Modular Medical, Inc. 10-Q

Item 1. Financial Statements Modular Medical, Inc. Condensed Consolidated Balance Sheets (In thousands, except par value) June 30, 2026 (Unaudited) March 31, 2026 ASSETS CURRENT ASSETS Cash and cash equivalents $ 3,920 $ 6,942 Prepaid expenses and other 925 600 TOTAL CURRENT ASSETS 4,845 7,542 Property and equipment, net 7,090 6,866 Right of use asset, net 257 363 Other assets 61 61 TOTAL ASSETS $ 12,253 $ 14,832 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 604 $ 992 Accrued expenses 607 488 Short-term lease liabilities 278 393 TOTAL CURRENT LIABILITIES 1,489 1,873 TOTAL LIABILITIES 1,489 1,873 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, 250,000 shares authorized; 5,571 and 4,661 shares issued and outstanding as of June 30, 2026 and March 31, 2026, respectively 6 5 Additional paid-in capital 130,111 125,949 Common stock issuable 128 — Accumulated deficit ( 119,481 ) ( 112,995 ) TOTAL STOCKHOLDERS’ EQUITY 10,764 12,959 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 12,253 $ 14,832 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 June 30, 2026 2025 Operating expenses Research and development $ 4,371 $ 5,134 Selling, general and administrative 2,167 1,670 Total operating expenses 6,538 6,804 Loss from operations ( 6,538 ) ( 6,804 ) Other income 52 102 Net loss $ ( 6,486 ) $ ( 6,702 ) Net loss per share Basic and diluted $ ( 1.19 ) $ ( 3.70 ) Shares used in computing net loss per share Basic and diluted 5,452 1,810 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) Common Stock Issuable Shares Additional Paid-In Accumulated Stockholders’ Shares Amount Shares Amount Capital Deficit Equity Balance as of March 31, 2026 4,661 $ 5 — $ — $ 125,949 $ ( 112,995 ) $ 12,959 Shares issued for services 2 — — — 7 — 7 At-the-market sales of stock, net 157 — 29 128 700 — 828 Issuance of common stock in registered direct offering, net 750 1 — — 2,963 — 2,964 Reversal of offering expense overpayment — — — — 45 — 45 Issuances under equity incentive plan 1 — — — 1 — 1 Stock-based compensation — — — — 446 — 446 Net loss — — — — — ( 6,486 ) ( 6,486 ) Balance as of June 30, 2026 5,571 $ 6 $ 29 128 130,111 $ ( 119,481 ) $ 10,764 Common Stock Issuable Shares Additional Paid-In Accumulated Stockholders’ Shares Amount Shares Amount Capital Deficit Equity Balance as of March 31, 2025 1,790 $ 2 — — $ 101,828 $ ( 84,753 ) $ 17,077 Shares issued for services — — — — 11 — 11 At-the-market sales of stock, net 33 — — — 728 — 728 Exercise of warrants 18 — — — 5 — 5 Issuances under equity incentive plan 1 — — — 4 — 4 Stock-based compensation — — — — 720 — 720 Net loss — — — — — ( 6,702 ) ( 6,702 ) Balance as of June 30, 2025 1,842 $ 2 — — $ 103,296 $ ( 91,455 ) $ 11,843 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) Three Months Ended June 30, 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 6,486 ) $ ( 6,702 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 447 724 Depreciation and amortization 501 410 Shares issued for services 2 2 Other ( 1 ) — Changes in assets and liabilities: Prepaid expenses and other assets ( 147 ) ( 338 ) Lease right-of-use asset 106 98 Accounts payable and accrued expenses ( 279 ) 536 Lease liabilities ( 115 ) ( 102 ) Net cash used in operating activities ( 5,972 ) ( 5,372 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment ( 688 ) ( 934 ) Net cash used in investing activities ( 688 ) ( 934 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from exercise of common stock warrants — 5 Fees paid for warrant inducement offering, net ( 26 ) — Proceeds from at-the-market sales of common stock, net 700 728 Proceeds from registered direct offering, net 2,964 — Net cash provided by financing activities 3,638 733 Net decrease in cash and cash equivalents ( 3,022 ) ( 5,573 ) Cash and cash equivalents at beginning of period 6,942 13,095 Cash and cash equivalents at end of period $ 3,920 $ 7,522 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”) is a commercial-stage 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 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 (the “FDA”) for its initial product, the MODD1, and, in September 2024, the Company received FDA clearance to market and sell the MODD1 pump in the United States. In August 2025, the Company announced the first human use of the MODD1 pump delivering insulin to a human patient. In addition, in August 2025, the Company announced its next-generation patch pump, branded as Pivot. The Company submitted a 510(k) premarket notification to the FDA for its Pivot product in November 2025, and the Company received regulatory approval in April 2026. In June 2026, the Company announced commercial availability of its Pivot product and commenced initial shipments in the United States. The Company is actively working to i) expand commercial activities for its Pivot product across metropolitan markets, ii) obtain regulatory clearance to market and sell its Pivot product in foreign jurisdictions, iii) improve the manufacturability and usability of its Pivot product and iv) develop new pump products. 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, 2026, 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 Notes 4 and 10, the Company completed a registered direct offering in April 2026, and, in June 2026, commenced sales under an at the market offering 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 2027 refers to the fiscal year ending March 31, 2027). The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Quasuras, Inc. 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 Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. The condensed consolidated balance sheet as of March 31, 2026 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 three months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending March 31, 2027 or for any other future period. Reverse Stock Split On March 30, 2026, the Company filed a certificate of amendment to its amended and restated articles of incorporation with the Secretary of State of the State of Nevada (the “Amendment”) to effect a one (1)-for-thirty (30) reverse stock split of the Company’s shares of common stock. Such Amendment and ratio were previously approved by a majority of the Company’s stockholders and by the board of directors. As a result of the reverse stock split, which was effective for trading purposes on March 31, 2026, every 30 shares of the Company’s pre-reverse split outstanding common stock and exchangeable shares were combined and reclassified into one share of common stock. Proportionate voting rights and other rights of holders of common stock were not affected by the reverse stock split. Any fractional shares of common stock resulting from the reverse stock split were rounded up to the nearest whole share. All stock options and restricted stock units outstanding and common stock reserved for issuance under the Company’s equity incentive plan and warrants outstanding immediately prior to the reverse stock split were adjusted by dividing the number of affected shares of common stock by 30 and, as applicable, multiplying the exercise price by 30, as a result of the reverse stock split. All share and per-share amounts in these condensed consolidated financial statements have been restated to reflect the reverse stock split as if it had occurred at the beginning of the earliest period presented. 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. Pre-launch Inventory The Company capitalizes inventories produced in preparation for product launches when commercialization of the related products is deemed probable, risks and uncertainties regarding ultimate regulatory approval and market acceptance have been significantly reduced and the Company has determined it is probable that these capitalized costs will provide some future economic benefit in excess of capitalized costs. The determination to capitalize is based on the particular facts and circumstances including but not limited to factors such as uncertainties surrounding receipt and analysis of positive clinical trial results, results from meetings with the relevant regulatory authorities prior to the filing of regulatory applications, all relevant communication with regulatory authorities during the regulatory application process, the status of the regulatory approval process, the Company’s historical experience with manufacturing and commercializing similar products and the relevant product candidate, existence of specific issues identified relating to safety, efficacy, manufacturing, marketing or labeling, shelf lives and anticipated volume, timing and estimated selling prices of future sales. Capitalized pre-launch inventory, if any, is measured in accordance with Accounting Standards Codification (“ASC”) No. 330, Inventory , at the lower of cost or net realizable value and is assessed each reporting period for impairment, including risks associated with delays in regulatory approval or changes in expected demand, with any write-downs recognized in earnings. 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”) 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 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. The expected option term is computed using the “simplified” method as permitted under the provisions of ASC Topic 718. The Company uses the simplified method to calculate expected term of share options and similar instruments, as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. 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. For the three months ended June 30, 2026 and 2025, 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 June 30, 2026 2025 Options to purchase common stock 426 240 Unvested restricted stock units — 3 Common stock purchase warrants 3,029 601 Total 3,455 844 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 months ended June 30, 2026 and 2025, the Company’s comprehensive loss was the same as its net loss. Recently Issued Accounting Pronouncements In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (the “Update”), an amendment to improve the guidance in Topic 270, Interim Reporting , by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. The amendments add to Topic 270 a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments in this Update clarify interim disclosure requirements and the applicability of Topic 270 apply to all entities that provide interim financial statements and notes in accordance with GAAP. In addition, the amendments in this Update result in a comprehensive list of interim disclosures that are required by GAAP with the objective to provide clarity about the current requirements. The Update is effective for the Company for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Update can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the impact that the Update will have on the presentation of its consolidated financial statements. 8 NOTE 2 – CONSOLIDATED BALANCE SHEET DETAIL June 30, 2026 March 31, 2026 (in thousands) Prepaid and other current assets Prepaid expenses $ 686 $ 583 Other receivables 239 17 Total $ 925 $ 600 June 30, 2026 March 31, 2026 (in thousands) Property and equipment, net Machinery and equipment $ 9,726 $ 8,499 Computer equipment and software 79 55 Construction-in-process 936 1,462 Leasehold improvements 33 33 Office equipment 45 45 10,819 10,094 Less: accumulated depreciation and amortization ( 3,729 ) ( 3,228 ) Total $ 7,090 $ 6,866 June 30, 2026 March 31, 2026 (in thousands) Accrued expenses Accrued wages and employee benefits $ 594 $ 413 Other 13 75 Total $ 607 $ 488 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 June 30, 2026, are listed in the table below (in thousands). Annual Fiscal Year 2027 283 Total future lease payments $ 283 Less: Imputed interest ( 5 ) Present value of lease liability $ 278 Cash paid for amounts included in the measurement of lease liabilities was approximately $ 122,000 and $ 117,000 for the three months ended June 30, 2026 and 2025, respectively. Rent expense was approximately $ 112,000 for each of the three-month periods ended June 30, 2026 and 2025. 9 NOTE 4 – STOCKHOLDERS’ EQUITY ATM Offering Programs Leerink ATM Agreement In November 2023, the Company entered into a Sales Agreement (the “Leerink ATM Agreement”) with Leerink Partners LLC (“Leerink”) under which the Company offered and sold, from time to time at its sole discretion, shares of its common stock, through an “at the market offering” program under which Leerink acted as sales agent or principal. On April 17, 2026, the Leerink ATM Agreement was terminated. Maxim ATM Agreement On April 23, 2026, the Company entered into a Sales Agreement (the “2026 ATM Agreement”) with Maxim Group LLC (“Maxim”) under which the Company may offer and sell, from time to time at its sole discretion, up to $ 100,000,000 of shares of its common stock through an “at the market offering” program under which Maxim will act as sales agent or principal. The 2026 ATM Agreement provides that Maxim 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 2026 ATM Agreement. The Company has no obligation to sell any shares under the 2026 ATM Agreement and may, at any time, suspend solicitation and offers under the 2026 ATM Agreement. April 2026 Registered Direct Offering On April 19, 2026, the Company entered into a Placement Agency Agreement (the “Placement Agency Agreement”) with Maxim, relating to a registered direct offering (the “April Offering”) of 750 ,000 shares of the Company’s common stock, referred to as the “Shares.” The April Offering closed on April 21, 2026, and the gross proceeds to the Company from the April Offering were approximately $ 3.375 million, before deducting the placement agent fee and other offering expenses. Pursuant to the Placement Agency Agreement, the Company paid Maxim a cash fee equal to 7 % of the gross proceeds received from the April Offering and reimbursed Maxim $ 75,000 for its expenses incurred in connection with the April Offering. Warrants As of June 30, 2026 and March 31, 2026, the Company had the following warrants outstanding (share amounts in thousands): Type Number of Shares Exercise Price Expiration Common stock 2,270 $ 5.29 March 2031 Common stock 108 25.20 September 2030 Common stock 33 13.86 December 2030 Common stock 233 13.50 December 2030 Common stock 13 56.25 November 2029 Common stock 64 33.60 March 2029 Common stock 29 42.00 March 2029 Common stock 200 0.03 — Common stock 16 39.60 May 2027 Common stock 56 36.60 May 2028 Common stock 133 198.00 February 2027 Common stock 48 198.00 November 2027 Common stock 26 $ 180.00 January 2027 - February 2027 Total 3,229 Other During the three months ended June 30, 2026, the Company issued 2 ,000 shares of common stock with a fair value of approximately $ 6,900 to a service provider. 10 NOTE 5 – STOCK-BASED COMPENSATION Amended 2017 Equity Incentive Plan In October 2017, the Company’s board of directors (the “Board”) approved the Amended and Restated 2017 Equity Incentive Plan, as amended (the “Plan”) with 33,334 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 11,112 and 44,444 shares, respectively. In January 2023, February 2024, February 2025 and January 2026, the Company’s stockholders approved increases in the number of shares reserved for issuance under the Plan by an additional 66,667 , 100,000 , 100,000 and 100,000 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 June 30, 2026, the unamortized compensation cost related to stock options was approximately $ 990,185 and is expected to be recognized as expense over a weighted-average period of approximately 0.44 years. The weighted-average grant date fair value of options granted was $ 2.90 and $ 22.50 per share for the three months ended June 30, 2026 and 2025, respectively. The following assumptions were used in the fair-value method calculations: Three Months Ended June 30, 2026 2025 Risk-free interest rates 4.19 % - 4.23 % 3.79 % - 4.14 % Volatility 108 % - 109 % 105 % - 107 % Expected life (years) 5.0 - 5.7 5.0 - 5.7 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 Company accounts for forfeitures as they occur. The following table summarizes the activity in the shares available for grant under the Plan during the three months ended June 30, 2026 (in thousands, except exercise price): Options Outstanding Weighted Shares Average Available Number of Exercise for Grant Shares Prices ($) Balance at March 31, 2026 117 326 51.97 Share awards — — 4.88 Options granted ( 118 ) 118 3.53 Options cancelled and returned to the Plan 18 ( 18 ) 54.76 Balance at June 30, 2026 17 426 38.42 11 There were no stock options exercised during the three months ended June 30, 2026 and 2025. During the three months ended June 30, 2026 and 2025, the Company awarded 218 and 214 shares, respectively, to its non-employee directors under the Company’s outside director compensation plan. For the three months ended June 30, 2026 and 2025, the Company recorded stock-based compensation expense for these share awards of approximately $ 1,000 and $ 4,000 , respectively. A summary of restricted stock unit (RSU) activity under the Plan is presented below. Weighted Average Number of Shares Grant-Date Fair Value ($) Balance at March 31, 2026 695 0.91 Vested ( 695 ) 0.91 Non-vested shares at June 30, 2026 — The following table summarizes the range of outstanding and exercisable options as of June 30, 2026 (in thousands, except contractual life and exercise price): Options Outstanding Options Exercisable Range of Exercise Price Number Outstanding Weighted Average Remaining Contractual Life (in Years) Weighted Average Exercise Price ($) Number Exercisable Weighted Average Exercise Price ($) Aggregate Intrinsic value $3.46 - $64.80 381 8.92 17.62 140 36.19 $ — $118.50 - $225.30 30 4.89 160.76 30 160.76 — $258.30 - $531.00 15 4.98 317.60 15 317.60 — $3.46 - $531.00 426 8.50 38.42 185 79.65 $ — 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 2026 may be subject to examination by the U.S. federal and state tax authorities. As of June 30, 2026, the Company has no t 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 months ended June 30, 2026 and 2025 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 June 30, 2026, the Company had outstanding purchase orders for machinery and equipment and related expenditures of approximately $ 0.8 million. At June 30, 2026, the Company had outstanding purchase orders for supplies and inventory components of approximately $ 0.2 million. 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 . 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: June 30, 2026 2025 (in thousands) Research and development $ 1,010 $ 1,490 Compensation 2,706 2,916 Stock-based compensation 447 724 Other operating expenses 2,375 1,674 Other income, net ( 52 ) ( 102 ) Net loss $ 6,486 $ 6,702 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: June 30, 2026 March 31, 2026 Vendor A 17 % 14 % Vendor B 12 % 15 % NOTE 9 – RELATED PARTY TRANSACTIONS A family member of one of the Company’s executive officers was an employee of the Company until March 2026, and, in April 2026, the family member converted to a consultant. During the three months ended June 30, 2026 and 2025, the Company paid the family member compensation of approximately $ 1,100 and $ 52,700 , 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 is an employee of the Company. During the three months ended June 30, 2026 and 2025, the Company paid the family member compensation of approximately $ 18,900 and $ 18,600 , 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. Royalty Agreement In July 2017, the Company entered into a royalty agreement with its founder, who currently serves as an executive officer of the Company (the “Founder”). Pursuant to the agreement, the Founder assigned and transferred all of his rights in the intellectual property of Quasuras, Inc. 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. NOTE 10 – SUBSEQUENT EVENTS Subsequent to June 30, 2026, the Company issued 2,530,250 shares of common stock for net proceeds of $ 5,113,542 under the 2026 ATM Agreement. 14