Part I – FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, lease obligations, debt, equity transactions, stock-based compensation, income taxes, related party transactions, commitments, contingencies, and subsequent events [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific points in time | Metric | December 31, 2020 ($) | March 31, 2020 ($) | | :-------------------------- | :---------------- | :--------------- | | Cash and cash equivalents | 596,542 | 3,122,134 | | Total Assets | 1,291,526 | 3,858,551 | | Total Liabilities | 1,292,279 | 980,129 | | Total Stockholders' Equity (Deficit) | (753) | 2,878,422 | | Accumulated Deficit | (14,174,465) | (8,569,034) | - The company's total assets decreased by approximately **$2,567,025**, and total stockholders' equity shifted from positive to negative, primarily driven by a significant reduction in cash and an increase in accumulated deficit[6](index=6&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's revenues, expenses, and net loss over specific periods, reflecting operational performance | Metric | 3 Months Ended Dec 31, 2020 ($) | 3 Months Ended Dec 31, 2019 ($) | 9 Months Ended Dec 31, 2020 ($) | 9 Months Ended Dec 31, 2019 ($) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Operating Expenses | 1,870,567 | 1,135,848 | 5,603,957 | 3,431,429 | | Net Loss | (1,870,545) | (1,133,517) | (5,605,431) | (3,403,281) | | Net Loss Per Share (Basic & Diluted) | (0.10) | (0.06) | (0.30) | (0.19) | - The company experienced a substantial increase in net loss for both the three months (from **$(1,133,517)** to **$(1,870,545)**) and nine months (from **$(3,403,281)** to **$(5,605,431)**) ended December 31, 2020, compared to the prior year, primarily due to higher operating expenses[8](index=8&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) This section details changes in the company's equity, including net losses, stock issuances, and stock-based compensation - Total Stockholders' Equity (Deficit) declined from **$2,878,422** as of March 31, 2020, to **$(753)** as of December 31, 2020, primarily due to recurring net losses[11](index=11&type=chunk) - Private placements of common stock generated **$1,118,634** (June 30, 2020) and **$667,248** (Dec 31, 2020), partially offsetting the accumulated deficit[11](index=11&type=chunk) - Stock-based compensation recognized during the period totaled **$940,374** (**$344,716** + **$300,604** + **$295,054**)[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by operating, investing, and financing activities over specific periods | Metric | 9 Months Ended Dec 31, 2020 ($) | 9 Months Ended Dec 31, 2019 ($) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | (4,570,713) | (2,776,998) | | Net cash used in investing activities | (109,541) | (58,278) | | Net cash provided by financing activities | 2,154,662 | 0 | | Net decrease in cash and cash equivalents | (2,525,592) | (2,835,276) | | Cash and cash equivalents at end of period | 596,542 | 3,718,492 | - Cash used in operating activities increased significantly in 2020, but financing activities provided substantial cash, primarily from private placements and a PPP loan, which helped mitigate the overall cash decrease[14](index=14&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [NOTE 1 – The Company and Summary of Significant Accounting Policies](index=7&type=section&id=NOTE%201%20%E2%80%93%20THE%20COMPANY%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note describes the company's business, its going concern status, and the impact of the COVID-19 pandemic on its operations - Modular Medical, Inc. is a development-stage medical device company focused on designing and commercializing an innovative insulin pump[18](index=18&type=chunk) - The company expects to incur operating losses and cash outflows, raising substantial doubt about its ability to continue as a going concern, necessitating additional capital raises[20](index=20&type=chunk) - The global COVID-19 pandemic has negatively affected the economy, supply chains, and financial markets, with the full impact on the company's performance remaining uncertain[31](index=31&type=chunk) [NOTE 2 – Leases](index=9&type=section&id=NOTE%202%20%E2%80%93%20LEASES) This note details the company's lease accounting policies, new lease agreements, and future lease payment obligations - The company adopted ASC 842 for leases on April 1, 2019, and executed a new 39-month corporate facility lease in San Diego commencing April 1, 2020[38](index=38&type=chunk) - A right-of-use asset of **$270,950** was obtained, along with a **$139,000** lease incentive for improvements[39](index=39&type=chunk) | Annual Fiscal Years | Operating lease ($) | | :------------------ | :-------------- | | 2021 | 37,239 | | 2022 | 153,432 | | 2023 | 158,028 | | 2024 | 40,692 | | Present value of lease liabilities | 338,042 | - Rent expense for the nine months ended December 31, 2020, was **$80,654**, up from **$25,500** in the prior year[41](index=41&type=chunk) [NOTE 3 – Note Payable](index=10&type=section&id=NOTE%203%20%E2%80%93%20NOTE%20PAYABLE) This note describes the company's Paycheck Protection Program (PPP) loan, its terms, and the status of its forgiveness application - The company received a **$368,780** unsecured loan under the Paycheck Protection Program (PPP Note) on April 24, 2020[42](index=42&type=chunk) - The PPP Note is due in April 2022, accrues interest at **1.0%** per annum, with monthly payments starting September 2021[43](index=43&type=chunk) - An application for forgiveness of the PPP Note was submitted in October 2020, but forgiveness is not assured[44](index=44&type=chunk) [NOTE 4 – Stockholders' Equity (Deficit)](index=10&type=section&id=NOTE%204%20%E2%80%93%20STOCKHOLDERS'%20EQUITY%20(DEFICIT)) This note details the company's private placement of common stock and the associated registration requirements - As of December 31, 2020, the company sold **962,387** shares of common stock in a private placement (2020 Placement) at **$2.87** per share, generating gross proceeds of **$2,762,054**[45](index=45&type=chunk) - The company is required to file a registration statement with the SEC within **90 days** of the 2020 Placement closing to register the shares for resale[45](index=45&type=chunk) [NOTE 5 – Stock-Based Compensation](index=10&type=section&id=NOTE%205%20%E2%80%93%20STOCK-BASED%20COMPENSATION) This note outlines changes to the equity incentive plan, unamortized compensation costs, and details of stock option grants - The 2017 Equity Incentive Plan was expanded in January 2020, increasing reserved shares by **1,000,000** to a total of **4,000,000**[46](index=46&type=chunk) - Unamortized stock-based compensation cost was **$2,354,079** at December 31, 2020, expected to be recognized over approximately **2.06 years**[47](index=47&type=chunk) - During the nine months ended December 31, 2020, options to purchase **355,476** shares were granted, with a fair value of **$825,838**, resulting in **$223,878** recorded as expense[48](index=48&type=chunk) | Metric | Value | | :-------------------------- | :------ | | Shares Available for Grant | 487,412 | | Number of Shares Outstanding | 3,512,588 | | Weighted Average Exercise Prices ($) | 1.71 | - As of December 31, 2020, **1,927,052** options were exercisable with a weighted average exercise price of **$1.16** and an aggregate intrinsic value of **$4,036,117**[52](index=52&type=chunk) [NOTE 6 – Income Taxes](index=13&type=section&id=NOTE%206%20%E2%80%93%20INCOME%20TAXES) This note explains the company's deferred tax assets, valuation allowance, and unrecognized tax benefits - The company has recorded a full valuation allowance against its federal and state net deferred tax assets, as management believes they are not likely to be fully realized[54](index=54&type=chunk) - No liability for unrecognized tax benefits related to uncertain tax positions was recorded as of December 31, 2020[55](index=55&type=chunk) [NOTE 7 – Related Party Transaction](index=13&type=section&id=NOTE%207%20%E2%80%93%20RELATED%20PARTY%20TRANSACTION) This note discloses an outstanding payable to a board member from a terminated consulting agreement - As of December 31, 2020, the company had an outstanding payable of **$5,585** to a member of its board of directors, stemming from a terminated consulting agreement[56](index=56&type=chunk) [NOTE 8 – Commitments and Contingencies](index=13&type=section&id=NOTE%208%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) This note addresses the company's involvement in legal proceedings and contractual indemnification arrangements - The company is involved in legal proceedings and contractual indemnification arrangements in the normal course of business[57](index=57&type=chunk)[58](index=58&type=chunk) - No amounts have been reflected in the financial statements for indemnification liabilities due to the inability to estimate the maximum potential amount[58](index=58&type=chunk) [NOTE 9 – Subsequent Event](index=13&type=section&id=NOTE%209%20%E2%80%93%20SUBSEQUENT%20EVENT) This note details the private placement of convertible promissory notes in February 2021, including their terms and conversion features - On February 8, 2021, the company sold **$1,100,000** of convertible promissory notes in a private placement[59](index=59&type=chunk) - The notes bear **12%** annual interest, payable monthly, and mature on September 30, 2021[59](index=59&type=chunk) - Notes automatically convert upon a Qualified Financing (equity offering of at least **$5,000,000**) at an **80%** conversion price (**20%** discount)[60](index=60&type=chunk) - Holders can demand repayment or convert to common stock at **$2.87** per share (or **20%** discount to any financing) after maturity or upon a Change of Control[61](index=61&type=chunk)[63](index=63&type=chunk) - The company's chairman and CEO, along with an existing investor, purchased the notes[64](index=64&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, highlighting its status as a development-stage medical device company, the significant net losses incurred, and the ongoing challenges related to liquidity and capital resources. It also details the operational and financial impacts of the COVID-19 pandemic and discusses key operating expenses [Company Overview](index=15&type=section&id=Company%20Overview) This section provides an overview of the company's development-stage status, financial performance, and going concern challenges - Modular Medical, Inc. is a development-stage medical device company focused on an innovative insulin pump, with development substantially completed but awaiting FDA clearance[67](index=67&type=chunk)[68](index=68&type=chunk) - The company has not generated product sales revenue and incurred net losses of approximately **$5.6 million** for the nine months ended December 31, 2020[68](index=68&type=chunk) - As of December 31, 2020, the company had negative working capital of approximately **$0.2 million** and an accumulated deficit of approximately **$14.2 million**, raising substantial doubt about its ability to continue as a going concern[68](index=68&type=chunk)[69](index=69&type=chunk) [Impacts of COVID-19](index=16&type=section&id=Impacts%20of%20COVID-19) This section discusses the negative effects of the COVID-19 pandemic on the company's operations, supply chain, and capital raising efforts - The COVID-19 pandemic has negatively affected the U.S. and global economy, disrupted supply chains, and restricted travel, with the full impact on the company's performance uncertain[70](index=70&type=chunk) - The company has experienced longer lead times for components and implemented teleworking policies, potentially delaying FDA submission and approval[71](index=71&type=chunk)[72](index=72&type=chunk) - The pandemic has led to disruption and volatility in global capital markets, posing a risk to the company's ability to raise additional capital on favorable terms[73](index=73&type=chunk) [Critical Accounting Policies and Estimates](index=16&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms the company's adherence to U.S. GAAP and the absence of material changes to accounting policies - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and judgments[75](index=75&type=chunk) - As of December 31, 2020, there have been no material changes to the company's significant accounting policies and estimates[75](index=75&type=chunk) [Results of Operations](index=17&type=section&id=Results%20of%20Operations) This section analyzes the changes in key operating expenses and interest income over the reporting periods [Research and Development](index=17&type=section&id=Research%20and%20Development) This section details the increase in R&D expenses driven by personnel and consulting costs, with expected future decreases | Period | 2020 (R&D Expense, $) | 2019 (R&D Expense, $) | Change (2019 to 2020, $) | Percentage Change | | :-------------------- | :----------------- | :----------------- | :-------------------- | :------------------ | | Three months ended Dec 31 | 1,086,669 | 608,019 | 478,650 | 78.7% | | Nine months ended Dec 31 | 3,150,149 | 1,945,043 | 1,205,106 | 62.0% | - The increase in R&D expenses was primarily due to increased engineering and manufacturing personnel and consulting costs, with R&D employee headcount rising from **8** to **15**[77](index=77&type=chunk)[78](index=78&type=chunk) - R&D expenses are expected to decrease for the remainder of fiscal 2021 due to expense management[78](index=78&type=chunk) [General and Administrative](index=17&type=section&id=General%20and%20Administrative) This section explains the rise in G&A expenses due to personnel, stock-based compensation, and facilities costs, with expected future decreases | Period | 2020 (G&A Expense, $) | 2019 (G&A Expense, $) | Change (2019 to 2020, $) | Percentage Change | | :-------------------- | :----------------- | :----------------- | :-------------------- | :------------------ | | Three months ended Dec 31 | 783,898 | 527,829 | 256,069 | 48.5% | | Nine months ended Dec 31 | 2,453,808 | 1,486,386 | 967,422 | 65.1% | - The increase in G&A expenses was mainly due to higher personnel costs, stock-based compensation, and facilities costs, with G&A employee headcount increasing from **2** to **4**[80](index=80&type=chunk) - G&A expenses are expected to decrease for the remainder of fiscal 2021 due to expense management[80](index=80&type=chunk) [Interest Income](index=17&type=section&id=Interest%20Income) This section highlights the significant decrease in interest income due to lower rates and reduced cash balances | Period | 2020 (Interest Income, $) | 2019 (Interest Income, $) | Change (2019 to 2020, $) | Percentage Change | | :-------------------- | :--------------------- | :--------------------- | :-------------------- | :------------------ | | Three months ended Dec 31 | 22 | 2,331 | (2,309) | (99.1%) | | Nine months ended Dec 31 | 126 | 28,148 | (28,022) | (99.6%) | - Interest income decreased significantly due to a reduction in interest rates and lower average cash balances[81](index=81&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ongoing operating losses, negative cash flows, and reliance on external capital to maintain going concern status - The company has incurred continuous operating losses and negative cash flows, with a net loss of approximately **$5.6 million** for the nine months ended December 31, 2020[83](index=83&type=chunk) - As of December 31, 2020, the company had a cash balance of approximately **$0.6 million** and an accumulated deficit of approximately **$14.2 million**, raising substantial doubt about its going concern ability[83](index=83&type=chunk) - The company's ability to continue as a going concern depends on raising additional capital through equity or debt, having recently secured funds from a private placement, a PPP loan, and convertible promissory notes (subsequent event)[83](index=83&type=chunk) | Cash Flow Activity | 9 Months Ended Dec 31, 2020 ($) | | :-------------------------------- | :-------------------------- | | Net cash used in operating activities | (4,570,713) | | Net cash used in investing activities | (109,541) | | Net cash provided by financing activities | 2,154,662 | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=18&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that quantitative and qualitative disclosures about market risk are not required for the company - The company is not required to provide quantitative and qualitative disclosures about market risk[88](index=88&type=chunk) [Item 4. Controls and Procedures](index=18&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020. There were no material changes in internal control over financial reporting during the nine months ended December 31, 2020 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[90](index=90&type=chunk) - There were no material changes in internal control over financial reporting during the nine months ended December 31, 2020[91](index=91&type=chunk) Part II - OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered equity sales, and other material information [Item 1. Legal Proceedings](index=20&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings under this item - No legal proceedings to report[93](index=93&type=chunk) [Item 1A. Risk Factors](index=20&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant business risks, including those previously disclosed in its Form 10-K. The ongoing COVID-19 pandemic presents new and emphasized risks related to operations, supply chains, regulatory approvals, and access to capital markets - The company faces many significant business risks, including those previously disclosed in its Annual Report on Form 10-K[94](index=94&type=chunk) - The COVID-19 pandemic negatively affects the world economy, supply chains, and financial markets, potentially delaying product production, FDA submission, and regulatory approvals[95](index=95&type=chunk)[96](index=96&type=chunk)[98](index=98&type=chunk) - The continued spread of COVID-19 could limit access to capital markets or make additional capital available only on significantly detrimental terms[99](index=99&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=20&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported unregistered sales of equity securities, including 962,387 shares of common stock in a private placement for approximately $2.8 million gross proceeds, and $1.1 million in convertible promissory notes issued in February 2021 - The company sold **962,387** shares of common stock in a private placement (2020 Placement) for approximately **$2.8 million** gross proceeds since March 2020[100](index=100&type=chunk) - In February 2021, the company issued **$1.1 million** aggregate principal amount of convertible promissory notes[101](index=101&type=chunk) [Item 3. Defaults Upon Senior Securities](index=20&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities[102](index=102&type=chunk) [Item 4. Mine Safety Disclosures](index=21&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[103](index=103&type=chunk) [Item 5. Other Information](index=21&type=section&id=Item%205.%20Other%20Information) This section provides further details on the $1.1 million convertible promissory notes sold on February 8, 2021, including their 12% interest rate, September 30, 2021 maturity, automatic conversion terms upon a Qualified Financing, and options for repayment or conversion at maturity or upon a Change of Control - The company sold **$1,100,000** of convertible promissory notes on February 8, 2021, bearing **12%** annual interest and maturing on September 30, 2021[104](index=104&type=chunk) - The notes automatically convert upon a Qualified Financing (equity offering of at least **$5,000,000**) at a **20%** discount to the lowest price paid by investors[105](index=105&type=chunk) - Holders have options for repayment or conversion into common stock at **$2.87** per share (or a **20%** discount to any financing) after maturity or upon a Change of Control[106](index=106&type=chunk)[107](index=107&type=chunk) - The notes were purchased by the company's chairman and CEO and an existing investor[108](index=108&type=chunk) [Item 6. Exhibits](index=21&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the form of convertible promissory note, certifications under the Sarbanes-Oxley Act, and XBRL taxonomy documents - Exhibits include the Form of Convertible Promissory Note dated February 8, 2021 (Exhibit **10.21**)[109](index=109&type=chunk) - Certifications of Paul M. DiPerna pursuant to Sections **302** and **906** of the Sarbanes-Oxley Act of 2002 are included (Exhibits **31.1**, **32.1**)[109](index=109&type=chunk) - XBRL Instance Document and Taxonomy Extension files are provided[109](index=109&type=chunk) SIGNATURES This section provides the official signatures certifying the accuracy and completeness of the report - The report was signed by Paul M. DiPerna, Chairman, Chief Executive Officer, Chief Financial Officer, Secretary, and Treasurer, on February 12, 2021[114](index=114&type=chunk)

[Part I – FINANCIAL INFORMATION](index=2&type=section&id=Part%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) The development-stage company reported a widened net loss of $3.7 million and a significant decline in stockholders' equity [Condensed Consolidated Balance Sheets](index=2&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $2.2 million while liabilities rose, causing a sharp decline in stockholders' equity Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | Sep 30, 2020 | Mar 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,486,574 | $3,122,134 | | Total Current Assets | $1,522,072 | $3,186,293 | | Total Assets | $2,199,398 | $3,858,551 | | Total Current Liabilities | $733,207 | $661,393 | | Total Liabilities | $1,291,908 | $980,129 | | Total Stockholders' Equity | $907,490 | $2,878,422 | [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company generated no revenue and reported a widened net loss of $3.7 million due to increased operating expenses Statement of Operations Summary (Unaudited) | Metric | Six Months Ended Sep 30, 2020 | Six Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Research and development | $2,063,480 | $1,337,025 | | General and administrative | $1,669,910 | $958,556 | | Total Operating Expenses | $3,733,390 | $2,295,581 | | Loss from operations | $(3,733,390) | $(2,295,581) | | Net Loss | $(3,734,886) | $(2,269,764) | | Net Loss Per Share (Basic and diluted) | $(0.20) | $(0.13) | [Condensed Consolidated Statements of Stockholders' Equity](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity fell sharply to $0.9 million, driven by a $3.7 million net loss despite new stock proceeds - Total stockholders' equity decreased from **$2,878,422** on March 31, 2020, to **$907,490** on September 30, 2020[13](index=13&type=chunk) - The decrease was driven by a net loss of over **$3.7 million**, partially offset by proceeds from a private stock placement ($1,118,634) and stock-based compensation ($645,320)[13](index=13&type=chunk)[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations increased to $3.0 million, leading to a $1.6 million decrease in total cash Cash Flow Summary (Unaudited) | Cash Flow Activity | Six Months Ended Sep 30, 2020 | Six Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,029,671) | $(1,747,462) | | Net cash used in investing activities | $(93,303) | $(30,600) | | Net cash provided by financing activities | $1,487,414 | $0 | | Net decrease in cash | $(1,635,560) | $(1,778,062) | | Cash at end of period | $1,486,574 | $4,775,706 | [Notes to Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes highlight the company's development stage, a going concern warning, a PPP loan, and a recent private placement - The company is a development-stage medical device company focused on designing and commercializing an innovative insulin pump[20](index=20&type=chunk) - Management has concluded that **substantial doubt exists** about the Company's ability to continue as a going concern[22](index=22&type=chunk) - In April 2020, the company received a **$368,780 unsecured loan** under the Paycheck Protection Program (PPP) and has since applied for forgiveness[44](index=44&type=chunk)[46](index=46&type=chunk) - The company initiated a private placement in March 2020, selling 729,897 shares for aggregate proceeds of **$2,094,806** as of September 30, 2020[47](index=47&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=11&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses its going concern risk, COVID-19 impacts, rising operating expenses, and reliance on external financing [Company Overview](index=13&type=section&id=Company%20Overview) The company is a pre-revenue medical device firm with a $12.3 million accumulated deficit and going concern doubts - The company is focused on the design, development, and commercialization of an innovative insulin pump for people with diabetes[64](index=64&type=chunk) - The company has **not yet obtained FDA clearance** for its insulin pump and has not generated any revenue from product sales[65](index=65&type=chunk) - As of September 30, 2020, the company had an accumulated deficit of approximately **$12.3 million**, and there is substantial doubt about its ability to continue as a going concern[65](index=65&type=chunk)[66](index=66&type=chunk) [Impacts of COVID-19](index=13&type=section&id=Impacts%20of%20COVID-19) The COVID-19 pandemic has caused operational disruptions, delaying the expected FDA submission to H1 2021 - The company has experienced **longer lead times** for certain components used to manufacture products for its FDA submission due to COVID-19 disruptions[68](index=68&type=chunk) - The product-approval submission to the FDA is now expected to occur in the **first half of calendar year 2021**[68](index=68&type=chunk) - The pandemic has led to disruption and volatility in global capital markets, which may impact the company's ability to raise additional capital[70](index=70&type=chunk) [Results of Operations](index=14&type=section&id=Results%20of%20Operations) Operating expenses rose significantly, driven by increased personnel and consulting costs in both R&D and G&A Research and Development Expenses (Six Months Ended Sep 30) | Period | 2020 | 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Six Months Ended | $2,063,480 | $1,337,025 | $726,455 | 54.3% | - The increase in R&D expenses was primarily due to increased engineering and manufacturing personnel and consulting costs, as the R&D employee headcount grew from four to 15 year-over-year[74](index=74&type=chunk) General and Administrative Expenses (Six Months Ended Sep 30) | Period | 2020 | 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Six Months Ended | $1,669,910 | $958,556 | $711,354 | 74.2% | - The increase in G&A expenses was primarily a result of increased personnel costs, stock-based compensation expenses, and facilities costs[76](index=76&type=chunk) [Liquidity and Capital Resources](index=15&type=section&id=Liquidity%20and%20Capital%20Resources) With a cash balance of $1.5 million and recurring losses, the company's ability to continue as a going concern is in doubt - The company had a cash balance of approximately **$1.5 million** and an accumulated deficit of **$12.3 million** as of September 30, 2020[78](index=78&type=chunk) - Management states that these conditions raise **substantial doubt** about the company's ability to continue as a going concern for at least one year[78](index=78&type=chunk) - During the six months ended September 30, 2020, the company received net proceeds of **$1,118,634** from a private stock placement and **$368,780** from a PPP loan[82](index=82&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=15&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not required for smaller reporting companies - Disclosure is not required[83](index=83&type=chunk) [Item 4. Controls and Procedures](index=16&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes during the period - Management concluded that as of September 30, 2020, the company's disclosure controls and procedures were **effective**[85](index=85&type=chunk) - There were **no changes** in internal control over financial reporting during the six months ended September 30, 2020, that have materially affected, or are reasonably likely to materially affect, internal controls[86](index=86&type=chunk) [Part II - OTHER INFORMATION](index=17&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=17&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings - None[89](index=89&type=chunk) [Item 1A. Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The COVID-19 pandemic poses significant risks to supply chains, regulatory timelines, and future capital raising efforts - The COVID-19 pandemic has negatively affected the world economy, disrupted supply chains, and could **delay product production and FDA submission**[91](index=91&type=chunk)[92](index=92&type=chunk) - An extended period of supply chain disruption could impact the ability to produce initial product quantities for **regulatory approval**[94](index=94&type=chunk) - Disruption and volatility in global capital markets due to COVID-19 may make it difficult for the company to **raise needed additional capital** in the future[95](index=95&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=17&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company raised approximately $2.45 million in gross proceeds from a private placement of its common stock - Since March 2020, the company has sold 854,897 shares of common stock at $2.87 per share in a private placement, raising gross proceeds of approximately **$2.45 million**[96](index=96&type=chunk) [Item 3. Defaults Upon Senior Securities](index=17&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[97](index=97&type=chunk) [Item 6. Exhibits](index=19&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the report, including incentive plans and Sarbanes-Oxley certifications

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 or o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 000-49671 MODULAR MEDICAL, INC. (Exact Name of Registrant as Specified in its Charter) (State or Other Jurisdiction of (I.R.S. Employer Incorporat ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2020 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 000-49671 MODULAR MEDICAL, INC. (Exact name of registrant as specified in its charter) Nevada 87-0620495 (State or Other Jurisdiction of I ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 For the quarterly period ended December 31, 2019 or o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 000-49671 MODULAR MEDICAL, INC. (Exact Name of Registrant as Specified in its Charter) FORM 10-Q (Mark One) x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Former Name, Former Address and Former Fiscal Year, if ...

Part I - Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the period ended September 30, 2019, reveal a development-stage company with no revenue, reporting a net loss of $2.27 million for the six-month period, a decrease in cash and cash equivalents to $4.78 million, and increased operating expenses primarily from research and development [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | September 30, 2019 ($) | March 31, 2019 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $4,775,706 | $6,553,768 | | Total Current Assets | $4,793,458 | $6,576,858 | | Total Assets | $4,885,668 | $6,652,986 | | **Liabilities & Equity** | | | | Total Liabilities | $330,592 | $178,929 | | Total Stockholders' Equity | $4,555,076 | $6,474,057 | | Accumulated deficit | $(5,517,925) | $(3,248,161) | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended Sep 30, 2019 ($) | Three Months Ended Sep 30, 2018 ($) | Six Months Ended Sep 30, 2019 ($) | Six Months Ended Sep 30, 2018 ($) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $633,241 | $367,550 | $1,337,025 | $503,340 | | General and administration | $524,100 | $181,448 | $958,556 | $300,848 | | **Loss From Operations** | **$(1,157,341)** | **$(548,998)** | **$(2,295,581)** | **$(804,188)** | | **Net Loss** | **$(1,147,566)** | **$(543,774)** | **$(2,269,764)** | **$(793,340)** | | Net Loss Per Share (Basic & Diluted) | $(0.06) | $(0.03) | $(0.13) | $(0.05) | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) - Total stockholders' equity decreased from **$6.47 million** at March 31, 2019, to **$4.56 million** at September 30, 2019, primarily driven by a net loss of **$2.27 million** for the six-month period, partially offset by stock-based compensation[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended September 30 (Unaudited) | Cash Flow Activity | 2019 ($) | 2018 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,747,462) | $(576,101) | | Net cash used in investing activities | $(30,600) | $(32,753) | | **Net decrease in cash** | **$(1,778,062)** | **$(608,854)** | | Cash at beginning of period | $6,553,768 | $4,296,676 | | Cash at end of period | $4,775,706 | $3,687,822 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company is a **development-stage medical device company** focused on designing and commercializing an innovative insulin pump, and has **not yet generated any revenue** from its operations[20](index=20&type=chunk) - Under the 2017 Equity Incentive Plan, the company granted options to purchase **100,485 shares** of common stock during the six months ended September 30, 2019, with unamortized stock-based compensation cost of **$352,936** as of September 30, 2019[46](index=46&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - The company has a royalty agreement with its founder, obligating it to pay royalties on future product sales up to a maximum of **$10 million**, with the royalty being the lesser of **$0.75 per unit** or **5% of the gross sale price**[56](index=56&type=chunk) - Management believes it is more likely than not that the net deferred tax assets will not be fully realizable and has recorded a **full valuation allowance** against them[55](index=55&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=12&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial results, highlighting significantly increased operating expenses due to accelerated product development and administrative costs, reporting a net loss of $2.2 million for the six months ended September 30, 2019, and noting that its current working capital of $4.5 million is insufficient to meet operating requirements for the next twelve months, necessitating additional capital raising [Company Overview](index=13&type=section&id=Company%20Overview) - The company is a **development-stage entity** that has **not yet obtained FDA clearance** for its insulin pump and has **not generated any revenue** from product sales[59](index=59&type=chunk)[60](index=60&type=chunk) - As of September 30, 2019, the company had working capital of **$4.5 million** and an accumulated deficit of **$5.5 million**[60](index=60&type=chunk) - The company does not have sufficient cash to meet its projected operating requirements for the next twelve months and will need to raise **additional capital**[61](index=61&type=chunk) [Results of Operations](index=13&type=section&id=Results%20of%20Operations) Comparison of Operating Expenses | Expense Category | Six Months Ended Sep 30, 2019 ($) | Six Months Ended Sep 30, 2018 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Research and development | $1,337,025 | $503,340 | +$833,685 | | General and administrative | $958,557 | $300,848 | +$657,709 | - The increase in R&D expenses was primarily due to **increased product development**, personnel, consulting, and stock-based compensation expenses to accelerate product development[64](index=64&type=chunk) - The increase in G&A expenses was mainly attributable to **increases in personnel, professional services, stock-based compensation**, and expenses for preparing a selling shareholders registration statement[65](index=65&type=chunk) [Liquidity and Capital Resources](index=14&type=section&id=Liquidity%20and%20Capital%20Resources) - Net cash used in operating activities increased significantly to **$1,747,462** for the six months ended September 30, 2019, compared to **$576,101** in the prior-year period, driven by a higher net loss from increased R&D activities[67](index=67&type=chunk)[69](index=69&type=chunk) - The company expects to continue **raising capital through future equity or debt offerings** to finance its operations[67](index=67&type=chunk)[68](index=68&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=14&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Modular Medical is not required to provide this disclosure - This disclosure is **not required** for the company[72](index=72&type=chunk) [Controls and Procedures](index=14&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were ineffective as of September 30, 2019, due to material weaknesses in internal control over financial reporting, including inadequate controls and a lack of segregation of duties, with remediation efforts initiated through hiring an accounting manager and a contract CFO - Management concluded that disclosure controls and procedures were **not effective** as of the end of the period covered by the report[74](index=74&type=chunk) - Material weaknesses were identified related to **inadequate internal controls** over financial reporting and a **lack of segregation of duties**[75](index=75&type=chunk) - To remediate these weaknesses, the company **hired a full-time accounting manager and engaged a contract CFO** during the six months ended September 30, 2019[76](index=76&type=chunk) Part II - Other Information [Legal Proceedings](index=15&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - The company reports that there are **no legal proceedings**[78](index=78&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company refers investors to the risk factors disclosed in its Annual Report on Form 10-K for the year ended March 31, 2019 - The company directs readers to its **Annual Report on Form 10-K** filed with the SEC on June 27, 2019, for a discussion of material risks[79](index=79&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=15&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the six-month period, the company issued 30,000 shares of common stock to a consultant for services, which were exempt from registration under the Securities Act - The company issued **30,000 shares** of common stock to a consultant for services, which were deemed exempt from registration under Rule 701 or Section 4(a)(2) of the Securities Act[80](index=80&type=chunk) [Defaults Upon Senior Securities](index=16&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - **None reported**[81](index=81&type=chunk) [Mine Safety Disclosures](index=16&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[82](index=82&type=chunk) [Other Information](index=16&type=section&id=Item%205.%20Other%20Information) The company reported no other information - **None reported**[83](index=83&type=chunk) [Exhibits](index=16&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications and XBRL data files - The report lists **certifications from the principal executive officer pursuant to Sarbanes-Oxley Act Sections 302 and 906**, as well as **XBRL data files**, as exhibits[84](index=84&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________________ to __________________________ Commission file number 000-49671 MODULAR MEDICAL, INC. (Exact Name of Registrant as Specified in its C ...

Part I [Item 1. Business](index=4&type=section&id=ITEM%201.%20BUSINESS) The company is a development-stage entity creating a simpler, more affordable insulin pump for the diabetes market [Overview](index=4&type=section&id=Overview) The company is designing an innovative, simple, and affordable insulin pump to expand therapy access for diabetics - The company is a development stage entity focused on designing and commercializing an innovative, simpler, and more affordable insulin pump to expand access for individuals requiring daily insulin administration[20](index=20&type=chunk)[21](index=21&type=chunk) - The company's founder and CEO, Paul DiPerna, also founded **Tandem Diabetes Care, Inc. (NASDAQ: TNDM)**, bringing significant experience in developing and commercializing insulin pumps[22](index=22&type=chunk) - Identified shortcomings of current insulin pumps include **complexity, being cumbersome, and high costs**, which limit broader market acceptance[23](index=23&type=chunk) [The Market and Opportunity](index=6&type=section&id=The%20Market%20and%20Opportunity) The company targets the large diabetes market, seeing opportunity in the complexity and high cost of existing pumps - In 2012, the CDC estimated **3.1 million people** in the U.S. required daily administration of rapid-acting insulin, which constitutes the company's target market[29](index=29&type=chunk) - The company believes existing pumps are **too complex, bulky, and expensive**, which has held back adoption rates and created an opportunity for a simpler, more affordable solution[27](index=27&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk) - A significant opportunity is seen in penetrating the **Type 2 diabetes marketplace** with a simplified insulin pump[33](index=33&type=chunk) [Our Solution and Strategy](index=7&type=section&id=Our%20Solution%20and%20Strategy) The company is developing a proprietary, simple, and low-cost insulin pump using a lean, experienced engineering team - The company's proposed pump aims to be the **simplest and least expensive** on the market, targeting users who find current products too complex, costly, or cumbersome[38](index=38&type=chunk) - An early prototype has been built to test the novel approach, which will require modification for safety features and low-cost manufacturing[39](index=39&type=chunk) - Business strategies include using proprietary technology, keeping development costs low, and utilizing a small, experienced engineering team under the CEO's direct supervision[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) [Government Regulations](index=8&type=section&id=Government%20Regulations) The company's insulin pump is subject to extensive FDA regulation and will likely require a lengthy PMA process - The medical device industry is heavily regulated by the FDA, covering product design, testing, manufacturing, marketing, and post-market surveillance[46](index=46&type=chunk)[47](index=47&type=chunk) - The company anticipates its proposed insulin pump will require the more rigorous, costly, and lengthy **Pre-Market Approval (PMA)** pathway from the FDA, as opposed to the 510(k) clearance process[48](index=48&type=chunk)[49](index=49&type=chunk) - Failure to comply with regulations or obtain timely approval could result in significant sanctions, including fines, recalls, and withdrawal of approvals, materially impacting the business[52](index=52&type=chunk) [Competition, Patents, and Corporate History](index=9&type=section&id=Competition%2C%20Patents%2C%20and%20Corporate%20History) The company targets mainstream patients to avoid direct competition and has applied for two U.S. patents - Key competitors are Medtronic, Tandem Diabetes Care, and Insulet; the company's strategy is to attract mainstream patients with a simple, cost-effective solution rather than competing for sophisticated users[54](index=54&type=chunk) - The company has applied for **two U.S. patents** on its proprietary fluid movement technology and product configuration[56](index=56&type=chunk) - The company acquired Quasuras, Inc. on July 24, 2017, becoming its wholly-owned subsidiary and concurrently completed a private placement raising approximately **$4.73 million** in gross proceeds[59](index=59&type=chunk)[60](index=60&type=chunk) [Item 1A. Risk Factors](index=11&type=section&id=ITEM%201A.%20RISK%20FACTORS) As a smaller reporting company, this disclosure is not required - As a smaller reporting company, Modular Medical is not required to provide this section[65](index=65&type=chunk) [Item 2. Properties](index=11&type=section&id=ITEM%202.%20PROPERTIES) The company's principal executive offices are located in Escondido, California - The company's principal executive offices are located in Escondido, California[66](index=66&type=chunk) [Item 3. Legal Proceedings](index=11&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is not currently a party to any pending legal proceedings - The company is not currently a party to any pending legal proceedings[67](index=67&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=11&type=section&id=ITEM%205%3A%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades sporadically on the OTC Pink Markets and it has never paid dividends - The company's common stock is quoted on the OTC Pink Markets under the symbol **"MODD"**, and trading is limited and sporadic[70](index=70&type=chunk) Common Stock Price Range (Fiscal Years 2018-2019) | Fiscal Year Ending March 31 | Quarter | High Bid ($) | Low Bid ($) | | :--- | :--- | :--- | :--- | | **2018** | Q1-Q4 | 0.38 | 0.38 | | **2019** | Q1-Q2 | 0.38 | 0.38 | | | Q3 | 1.01 | 0.20 | | | Q4 | 1.01 | 1.01 | - The company has **never paid dividends** and has no current plans to do so[74](index=74&type=chunk) - In the 2018 Private Placement (from Nov 2018 to Mar 2019), the company sold 1,856,988 shares at $2.25 per share, raising gross proceeds of **$4,142,666**[76](index=76&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=12&type=section&id=ITEM%207%3A%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) The company's net loss increased to $2.54 million in FY2019, driven by a 466% rise in R&D expenses [Results of Operations](index=13&type=section&id=Results%20of%20Operations) The net loss for FY2019 increased to $2.54 million, primarily due to a 466% surge in R&D expenses Results of Operations (Fiscal Years 2019 vs. 2018) | | 2019 | 2018 | | :--- | :--- | :--- | | **Research and development** | $1,882,345 | $332,642 | | **Total operating expenses** | $2,577,299 | $666,164 | | **Operating loss** | ($2,577,299) | ($666,164) | | **Net loss** | **($2,539,498)** | **($659,246)** | - The increase in net loss was primarily due to a **466% increase in research and development expenses**, reflecting higher engineering headcount and costs for designing the insulin pump[83](index=83&type=chunk)[85](index=85&type=chunk) [Liquidity and Capital Resources](index=13&type=section&id=Liquidity%20and%20Capital%20Resources) The company relies on equity financing, raising $4.14 million in FY2019 and holding $6.55 million in cash Summary of Cash Flows (Fiscal Years 2019 vs. 2018) | | 2019 | 2018 | | :--- | :--- | :--- | | **Cash used in operating activities** | ($1,807,934) | ($791,131) | | **Cash used in investing activities** | ($77,124) | ($15,332) | | **Cash provided by financing activities** | $4,142,150 | $4,711,132 | | **Net change in cash** | $2,257,092 | $3,904,669 | - The company has historically raised capital through private placements and expects to continue to raise capital through future equity offerings to finance its operations[88](index=88&type=chunk) Working Capital (As of March 31) | | 2019 | 2018 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $6,553,768 | $4,296,676 | | **Total current assets** | $6,569,358 | $4,313,480 | | **Total current liabilities** | $178,929 | $15,471 | | **Working capital** | **$6,390,429** | **$4,298,009** | [Item 8. Financial Statements and Supplementary Data](index=15&type=section&id=ITEM%208%3A%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) The audited financial statements reflect a development-stage company with no revenue and increasing R&D-driven losses [Consolidated Financial Statements](index=17&type=section&id=Consolidated%20Financial%20Statements) Financial statements show a development-stage company with no revenue, growing losses, and reliance on equity financing Consolidated Balance Sheet Data (As of March 31) | | 2019 | 2018 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $6,553,768 | $4,296,676 | | **Total Assets** | $6,652,986 | $4,334,452 | | **Total Liabilities** | $178,929 | $15,471 | | **Total Stockholders' Equity** | $6,474,057 | $4,318,981 | Consolidated Statement of Operations Data (For the Year Ended March 31) | | 2019 | 2018 | | :--- | :--- | :--- | | **Total Operating Expenses** | $2,577,299 | $666,164 | | **Loss From Operations** | ($2,577,299) | ($666,164) | | **Net Loss** | ($2,539,498) | ($659,246) | | **Net Loss Per Share (Basic & Diluted)** | ($0.153) | ($0.049) | Consolidated Statement of Cash Flows Data (For the Year Ended March 31) | | 2019 | 2018 | | :--- | :--- | :--- | | **Net cash used in operating activities** | ($1,807,934) | ($791,131) | | **Net cash provided by financing activities** | $4,142,150 | $4,711,132 | | **Cash and cash equivalents, end of period** | $6,553,768 | $4,296,676 | [Notes to Consolidated Financial Statements](index=21&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail the 2017 reverse merger, stock option program, NOLs, and a royalty agreement with the founder - The July 24, 2017 acquisition of Quasuras was accounted for as a **reverse merger**, with Quasuras as the accounting acquirer[118](index=118&type=chunk) - An Employee Stock Option Program (ESOP) was approved on October 19, 2017, reserving **3,000,000 shares** of common stock for issuance to employees, directors, and consultants[161](index=161&type=chunk) - As of March 31, 2019, the company had federal net operating loss carryforwards of approximately **$817,000**, which are fully offset by a valuation allowance[170](index=170&type=chunk) - A royalty agreement is in place with the founder, Paul DiPerna, entitling him to a royalty on future product sales, capped at a total of **$10 million**[172](index=172&type=chunk) [Item 9A. Controls and Procedures](index=30&type=section&id=ITEM%209A%3A%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls were ineffective due to a material weakness in financial reporting controls - Management concluded that disclosure controls and procedures were **not effective** as of March 31, 2019[179](index=179&type=chunk) - A **material weakness** was identified related to inadequate internal controls over financial reporting and a lack of segregation of duties[183](index=183&type=chunk)[184](index=184&type=chunk) - Subsequent to the fiscal year-end, the company hired a full-time Accounting Manager to remedy the material weaknesses[186](index=186&type=chunk) Part III [Item 10. Directors, Executive Officers, and Corporate Governance](index=31&type=section&id=ITEM%2010%3A%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%2C%20AND%20CORPORATE%20GOVERNANCE) The company is led by CEO Paul DiPerna, founder of Tandem Diabetes Care, and lacks formal board committees Directors and Executive Officers | Name | Age | Position | | :--- | :--- | :--- | | Paul DiPerna | 60 | CEO, CFO, Secretary, Treasurer, Director (Chairman) | | Liam Burns | 53 | Director | | Morgan C. Frank | 47 | Director | - Paul DiPerna, the CEO, previously founded **Tandem Diabetes Care, Inc. (TNDM)** and has significant experience in the diabetes and medical device industries[191](index=191&type=chunk) - The company has **not established an Audit Committee or a Nominating Committee** due to its small size and early stage of operations[207](index=207&type=chunk)[208](index=208&type=chunk) [Item 11. Executive Compensation](index=35&type=section&id=ITEM%2011%3A%20EXECUTIVE%20COMPENSATION) CEO Paul DiPerna's total compensation for FY2019 was $260,271, including salary and option awards Summary Compensation Table (FY 2019) | Name and Principal Position | Salary ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | Paul DiPerna, CEO, CFO | 192,510 | 67,761 | 0 | 260,271 | | Liam Burns, Director | 0 | 0 | 10,000 | 10,000 | - As of March 31, 2019, CEO Paul DiPerna held vested options to purchase **64,687 shares** of common stock[216](index=216&type=chunk) - Director Liam Burns was granted **90,000 non-qualified stock options** with a three-year vesting period and an exercise price of $2.25 per share[217](index=217&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=37&type=section&id=ITEM%2012%3A%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Company ownership is highly concentrated, with officers and directors beneficially owning 78.04% of common stock Security Ownership of Beneficial Owners and Management (as of March 31, 2019) | Name of Beneficial Owner | Common Stock Beneficially Owned | Percentage of Common Stock | | :--- | :--- | :--- | | Paul DiPerna (CEO, Director) | 7,588,117 | 42.38% | | Morgan C. Frank (Director) | 6,384,691 | 35.79% | | All officers and directors as a group (3 persons) | 13,972,808 | 78.04% | | James E. Besser / Manchester Group | 6,384,691 | 35.79% | - Ownership is highly concentrated, with the CEO and the Manchester-affiliated group controlling the vast majority of the company's stock[220](index=220&type=chunk) [Item 14. Principal Accounting Fees and Services](index=39&type=section&id=ITEM%2014%3A%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) Audit fees were $23,500 in FY2019 and $22,000 in FY2018, with no other fees billed by the auditor Accountant Fees (Fiscal Years) | Fee Type | 2019 | 2018 | | :--- | :--- | :--- | | Audit Fees | $23,500 | $22,000 | | Audit Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | | **Total** | **$23,500** | **$22,000** | Part IV [Item 15. Exhibits and Financial Statement Schedules](index=40&type=section&id=ITEM%2015%3A%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists key filed exhibits, including agreements for reorganization, equity plans, and intellectual property - Key filed exhibits include the Reorganization and Share Exchange Agreement (2.1), 2017 Equity Incentive Plan (4.1), and the Intellectual Property Transfer Agreement (10.3)[232](index=232&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2018 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________________ to __________________________ Commission file number 000-49671 MODULAR MEDICAL, INC. (Exact Name of Registrant as Specified in i ...