ASU

2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

The new standard requires disclosures about specific types of expenses included in the

expense captions presented on the face of the income statement as well as disclosures about selling expenses.

The standard is effective

for the Company for annual periods beginning April 1, 2027 and interim periods beginning April 1, 2028, with early adoption permitted.

The standard may be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively

to any or all prior periods presented in the financial statements.

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

presentation of its consolidated financial statements.

NOTE 2 – CONSOLIDATED BALANCE

(in thousands)

15 unchanged sentences

Accrued wages

Bernardo Drive, San Diego, CA

39 -month lease term expired on June 30, 2023 , and, subsequent to expiration, the landlord refunded the Company’s security deposit.

Road, San Diego, CA

48 -month lease term commenced February 1, 2023, and the lease provides for an initial base monthly rent of $ 36,000 with annual rent increases

of approximately 4 %.

In addition to the minimum lease payments, the Company is responsible for property taxes, insurance and other certain

operating costs.

A discount rate of 8 %, which approximated the Company’s incremental borrowing rate, was used to measure the lease

asset and liability.

The Company obtained a right-of-use asset of approximately $ 1,560,000 in exchange for its obligations under the

operating lease.

Future minimum

payments under the facility operating lease, as of March 31, 2024, are listed in the table below (in thousands).

ending March 31,

Thornmint Road, San Diego, CA

The 48 -month lease term commenced February

1, 2023, and the lease provides for an initial base monthly rent of $ 36,000 with annual rent increases of approximately 4 %.

to the minimum lease payments, the Company is responsible for property taxes, insurance and other certain operating costs.

rate of 8 %, which approximated the Company’s incremental borrowing rate, was used to measure the lease asset and liability.

Company obtained a right-of-use asset of approximately $ 1,560,000 in exchange for its obligations under the operating lease.

Future minimum payments under the facility operating lease,

as of March 31, 2025, are listed in the table below (in thousands).

Fiscal year ending March 31,

Total future lease payments

1 unchanged sentence

Present value of lease liabilities

paid for amounts included in the measurement of lease liabilities was approximately $ 476,000 and $ 230,000 for the years ended March 31,

2024 and 2023, respectively.

Rent expense was approximately $ 449,000 and $ 237,000 for the years ended March 31, 2024 and 2023, respectively.

4 – STOCKHOLDERS’ EQUITY

in Authorized Shares

February 2024, the Company’s stockholders approved an amendment to the Company’s Articles of Incorporation (the Amendment)

to increase the number of authorized shares of common stock from 50,000,000 shares, to 100,000,000 shares.

The Amendment was filed with

the state of Nevada and became effective on February 15, 2024.

2024 Public Offering

On February 15, 2024, the Company entered into

an underwriting agreement (the 2024 Underwriting Agreement) with Titan Partners Group LLC, a division of American Capital Partners, LLC

(Titan), with respect to the issuance and sale 9,090,910 shares of its common stock at a price of $ 1.10 per share in a firm commitment

underwritten offering (the 2024 Offering) by the Company.

Upon the closing of the 2024 Offering, the Company received aggregate proceeds

of approximately $ 10,000,000 , before deducting underwiring discounts and commissions and other offering expenses.

Cash paid for amounts included in the

measurement of lease liabilities was approximately $ 452,000 and $ 476,000 for the years ended March 31, 2025 and 2024, respectively.

expense was approximately $ 449,000 for each of the years ended March 31, 2025 and 2024.

NOTE 4 – STOCKHOLDERS’

Increase in Authorized Shares

In February 2024, the Company’s stockholders approved an amendment

to the Company’s Articles of Incorporation (the “Amendment”) to increase the number of authorized shares of common stock

from 50,000,000 shares, to 100,000,000 shares.

The Amendment was filed with the state of Nevada and became effective on February 15, 2024.

In November 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 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.

During the twelve

months ended March 31, 2025 and 2024, under the ATM Agreement, the Company sold 920,199 and 153,879 shares of common stock, respectively,

for gross proceeds of $ 2,224,440 and $ 286,120 .

During the twelve months ended March 31, 2025 and 2024, the Company incurred commissions

and legal fees of $ 110,440 and $ 127,196 , respectively.

March 2025 Private Placement

On March 20, 2025, the Company entered into securities purchase agreements

(the “Purchase Agreements”) with investors (the Investors) for the private placement (the “Private Placement”)

of 6,247,656 units (each a Unit), with each Unit consisting of (A) two shares of the Company’s common stock and (B) one

warrant (a “Warrant”) to purchase one share of common stock, at an offering price of $ 1.92 per Unit.

Certain affiliates, officers

and directors of the Company purchased a total of 374,478 Units in the Private Placement.

The common stock and the Warrants included in

the Units and the common stock underlying the Warrants are collectively referred to herein as the “Securities.”

The Private Placement closed on March 26, 2025 with aggregate gross proceeds totaling approximately $ 12 million, before deducting placement

agent fees and other expenses.

Concurrently with the Private Placement, the Company entered into a subscription agreement with a foreign

investor pursuant to which the Company completed a direct private placement of 260,417 Units for additional aggregate gross proceeds of

approximately $ 0.5 million on the same terms as the Private Placement.

The Warrants have an exercise price of $ 1.12 per share.

is exercisable immediately and will expire four years from the date of issuance.

The exercise price

and number of shares of common stock issuable upon exercise of the warrants is subject to appropriate adjustment in the event of stock

dividends, stock splits, reorganizations or similar events affecting the common stock and the exercise price.

Subject to limited exceptions,

an Investor may not exercise any portion of its warrants to the extent that the Investor would beneficially own more than 4.99 % (or, at

the election of the holder prior to the date of issuance, 9.99 %) of the Company’s outstanding common stock after exercise.

In the event of certain fundamental transactions, the holder of the Warrants will have the right to receive the Black Scholes Value

(as defined in the Warrants) of its Warrants calculated pursuant to a formula set forth in the Warrants, payable in cash.

Newbridge Securities Corporation (the “Placement Agent”)

acted as the Company’s placement agent in connection with the Private Placement, pursuant to that certain engagement letter, dated

as of February 10, 2025, between the Company and the Placement Agent, pursuant to which the Company paid the Placement Agent (i) a cash

fee equal to 7.25 % of the aggregate gross proceeds from the sale of the Securities in the Private Placement and (ii) reimbursement

for certain of out-of-pocket expenses, including for reasonable expenses and legal fees of $ 50,000 .

In addition, the Company issued to

the Placement Agent or its designees warrants (the “Placement Agent Warrants”) to purchase up to an aggregate of 874,672 shares

of common stock ( 7.0 % of the common stock sold in the Private Placement).

The Placement Agent Warrants have substantially the same terms

as the Warrants except the Placement Agent Warrants will have an exercise price equal to $ 1.40 per share ( 125 % of the exercise price of

the Warrants).

The Placement Agent Warrants will be exercisable six months from the date of issuance and expire on the fourth anniversary

of the issuance date.

November 2024 Public Offering

In November 2024, the Company entered into an

underwriting agreement (the “Agreement”) with Titan Partners Group LLC, a division of American Capital Partners, LLC (“Titan”),

relating to a firm commitment underwritten offering (the “November 2024 Offering”) of 5,450,573 shares (the “Shares”)

of common stock of the Company, at a public offering price of $ 1.50 per share.

The November 2024 Offering closed on November 25, 2024

(the “Closing Date”), resulting in gross proceeds to the Company of approximately $ 8.2 million, before deducting underwriting

discounts, commissions and offering expenses.

Pursuant to the Agreement, as partial compensation

for its services, the Company issued to Titan on the Closing Date, warrants (the “Underwriter Warrants”) to purchase an aggregate

of 381,540 shares of common stock.

The Underwriter Warrants are exercisable, in whole or in part, commencing on May 21, 2025 and expire

on November 25, 2029 , at an exercise price per share of $ 1.875 .

February 2024 Public Offering

On February 15, 2024, the Company entered into an underwriting agreement

(the “2024 Underwriting Agreement”) with Titan, with respect to the issuance and sale 9,090,910 shares of its common stock

at a price of $ 1.10 per share in a firm commitment underwritten offering (the “February 2024 Offering”) by the Company.

the closing of the February 2024 Offering, the Company received aggregate proceeds of approximately $ 10,000,000 , before deducting underwiring

discounts and commissions and other offering expenses.

Pursuant to the 2024 Underwriting Agreement,

the Company granted Titan a 30-day option to purchase up to an additional 1,321,989 shares of common stock to cover over allotments,

On March 13, 2024, Titan exercised this option in full and purchased the additional securities for aggregate proceeds to the

Company of approximately $ 1,454,000 before deducting underwriting discounts and commissions and other offering expenses.

was paid a cash fee of 7.0 % of the aggregate gross proceeds of the 2024 Offering (including the over-allotment option) and reimbursed

certain out-of-pocket expenses of approximately $ 75,000 .

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.

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.

In January 2024, under the ATM Agreement, the Company sold 153,879

shares of common stock for net proceeds of approximately $ 278,000 .

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.

Upon the closing of the 2023

Offering, the Company sold 8,816,900 shares of its common stock and warrants to purchase 4,408,450 shares of its common stock for aggregate

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

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,

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

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

this option in full 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.

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.

Subsequently, the

UW Warrants were reissued to the Underwriter and its agents for a total of 604,623 shares.

The UW warrants were exercisable six months

from the respective issuance dates and have a four-year term and a per share exercise price of $ 1.32 .

May 2, 2022, the Company entered into a securities purchase agreement (the Purchase Agreement) with an institutional investor, pursuant

to which the Company sold, in a registered direct offering, which closed on May 5, 2022, an aggregate of 449,438 shares (the Shares)

of the Company’s common stock, par value $ 0.001 per share, at a purchase price per Share of $ 4.45 and pre-funded warrants (the

Pre-Funded Warrants) to purchase an aggregate of approximately 1,348,000 shares of common stock at a purchase price per Pre-Funded Warrant

The Pre-Funded Warrants will be exercisable immediately on the date of issuance at an exercise price of $ 0.01 per share and

may be exercised at any time until all of the Pre-Funded Warrants are exercised in full.

In a concurrent private placement under the

Purchase Agreement, the Company issued to the Investor warrants (the Private Placement Warrants) to purchase an aggregate of 1,438,202

shares of common stock at an exercise price of $ 6.60 per share.

The Private Placement Warrants were exercisable beginning on the six-month

anniversary of the date of issuance (the Initial Exercise Date) and will expire on the five-year anniversary of the Initial Exercise

of Common Stock and Warrants

the years ended March 31, 2024 and 2023, the Company issued 1,429 and 11,264 shares of common stock to service providers, respectively,

with fair values of approximately $ 1,400 and $ 22,000 , respectively.

of March 31, 2024, the Company had the following warrants outstanding (share amounts in thousands):

Type Number of Shares Exercise Prices Expiration

the Company granted Titan a 30 -day option to purchase up to an additional 1,321,989 shares of common stock to cover over allotments, if

On March 13, 2024, Titan exercised this option in full and purchased the additional securities for aggregate proceeds to the Company

of approximately $ 1,454,000 before deducting underwriting discounts and commissions and other offering expenses.

Titan was paid a cash fee of 7.0 % of the

aggregate gross proceeds of the February 2024 Offering (including the over-allotment option) and reimbursed certain out-of-pocket expenses

of approximately $ 75,000 .

May 2023 Public Offering

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.

Upon the closing of the 2023 Offering, the Company sold 8,816,900 shares of its common stock

and warrants to purchase 4,408,450 shares of its common stock for aggregate proceeds of approximately $ 9,390,000 , before deducting underwriting

discounts and commissions and other offering expenses.

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, have a per share exercise price of $ 1.22 and expire

five years from the date of issuance.

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 this option in full 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.

Subsequently, the UW Warrants were reissued to the Underwriter and its agents

for a total of 604,623 shares.

The UW warrants were exercisable six months from the respective issuance dates and have a four-year term

and a per share exercise price of $ 1.32 .

Issuances of Common Stock and Warrants

During the years ended March 31, 2025 and 2024, the Company issued

30 ,000 and 1,429 shares of common stock to service providers, respectively, with fair values of approximately $ 50,500 and $ 1,400 , respectively.

As of March 31, 2025, the Company had the following warrants

outstanding (share amounts in thousands):

Balance as of March 31, 2024 12,521

Issuance of common stock warrants 381 $ 1.875 November 2027

Issuance of common stock warrants 6,508 $ 1.12 March 2029

Issuance of common stock warrants 875 $ 1.40 March 2029

Common stock warrants exercised ( 817 ) $ 0.01 —

Common stock warrants exercised ( 51 ) $ 1.32 May 2027

Common stock warrants exercised ( 856 ) $ 1.22 May 2028

Balance as of March 31, 2025 18,561

As of March 31, 2024, the Company had the following warrants

outstanding (share amounts in thousands):

Balance as of March 31, 2023 7,565

Issuance of common stock warrants 605 $ 1.32 May 2027

3 unchanged sentences

Balance as of March 31, 2024 12,521

March 31, 2024, the Company had a receivable from its transfer agent for approximately $ 142,000 for the proceeds from warrants exercised

prior to March 31, 2024.

The receivable was recorded in the prepaid and other line in the consolidated balance sheet at March 31, 2024.

of March 31, 2023, the Company had the following warrants outstanding (share amounts in thousands):

Type Number of Shares Exercise Prices Expiration

Common stock 1,348 $ 0.01 —

Common stock 768 $ 6.00 January - February 2027

Common stock 4,011 $ 6.60 February 2027

Common stock 1,438 $ 6.60 November 2027

– STOCK-BASED COMPENSATION

2017 Equity Incentive Plan

October 2017, the Company’s Board approved the 2017 Equity Incentive Plan (the Plan) with 1,000,000 shares of common stock reserved

for issuance.

In January 2020 and August 2021, the Board approved increases in the number of shares reserved for issuance under the Plan

by 333,334 and 1,333,334 shares, respectively.

In January 2023 and February 2024, the Company’s stockholders approved increases

in the number of shares reserved for issuance under the Plan by an additional 2,000,000 and 3,000,000 shares, respectively.

Plan, eligible employees, directors and consultants may be granted a broad range of awards, including stock options, stock appreciation

rights, restricted stock, performance-based awards and restricted stock units (RSUs).

The Plan is administered by the Board or, in the

alternative, a committee designated by the Board.

At March 31, 2024, the Company had a receivable

from its transfer agent for approximately $ 142,000 for the proceeds from warrants exercised prior to March 31, 2024.

The receivable was

recorded in the prepaid and other line in the consolidated balance sheet at March 31, 2024 and collected during the three months ended

June 30, 2024.

NOTE 5 – STOCK-BASED COMPENSATION

Amended 2017 Equity

Incentive Plan

In October 2017, the Company’s Board approved the 2017 Equity

Incentive Plan (the “Plan”) with 1,000,000 shares of common stock reserved for issuance.

In January 2020 and August 2021,

the Board approved increases in the number of shares reserved for issuance under the Plan by 333,334 and 1,333,334 shares, respectively.

In January 2023, February 2024 and February 2025, the Company’s stockholders approved increases in the number of shares reserved

for issuance under the Plan by an additional 2,000,000 , 3,000,000 and 3,000,000 shares, respectively.

Under the Plan, eligible employees,

directors and consultants may be granted a broad range of awards, including stock options, stock appreciation rights, restricted stock,

performance-based awards and restricted stock units (“RSUs”).

The Plan is administered by the Board or, in the alternative,

a committee designated by the Board.

Compensation Expense

options granted by the Company generally vest over 36 months and have a 10-year term.

As of March 31, 2024, the unamortized compensation

cost related to stock options was approximately $ 2,035,000 and is expected to be recognized as expense over a weighted-average period

of approximately 1.3 years.

October 2023, under its Two-Part FDA Submission and Clearance Milestone Bonus Program (the Bonus Program), the Company granted stock

options for 909,533 shares, which are subject to vesting based upon the achievement of certain performance milestones by the

Company and continued service by the optionees.

In January 2024, options to purchase 625,326 shares (net of forfeitures), which were

granted under part one of the Bonus Program, vested upon the Company’s submission to the FDA.

As of March 31, 2024, the Company

had not commenced expense recognition of 242,307 (net of forfeitures) of the options, which were granted under part two of

the Bonus Program, based on its assessment of the probability of achievement of the applicable performance requirements.

the year ended March 31, 2024, the Company granted options to purchase 127,500 shares that vested immediately when granted.

weighted-average grant date fair values of stock options granted during the years ended March 31, 2024 and 2023 was $ 0.99 and $ 2.85 ,

respectively.

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

Ended March 31,

Stock options granted by the Company generally

vest over 36 months and have a 10 -year term.

As of March 31, 2025, the unamortized compensation cost related to stock options was approximately

$ 1,369,000 and is expected to be recognized as expense over a weighted-average period of approximately 1.9 years.

In October 2023, under its Two-Part FDA Submission and Clearance Milestone

Bonus Program (the “Bonus Program”), the Company granted stock options for 909,533 shares, which are subject to vesting based

upon the achievement of certain performance milestones by the Company and continued service by the optionees.

In January 2024, options

to purchase 625,326 shares (net of forfeitures), which were granted under part one of the Bonus Program, vested upon the Company’s

submission to the FDA.

In August 2024, options to purchase 242,307 shares (net of forfeitures), which were granted under part two of the

Bonus Program, were canceled, as the Company did not receive clearance from the FDA for its MODD1 product by August 1, 2024.

2024, the Company granted new options to purchase 339,298 shares (the “Clearance Options”), which were subject to vesting

based upon the Company’s receipt of clearance from the FDA for its MODD1 product by December 31, 2024 and continued service by the

The Clearance Options vested in full in September 2024 upon the Company’s receipt of clearance from the FDA for its MODD1

During the year ended March 31, 2025,

the Company granted options to purchase 157,500 shares that vested immediately when granted.

The weighted-average grant date fair values

of stock options granted during the years ended March 31, 2025 and 2024 was $ 1.31 and $ 0.99 , respectively.

The following assumptions were

used in the fair-value method calculations:

Year Ended March 31,

Risk-free interest rates

3 unchanged sentences

Dividend yield

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 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 expected volatility is based on the historical volatility of the Company’s stock price.

The risk-free interest rate was derived from the Daily Treasury Yield Curve Rates, as published by the U.S.

Department of the Treasury

as of the grant date for terms equal to the expected terms of the options.

A dividend yield of zero was applied because the Company has

never paid dividends and has no intention to pay dividends in the foreseeable future.

The risk-free interest rate was derived

from the Daily Treasury Yield Curve Rates, as published by the U.S.

Department of the Treasury as of the grant date for terms equal to

the expected terms of the options.

A dividend yield of zero was applied because the Company has never paid dividends and has no intention

to pay dividends in the foreseeable future.

The Company accounts for forfeitures as they occur.

following table summarizes the activity in the shares available for grant under the Plan during the year ended March 31, 2024:

The following table summarizes the activity in

the shares available for grant under the Plan during the years ended March 31, 2025 and 2024:

Options Outstanding

Balance at March 31, 2023

Additional shares authorized

under the Plan

Additional shares authorized under the Plan

Options granted

( 1,448,533 )

Options cancelled and

returned to the Plan

Options cancelled and returned to the Plan

Balance at March 31, 2024

Additional shares authorized

under the Plan

Additional shares authorized under the Plan

Options granted

( 1,579,798 )

Options cancelled and

returned to the Plan

Options exercised

Options cancelled and returned to the Plan

Balance at March 31, 2025

stock options were exercised during the years ended March 31, 2024 and 2023.

During the years ended March 31, 2024 and 2023, the Company

issued 25,390 and 26,789 shares, respectively, to its non-employee directors under the Company’s outside director compensation

For the years ended March 31, 2024 and 2023, the Company recorded stock-based compensation expense for these share awards of approximately

$ 37,000 and $ 86,000 , respectively.

summary of RSU activity under the Plan is presented below.

During the years ended March 31, 2025

and 2024, the Company issued 15,500 and 25,390 shares, respectively, to its non-employee directors under the Company’s outside director

compensation plan.

For the years ended March 31, 2025 and 2024, the Company recorded stock-based compensation expense for these share

awards of approximately $ 24,000 and $ 37,000 , respectively.

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

Balance at March 31, 2023

Balance at March 31, 2024

total intrinsic value of RSUs outstanding as of March 31, 2024 was approximately $ 347,000 .

The unamortized compensation cost at March

31, 2024 was approximately $ 171,000 related to RSUs and is expected to be recognized as expense over a period of approximately 2.25 years.

following table summarizes the range of outstanding and exercisable options as of March 31, 2024:

Balance at March 31, 2025

The total intrinsic value of RSUs outstanding

as of March 31, 2025 was approximately $ 113,543 .

The unamortized compensation cost at March 31, 2025 was approximately $ 96,000 related

to RSUs and is expected to be recognized as expense over a period of approximately 1.25 years.

The following table summarizes the range

of outstanding and exercisable options as of March 31, 2025:

Options Outstanding Options Exercisable

7 unchanged sentences

$8.61 - $17.70 499,129 6.23 10.56 499,129 10.56 —

intrinsic value per share is calculated as the excess of the closing price of the common stock on the Company’s principal trading

market over the exercise price of the option at March 31, 2024.

– INCOME TAXES

tax provision consisted of the following:

$0.87 - $17.70 4,917,090 7.57 3.17 3,600,761 3.76 13,279

The intrinsic value per share is calculated

as the excess of the closing price of the common stock on the Company’s principal trading market over the exercise price of the

option at March 31, 2025.

NOTE 6 – INCOME TAXES

The income tax provision consisted of the following:

Year Ended March 31,

(in thousands)

Current portion:

Deferred portion:

Change in valuation allowance

Provision for income taxes

At March 31, 2024, the Company had net operating

loss carryforwards (NOLs) of approximately $ 35,000,000 for federal income tax purposes and $ 50,400,000 for state income tax purposes.

These NOLs are available to reduce future taxable income and will expire at various times from 2037 through 2045, except federal NOLs

from fiscal 2018 and later, which will never expire.

The Company also had federal research and development

tax credit carryforwards of approximately $ 2,100,000 , which will begin expiring at various times from 2038 through 2044, and state research

and development credits of approximately $ 500,000 , which do not have an expiration date.

reconciliation of income taxes provided at the federal statutory rate to the actual income tax provision is as follows:

Current provision:

Deferred provision:

Total income tax provision

A reconciliation of income taxes provided at the

federal statutory rate to the actual income tax provision is as follows:

Year Ended March 31,

4 unchanged sentences

Effective income tax rate

losses before income tax provision for the years ended March 31, 2024 and 2023 were solely attributable to US operations.

components of the Company’s deferred tax assets and liabilities were (in thousands):

The losses before income tax provision for the years ended March 31,

2025 and 2024 were solely attributable to US operations.

Significant components of the Company’s

deferred tax assets and liabilities were (in thousands):

Net operating loss carryforwards

2 unchanged sentences

Research and development tax credits

Lease liability

Reserves, accruals and other

Total gross deferred tax assets

Right-of-use asset

Property and equipment

Total deferred tax assets

Section 179 assets

Reserves, accruals and other

2 unchanged sentences

Deferred tax assets, net

Deferred income taxes reflect the net tax effects of temporary differences

between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

on the available information and other factors, management believes it is more likely than not that the net deferred tax assets at March

2 unchanged sentences

tax assets at March 31, 2025 and 2024.

has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s consolidated

financial statements at March 31, 2024 and 2023.

The Company does not expect any significant changes in its unrecognized tax benefits

within twelve months of the reporting date.

– ROYALTY AGREEMENT

July 2017, the Company entered into a royalty agreement with its founder, then-chief executive officer, president and major shareholder

(the Founder).

Pursuant to the agreement, the Founder assigned and transferred all of his rights in the intellectual property of Quasuras

in return for future royalty payments on the Company’s product.

The Company is obligated to make royalty payments under the agreement

to the Founder on any sales of the royalty product sold or otherwise commercialized by the Company equal to (a) $0.75 on each sale of

a royalty product or (b) 5% of the gross sale price of the royalty product, whichever is less.

The royalty payments will cease, and the

agreement will terminate, at such time as the total sum of royalty payments actually paid to the Founder, pursuant to the agreement,

reaches $10,000,000.

The Company has the option to terminate the agreement at any time upon payment, to the Founder, of the difference

between total royalty payments actually made to him to date and the sum of $10,000,000.

All payments of the royalties, if due, for the

preceding quarter, will be made by the Company to the Founder within 30 days after the end of each calendar quarter.

– COMMITMENTS AND CONTINGENCIES

Claims and Assessments

the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course

The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable

The net change in the total valuation allowance for the year ended March 31, 2025 and 2024 was

an increase of approximately $ 3,828,000 and $ 4,387,000 respectively.

At March 31, 2025, the Company had net operating loss carryforwards

(“NOLs”) of approximately $ 45,556,000 for federal income tax purposes and $ 68,499,000 for state income tax purposes.

These NOLs are available

to reduce future taxable income and will expire at various times from 2037 through 2045, except federal NOLs from fiscal 2018 and later,

which will never expire.

The Company also had federal research and development tax credit carryforwards

of approximately $ 2,600,000 , which will begin expiring at various times from 2038 through 2045, and state research and development credits

of approximately $ 1,074,000 , which do not have an expiration date.

Internal Revenue Code Sections 382 and 383 place

a limitation on the amount of net operating loss and income tax credit carryforwards that can offset taxable income after a change in

control (generally a greater than 50 % change in ownership) of a loss corporation.

Most states have similar rules.

Due to these “change

in ownership” provisions, utilization of the net operating loss carryforwards may be subject to an annual limitation regarding their

utilization against taxable income.

The Company’s unrecognized tax benefits were as follows (in thousands):

Year Ended March 31,

Beginning balance

Additions based on tax positions related to the current year

Additions for tax positions of prior years

Ending balance

There are no unrecognized tax benefits that, if recognized, would impact

the Company's effective tax rate.

The Company's policy is to include interest and penalties related to unrecognized tax benefits within

the Company's provision for income taxes.

As of March 31, 2025, the Company had no accrual for interest and penalties related to unrecognized

tax benefits.

The Company does not expect any unrecognized tax benefits to be recognized within the next 12 months.

The Company files U.S.

federal and various state income tax returns.

The Company is not currently under audit by any taxing authorities.

The federal and state income tax returns are generally subject to

examination for tax years 2022 through 2024.

The statute of limitations for U.S.

net operating losses and research and development tax

credit carryovers begin to toll in the year they are used;

therefore, all carryovers are subject to examination.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Litigations, Claims and Assessments

In the normal course of business, the

Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business.

The Company records legal

costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements.

Indemnification

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 years ended March 31, 2024 and 2023 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.

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

Company’s primary purchase obligations include purchase orders for machinery and equipment.

At March 31, 2024, the Company had

outstanding purchase orders for machinery and equipment and related expenditures of approximately $ 1,100,000 .

In December 2023, the Company signed a device integration agreement

with a provider of connected-care and remote monitoring diabetes technology solutions.

As of March 31, 2024, the Company had a remaining

obligation under the device integration agreement of approximately $ 400,000 over three years for technology license fees.

– RELATED PARTY TRANSACTIONS

Management Company, LLC (MMC), as the general partner of Manchester Explorer, LP (Explorer), combined with the holdings of its affiliates,

JEB Partners LP, James Besser and Morgan Frank, owned approximately 11 % of the Company’s outstanding shares of common stock as

of March 31, 2024.

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 years ended

March 31, 2025 and 2024 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.

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

Purchase Obligations

The Company’s primary purchase obligations

include purchase orders for machinery and equipment.

At March 31, 2025, the Company had outstanding purchase orders for machinery and

equipment and related expenditures of approximately $ 1,500,000 .

In December 2023, the Company signed a

device integration agreement with a provider of connected-care and remote monitoring diabetes technology solutions.

As of March 31, 2025,

the Company had a remaining obligation under the device integration agreement of approximately $ 400,000 over three years for technology

license fees.

NOTE 8 – BUSINESS SEGMENTS, CONCENTRATIONS OF CREDIT

RISKS AND SIGNIFICANT CUSTOMER

Segment Information

The Company determines its reporting units in accordance with ASC No.

280, Segment Reporting (“ASC 280”), as amended by ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which the Company adopted effective March 31, 2025.

Management evaluates a reporting

unit by first identifying its operating segments under ASC 280.

The Company then evaluates each operating segment to determine if it includes

one or more components that constitute a business.

If there are components within an operating segment that meet the definition of a business,

the Company evaluates those components to determine if they must be aggregated into one or more reporting units.

If applicable, when determining

if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if

so, the operating segments are aggregated.

The Company’s chief executive officer is the chief operating

decision maker (the “CODM”), and the CODM evaluates financial performance and makes operating decisions about allocating resources

based on financial data presented on a consolidated basis, including consolidated net income (loss).

Because the CODM evaluates financial

performance on a consolidated basis, the Company operates and manages its business as one reportable and operating segment as

a medical device company focused on the design, development and eventual commercialization of innovative insulin pumps using modernized

The measure of segment assets is reported on the balance sheet as total consolidated assets.

The Company’s reporting

segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments.

Significant segment expenses include research

and development expenditures, salaries and benefits, and stock-based compensation.

Operating expenses include all remaining costs necessary

to operate the Company’s business, which primarily include facilities, external professional services and other administrative expenses.

following table presents the significant segment expenses and other segment items regularly reviewed by the CODM:

(in thousands)

Research and development

Stock-based compensation

Other operating expenses

Other income and expense

Concentrations

Financial instruments that potentially subject the Company to concentration

of credit risk consist primarily of cash held in demand deposit accounts.

The Company maintains its cash at high credit quality financial

institutions within the United States, which are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to limits

of approximately $ 250,000 .

No reserve has been made in the financial statements for any possible loss due to financial institution failure.

The following table lists significant

vendors that represented more than 10 % of the Company’s total accounts payable balance at each respective balance sheet date:

* Represents less than 10 %

NOTE 9 – RELATED PARTY TRANSACTIONS

Management Company, LLC (“MMC”), as the general partner of Manchester Explorer, L.P.

(“Explorer”), combined with

the holdings of its affiliates, JEB Partners LP, James Besser and Morgan Frank, owned approximately 9 % of the Company’s outstanding

shares of common stock at March 31, 2025.

Besser is the Company’s chief executive officer and a managing member of MMC.

Frank is one of our directors

and serves as the portfolio manager of Explorer and as a managing member of MMC.

February 2024, Explorer purchased 900,000 shares of common stock in the 2024 Offering at the public offering price per share of $ 1.10

for aggregate gross proceeds to the Company of $ 990,000 .

daughter of the Founder is an employee of the Company.

During the years ended March 31, 2024 and 2023, the Company paid her approximately

$ 137,000 and $ 201,000 , respectively, which includes the aggregate grant date fair values, as determined pursuant to FASB ASC Topic 718,

of stock options granted to her during each year.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Frank is a member of the Company’s Board, and he serves as the portfolio manager of Explorer and as a managing member of MMC.

purchased 900,000 shares in the February 2024 Offering for aggregate gross proceeds to the Company of $ 990,000 .

Explorer purchased 166,666

shares in the November 2024 Offering for aggregate gross proceeds to the Company of $ 250,000 .

In March 2025, Explorer purchased 260,416

units in the 2025 Placement for aggregate gross proceeds to the Company of $ 500,000 .

In addition, Mr.

Besser purchased 78,125 units in

the 2025 Placement for aggregate gross proceeds to us of approximately $ 150,000 .

Two members of the Board purchased a total of 35,937 Units

in the 2025 Placement for gross proceeds to the Company of $ 69,000 .

In May 2023, a member of the Board purchased a total 117,300

shares of common stock in the 2023 Offering for gross proceeds to the Company of $ 249,210 .

The daughter of an executive officer is an employee of the

During the years ended March 31, 2025 and 2024, the Company paid her approximately $ 169,000 and $ 137,000 , respectively, which

includes the aggregate grant date fair values, as determined pursuant to FASB ASC Topic 718, of stock options granted during each year.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data