Modular Medical(MODD) - 2023 Q3 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with notes on accounting policies, leases, debt, and equity Condensed Consolidated Balance Sheets Total assets decreased from $9.85 million to $8.74 million, driven by reduced cash; liabilities and equity also declined ASSETS | ASSETS | | | :--- | :--- | | CURRENT ASSETS | | | Cash and cash equivalents (Dec 31, 2022) | $7,690,957 | | Cash and cash equivalents (Mar 31, 2022) | $9,076,372 | | TOTAL ASSETS | | | December 31, 2022 | $8,738,842 | | March 31, 2022 | $9,846,446 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | TOTAL LIABILITIES | | | December 31, 2022 | $715,297 | | March 31, 2022 | $1,009,656 | | TOTAL STOCKHOLDERS' EQUITY | | | December 31, 2022 | $8,023,545 | | March 31, 2022 | $8,836,790 | Condensed Consolidated Statements of Operations The company reported a net loss of $(3.36 million) for the three months ended December 31, 2022, an improvement from $(4.84 million) in the prior year period Condensed Consolidated Statements of Operations | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and development | $2,196,546 | $1,849,399 | $6,804,069 | $5,742,911 | | General and administrative | $1,161,351 | $1,981,665 | $3,502,029 | $5,156,152 | | Total operating expenses | $3,831,064 | $3,357,897 | $10,306,098 | $10,899,063 | | Loss from operations | $(3,831,064) | $(3,357,897) | $(10,306,098) | $(10,899,063) | | Net loss | $(3,358,484) | $(4,841,307) | $(10,307,682) | $(14,058,154) | | Net loss per share (Basic and diluted) | $(0.31) | $(0.76) | $(0.95) | $(2.22) | Condensed Consolidated Statements of Stockholders' Equity (Deficit) Stockholders' equity decreased from $8.84 million to $8.02 million, primarily due to net losses, partially offset by equity offerings and stock-based compensation Stockholders' Equity (Deficit) | Metric | March 31, 2022 | December 31, 2022 | | :-------------------------- | :--------------- | :---------------- | | Common Stock Amount | $10,462 | $10,932 | | Additional Paid-In Capital | $43,406,099 | $52,900,066 | | Accumulated Deficit | $(34,579,771) | $(44,887,453) | | Total Stockholders' Equity | $8,836,790 | $8,023,545 | - Issuance of common stock and warrants in equity offering, net, contributed $7,372,347 to additional paid-in capital as of June 30, 2022[15] - Stock-based compensation recognized during the nine months ended December 31, 2022, totaled $2,043,641[15] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $(8.18 million), while financing activities provided $7.37 million, primarily from equity offerings Cash Flow Summary | Cash Flow Activity | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(8,184,696) | $(7,128,787) | | Net cash used in investing activities | $(573,066) | $(22,779) | | Net cash provided by financing activities | $7,372,347 | $5,887,199 | | Net decrease in cash and cash equivalents | $(1,385,415) | $(1,264,367) | | Cash and cash equivalents at end of period | $7,690,957 | $204,098 | - Financing activities in 2022 were primarily driven by $7,372,347 from the issuance of common stock and warrants, net[17] - Financing activities in 2021 included $4,137,199 from convertible notes, $250,000 from private placement, and $1,500,000 from a promissory note[17] Notes to Condensed Consolidated Financial Statements This section provides detailed disclosures on the Company's business, accounting policies, lease obligations, debt, equity, stock-based compensation, income taxes, commitments, and subsequent events NOTE 1 – THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Modular Medical, Inc. is a development-stage medical device company focused on an innovative insulin pump, facing substantial doubt about its going concern ability due to expected operating losses - Modular Medical, Inc. is a development-stage medical device company focused on the design, development, and eventual commercialization of an innovative insulin pump[21] - The Company expects to continue to incur operating losses and cash outflows, raising substantial doubt about its ability to continue as a going concern within one year, requiring additional capital[24] Fixed Assets | Fixed Assets | | | | :------------------------------------ | :------------------ | :----------------- | | | December 31, 2022 | March 31, 2022 | | Machinery and equipment | $487,855 | $346,358 | | Construction-in-process | $427,670 | $— | | Leasehold improvements | $139,197 | $139,197 | | Total property and equipment | $1,054,722 | $485,555 | | Less: accumulated depreciation and amortization | $(338,313) | $(249,596) | | Total property and equipment, net | $716,409 | $235,959 | Anti-Dilutive Securities (Nine Months Ended Dec 31) | Anti-Dilutive Securities (Nine Months Ended Dec 31) | | | | :------------------------ | :--------- | :--------- | | | 2022 | 2021 | | Options to purchase common stock | 2,174,198 | 1,967,188 | | Common stock warrants | 7,565,588 | 767,796 | | Total | 9,739,786 | 2,734,984 | NOTE 2 – LEASES The Company leases its corporate facility in San Diego, California, with a 39-month term commencing April 1, 2020, and lease liabilities are measured using an 11% discount rate - The Company accounts for its corporate facility lease in San Diego, California, in accordance with ASC No. 842, with a 39-month term commencing April 1, 2020[52] Future Minimum Lease Payments (as of Dec 31, 2022) | Future Minimum Lease Payments (as of Dec 31, 2022) | | | :------------------ | :-------------- | | Annual Fiscal Years | Operating Lease | | 2023 | $39,507 | | 2024 | $40,692 | | Less: Imputed interest | $(2,527) | | Present value of lease liabilities | $77,672 | - Rent expense was $80,698 for both the nine-month periods ended December 31, 20