Modular Medical, Inc. 10-Q

Item 1. Financial Statements Modular Medical, Inc. Condensed Consolidated Balance Sheets (In thousands, except par value) September 30, 2025 March 31, (Unaudited) 2025 ASSETS CURRENT ASSETS Cash and cash equivalents $ 5,316 $ 13,095 Prepaid expenses and other 631 422 TOTAL CURRENT ASSETS 5,947 13,517 Property and equipment, net 6,459 4,453 Right of use asset, net 568 765 TOTAL ASSETS $ 12,974 $ 18,735 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 2,879 $ 338 Accrued expenses 715 504 Short-term lease liabilities 450 423 TOTAL CURRENT LIABILITIES 4,044 1,265 Long-term lease liabilities 161 393 TOTAL LIABILITIES 4,205 1,658 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 shares authorized; 61,171 and 53,706 shares issued and outstanding as of September 30, 2025 and March 31, 2025, respectively 61 54 Additional paid-in capital 107,515 101,776 Common stock issuable 438 — Accumulated deficit ( 99,245 ) ( 84,753 ) TOTAL STOCKHOLDERS’ EQUITY 8,769 17,077 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 12,974 $ 18,735 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 Modular Medical, Inc. Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share data) Three Months Ended September 30, Six Months Ended September 30, 2025 2024 2025 2024 Operating expenses Research and development $ 5,593 $ 3,702 $ 10,727 $ 6,907 Selling, general and administrative 2,236 1,294 3,906 2,309 Total operating expenses 7,829 4,996 14,633 9,216 Loss from operations ( 7,829 ) ( 4,996 ) ( 14,633 ) ( 9,216 ) Other income 41 42 143 125 Loss before income taxes ( 7,788 ) ( 4,954 ) ( 14,490 ) ( 9,091 ) Provision for income taxes 2 2 2 2 Net loss $ ( 7,790 ) $ ( 4,956 ) $ ( 14,492 ) $ ( 9,093 ) Net loss per share Basic and diluted $ ( 0.14 ) $ ( 0.14 ) $ ( 0.26 ) $ ( 0.27 ) Shares used in computing net loss per share Basic and diluted 55,576 34,338 54,936 34,114 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 Modular Medical, Inc. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) (In thousands) Additional Common Stock Issuable Shares Paid-In Accumulated Stockholders’ Shares Amount Shares Amount Capital Deficit Equity Balance as of March 31, 2025 53,706 $ 54 — $ — $ 101,776 $ ( 84,753 ) $ 17,077 Shares issued for services 10 — — — 11 — 11 At-the-market sales of stock, net 1,000 1 — — 727 — 728 Exercise of warrants 532 — — — 5 — 5 Issuances under equity incentive plan 27 — — — 4 — 4 Stock-based compensation — — — — 720 — 720 Net loss — — — — — ( 6,702 ) ( 6,702 ) Balance as of June 30, 2025 55,275 $ 55 — $ — $ 103,243 $ ( 91,455 ) $ 11,843 At-the-market sales of stock, net 9 — — 6 — 6 Issuance of common stock and warrants from warrant inducement offering 5,860 6 644 438 3,454 — 3,898 Issuances under equity incentive plan 27 — — — 4 — 4 Stock-based compensation — — — — 808 — 808 Net loss — — — — — ( 7,790 ) ( 7,790 ) Balance as of September 30, 2025 61,171 $ 61 644 $ 438 $ 107,515 $ ( 99,245 ) $ 8,769 Additional Common Stock Issuable Shares Paid-In Accumulated Stockholders’ Shares Amount Shares Amount Capital Deficit Equity Balance as of March 31, 2024 32,464 $ 32 — $ — $ 77,432 $ ( 65,929 ) $ 11,535 Shares issued for services 10 — — — 15 — 15 Exercise of warrants 55 — — — 68 — 68 Issuances under equity incentive plan 32 — — — 6 — 6 Stock-based compensation — — — — 529 — 529 Net loss — — — — — ( 4,137 ) ( 4,137 ) Balance as of June 30, 2024 32,561 $ 32 — $ — $ 78,050 $ ( 70,066 ) $ 8,016 Shares issued for services 20 — — — 35 — 35 Exercise of warrants 939 1 — — 844 — 845 At-the-market sales of stock, net 825 1 — 1,922 — 1,923 Issuances under equity incentive plan 25 — — — 9 — 9 Stock-based compensation — — — — 1,044 — 1,044 Net loss — — — — — ( 4,956 ) ( 4,956 ) Balance as of September 30, 2024 34,370 $ 34 — $ — $ 81,904 $ ( 75,022 ) $ 6,916 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Modular Medical, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) Six Months Ended September 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 14,492 ) $ ( 9,093 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 1,537 1,588 Depreciation and amortization 801 456 Shares issued for services 4 26 Changes in assets and liabilities: Prepaid expenses and other assets ( 200 ) 64 Lease right-of-use asset 197 182 Accounts payable and accrued expenses 1,576 ( 355 ) Lease liabilities ( 206 ) ( 182 ) Net cash used in operating activities ( 10,783 ) ( 7,314 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment ( 1,705 ) ( 1,003 ) Net cash used in investing activities ( 1,705 ) ( 1,003 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from at-the-market sales of common stock, net 732 1,923 Proceeds from exercise of common stock purchase warrants 5 1,055 Proceeds from warrant inducement offering, net 3,972 — Net cash provided by financing activities 4,709 2,978 Net decrease in cash and cash equivalents ( 7,779 ) ( 5,339 ) Cash and cash equivalents at beginning of period 13,095 9,232 Cash and cash equivalents at end of period $ 5,316 $ 3,893 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 MODULAR MEDICAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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. The Company is a pre-revenue, medical device company focused on the design, development and commercialization of innovative insulin delivery systems using modernized technology to increase pump adoption in the diabetes marketplace. Through the creation of innovative two-part patch pumps, 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 its initial product, 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 seeking FDA approval 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 go to market with its Pivot product, when the required regulatory approval from the FDA is received. 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. 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, 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 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. As disclosed in Note 4, in September 2025, the Company effected a warrant inducement offering for net proceeds of approximately $ 3.9 million, and, during the six months ended September 30, 2025, the Company received net proceeds of approximately $ 0.7 million from sales of shares of common stock under its at-the-market sales program. 5 Basis of Presentation The Company’s fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in these notes to the condensed consolidated financial statements refers to the fiscal year ended March 31 of the calendar year indicated (for example, fiscal 2026 refers to the fiscal year ending March 31, 2026). The condensed 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. The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and with the rules and regulations of the United States Security and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated balance sheet as of March 31, 2025 has been derived from the audited consolidated financial statements at that date. Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with these rules and regulations of the SEC. The information in this report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in its most recent annual report on Form 10-K filed with the SEC. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to summarize fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. The operating results for the six months ended September 30, 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. Use of Estimates The preparation of the accompanying condensed consolidated financial statements in conformity with 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 condensed 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 as incurred. 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. 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. 6 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. Construction-in-process includes machinery and equipment and is stated at cost and not depreciated. Depreciation on construction-in-process commences when the assets are ready for their intended use and placed into service. 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. ● 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. Leases The Company’s right-of-use assets consist of leased assets recognized in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 842, Leases , which requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and the lease liability represents the Company’s obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception are not recorded on the consolidated balance sheets and are expensed on a straight-line basis over the lease term in the consolidated statement of operations and comprehensive loss. The Company determines the lease term by agreement with the lessor. In cases where the lease does not provide an implicit interest rate, the Company uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. 7 Stock-Based Compensation The Company periodically issues stock options, restricted stock units and stock awards to employees and non-employees. The Company accounts for such awards based on FASB 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. Compensation expense is recorded based upon the value derived from the Black-Scholes model. The assumptions used in the Black-Scholes model could materially affect compensation expense recorded in future periods. Per-Share Amounts Basic net loss per share is computed by dividing loss for the period by the weighted-average number of shares of common stock outstanding (“WASO”) during the period. In addition, the Company includes the number of shares of common stock issuable, including 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. For the six months ended September 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). Six Months Ended September 30, 2025 2024 Options to purchase common stock 7,229 4,531 Unvested restricted stock units 63 146 Common stock purchase warrants 15,100 10,430 Total 22,392 15,107 Reclassifications Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations or cash flows. Comprehensive Loss Comprehensive loss represents the changes in equity of an enterprise, other than those resulting from stockholder transactions. Accordingly, comprehensive loss may include certain changes in equity that are excluded from net loss. For the three and six months ended September 30, 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. 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. 8 NOTE 2 – CONSOLIDATED BALANCE SHEET DETAIL September 30, March 31, 2025 2025 (in thousands) Prepaid and other current assets Prepaid expenses $ 606 $ 352 Other receivables 25 70 $ 631 $ 422 September 30, March 31, 2025 2025 (in thousands) Property and equipment, net Machinery and equipment $ 7,904 $ 5,311 Computer equipment and software 45 66 Construction-in-process 788 685 Leasehold improvements 33 33 Office equipment 45 45 8,815 6,140 Less: accumulated depreciation and amortization ( 2,356 ) ( 1,687 ) Total $ 6,459 $ 4,453 September 30, 2025 March 31, 2025 (in thousands) Accrued expenses Accrued wages and employee benefits $ 460 $ 391 Other 255 113 Total $ 715 $ 504 NOTE 3 – LEASES 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 %. In addition to the minimum lease payments, the Company is responsible for property taxes, insurance and certain other 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 September 30, 2025, are listed in the table below (in thousands). Annual Fiscal Years 2026 $ 237 2027 405 Total future lease payments $ 642 Less: Imputed interest ( 31 ) Present value of lease liability $ 611 Cash paid for amounts included in the measurement of lease liabilities was approximately $ 234,000 and $ 225,000 for the six months ended September 30, 2025 and 2024, respectively. Rent expense was approximately $ 225,000 for each of the six-month periods ended September 30, 2025 and 2024, respectively, and $ 113,000 for each of the three-month periods ended September 30, 2025 and 2024. 9 NOTE 4 – STOCKHOLDERS’ EQUITY ATM Offering 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, for aggregate gross proceeds of up to $ 6,500,000 through an “at the market offering” program under which Leerink will act as sales agent or principal. The ATM Agreement provides that Leerink will be entitled to compensation for its services equal to 3.0 % of the gross proceeds from sales of any shares of common stock under the ATM Agreement. The Company has no obligation to sell any shares under the ATM Agreement and may, at any time, suspend solicitation and offers under the ATM Agreement. During the three and six months ended September 30, 2025, under the ATM Agreement, the Company sold 9,200 and 1,009,200 shares of common stock for net proceeds of $ 6,286 and $ 733,786 , respectively. Warrant Inducement Offering In September 2025, the Company entered into inducement offer letter agreements (the “Inducement Letters”) with certain holders (the “Holders”) of warrants issued in May 2023 (the “2023 Warrants”) and in March 2025 (the “March 2025 Warrants” and, collectively with the 2023 Warrants, the “Existing Warrants”) to purchase up to an aggregate of 6,504,731 shares of the Company’s common stock. Pursuant to the Inducement Letters, the Holders agreed to exercise for cash i) 2023 Warrants to purchase 1,901,700 shares of common stock with an original exercise price of $ 1.22 per share and ii) March 2025 Warrants to purchase 4,603,031 shares with an original exercise price of $ 1.12 per share at a reduced exercise price of $ 0.68 per share in consideration for the Company’s agreement to issue in a private placement new common stock purchase warrants to purchase an aggregate of 3,252,366 shares (the “September 2025 Warrants”). The September 2025 Warrants have an exercise price of 0.84 per share, were exercisable upon issuance and expire on the five-year anniversary of the date of issuance. As of September 30, 2025, the Company had issued 5,860,483 shares of common stock and 2,930,242 September 2025 Warrants, and the processing of the exercise of 175,500 2023 Warrants and 468,748 2025 Warrants was pending. As a result, as of September 30, 2025, 644,248 shares of common stock (the “Issuable Shares”) and 322,124 September 2025 Warrants were pending issuance. The fair value of the unissued Issuable Shares has been presented separately as issuable shares on the condensed consolidated balance sheets and statements of stockholders’ equity as of September 30, 2025. The Company accounted for the issuance of the: i) shares of its common stock and ii) the September 2025 Warrants as a single equity transaction for gross proceeds of approximately $ 4.4 million, which proceeds had been received in full as of September 30, 2025. In relation to the above warrant inducement offering, the Company engaged Newbridge Securities Corporation as the servicing agent and paid a fee of $ 400,000 and expense reimbursement of $ 50,000 . Equity-Classified Warrants The following table sets forth changes in the number of common stock purchase warrants outstanding during fiscal 2026 (share amounts in thousands): Number of Exercise Shares Price ($) Expiration Balance as of March 31, 2025 18,561 Warrants exercised ( 531 ) 0.01 — Balance as of June 30, 2025 18,030 Warrants issued 2,930 0.84 September 2030 Warrants exercised ( 1,726 ) 0.68 May 2028 Warrants exercised ( 4,134 ) 0.68 March 2029 Balance as of September 30, 2025 15,100 As of September 30, 2025, the Company had the following warrants outstanding (share amounts in thousands): Number of Exercise Type Shares Price ($) Expiration Common stock 2,930 0.84 September 2030 Common stock 2,374 1.12 March 2029 Common stock 1,839 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 Common stock 4,011 6.60 February 2027 Common stock 1,438 6.60 November 2027 Total 15,100 10 Share Issuances to Service Providers During the six months ended September 30, 2025 and 2024, the Company issued 10,000 and 30,000 shares of common stock, respectively, with fair values of approximately $ 11,000 and $ 51,000 , respectively, to service providers. NOTE 5 – STOCK-BASED COMPENSATION Amended and Restated 2017 Equity Incentive Plan In October 2017, the Company’s board of 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 September 30, 2025, the unamortized compensation cost related to stock options was approximately $ 1,526,736 and is expected to be recognized as expense over a weighted-average period of approximately 1.12 years. 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 $ 0.74 and $ 1.41 per share for the six months ended September 30, 2025 and 2024, respectively, and $ 0.56 and $ 1.51 for the three months ended September 30, 2025 and 2024, respectively. The following assumptions were used in the fair-value method calculations: Three Months Ended September 30, Six Months Ended September 30, 2025 2024 2025 2024 Risk-free interest rates 3.7 % - 4.1 % 3.4 % - 4.1 % 3.7 % - 4.1 % 3.5 % - 4.4 % Volatility 102 % - 106 % 114 % - 117 % 102 % - 107 % 114 % - 123 % Expected life (years) 5.0 – 5.7 5.0 – 5.7 5.0 – 5.7 5.0 – 5.7 Expected dividend % — — — — 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, as well as average volatility. 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. The following table summarizes the activity in the shares available for grant under the Plan during the six months ended September 30, 2025: Options Outstanding Weighted Shares Average Available Number of Exercise for Grant Shares Prices Balance at March 31, 2025 5,397,872 4,917,090 $ 3.17 Share awards ( 6,375 ) — 0.68 Options granted ( 2,291,172 ) 2,291,172 0.93 Options cancelled and returned to the Plan 8,056 ( 8,056 ) 1.52 Balance at June 30, 2025 3,108,381 7,200,206 $ 2.46 Share awards ( 6,375 ) — 0.70 Options granted ( 139,375 ) 139,375 0.71 Options cancelled and returned to the Plan 110,555 ( 110,555 ) 1.13 Balance at September 30, 2025 3,073,186 7,229,026 $ 2.44 11 There were no stock options exercised during the six months ended September 30, 2025. A stock option was exercised on a cashless basis for 7,530 shares of common stock during the six months ended September 30, 2024. During the six months ended September 30, 2025 and 2024, the Company awarded 12,750 and 7,750 shares, respectively, and for the three months ended September 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 six months ended September 30, 2025 and 2024, the Company recorded stock-based compensation expense for these share awards of approximately $ 9,000 and $ 15,000 , respectively, and for the three months ended September 30, 2025 and 2024, the Company recorded stock-based compensation expense for these share awards of approximately $ 4,000 and $ 9,000 , respectively. A summary of restricted stock unit (RSU) activity under the Plan is presented below. Weighted Average Number of Shares Grant-Date Fair Value Non-vested shares at March 31, 2025 104,168 $ 0.91 Vested ( 20,833 ) $ 0.91 Non-vested shares at June 30, 2025 83,335 $ 0.91 Vested ( 20,834 ) $ 0.91 Non-vested shares at September 30, 2025 62,501 $ 0.91 The total intrinsic value of RSUs outstanding as of September 30, 2025 was approximately $ 44,000 . The unamortized compensation cost at September 30, 2025 was approximately $ 58,000 related to RSUs and is expected to be recognized as expense over a period of approximately 0.75 years. The following table summarizes the range of outstanding and exercisable options as of September 30, 2025: Options Outstanding Options Exercisable Weighted Average Remaining Weighted Weighted Contractual Average Average Aggregate Number Life Exercise Number Exercise Intrinsic Range of Exercise Price Outstanding (in Years) Price Exercisable Price value $0.68 - $2.28 5,796,752 8.42 $ 1.27 2,712,909 $ 1.53 $ 795 $3.95 - $7.51 933,145 5.69 $ 5.30 933,145 $ 5.30 — $8.61 - $17.70 499,129 5.73 $ 10.56 499,129 $ 10.56 — $0.68 - $17.70 7,229,026 7.88 $ 2.44 4,145,183 $ 3.47 $ 795 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. NOTE 6 – INCOME TAXES The Company determines deferred tax assets and liabilities based upon the differences between the financial statement and tax bases of the Company’s assets and liabilities using tax rates in effect for the year in which the Company expects the differences to affect taxable income. A valuation allowance is established for any deferred tax assets for which it is more likely than not that all or a portion of the deferred tax assets will not be realized. Based on the available information and other factors, management believes it is more likely than not that its federal and state net deferred tax assets will not be fully realized, and the Company has recorded a full valuation allowance. The Company files U.S. federal and state income tax returns in jurisdictions with varying statutes of limitations. All tax returns for fiscal 2018 to fiscal 2025 may be subject to examination by the U.S. federal and state tax authorities. As of September 30, 2025, the Company has not recorded any liability for unrecognized tax benefits related to uncertain tax positions. 12 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 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 three and six months ended September 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. Purchase Obligations The Company’s primary purchase obligations include purchase orders for machinery and equipment. At September 30, 2025, the Company had outstanding purchase orders for machinery and equipment and related expenditures of approximately $ 1,719,000 . 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. 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 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. 13 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. The following table presents the significant segment expenses and other segment items regularly reviewed by the CODM: September 30, 2025 2024 (in thousands) Research and development $ 3,134 $ 1,912 Compensation 6,202 3,497 Stock-based compensation 1,537 1,587 Other operating expenses 3,760 2,220 Other income ( 141 ) ( 123 ) Net loss $ 14,492 $ 9,093 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 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: September 30, March 31, 2025 2025 Vendor A 30 % 13 % Vendor B 12 % * Vendor C * 12 % Vendor D * 10 % * Represents less than 10% NOTE 9 – RELATED PARTY TRANSACTIONS A family member of one of the Company’s executive officers is an employee of the Company. During the three months ended September 30, 2025 and 2024, the Company paid the family member approximately $ 33,760 and $ 43,365 , 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 six months ended September 30, 2025 and 2024, the Company paid the family member approximately $ 86,460 and $ 100,625 , 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. A second family member of one of the Company’s executive officers consulted with and became an employee of the Company during 2025. During the three months ended September 30, 2025, the Company paid the family member approximately $ 16,000 , 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 six months ended September 30, 2025, the Company paid the family member approximately $ 34,600 , which includes the aggregate grant date fair values, as determined pursuant to FASB ASC Topic 718, of any stock options granted during each period. NOTE 10 – SUBSEQUENT EVENTS Subsequent to September 30, 2025, under the ATM Agreement, the Company sold 1,793,064 shares of common stock for net proceeds of approximately $ 1.1 million. 14