Modular Medical (NASDAQ: MODD) posts larger loss and flags going concern risk
Modular Medical, Inc. reported higher operating losses for the quarter ended December 31, 2025 as it continues to be a pre-revenue diabetes insulin pump developer. Quarterly research and development expense rose to
For the nine months, the net loss widened to
The company received FDA clearance in September 2024 for its MODD1 insulin pump but plans to commercialize its next‑generation Pivot patch pump instead. A 510(k) submission for Pivot was filed on November 13, 2025, and the company expects potential clearance by March 31, 2026 or shortly thereafter.
To shore up liquidity, Modular Medical raised roughly
Positive
- None.
Negative
- Severe liquidity stress and going concern risk: Cash was
$2.9M at December 31, 2025, after using$17.9M in operating cash for nine months, and management states it currently lacks sufficient liquidity to fund operations for the next 30 days. - Escalating losses ahead of commercialization: Nine‑month net loss widened to
$21.9M from$13.9M a year earlier as R&D and SG&A rose sharply while the company remains pre‑revenue. - Nasdaq listing at risk: The company is out of compliance with Nasdaq’s
$1.00 minimum bid price rule and has untilJune 29, 2026 to regain compliance, potentially via a reverse split, or face delisting. - Material weakness in internal controls: Management disclosed a material weakness related to misclassification of newly issued warrants, indicating deficiencies in technical accounting controls around financing transactions.
Insights
Deepening losses, acute cash shortfall, and listing risk create a stressed profile.
Modular Medical remains pre-revenue while scaling R&D and SG&A ahead of its Pivot insulin pump launch. Nine‑month operating expenses reached
This spending drove a nine‑month net loss of
Management explicitly states it lacks sufficient liquidity to fund operations for the next 30 days and that “substantial doubt” exists about continuing as a going concern. Simultaneously, the company is under Nasdaq minimum bid price pressure, planning a reverse split by
New warrant liabilities and a control weakness add financial reporting risk.
The December 2025 offering included common stock and warrants that are classified as liabilities under ASC 480 because authorized shares were initially insufficient. Liability‑classified warrants totaling 7.98 million had a fair value of
Management identified a material weakness in internal control over financial reporting tied to this warrant accounting. They plan remediation by adding technical GAAP expertise and using third‑party advisors for complex transactions. Until remediation is proven effective, there is elevated risk of future accounting misstatements, particularly around equity and financing structures.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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The number of outstanding shares of the registrant’s
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MODULAR MEDICAL, INC.
FORM 10-Q
DECEMBER 31, 2025
TABLE OF CONTENTS
| PART I — FINANCIAL INFORMATION | 1 | |
| Item 1. | Financial Statements (Unaudited): | 1 |
| Condensed Consolidated Balance Sheets as of December 31, 2025 and March 31, 2025 | 1 | |
| Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2025 and 2024 | 2 | |
| Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended December 31, 2025 and 2024 | 3 | |
| Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2025 and 2024 | 4 | |
| Notes to Condensed Consolidated Financial Statements | 5 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 22 |
| Item 4. | Controls and Procedures | 22 |
| PART II — OTHER INFORMATION | 23 | |
| Item 1. | Legal Proceedings | 23 |
| Item 1A. | Risk Factors | 23 |
| Item 2. | Unregistered Sales of Equity Securities | 24 |
| Item 3. | Defaults Upon Senior Securities | 24 |
| Item 4. | Mine Safety Disclosures | 24 |
| Item 5. | Other Information | 24 |
| Item 6. | Exhibits | 25 |
| Signatures | 26 | |
i
Part I – FINANCIAL INFORMATION
Item 1. Financial Statements
Modular Medical, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except par value)
| December 31, | ||||||||
| 2025 | March 31, | |||||||
| (Unaudited) | 2025 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Property and equipment, net | ||||||||
| Right of use asset, net | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Short-term lease liabilities | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| Warrant liabilities | — | |||||||
| Long-term lease liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and Contingencies (Note 8) | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred Stock, $ | — | — | ||||||
| Common Stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Common stock issuable | — | |||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
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 December 31, | Nine Months Ended December 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of warrant liabilities | ( | ) | — | ( | ) | — | ||||||||||
| Other income | ||||||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | — | — | ||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share | ||||||||||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Shares used in computing net loss per share | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
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 | $ | — | $ | — | $ | $ | ( | ) | $ | |||||||||||||||||||
| Shares issued for services | — | — | — | — | ||||||||||||||||||||||||
| At-the-market sales of stock, net | — | — | — | |||||||||||||||||||||||||
| Exercise of warrants | — | — | — | — | ||||||||||||||||||||||||
| Issuances under equity incentive plan | — | — | — | — | ||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of June 30, 2025 | $ | — | $ | — | $ | $ | ( | ) | $ | |||||||||||||||||||
| At-the-market sales of stock, net | — | — | — | — | ||||||||||||||||||||||||
| Issuance of common stock and warrants from warrant inducement offering | — | |||||||||||||||||||||||||||
| Issuances under equity incentive plan | — | — | — | — | ||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| At-the-market sales of stock, net | — | — | — | |||||||||||||||||||||||||
| Issuance of common stock and warrants from warrant inducement offering, net | ( | ) | ( | ) | — | — | ||||||||||||||||||||||
| Proceeds from public offering of common stock and common stock warrants, net | — | — | — | |||||||||||||||||||||||||
| Issuances under equity incentive plan | — | — | — | — | ||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Additional | ||||||||||||||||||||||||||||
| Common Stock | Issuable Shares | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance as of March 31, 2024 | $ | — | $ | — | $ | $ | ( | ) | $ | |||||||||||||||||||
| Shares issued for services | — | — | — | — | ||||||||||||||||||||||||
| Exercise of warrants | — | — | — | — | ||||||||||||||||||||||||
| Issuances under equity incentive plan | — | — | — | — | ||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of June 30, 2024 | $ | — | $ | — | $ | $ | ( | ) | $ | |||||||||||||||||||
| Shares issued for services | — | — | — | — | ||||||||||||||||||||||||
| Exercise of warrants | — | — | — | |||||||||||||||||||||||||
| At-the-market sales of stock, net | — | — | — | |||||||||||||||||||||||||
| Issuances under equity incentive plan | — | — | — | — | ||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| 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 | — | — | — | — | — | |||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of December 31, 2024 | $ | — | $ | — | $ | $ | ( | ) | $ | |||||||||||||||||||
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)
| Nine Months Ended | ||||||||
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation expense | ||||||||
| Depreciation and amortization | ||||||||
| Change in fair value of warrant liabilities | — | |||||||
| Shares issued for services | ||||||||
| Changes in assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ( | ) | ( | ) | ||||
| Lease right-of-use asset | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from at-the-market sales of common stock, net | ||||||||
| Proceeds from exercise of common stock purchase warrants | ||||||||
| Proceeds from public offering of common stock, net | — | |||||||
| Proceeds from public offering of common stock and warrants, net | — | |||||||
| Proceeds from warrant inducement offering, net | — | |||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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 December 2025, the Company completed a public offering of common stock and warrants for
net proceeds of approximately $
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 nine months ended December 31, 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
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 unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment are used to measure fair value. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. The determination of fair value for Level 3 investments and other financial instruments involves the most management judgment and subjectivity. |
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 nine months ended December 31, 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).
| Nine Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Options to purchase common stock | ||||||||
| Unvested restricted stock units | ||||||||
| Common stock purchase warrants | ||||||||
| Total | ||||||||
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 nine months ended December 31, 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
In December 2025, the FASB issued ASU 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.
NOTE 2 – CONSOLIDATED BALANCE SHEET DETAIL
| December 31, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (in thousands) | ||||||||
| Prepaid and other current assets | ||||||||
| Prepaid expenses | $ | $ | ||||||
| Other | ||||||||
| $ | $ | |||||||
| December 31, | March 31, | |||||||
| 2025 | 2025 | |||||||
| (in thousands) | ||||||||
| Property and equipment, net | ||||||||
| Machinery and equipment | $ | $ | ||||||
| Computer equipment and software | ||||||||
| Construction-in-process | ||||||||
| Leasehold improvements | ||||||||
| Office equipment | ||||||||
| Less: accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
| December 31, 2025 | March 31, 2025 | |||||||
| (in thousands) | ||||||||
| Accrued expenses | ||||||||
| Accrued wages and employee benefits | $ | $ | ||||||
| Other | ||||||||
| Total | $ | $ | ||||||
NOTE 3 – LEASES
Thornmint Road, San Diego, CA
The
9
Future minimum payments under the facility operating lease, as of December 31, 2025, are listed in the table below (in thousands).
| Annual Fiscal Years | ||||
| 2026 | $ | |||
| 2027 | ||||
| Total future lease payments | $ | |||
| Less: Imputed interest | ( | ) | ||
| Present value of lease liability | $ | |||
Cash paid for amounts included in the
measurement of lease liabilities was approximately $
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 $
Public Offering
On December 10, 2025, the Company entered into an Underwriting Agreement
(the “Underwriting Agreement”) with Newbridge Securities Corporation (“Newbridge”), relating to a firm commitment
underwritten offering (the “Offering”) of (i)
The Company also agreed to issue to Newbridge
on the Closing Date and each Over-allotment Option closing date, warrant (the “Underwriter Warrants”) for the purchase of
a number of shares of common stock equal to an aggregate of
10
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
As of December 31, 2025, the Company had issued
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 ($) | Expiration | ||||||||
| Balance as of March 31, 2025 | ||||||||||
| Warrants exercised | ( | ) | — | |||||||
| Balance as of June 30, 2025 | ||||||||||
| Warrants issued | ||||||||||
| Warrants exercised | ( | ) | ||||||||
| Warrants exercised | ( | ) | ||||||||
| Balance as of September 30, 2025 | ||||||||||
| Warrants issued | ||||||||||
| Warrants exercised | ( | ) | ||||||||
| Warrants exercised | ( | ) | ||||||||
| Balance as of December 31, 2025 | ||||||||||
As of December 31, 2025, the Company had the following warrants outstanding (share amounts in thousands):
| Number of | Exercise | |||||||||
| Type | Shares | Price ($) | Expiration | |||||||
| Common stock | ||||||||||
| Common stock | ||||||||||
| Common stock | ||||||||||
| Common stock | ||||||||||
| Common stock | ||||||||||
| Common stock | ||||||||||
| Common stock | ||||||||||
| Common stock | ||||||||||
| Common stock | ||||||||||
| Total | ||||||||||
11
Share Issuances to Service Providers
During the nine months ended December 31, 2025
and 2024, the Company issued
Note 5 – WARRANTS CLASSIFIED AS LIABILITIES
As of the Closing Date and Over-Allotment Closing Date, the Company did not have adequate authorized shares of common stock to settle all of the Firm Warrants, the Over-allotment Warrants and the Underwriter Warrants (collectively, the “Offering Warrants”). Therefore, pursuant to ASC No. 480, the Company has classified the Offering Warrants as liabilities in its condensed consolidated balance sheets. The classification of the Offering Warrants, including whether the Offering Warrants should be recorded as liabilities or as equity, is evaluated at the end of each reporting period with changes in the fair value reported in other income (expense) in the condensed consolidated statements of operations.
The fair values of the Firm Warrants and Underwriter Warrants issued
on the Closing Date were determined using the Black Scholes model with the following assumptions: (i) expected term based on the remaining
contractual terms, (ii) risk-free interest rate of
The fair values of the Underwriter Warrants and Over-Allotment Warrants
issued on the Over-Allotment Closing Date, were determined using the Black Scholes model with the following assumptions: (i) expected
term based on the remaining contractual terms, (ii) risk-free interest rate of
The fair values of the Offering Warrants at December 31, 2025, were
determined using the Black Scholes model with the following assumptions: (i) expected term based on the remaining contractual terms, (ii)
risk-free interest rate of
As of December 31, 2025, the Company had the following liability-classified warrants outstanding (amounts in thousands):
| Number of Warrants | ||||||||
| on Common Shares | Amount ($) | |||||||
| Balance as of March 31, 2025 | — | — | ||||||
| Recognition of warrant liability | ||||||||
| Loss on change in fair value of warrants | — | |||||||
| Balance as of December 31, 2025 | ||||||||
NOTE 6 – 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
Stock-Based Compensation Expense
Stock options granted by the Company generally
vest over
In April 2025, under its Two-Part FDA Submission
and Product Milestone Bonus Program (the “Program”, the Company granted stock options for
12
The weighted-average grant date fair value of
options granted was $
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Risk-free interest rates | ||||||||||||||||
| Volatility | ||||||||||||||||
| Expected life (years) | ||||||||||||||||
| 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
The following table summarizes the activity in the shares available for grant under the Plan during the nine months ended December 31, 2025:
| Options Outstanding | ||||||||||||
| Weighted | ||||||||||||
| Shares | Average | |||||||||||
| Available | Number of | Exercise | ||||||||||
| for Grant | Shares | Prices | ||||||||||
| Balance at March 31, 2025 | $ | |||||||||||
| Share awards | ( | ) | — | |||||||||
| Options granted | ( | ) | ||||||||||
| Options cancelled and returned to the Plan | ( | ) | ||||||||||
| Balance at June 30, 2025 | $ | |||||||||||
| Share awards | ( | ) | — | |||||||||
| Options granted | ( | ) | ||||||||||
| Options cancelled and returned to the Plan | ( | ) | ||||||||||
| Balance at September 30, 2025 | $ | |||||||||||
| Share awards | ( | ) | — | |||||||||
| Options granted | ( | ) | ||||||||||
| Options cancelled and returned to the Plan | ( | ) | ||||||||||
| Balance at December 31, 2025 | $ | |||||||||||
There were no stock options exercised during the
nine months ended December 31, 2025. A stock option was exercised on a cashless basis for
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 | $ | |||||||
| Vested | ( | ) | $ | |||||
| Non-vested shares at June 30, 2025 | $ | |||||||
| Vested | ( | ) | $ | |||||
| Non-vested shares at September 30, 2025 | $ | |||||||
| Vested | ( | ) | $ | |||||
| Non-vested shares at December 31, 2025 | $ | |||||||
The total intrinsic value of RSUs outstanding
as of December 31, 2025 was approximately $
13
The following table summarizes the range of outstanding and exercisable options as of December 31, 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 ($) | ||||||||||||||||||
| $0.36 - $2.28 | ||||||||||||||||||||||||
| $3.95 - $7.51 | — | |||||||||||||||||||||||
| $8.61 - $17.70 | — | |||||||||||||||||||||||
| $0.36 - $17.70 | ||||||||||||||||||||||||
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 7 – 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 December 31, 2025, the Company has not recorded any liability for unrecognized tax benefits related to uncertain tax positions.
NOTE 8 – 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.
14
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 nine months ended December 31, 2025 and 2024 related to these indemnifications. The Company has not estimated the maximum potential amount of indemnification liability under these agreements due to the limited history of prior claims and the unique facts and circumstances applicable to each particular agreement. To date, the Company has not made any payments related to these indemnification agreements.
Purchase Obligations
The Company’s primary purchase obligations
include purchase orders for machinery and equipment. At December 31, 2025, the Company had outstanding purchase orders for machinery and
equipment and related expenditures of approximately $
NOTE 9 – 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.
15
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.
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| (in thousands) | ||||||||
| Research and development | $ | $ | ||||||
| Compensation | ||||||||
| Stock-based compensation | ||||||||
| Other operating expenses | ||||||||
| Other expense | ( | ) | ( | ) | ||||
| Net loss | $ | $ | ||||||
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 $
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:
| December 31, | March 31, | |||||||
| 2025 | 2025 | |||||||
| Vendor A | % | — | ||||||
| Vendor B | % | — | ||||||
| Vendor C | * | % | ||||||
| Vendor D | — | % | ||||||
| * |
NOTE 10 – 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 December 31, 2025 and 2024, the Company paid the family
member approximately $
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 December 31, 2025,
the Company paid the family member approximately $
Two members of the Board participated in the Offering
and purchased
NOTE 11 – SUBSEQUENT EVENTS
On January 23, 2026, the Company’s shareholders
approved increases to: i) the number of shares reserved for issuance under the Plan by
16
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying condensed consolidated financial statements and notes included in this Quarterly Report on Form 10-Q (this Report). This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which include, without limitation, statements about the market for our technology, our strategy, competition, expected financial performance and capital raising efforts, and other aspects of our business identified in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission on June 20, 2025 and in other reports that we file from time to time with the Securities and Exchange Commission. Any statements about our business, financial results, financial condition and operations contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “expects,” “intends,” “plans,” “projects,” or similar expressions are intended to identify forward-looking statements. Our actual results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including the risk factors described under Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2025. These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors including, without limitation, inflationary risks, including the risk of increasing costs for certain of the Company’s components and related issues that may arise therefrom. Many of those factors are outside of our control and could cause actual results to differ materially from those expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.
Our fiscal year ends on March 31 of each calendar year. Each reference to a fiscal year in this Report, 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). Unless the context requires otherwise, references to “we,” “us,” “our,” and the “Company” refer to Modular Medical, Inc. and its consolidated subsidiary.
Company Overview
We are 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 a novel two-part patch pump, we seek to fundamentally alter the trade-offs between cost and complexity and access to the higher standards of care that presently-available insulin pumps provide. By simplifying and streamlining the user experience from introduction, prescription, reimbursement, training and day-to-day use, we seek 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, we submitted a 510(k) premarket notification to the United States Food and Drug Administration (the “FDA”) for our initial product, our MODD1, and, in September 2024, we received FDA clearance to market and sell our MODD1 pump in the United States. In August 2025, we announced the first human use of our MODD1 pump delivering insulin to a human patient. In addition, in August 2025, we announced our next-generation patch pump, branded as Pivot. We intend to commercialize our Pivot product, and will not commercialize our MODD1 product. We submitted a 510(k) premarket notification to the FDA for our Pivot product on November 13, 2025, when the United States government shutdown ended. We intend to initiate our commercial launch with the Pivot product, when the required regulatory approval from the FDA is received, which we believe may occur by March 31, 2026 or shortly thereafter. We are actively working to i) obtain regulatory clearance and prepare to commence commercialization of our Pivot product, ii) obtain regulatory clearance to market and sell our Pivot product in foreign jurisdictions, iii) improve the manufacturability and usability of our Pivot product and iv) develop new pump products.
Historically, we have financed our operations principally through private placements and public offerings of our common stock and warrants and sales of convertible promissory notes. Based on our current operating plan, substantial doubt about our ability to continue as a going concern for a period of at least one year from the date that the financial statements included in Item 1 of this Report are issued exists. Our ability to continue as a going concern depends on our ability to raise additional capital, through the sale of equity or debt securities, to support our future operations. If we are unable to secure additional capital, we will be required to curtail our research and development initiatives and take additional measures to reduce costs. We have provided additional disclosure in Note 1 to the condensed consolidated financial statements in Item 1 of this Report and under Liquidity below.
17
Recent Developments
Financing
As disclosed in Note 4 to the condensed consolidated financial statements in this Report, in December 2025, the Company entered into a firm commitment underwritten offering for net proceeds of approximately $4.8 million.
Compliance with Nasdaq Continued Listing Requirements
On June 30, 2025, we received a letter from the Listing Qualifications Staff of the Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of our common stock for the 30 consecutive business days ending on June 27, 2025, we no longer met the requirement to maintain a minimum bid price of $1 per share, as set forth in Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were provided a period of 180 calendar days, or until December 29, 2025, in which to regain compliance.
On December 23, 2025, we submitted a request to Nasdaq for an additional 180-day period (the “Second Compliance Period”) to provide additional time for us to demonstrate compliance with the minimum bid price requirement. In such request, we communicated that we intend to regain compliance during the Second Compliance Period by effecting a reverse stock split. On December 30, 2025, we received written notification from the Listing Qualifications Department of Nasdaq, granting our request for a 180-day extension to regain compliance with the minimum bid price requirement. We now have until June 29, 2026 to meet the requirement. If at any time prior to June 29, 2026, the bid price of our common stock closes at $1 per share or more for a minimum of 10 consecutive business days, we will regain compliance with the minimum bid price requirement. In the event we do not regain compliance with the minimum bid price requirement during the additional 180-day extension, Nasdaq will provide written notification to us that our Common Stock will be delisted. At that time, we may appeal the relevant delisting determination to a hearings panel pursuant to the procedures set forth in the applicable Nasdaq Listing Rules. However, there can be no assurance that, if we do appeal the delisting determination by Nasdaq to the hearings panel, that such appeal would be successful. On January 23, 2026, at our annual meeting of shareholders, our shareholders authorized our board of directors to effect a reverse split, as necessary, to regain compliance. We will continue to monitor the closing bid price of our common stock and evaluate available options to regain compliance with the minimum bid price requirement. Nasdaq’s extension notice has no immediate effect on the listing or trading of our common stock, which continues to trade on the Nasdaq Capital Market under the ticker symbol, “MODD.”
Increase in Authorized Shares
On January 23, 2026, we filed a certificate of amendment to our Amended and Restated Articles of Incorporation with the secretary of state of the state of Nevada to increase our number of authorized shares of common stock to 250,000,000.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make certain estimates and judgments that affect the reported amounts of assets, liabilities, and expenses. On an ongoing basis, we make these estimates based on our historical experience and on assumptions that we consider reasonable under the circumstances. Actual results may differ from these estimates and reported results could differ under different assumptions or conditions. Our significant accounting policies and estimates are disclosed in Note 1 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended March 31, 2025. As of December 31, 2025, there have been no material changes to our significant accounting policies and estimates.
18
Results of Operations
Research and Development
| December 31, | Change | |||||||||||||||
| 2025 | 2024 | 2024 to 2025 | ||||||||||||||
| (dollar amounts in thousands) | ||||||||||||||||
| Research and development – Three months ended | $ | 5,405 | $ | 3,853 | $ | 1,553 | 40.3 | % | ||||||||
| Research and development – Nine months ended | $ | 16,132 | $ | 10,760 | $ | 5,372 | 49.9 | % | ||||||||
Our research and development, or R&D, expenses include personnel, consulting, testing, materials and supplies, depreciation and amortization and other non-capitalizable operational costs associated with the production of our insulin pump product. We expense R&D costs as they are incurred.
R&D expenses increased for the three months ended December 31, 2025 compared with the same period of 2024, primarily due to an increase in personnel-related costs of approximately $0.5 million, an increase in consulting and outside services costs of $0.6 million, an increase in shipping and freight costs of approximately $0.2 million, an increase in depreciation expense of approximately $0.1 million and a $0.1 million increase in stock-based compensation expenses.
R&D expenses increased for the nine months ended December 31, 2025 compared with the same period of 2024, primarily due to increased personnel-related costs of approximately $2.4 million, an increase in consulting and outside services costs of $1.2 million, an increase in materials and supplies costs of $0.6 million, an increase in depreciation expense of approximately $0.5 million, and an increase in shipping and freight costs of approximately $0.5 million and increases and a $0.2 million increase in stock-based compensation expenses.
Our full-time R&D employee headcount increased to 58 at December 31, 2025 from 44 at December 31, 2024. R&D expenses included stock-based compensation expenses of approximately $0.4 million and $0.3 million for the three-months ended December 31, 2025 and 2024, respectively, and $1.7 million and $1.5 million for the nine-month periods ended December 31, 2025 and 2024, respectively. We expect research and development expenses to remain flat to decrease in the last quarter of fiscal 2026, as we manage expenses in anticipation of expected FDA clearance and the commercialization of our Pivot pump product.
19
Selling, General and Administrative
| December 31, | Change | |||||||||||||||
| 2025 | 2024 | 2024 to 2025 | ||||||||||||||
| (dollar amounts in thousands) | ||||||||||||||||
| Selling, general and administrative – Three months ended | $ | 1,839 | $ | 1,001 | $ | 838 | 83.7 | % | ||||||||
| Selling, general and administrative – Nine months ended | $ | 5,745 | $ | 3,310 | $ | 2,435 | 73.5 | % | ||||||||
Selling, general and administrative, or SG&A, expenses consist primarily of personnel and related overhead costs for facilities, finance, human resources, legal, sales, marketing and general management.
SG&A expenses increased for the three months ended December 31, 2025 compared with the same period of 2024, primarily as a result of increases in personnel costs of approximately $0.4 million, increases in consulting expenses of approximately $0.6 million, which was partially offset by a decrease in legal and professional services of $0.2 million.
SG&A expenses increased for the nine months ended December 31, 2025 compared with the same period of 2024, primarily as a result of increases in personnel costs of approximately $1.0 million, increases in consulting expenses of approximately $1.2 million, and a $0.3 million increase in marketing costs, which was partially offset by a $0.1 million decrease in stock-based compensation expenses.
Our full-time SG&A employee headcount increased to 11 at December 31, 2025 from 4 at December 31, 2024. SG&A expenses included stock-based compensation expenses of approximately $0.1 million for the three-month periods ended December 31, 2025 and 2024, and $0.4 million and $0.5 million for the nine months ended December 31, 2025 and 2024, respectively. We expect SG&A expenses to remain flat to decrease in the last quarter of fiscal 2026, as we manage expenses in anticipation of expected FDA clearance and the commercialization of our Pivot pump product.
Liquidity and Capital Resources; Changes in Financial Condition
Cash Flows
For the nine months ended December 31, 2025, we used approximately $17.9 million of cash in operating activities, which primarily resulted from our net loss of approximately $21.9 million, as adjusted for net changes in operating assets and liabilities of approximately $0.5 million, stock-based compensation expenses of approximately $2.1 million, an approximately $0.1 million change in fair value of warrant liabilities and depreciation and amortization expenses of approximately $1.2 million. For the nine months ended December 31, 2024, we used approximately $11.4 million of cash in operating activities, which primarily resulted from our net loss of approximately $13.9 million and net changes in operating assets and liabilities of approximately $0.3 million, as adjusted for stock-based compensation expenses of approximately $2.0 million, depreciation and amortization expenses of approximately $0.7 million and other immaterial adjustments.
For the nine months ended December 31, 2025 and 2024, cash used in investing activities of approximately $2.9 million and $1.5 million, respectively, was for the purchase of property and equipment.
Cash provided by financing activities of approximately $10.7 million for the nine months ended December 31, 2025 was attributable to $4.8 million of net proceeds from a public offering of our common stock and warrants completed in December 2025, $4.0 million of net proceeds from a warrant inducement offering completed in September 2025 and $1.9 million of net proceeds from sales of common stock under the ATM Agreement. Cash provided by financing activities of approximately $10.7 million for the nine months ended December 31, 2024 was attributable to $7.3 million of net proceeds from the issuance of common stock in a public offering, $2.1 million of net proceeds from sales of our common stock under the ATM Agreement and $1.3 million of proceeds from exercises of common stock purchase warrants.
20
Purchase Obligations
Our primary purchase obligations include purchase orders for machinery and equipment. At December 31, 2025, we had outstanding purchase orders for machinery and equipment and related expenditures of approximately $2.0 million.
Going Concern - Working Capital
We do not currently have revenues to generate cash flows to cover operating expenses. Since our inception, we have incurred operating losses and negative cash flows in each year due to costs incurred in connection with R&D activities and SG&A expenses associated with our operations. For the nine months ended December 31, 2025 and year ended March 31, 2025, we incurred net losses of approximately $21.9 million and $18.8 million, respectively. At December 31, 2025, we had a cash balance of $2.9 million and an accumulated deficit of $106.6 million. When considered with our current operating plan, these conditions raise substantial doubt about our ability to continue as a going concern for a period of at least one year from the date that the financial statements included in Item 1 of this Report are issued. We currently lack sufficient liquidity to fund our operations for the next 30 days. If we do not obtain additional financing, we will be unable to meet our upcoming obligations, including employee compensation and vendor payments. In addition, our independent registered public accounting firm, in its report on our consolidated financial statements for the year ended March 31, 2025, expressed substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements presented in Part I, Item 1 of this Report have been prepared assuming that we will continue as a going concern, and do not include any adjustments that might result from the outcome of this uncertainty. Our operating needs include the planned costs to operate our business, including amounts required to fund continued research and development activities, working capital and capital expenditures. Our ability to continue as a going concern depends on our ability to raise additional capital, through the sale of equity or debt securities to support our 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 us. We are currently seeking additional financing in order to meet our cash requirements for the foreseeable future. If we are unable to obtain adequate capital to fund our operations, we would not be able to continue to operate our business pursuant to our current business plan, which would require us to modify our operations to reduce spending to a sustainable level by, among other things, delaying, scaling back or eliminating some or all of our ongoing or planned investments in our product, including but not limited to research and development and other activities, which would have a material impact on our operations or force us to discontinue our operations entirely.
In November 2023, we entered into a Sales Agreement (the “ATM Agreement”) with Leerink Partners LLC (“Leerink”) under which we may offer and sell, from time to time at our sole discretion, shares of our common stock (subject to availability on our shelf registration statement) through an “at the market offering” program under which Leerink will act as sales agent or principal. During the nine months ended December 31, 2025, we received net proceeds of approximately $1.9 million from sales of common stock under the ATM Agreement. In December 2025, we completed a public offering of our common stock and warrants for net proceeds of approximately $4.8 million.
If we were to raise additional capital through sales of our equity securities, our shareholders would suffer dilution of their equity ownership. If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, prohibit us from paying dividends, repurchasing our stock or making investments, and force us to maintain specified liquidity or other ratios, any of which could harm our business, operating results and financial condition. If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things:
| ● | continue to seek regulatory approvals for our Pivot insulin delivery system in the United States and other jurisdictions; |
| ● | commercialize our Pivot insulin delivery system; |
| ● | develop or enhance our products; |
| ● | continue to expand our product development and sales and marketing organizations; |
| ● | expand operations, in the United States or internationally; |
| ● | hire, train and retain employees; or |
| ● | respond to competitive pressures or unanticipated working capital requirements. |
Our failure to do any of these things could seriously harm our ability to execute our business strategy and may force us to curtail our existing operations.
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Off-Balance Sheet Arrangements
We do not maintain any off-balance sheet arrangements or obligations that are reasonably likely to have a material current or future effect on our financial condition, results of operations, liquidity or capital resources.
Indemnifications
In the ordinary course of business, we enter into contractual arrangements under which we may agree to indemnify the counter-party from losses relating to a breach of representations and warranties, a failure to perform certain covenants, or claims and losses arising from certain external events as outlined within the 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. We have also entered into indemnification agreements with our officers and directors. No material amounts related to these indemnifications are reflected in our condensed consolidated financial statements for the three and nine months ended December 31, 2025.
Recently Issued Accounting Pronouncements
Recently issued accounting pronouncements are detailed in Note 1 in the Notes to the Condensed Consolidated Financial Statements included in Item 1 of this Report.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not required.
Item 4. Controls and Procedures
Disclosure Controls and Procedures.
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based on this evaluation, management identified a material weakness in the Company’s internal control over financial reporting in the third quarter of fiscal 2026 related to the accounting for the warrants issued in the public offering completed in December 2025. It was determined that the Company should have accounted for the warrants issued in the public offering as liabilities rather than equity instruments, as the Company did not have a sufficient amount of authorized shares to deliver shares of common stock upon exercise under the terms of the warrants. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of December 31, 2025 as a result of the identified material control weakness.
Remediation Plan
The Company plans to amend its control activities to remediate the material weakness identified, including hiring additional staff with technical GAAP expertise and utilizing third-party experts to evaluate the accounting for its financing and other complex transactions to ensure compliance with GAAP. The Company believes implementation of these processes and appropriate testing of their effectiveness will remediate this material control weakness.
Changes in Internal Control over Financial Reporting.
During the three months ended December 31, 2025, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except for the planned remedial actions toward the control deficiency identified above.
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Part II – OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. To our knowledge, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of us or our subsidiary, threatened against or affecting us, our common stock, our subsidiary or our subsidiary’s officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
Item 1A. Risk Factors
We face many significant risks in our business, some of which are unknown to us and not presently foreseen. These risks could have a material adverse impact on our business, financial condition and results of operations in the future. Other than as set forth below, there have been no material changes to the risk factors set forth under Item 1A of our Annual Report on Form 10-K for the year ended March 31, 2025, which we filed with the SEC on June 20, 2025.
We might not be able to continue as a going concern.
Our condensed consolidated financial statements as of December 31, 2025 have been prepared under the assumption that we will continue as a going concern twelve months from the date of issuance of this Report. At December 31, 2025, we had cash and cash equivalents of $2.9 million and an accumulated deficit of $106.6 million. As disclosed in Note 4 to the condensed consolidated financial statements in this Report, in December 2025, we closed a public offering for net proceeds of approximately $4.8 million, and, during the three months ended December 31, 2025, we generated net proceeds of approximately $1.2 million from sales under our at-the-market sales program. Even with these proceeds, we do not believe that our cash and cash equivalents will be sufficient to fund our operations for the next 30 days, and we need to raise additional capital. As a result of our expected operating losses and cash burn for the foreseeable future and recurring losses from operations, if we are unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt as to our ability to continue as a going concern. If we cannot continue as a viable entity, our stockholders would likely lose most or all of their investment in us. If we are unable to generate sustainable operating profit and sufficient cash flows, then our future success will depend on our ability to raise capital. We intend to seek additional financing and evaluate financing alternatives in order to meet our cash requirements for the foreseeable future. We cannot be certain that raising additional capital, whether through selling additional debt or equity securities or obtaining a line of credit or other loan, will be available to us or, if available, will be on terms acceptable to us. If we issue additional securities to raise funds, these securities may have rights, preferences, or privileges senior to those of our common stock, and our current stockholders may experience dilution. If we are unable to obtain funds when needed or on acceptable terms, we may be required to curtail our current product development programs, cut operating costs, forego future development and other opportunities or even terminate our operations.
If we are unable to satisfy the continued listing requirements of the Nasdaq, our common stock could be delisted and the price and liquidity of our common stock may be adversely affected.
Our common stock may lose value and could be delisted from Nasdaq due to several factors or a combination of such factors. While our common stock is currently listed on Nasdaq, we can give no assurance that we will be able to satisfy the continued listing requirements of Nasdaq in the future, including, but not limited to, the corporate governance requirements and the minimum closing bid price requirement or the minimum equity requirement.
On June 30, 2025, we received a letter from the Listing Qualifications Staff of the Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of our common stock for the 30 consecutive business days ending on June 27, 2025, we no longer met the requirement to maintain a minimum bid price of $1 per share, as set forth in Nasdaq Listing Rule 5550(a)(2). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were provided a period of 180 calendar days, or until December 29, 2025, in which to regain compliance.
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On December 23, 2025, we submitted a request to Nasdaq for an additional 180-day period (the “Second Compliance Period”) to provide additional time for us to demonstrate compliance with the minimum bid price requirement. In such request, we communicated that we intend to regain compliance during the Second Compliance Period by effecting a reverse stock split. On December 30, 2025, we received written notification from the Listing Qualifications Department of Nasdaq, granting our request for a 180-day extension to regain compliance with the minimum bid price requirement. We now have until June 29, 2026 to meet the requirement. If at any time prior to June 29, 2026, the bid price of our common stock closes at $1 per share or more for a minimum of 10 consecutive business days, we will regain compliance with the minimum bid price requirement. In the event we do not regain compliance with the minimum bid price requirement during the additional 180-day extension, Nasdaq will provide written notification to us that our Common Stock will be delisted. At that time, we may appeal the relevant delisting determination to a hearings panel pursuant to the procedures set forth in the applicable Nasdaq Listing Rules. However, there can be no assurance that, if we do appeal the delisting determination by Nasdaq to the hearings panel, that such appeal would be successful. On January 23, 2026, at our annual meeting of shareholders, our shareholders authorized our board of directors to effect a reverse split, as necessary, to regain compliance. We will continue to monitor the closing bid price of our common stock and evaluate available options to regain compliance with the minimum bid price requirement. Nasdaq’s extension notice has no immediate effect on the listing or trading of our common stock, which continues to trade on the Nasdaq Capital Market under the ticker symbol, “MODD.”
There can be no assurance that we will be able to regain compliance with the minimum bid price requirement, maintain compliance with the other continued listing requirements of Nasdaq, or that our common stock will not be delisted in the future. If we were to be delisted, we would expect our common stock to be traded in the over-the-counter market which could adversely affect the liquidity of our common stock. Additionally, we could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our common stock; |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future; |
| ● | reduced liquidity for our stockholders; |
| ● | potential loss of confidence by customers, collaboration partners and employees; and |
| ● | loss of institutional investor interest. |
In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement, or prevent future non-compliance with Nasdaq’s listing requirements.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
During the nine months ended December 31, 2025, we issued 62,500 shares to one of our non-employee directors upon vesting of a restricted stock unit award granted under our Amended and Restated 2017 Equity Incentive Plan, as amended.
Item 3. Defaults Upon Senior Securities
There has been no default in the payment of principal, interest, or a sinking or purchase fund installment, or any other material default, with respect to any indebtedness of ours.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
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Item 6. Exhibits
| Filed or | ||||||||||
| Exhibit | Reference | Furnished | ||||||||
| Number | Exhibit Description | Form | Exhibit | Filing Date | Herewith | |||||
| 1.1 | Underwriting Agreement dated as of December 10, 2025 between Modular Medical, Inc. and Newbridge Securities Corporation | 8-K | 1.1 | 12/11/2025 | ||||||
| 3.1 | Third Amended and Restated Articles of Incorporation of Modular Medical, Inc., as filed with the Secretary of State of Nevada on June 27, 2017 | 8-K | 3.1 | 06/29/2017 | ||||||
| 3.2 | Certificate of Amendment to the Amended and Restated Articles of Incorporation of Modular Medical, Inc., filed with the Secretary of State of the State of Nevada on November 24, 2021 | 8-K | 3.1 | 12/01/2021 | ||||||
| 3.3 | Certificate of Amendment to the Amended and Restated Articles of Incorporation of Modular Medical, Inc., filed with the Secretary of State of the State of Nevada on February 15, 2024 | 8-K | 3.1 | 02/15/2024 | ||||||
| 3.4 | Amended Bylaws of Modular Medical, Inc. | 10-SB | 3.2 | 03/08/2002 | ||||||
| 3.5 | Certificate of Amendment to Amended and Restated Articles of Incorporation of Modular Medical, Inc., filed with the Secretary of State of the State of Nevada on January 23, 2026 | 8-K | 3.1 | 01/23/2026 | ||||||
| 4.1 | Form of Common Stock Purchase Warrant | 8-K | 4.1 | 12/11/2025 | ||||||
| 4.2 | Form of Underwriter Warrant | 8-K | 4.2 | 12/11/2025 | ||||||
| 31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||||||
| 31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 | X | ||||||||
| 32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002 | X | ||||||||
| 101 | The following financial information from Modular Medical, Inc.’s quarterly report on Form 10-Q for the period ended December 31, 2025, filed with the SEC on February 13, 2026, formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2025 and 2024, (ii) the Condensed Consolidated Balance Sheets as of December 31, 2025 and March 31, 2025, (iii) the Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended December 31, 2025 and 2024, (iv) the Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2025 and 2024, and (v) Notes to Condensed Consolidated Financial Statements. | X | ||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MODULAR MEDICAL, INC. | ||
| Date: February 17, 2026 | By: | /s/ James E. Besser |
| James E. Besser | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| By: | /s/ Paul DiPerna | |
| Paul DiPerna | ||
| Chairman, President, Chief Financial Officer and Treasurer (Principal Financial Officer) | ||
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FAQ
What were Modular Medical (MODD) losses for the quarter ended December 31, 2025?
How much cash does Modular Medical (MODD) have, and what is its runway?
What recent financings did Modular Medical (MODD) complete during the nine months ended December 31, 2025?
What is the regulatory status of Modular Medical’s MODD1 and Pivot insulin pumps?
Why does Modular Medical (MODD) face a Nasdaq delisting risk?
What material weakness in internal control did Modular Medical disclose?
How fast are Modular Medical’s operating expenses growing year over year?
