Modular Medical, Inc.

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included in this Annual Report on Form 10-K, or the Report. Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties and other factors. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Actual results could differ materially because of the factors discussed in Part I, Item 1A, These risks and uncertainties may cause actual results to differ materially from those discussed in the forward-looking statements.

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.

Overview

We are a commercial-stage medical device company focused on the design, development and commercialization of innovative insulin pumps using modernized technology to increase pump adoption in the diabetes marketplace. Through the creation of 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 submitted a 510(k) premarket notification to the FDA for our Pivot product on November 13, 2025, and we received regulatory approval on April 9, 2026. In June 2026, we announced commercial availability of our Pivot product and commenced initial shipments. We are actively working to i) expand commercial activities for our Pivot product across metropolitan markets, 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.

On April 19, 2026, we entered into a placement agency agreement with Maxim Group LLC (“Maxim”), relating to a registered direct offering (the “April 2026 Offering”) of 750,000 shares of our common stock, par value $0.001 per share. The gross proceeds to us from the April 2026 Offering were approximately $3.375 million, before deducting offering expenses. The April 2026 Offering closed on April 21, 2026.

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, there is substantial doubt about our ability to continue as a going concern for a period of at least one year from June 29, 2026. 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 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 operating expenses and capital expenditures incurred to conduct our operations. We incurred net losses of approximately $28.2 million and $18.8 million for the years ended March 31, 2026 and 2025, respectively, and we had an accumulated deficit of approximately $113.0 million as of March 31, 2026. These and prior year losses have resulted in significant negative cash flows and have necessitated that we raise substantial amounts of additional capital during this period. This raises significant doubt about our ability to continue as a going concern, which was also expressed by our independent registered public accounting firm in its report on our consolidated financial statements for the year ended March 31, 2026. 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.

World Unrest

World unrest due to wars and terrorist attacks have led to economic disruptions. Mounting inflationary cost pressures and recessionary fears have negatively impacted the global economy. Since mid-2022, at times, the U.S. Federal Reserve has addressed elevated inflation by increasing interest rates. Market conditions may prevent us from accessing the capital markets, and additional capital may only be available to us on terms that could be significantly detrimental to our existing stockholders and to our business.

Results of Operations

The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Report.

Research and Development

Our research and development, or R&D, expenses include personnel, consulting, testing, materials and supplies, depreciation and amortization and other operational costs associated with the production of our insulin pump products. We expense R&D costs as they are incurred. R&D expenses increased in fiscal 2026 compared with fiscal 2025 primarily due to increases in engineering and operations personnel costs of $2.9 million, consulting expenses of $1.2 million, depreciation and amortization of $0.6 million, shipping expenses $0.5 million and materials and supply expenditures of approximately $0.4 million. The increase in personnel costs was attributable to increased average headcount year over year, salary increases effected during fiscal 2026 and higher payroll taxes. The increase in consulting expenditures and material and supply expenditures was primarily due to an increase in utilization of consultants and material and job supplies, in support of our FDA submission of our new Pivot product in fiscal year 2026. The increase in depreciation and amortization expenses was primarily due to an increase in machinery and equipment purchased and placed in service to further develop and expand our manufacturing capabilities. The increases in R&D expense were partially offset by a decrease in stock-based compensation expenses of $0.5 million. R&D expenses included stock-based compensation expenses of approximately $1.3 million and $1.8 million for fiscal 2026 and fiscal 2025, respectively.

We expect R&D expenses will increase in fiscal 2027, as we continue to hire additional engineering, quality assurance, and operations personnel, optimize our manufacturing process at our medical device contract manufacturer and continue to advance the product development roadmap for our pump products.

General and Administrative

General and administrative, or G&A, expenses consist primarily of personnel and related overhead costs for facilities, finance, human resources, general management and marketing.

G&A expenses increased in fiscal 2026 compared with fiscal 2025 primarily due to increases in general and administrative personnel costs of $1.5 million, consulting expenses of $1.3 million, sales and marketing activities of $0.5 million, The increase in personnel costs was attributable to increased average headcount year over year, salary increases effected during fiscal 2026 and higher payroll taxes. The increases in G&A expense were partially offset by a decrease in stock-based compensation expenses of $0.2 million. G&A expenses included stock-based compensation expenses of approximately $0.4 million and $0.6 million for fiscal 2026 and fiscal 2025, respectively. We expect G&A expenses to increase in fiscal 2027, as we expect to increase headcount, as we continue to expand our limited sales and marketing organization, add finance and administration personnel and implement additional systems to support our anticipated growth and commercialization of our product during fiscal 2027.

Liquidity and Capital Resources; Changes in Financial Condition

Going Concern

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 associated with our operations. For the years ended March 31, 2026 and 2025, we incurred net losses of approximately $28.2 million and $18.8 million, respectively. At March 31, 2026, we had a cash balance of $6.9 million and an accumulated deficit of approximately $113.0 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 8 of this Report are issued. Our financial statements do not include adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. 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.

In March 2026, the Company completed a securities purchase agreement public offering of its common stock and pre-funded warrants for gross proceeds of approximately $12.0 million. Our future capital requirements and the adequacy of our available funds will depend on many factors, including, without limitation, our ability to successfully commercialize our product, 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 our product offerings. If we are unable to secure additional capital timely, we may be required to curtail R&D initiatives, reduce headcount and take additional measures to reduce costs in order to conserve our cash.

Purchase Obligations

Our primary purchase obligations include purchase orders for machinery and equipment. At March 31, 2026, we had outstanding purchase orders for machinery and equipment and related expenditures of approximately $1.6 million. At March 31, 2026, we had outstanding purchase orders for supplies and inventory components of approximately $431,000.

Liquidity

In fiscal 2026, we used approximately $23.8 million in operating activities, which primarily resulted from our net loss of approximately $28.2 million, as increased by changes to operating assets and liabilities of approximately $0.2 million, and as adjusted for non-cash charges and gains, which included approximately $1.8 million of stock-based compensation expenses, depreciation and amortization expenses of approximately $1.7 million, change in fair value of warrant liabilities of approximately $0.8 million and other immaterial adjustments. The changes in operating assets and liabilities primarily related to the timing of payments to vendors.

In fiscal 2025, we used approximately $15.7 million in operating activities, which primarily resulted from our net loss of approximately $18.8 million, less changes to operating assets and liabilities of approximately $0.4 million, as adjusted for non-cash charges and gains, which included stock-based compensation expenses of approximately $2.4 million, depreciation and amortization of approximately $1.1 million and other immaterial adjustments. The changes in operating assets and liabilities primarily related to the timing of payments to vendors.

For fiscal 2026 and fiscal 2025, cash used in investing activities of approximately $3.9 million and $2.5 million, respectively, was for the purchase of property and equipment.

Cash provided by financing activities for fiscal 2026 totaled approximately $21.5 million and was primarily attributable to net proceeds of approximately $15.7 million from a public offering of common stock and warrants, which closed in March 2026, net proceeds of approximately $4.0 million from the issuance of common stock and warrants in a warrant inducement offering in September 2025 and proceeds of approximately $1.9 million from the sale of shares under the ATM Agreement

Cash provided by financing activities for fiscal 2025 totaled approximately $22.1 million and was primarily attributable to proceeds of approximately $11.4 million from a private placement of common stock and warrants, which closed in March 2025, net proceeds of approximately $7.3 million from the issuance of common stock and warrants in a public offering, which closed in November 2024, proceeds of approximately $1.3 million for the exercise of common stock purchase warrants and approximately $2.1 million from the sale of shares under the ATM Agreement.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Note 1 to the consolidated financial statements in Item 8 of this Report describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. We have identified the accounting policies below as some of the more critical to our business and the understanding of our results of operations. These policies may involve estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Although we believe our judgments and estimates are appropriate, actual future results may differ from our estimates, and if different assumptions or conditions were to prevail, the results could be materially different from our reported results.

Use of estimates

The preparation of financial statements in conformity with GAAP requires us 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 financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates may include those pertaining to accruals, stock-based compensation and income taxes. Actual results could materially differ from those estimates.

Stock-based compensation

We periodically issue stock options, restricted stock units and stock awards to employees and non-employees. We account for such awards based on Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 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, we assess the probability of achieving the requisite performance criteria before recognizing compensation expense. We estimate the fair value of stock options on the date of grant 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.

Income taxes

We determine deferred tax assets and liabilities based upon the differences between the financial statement and tax bases of our assets and liabilities using tax rates in effect for the year in which we expect 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 our federal and state net deferred tax assets will not be fully realized, and we have recorded a full valuation allowance.

We account for uncertain tax positions in accordance with ASC Topic 740, Income Taxes. When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in general and administrative expenses in the consolidated statements of operations.

Leases

We account for our leases under ASC 842, Leases (“ASC 842”), and related ASUs, which provide supplementary guidance and clarifications. Under ASC 842, all significant lease arrangements are generally recognized at lease commencement. Operating lease right-of-use (“ROU”) assets and lease liabilities are recognized at the commencement date. ROU assets and corresponding lease liabilities are not recorded for leases with an initial term of 12 months or less (short-term leases), and we recognize lease expense for these leases as incurred over the lease term.

ROU assets represent our right to use an underlying asset during the reasonably certain lease terms, and lease liabilities represent our obligation to make lease payments arising from the lease. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. We use our incremental borrowing rate, based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments related to initial direct cost and prepayments and excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term.

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.

Contractual Obligations

As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, we are not required to provide the information requested by paragraph (a)(5) of this Item.

Recent Accounting Pronouncements

See Note 1 to the consolidated financial statements in Item 8 of this Report for a full description of relevant recent accounting pronouncements.