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What changed 10-Q

Item 1. Financial Statements

2025-08-14 compared with 2025-02-13 · 210 added, 274 removed, 325 unchanged (60% of the section changed)

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Common Stock, $ 0.001 par value, 100,000 shares authorized;

40,665 and 32,464 shares issued and outstanding

as of December 31, 2024 and March 31, 2024, respectively

55,275 and 53,706 shares issued and outstanding as of June 30, 2025 and March 31, 2025, respectively

Additional paid-in capital

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Three Months Ended

Nine Months Ended

Operating expenses

Research and development

General and administrative

Selling, general and administrative

Total operating expenses

Loss from operations

Loss before income taxes

Provision for income taxes

Net loss per share

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Shares issued for services

At-the-market sale of stock, net

Exercise of warrants

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Balance as of June 30, 2025

Shares issued for services

Exercise of warrants

At-the-market sales of stock, net

Issuances under equity incentive plan

Stock-based compensation

Balance as of September 30, 2024

Issuance of common stock in equity offering, net

Exercise of warrants

At-the-market sales of stock, net

Issuances under equity incentive plan

Stock-based compensation

Balance as of December 31, 2024

Stockholders’

Balance as of March 31, 2024

Issuance of common stock and warrants in equity offering, net

Issuances under equity incentive plan

Stock-based compensation

Balance as of June 30, 2023

Shares issued for services

Issuances under equity incentive plan

Stock-based compensation

Balance as of September 30, 2023

Exercise of warrants

Issuance of common stock under equity incentive plan

Issuances under equity incentive plan

Stock-based compensation

Balance as of December 31, 2023

Balance as of June 30, 2024

The accompanying notes are an integral part of

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(In thousands)

Nine Months Ended

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

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Stock-based compensation expense

Loss on asset disposal

Depreciation and amortization

Shares for services

Shares issued for services

Changes in assets and liabilities:

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Accounts payable and accrued expenses

Change in lease liability

Lease liabilities

Net cash used in operating activities

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CASH FLOWS FROM FINANCING ACTIVITIES

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

Proceeds from exercise of common stock purchase warrants

Proceeds from issuance of common stock, net

Proceeds from issuance of common stock and warrants, net

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

Proceeds from exercise of common stock warrants

Net cash provided by financing activities

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to Modular Medical, Inc.

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.

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

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.

The Company expects initial shipments of the MODD1 by October 2025.

The Company is currently

preparing a second 510(k) premarket notification application to the FDA for an updated version of the MODD1 product, called the Pivot,

which is a tubeless version of the product that integrates the set into a true tubeless patch.

The Company intends to replace the MODD1

product with the Pivot product, as soon as the required regulatory approval from the FDA is received.

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 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.

The Company expects that its operating expenses will continue to increase, and,

as a result, it will eventually need to generate significant revenue to achieve profitability.

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.

The Company expects that its operating expenses will continue to increase,

and, as a result, it will eventually need to generate significant revenue to achieve profitability.

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 the consolidated financial statements as of and for the year ended March 31, 2024,

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

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 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.

These condensed consolidated financial

statements do not include any adjustments that might result from this uncertainty.

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.

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 MODD1 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 product commercialization and research and development initiatives and take additional measures to reduce costs in order

to conserve its cash.

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.

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.

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.

From a financing perspective, in

June 2025, the Company sold 1,000,000 shares of common stock under the at-the-market sales program for net proceeds of $ 727,500 .

March 2025, the Company completed private placements of its common stock and warrants for net proceeds of approximately

$ 11,367,000 .

Basis of Presentation

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

operating results for the nine months ended December 31, 2024 are not necessarily indicative of the results that may be expected for the

operating results for the three months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the

year ending March 31, 2026 or for any other future period.

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Actual results could differ from those estimates.

Reportable Segment

The Company operates in one business segment and

uses one measurement of profitability for its business.

Research and Development

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expenditures as incurred.

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 a portion

of its cash in demand deposit accounts at high credit quality financial institutions within the United States, which are insured by the

Federal Deposit Insurance Corporation 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.

Risks and Uncertainties

1 unchanged sentence

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

customer requirements, limited operating history, pandemics, wars and acts of terrorism and the volatility of public markets.

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.

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

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 and Cash Equivalents

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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

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

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.

of 12 months or less at inception are not recorded on the consolidated balance sheets and are expensed on a straight-line basis over

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

The Company determines the lease term by agreement

with the lessor.

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

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

Stock-Based Compensation

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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).

Nine Months Ended

For the three months ended June 30, 2025 and 2024,

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).

Three Months Ended

Options to purchase common stock

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in equity that are excluded from net loss.

For the three and nine months ended December 31, 2024 and 2023, the Company’s comprehensive

loss was the same as its net loss.

For the three months ended June 30, 2025 and 2024, the Company’s comprehensive loss was

the same as its net loss.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU No.

Segment Reporting (Topic 280):

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

information on an annual and interim basis.

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

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

in the financial statements.

As the Company has only one operating segment, 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 December 2023, the FASB issued ASU No.

Income Taxes (Topic 740):

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

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

and foreign jurisdictions.

The update will be effective

for annual periods beginning after December 15, 2024.

The Company 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 No.

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

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(in thousands)

Prepaid and other current assets

Prepaid expenses

Other receivables

(in thousands)

Property and equipment, net

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Future minimum payments under the facility operating

lease, as of December 31, 2024, are listed in the table below (in thousands).

lease, as of June 30, 2025, are listed in the table below (in thousands).

Annual Fiscal Years

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Cash paid for amounts included in the measurement

of lease liabilities was approximately $ 337,000 and $ 365,000 for the nine months ended December 31, 2024 and 2023, respectively.

expense was approximately $ 337,000 for each of the nine month periods ended December 31, 2024 and 2023, respectively and $ 112,000 for

each of the three month periods ended December 31, 2024 and 2023.

of lease liabilities was approximately $ 117,000 and $ 112,000 for the three months ended June 30, 2025 and 2024, respectively.

was approximately $ 112,000 for each of the three-month periods ended June 30, 2025 and 2024.

NOTE 4 – STOCKHOLDERS’ EQUITY

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 (the “Underwriter”),

relating to a firm commitment underwritten offering (the “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 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

The Offering was made pursuant to an effective registration statement on Form S-3 (Registration Statement No.

333-264193) previously

filed with the Securities and Exchange Commission on April 8, 2022, subsequently amended on April 15, 2022, and declared effective by

the SEC on April 19, 2022, and a preliminary prospectus supplement relating to the Offering dated November 21, 2024.

Pursuant to the Agreement, as partial compensation

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

an aggregate of 381,540 shares of common stock, representing 7 % of the Shares issued on the Closing Date.

The Underwriter Warrants will

be exercisable, in whole or in part, commencing on May 21, 2025 and expiring on November 25, 2029 , at an exercise price per share of $ 1.875 .

Pursuant to the Agreement, each of the Company’s

directors and executive officers entered into “lock-up” agreements with the Underwriter that, subject to certain exceptions,

prohibit, without the prior written consent of the Underwriter, the sale, transfer or other disposition of securities of the Company for

a period of 60 days after the Closing Date (the “Lock-Up Period”).

In addition, pursuant to the Agreement, except with respect

to certain exempt issuances, the Company is prohibited from issuing common stock or common stock equivalents during the Lock-Up Period

and from engaging in certain variable rate transactions for a period of one year from the Closing Date.

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 three

and nine months ended December 31, 2024, under the ATM Agreement, the Company sold 95,685 and 920,199 shares of common stock, respectively,

for gross proceeds of $ 218,449 and $ 2,224,440 .

During the three and nine months ended December 31, 2024, the Company incurred commissions

and legal fees of $ 27,760 and $ 110,440 , respectively.

Common Stock Purchase

As of December

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

Shares Exercise

Price ($) Expiration

Agreement (the “ATM Agreement”) with Leerink Partners LLC (Leerink) under which the Company may offer and sell, from time

to time at its sole discretion, shares of its common stock, for aggregate gross proceeds of up to $ 6,500,000 through an “at the

market offering” program under which Leerink will act as sales agent or principal.

The ATM Agreement provides that Leerink will

be entitled to compensation for its services equal to 3.0 % of the gross proceeds from sales of any shares of common stock under the ATM

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 three months ended June 30, 2025, under the ATM Agreement, the Company sold 1,000,000 shares of common

stock for net proceeds of $ 727,500 .

30, 2025, the Company had the following common stock purchase warrants outstanding (share amounts in thousands):

Balance as of March 31, 2025

Warrants exercised ( 55 ) 1.22 May 2028

Balance as of June 30, 2024 12,466

Warrants exercised

Warrants exercised ( 649 ) 1.22 May 2028

Warrants exercised ( 39 ) 1.32 May 2027

Balance as of September 30, 2024 11,526

Issuance of warrants 382 1.875 Nov 2029

Warrants exercised ( 565 ) 0.01 —

Warrants exercised ( 152 ) 1.22 May 2028

Warrants exercised ( 12 ) 1.32 May 2027

Balance as of December 31, 2024 11,179

Balance as of June 30, 2025

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

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Common stock 531 $ 0.01 —

Common stock 6,508 1.12 March 2029

Common stock 3,565 1.22 May 2028

Common stock 484 1.32 May 2027

Common stock 875 1.40 March 2029

Common stock 381 1.875 November 2027

Common stock 768 6.00 January 2027 - February 2027

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Common stock 1,438 $ 6.60 November 2027

The outstanding

pre-funded warrants with an exercise price of $ 0.01 per share were included in the weighted average shares outstanding calculation for

each of the three and nine month periods ended December 31, 2024 and 2023.

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 was collected during the three months ended June 30, 2024.

During the nine months ended December 31, 2024

and 2023, the Company issued 30,000 and 1,429 shares of common stock with fair values of approximately $ 51,000 and $ 1,400 , respectively,

to service providers.

During the three months ended June 30, 2025,

the Company issued 10,000 shares of common stock with a fair value of approximately $ 11,000 to a service provider.

NOTE 5 – STOCK-BASED COMPENSATION

Amended 2017 Equity Incentive Plan

Amended and Restated 2017 Equity Incentive

In October 2017, the Company’s board of

directors (the “Board”) approved the 2017 Equity Incentive Plan (the “Plan”), as amended, with 1,000,000 shares

of common stock reserved for issuance.

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

for issuance 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.

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.

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

a committee designated by the Board.

directors (the “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.

Stock-Based Compensation Expense

Stock options granted by the Company generally

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

As of December 31, 2024, the unamortized compensation cost related to stock options was approximately

Stock options granted by the Company generally vest over 36 months

and have a 10 -year term.

As of June 30, 2025, the unamortized compensation cost related to stock options was approximately $ 2,369,550

and is expected to be recognized as expense over a weighted-average period of approximately 1.21 years.

In October 2023, under its Two-Part FDA Submission

and Clearance Milestone Bonus Program (the “Bonus Program”), the Company granted stock options to purchase 909,533 shares

of common stock, which were 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.

In August 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 optionees.

The Clearance Options vested in full in September 2024 upon the Company’s

receipt of clearance from the FDA for its MODD1 product.

In April 2025, under its Two-Part FDA Submission and Product Milestone

Bonus Program, the Company granted stock options for 1,941,000 shares, which are subject to vesting based upon achievement of certain

performance milestones by the Company and continued service by the optionee.

As of June 30, 2025, the Company had commenced expense recognition

for all 1,941,000 of these option shares based on its assessment of the probability of achievement of the applicable performance requirements,

including (i) submission of the 510(k) to the FDA for the Pivot pump product on or before October 31, 2025 and (ii) validation of the

manufacturing line validated for the Pivot pump product with capacity to serve 6,000 patents by March 15, 2026.

The weighted-average grant date fair value of

options granted was $ 1.42 and $ 0.98 per share for the nine months ended December 31, 2024 and 2023, respectively, and $ 1.56 and $ 0.97

for the three months ended December 31, 2024 and 2023, respectively.

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

options granted was $ 0.75 and $ 1.33 per share for the three months ended June 30, 2025 and 2024, respectively.

The following assumptions

were used in the fair-value method calculations:

Three Months Ended

Nine Months Ended

Risk-free interest rates

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118 % - 123 %

110 % - 113 %

123.4 % - 127.6 %

110 % - 123 %

82.5 % - 152.2 %

Expected life (years)

The fair values of options at the grant date were

estimated utilizing the Black-Scholes valuation model, which includes simplified methods to establish the expected life of options, as well

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

as average volatility.

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The following table summarizes the activity in

the shares available for grant under the Plan during the nine months ended December 31, 2024:

the shares available for grant under the Plan during the three months ended June 30, 2025:

Options Outstanding

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Options granted

Options exercised

( 2,291,172 )

Options cancelled and returned to the Plan

Balance at June 30, 2025

Options granted

Options cancelled and returned to the Plan

Balance at September 30, 2024

Options granted

Options cancelled and returned to the Plan

Balance at December 31, 2024

A stock option was exercised on a cashless basis

for a net issuance of 7,530 shares of common stock during the nine months ended December 31, 2024.

There were no stock options exercised

during the nine months ended December 31, 2023.

During the nine months ended December 31, 2024 and 2023, the Company awarded 11,625 and

19,015 shares, respectively, and for the three months ended December 31, 2024 and 2023, the Company awarded 3,875 and 6,375 shares, respectively,

to its non-employee directors under the Company’s outside director compensation plan.

For the nine months ended December 31, 2024

and 2023, the Company recorded stock-based compensation expense for these share awards of approximately $ 20,000 and $ 25,000 , respectively,

and for the three months ended December 31, 2024 and 2023, the Company recorded stock-based compensation expense for these share awards

of approximately $ 5,000 and $ 11,000 , respectively.

A summary of restricted stock unit (“RSU”)

activity under the Plan is presented below.

Non-vested shares at March 31, 2024

There were no stock options exercised during the

three months ended June 30, 2025.

A stock option was exercised on a cashless basis for 7,530 shares of common stock during the three months

ended June 30, 2024.

During the three months ended June 30, 2025 and 2024, the Company awarded 6,375 and 3,875 shares, respectively, to

its non-employee directors under the Company’s outside director compensation plan.

For the three months ended June 30, 2025 and

2024, the Company recorded stock-based compensation expense for these share awards of approximately $ 4,000 and $ 6,000 , respectively.

A summary of restricted stock unit (RSU) activity

under the Plan is presented below.

Balance at March 31, 2025

Non-vested shares at June 30, 2025

Non-vested shares at September 30, 2024

Non-vested shares at December 31, 2024

The total intrinsic value of RSUs outstanding

as of December 31, 2024 was approximately $ 171,000 .

The unamortized compensation cost at December 31, 2024 was approximately $ 115,000

related to RSUs and is expected to be recognized as expense over a period of approximately 1.5 years.

as of June 30, 2025 was approximately $ 63,000 .

The unamortized compensation cost at June 30, 2025 was approximately $ 77,000 related to

RSUs and is expected to be recognized as expense over a period of approximately one year .

The following table summarizes the range of outstanding

and exercisable options as of December 31, 2024:

and exercisable options as of June 30, 2025:

Options Outstanding Options Exercisable

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(in Years) Weighted

Price ($) Number

Exercisable Weighted

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$0.68 - $17.70 7,200,206 8.12 $ 2.46 3,960,808 $ 3.56 $ 2,812

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.

The common stock on the Company’s principal trading market over the exercise price of the option.

NOTE 6 – INCOME TAXES

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federal and state tax authorities.

As of December 31, 2024, the Company has not recorded any liability for unrecognized tax

benefits related to uncertain tax positions.

As of June 30, 2025, the Company has not recorded any liability for unrecognized tax benefits

related to uncertain tax positions.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

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with its officers and directors.

No amounts were reflected in the Company’s consolidated financial statements for the three and

nine months ended December 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.

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

ended June 30, 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.

2 unchanged sentences

include purchase orders for machinery and equipment.

At December 31, 2024, the Company had outstanding purchase orders for machinery and

equipment and related expenditures of approximately $ 1,061,000 .

In December 2023, the Company signed a device

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

As of December 31, 2024,

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

license and maintenance fees.

At June 30, 2025, the Company had outstanding purchase orders for machinery and equipment

and related expenditures of approximately $ 2,431,000 .

In addition, at June 30, 2025, the Company

had purchase commitments of approximately $ 900,000 over the next three years for technology related to its pump

NOTE 8 – BUSINESS SEGMENT AND CONCENTRATIONS

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.

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

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).

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 technology.

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:

less than 10%

NOTE 9 – RELATED PARTY TRANSACTIONS

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executive officers is an employee of the Company.

During the three months ended December 31, 2024 and 2023, the Company paid the family

member $ 38,191 and $ 44,095 , respectively, which includes the aggregate grant date fair values, as determined pursuant to FASB ASC Topic

718, of any stock options granted during each period.

During the nine months ended December 31, 2024 and 2023, the Company paid the family

member $ 138,510 and $ 107,849 , respectively, which includes the aggregate grant date fair values, as determined pursuant to FASB ASC Topic

718, of any stock options granted during each period.

During the three months ended June 30, 2025 and 2024, the Company paid the family member

approximately $ 52,700 and $ 57,300 , respectively, which includes the aggregate grant date fair values, as determined pursuant to FASB ASC

Topic 718, of stock options granted during each period.

A second family member of one of the

Company’s executive officers consulted with and became an employee of the Company during the three months ended June 30, 2025.

During the three months ended June 30,

2025, the Company paid the family member approximately $ 18,600 which includes the aggregate grant date fair values, as determined

pursuant to FASB ASC Topic 718, of stock options granted during the period.

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.