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MODD US Equity

Modular Medical, Inc.Health Care · Surgical & Medical Instruments & Apparatus · CIK 1074871 · FY ends Mar 31
$3.54
+0.11 (+3.21%)
USD · as of 2026-08-21 · marketstack
Returns are measured from 2020-07-22 — the price history has a 335-day gap before it.

MODD · 10-K · period ended 2023-03-31

← all MODD documents
filed 2023-06-26 · EDGAR original ↗

Our rendering of the filing — original pagination and typography are not reproduced, and tables are reduced to their short label cells (the figures live on FA). Nothing is summarized: every line below is the filing's own text.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ANNUAL REPORT PURSUANT TO SECTION

13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: March 31, 2023

or

☐ TRANSITION

REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

MODULAR MEDICAL,

INC.

(Exact name of registrant as specified in its charter)

(Address of principal executive offices) (Zip Code)

Registrant ’s telephone number, including area code: (858) 800-3500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

Common Stock, par value $0.001 per share MODD The Nasdaq Stock Market, LLC

Securities registered pursuant to Section 12(g) of the

Act:

(Title of class)

Indicate by check mark if the registrant is a well-known

seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

Indicate by check mark if the registrant

is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.

Yes ☐ No ☒

Indicate by check mark if the registrant

(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months

(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements

for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted

electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405

of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such

files).

Yes ☒ No ☐

Indicate by check mark whether

the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging

growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting

company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer Accelerated filer

Non-accelerated Filer ☒ Smaller reporting company ☒

Emerging growth company

If an emerging growth company,

indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial

accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant

has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial

reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or

issued its audit report. ☐

If

securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant

included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation

received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell

company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The aggregate market value of the voting and non-voting

common stock held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on the Nasdaq Stock Market

on September 30, 2022 was $22,757,170.

The number of shares of the registrant’s

common stock outstanding, par value $0.001 per share, as of June 22, 2023, was 21,088,823.

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED MARCH 31, 2023

TABLE OF CONTENTS

Part I

Item 1. Business 1

Item 1A. Risk Factors 22

Item 1B. Unresolved Staff Comments 36

Item 2. Properties 36

Item 3. Legal Proceedings 36

Item 4. Mine Safety Disclosures 36

Part II

Item 6. Reserved 38

Item 7A. Quantitative and Qualitative Disclosures about Market Risk 42

Item 8. Financial Statements and Supplementary Data F-1

Item 9A. Controls and Procedures 43

Item 9B. Other Information 44

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 44

Part III

Item 10. Directors, Executive Officers and Corporate Governance 45

Item 11. Executive Compensation 53

Item 14. Principal Accountant Fees and Services 59

Part IV

Signatures 62

i

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this “Report”)

contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities

Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that relate to future

events or to our future operations or financial performance. Any forward-looking statement involves known and unknown risks, uncertainties

and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future

results, levels of activity, performance or achievements expressed or implied by such forward-looking statement.

Words such as, but not limited

to, “believe,” “expect,” “anticipate,” “estimate,” “forecast,” “intend,”

“may,” “plan,” “potential,” “predict,” “project,” “targets,” “likely,”

“will,” “would,” “could,” “should,” “continue,” “scheduled” and

similar expressions or phrases, or the negative of those expressions or phrases, are intended to identify forward-looking statements,

although not all forward-looking statements contain these identifying words. Although we believe that we have a reasonable basis for each

forward- looking statement contained in this report, we caution you that these statements are based on our estimates or projections of

the future that are subject to known and unknown risks and uncertainties and other important factors that may cause our actual results,

level of activity, performance, experience or achievements to differ materially from those expressed or implied by any forward- looking

statement. Actual results, level of activity, performance, experience or achievements may differ materially from those expressed or implied

by any forward-looking statement as a result of various important factors, including our critical accounting policies and risks and uncertainties

relating to:

● our strategies, prospects, plans, expectations, forecasts or objectives;

● our ability to expand, protect and maintain our intellectual property rights;

● our analysis of the target market for our insulin pump;

● regulatory developments in the United States and other countries;

● general economic, business, political and social conditions;

● our ability to generate significant revenues and achieve profitability;

● our ability to manage the growth of our business;

● the success of competing third-party products;

● various other matters, many of which are beyond our control.

ii

PART I

ITEM 1. BUSINESS

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 2023 refers to the fiscal year ended March 31, 2023). Unless the context requires otherwise, references

to “we,” “us,” “our,” and the “Company” refer to Modular Medical, Inc. and its consolidated

subsidiary.

Overview

Modular Medical is a development-stage, medical device company focused

on the design, development, and commercialization of an innovative insulin pump using modernized technology to increase pump adoption

in the diabetes marketplace. Through the creation of a novel two-part patch pump, the Company seeks 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” to expand the category into the mass market.

Our product seeks to serve both the type 1 and the rapidly growing, especially in terms of device adoption, type 2 diabetes markets.

Differentiation

We believe that there are a number of shortcomings and issues with

currently available insulin pumps that prevent a substantial number of people who require insulin on a daily basis from choosing an insulin

pump to treat their diabetes. We believe, that by tailoring our insulin pump to address such factors, we can expand the scope and adoption

rate of insulin pump usage. We believe that to achieve broader market acceptance, an insulin pump must be easier to learn to use, be less

time- consuming to operate, more intuitive to both patients and physicians, and meet the standards for coverage by insurance providers

so that co-payments required from patients are affordable and the hurdles to insurance coverage are significantly reduced.

Among the more

prominent issues are:

Our team has substantial knowledge of the diabetes industry and experience

in developing, obtaining marketing authorization for, and bringing insulin pumps to market. Based on this experience, we believe that

our innovative insulin pump, using a new and proprietary method of pumping insulin, can address most or all of these shortcomings. It

provides a state-of-the-art insulin pump capable of both basal (steady flow) and bolus (mealtime dosing) insulin disbursement. It also

has been designed considering a natural migration path to multi-chamber/multi-liquid pumps, potentially offering an exciting array of

new therapies to patients with diabetes and other conditions.

1

Our goal is to become the leader in expanding

access to insulin pump technology to a wider portion of diabetes sufferers and provide not just care for the super users, but “diabetes

care for the rest of us.” While our initial target market is people with Type 1 diabetes, we believe there is a substantial opportunity

to penetrate the type 2 marketplace, whether through our initial MODD1 pump or further simplification of our pump to address the type

2 marketplace.

The MODD1 is a high-precision pump that we believe represents the best

choice for new pump patients because it is easy to afford, easy to learn, easy to use, and has a revolutionary design and internal technology

that enable precision with low-cost manufacture and high reproducibility.

Key features

include:

● One button interface, easy to learn and use;

● 90-day reusable, 3-day disposable;

● No external controller required, no charging, no battery replacement; and

● Slim profile, lighter weight.

A proprietary survey of American healthcare payors

representing 50 million covered lives (approximately 1/3 of U.S. covered lives) performed for us by industry leading survey firm ISA in

2019 has demonstrated that payors are willing to grant equivalent or preferential coverage for a product with this feature set at launch

in exchange for discounts of approximately 20%.

Diabetes

Classifications and Therapies

Diabetes is typically classified as either type

1 or type 2:

Glucose, the

primary source of energy for cells, must be maintained at certain levels in the blood in order to permit optimal cell function and health.

In people with diabetes, blood glucose levels are not well controlled and frequently become very high, a condition known as hyperglycemia,

and very low, a condition called hypoglycemia. Hyperglycemia can lead to serious long-term complications, including blindness, kidney

disease, nervous system disorders, occlusive vascular diseases, lower-limb amputation, stroke, cardiovascular disease, and death. Hypoglycemia

can lead to confusion or loss of consciousness, often requiring a visit to the emergency room or, in certain cases, result in seizures,

coma, and/or death.

All people with

T1D, which is our primary market, require daily insulin. According to the Seagrove 2021 Diabetes Blue Book, approximately 18% of people

with T2D in the United States, or approximately 4.7 million people, require insulin (basal alone represent 3.1 million and basal plus

mealtime represent 1.6 million) to manage their diabetes. In this Report, we refer to people with T1D and people with T2D who require

mealtime insulin as “insulin-requiring people with diabetes.”

2

Currently, there

are two primary therapies available for insulin-requiring people with diabetes: multiple daily insulin injections directly into the body

through syringes or insulin pens (a type of syringe) , referred to as Multiple Daily Injection, or MDI therapy, or the use of an insulin

pump to deliver mealtime insulin boluses to help with glucose absorption after carbohydrate consumption and a continuous subcutaneous

insulin infusion, or CSII therapy, into the body. Generally, CSII therapy is considered to provide a number of advantages over MDI therapy,

primarily an improvement in glycemic control, as measured by certain diabetes management tests such as hemoglobin A1c (HbA1c) measure

and more recently Time in Range (TIR) where a continuous glucose measuring device is used to calculate this test. Among other clinical

benefits, a study conducted by Tandem Diabetes Care, Inc. in 2021 demonstrated that insulin pump use can decrease glucose variability,

reduce the number of hypoglycemia events, and reduce the fear of hypoglycemia.

Notwithstanding these advantages, we believe the

difficulty in use resulting from the complexity and cumbersome design of available insulin pumps as well as high and often prohibitive

costs for both the patient and insurance provider has resulted not only in dissatisfaction among many existing pump users (fewer than

half purchase a new pump after the warranty expires, as noted in a Seagrove Partners 2021 study), but also has severely limited the adoption

rate of insulin pumps by a large segment of the MDI diabetes population, whom we refer to in this Report as “Almost Pumpers.”

Our research, along with marketplace data provided

by Seagrove Partners in 2023, estimates that 33% of Americans with T1D have an insulin pump and 28% of Americans with T1D (44% of those

who currently utilize MDI) can be classified as having an interest in pump adoption and meeting the American Diabetes Association guidelines

of glucose control if their objections to the currently available suite of products can be overcome. They do not want to closely manage

their glucose levels and incur the associated time and effort involved; however, they understand they need to do more to achieve a reasonable

level of glucose. They are the Almost Pumpers. We have developed what we believe to be the most technologically advanced delivery system

overcome the objections and provided motivation for this market. We believe that there are four addressable hurdles to adoption:

● Usability: the device needs to be easy to learn and to operate;

We believe this

conversion process, engaging people to try and thereby receive the benefits of our technology will substantially increase adoption of

insulin pumps among both those with T1D and T2D who remain reliant upon multiple daily injections. Diabetes is a disease that appears

throughout the world. Therefore, we cannot segment the market by socioeconomics, education or level of care. We intend to create an insulin

pump that appeals to all Almost Pumpers.

3

Market

The International Diabetes Federation estimated

that, in 2019, approximately 460 million people were living with diabetes worldwide, and by 2045, this number will increase to approximately

700 million people.

An estimated 34 million people in the United States

live with diabetes. Within this group, T1D accounts for approximately 1.8 million people with the remainder being T2D. All people with

T1D require daily insulin. However, of the approximately 32.2 million people with T2D, about 1.6 million of them require multiple daily

injections of insulin to manage their diabetes. This represents a large and growing market with the effects of diabetes accounting for

roughly 25% of all healthcare dollars spent annually in the United States.

According to the National Diabetes HCP Survey

conducted by Seagrove Partners, LLC in 2021, approximately 25% of the 1.6 million highly insulin intensive T2D have considered going “on

pump.”

Insulin pumps have been shown to provide a higher

level of care for insulin dependent people with diabetes and result in better glycemic control, fewer comorbidities, fewer trips to the

emergency room, and higher overall quality of life. They also result in lower overall costs to the healthcare system, reducing typical

expense per patient year from $27,195 to $16,992.

Despite these benefits, only 1 in 3 (33%) of the

1.8 million Americans with T1D and very few of the 1.6 million T2D intensively treated with insulin currently use an insulin pump, for

a total of approximately 670,000 current users, with only a slow increase of insulin pump use. The remaining 68% of T1D’s and virtually

all of the T2D’s rely on multiple daily injections (MDI) for glucose control. Decades of advances in technology advances have left

these non-pumpers at a significant disadvantage from a control perspective versus their “pumping” counterparts.

We have identified a large segment of the market

that we refer to as “Almost Pumpers.” Almost Pumpers are those insulin-requiring people with diabetes (T1D and T2D) who feel

that they would adopt the pump if it were less expensive, less time consuming, less technically intimidating, and if there was no separate

controller. We believe that they represent approximately 32% of the T1D market correlating to a $1.9 billion growth opportunity.

Insulin pumps on the market today require a substantial

amount of time to manage the therapy, have high out-of-pocket costs that place these technologies out of reach for a large part of the

population, and are feature-heavy with complex systems that we believe have hampered adoption and intimidated many users. The most commonly

used insulin pumps today require extensive training and hours of daily management. The average pump user must go through 42 steps of setup

and refill process every 72 hours to “stay on track.” Our product only requires nine steps for setup and refill every 72 hours.

The current reluctance to adopt the insulin pump

has had serious consequences on the healthcare system. In the United States, people living with T1D have struggled to attain glycemic

targets. A 2019 analysis of the large T1D Exchange clinical registry found that only 21% of U.S. adults with T1D achieved the ADA A1c

goal (<7.0%). Further, according to a study published in JAMA Internal Medicine, researchers found no significant improvements in diabetes

care between 2005 and 2016, with persistent gaps in care related to socioeconomic status.

Another transition in the care of diabetes is

the measuring of glucose from finger-stick tests to continuous glucose monitoring, or “CGM”, sensors, which are wearable devices.

These sensors are placed under the skin and give a reading every five minutes of the user’s glucose level. While Dexcom has been

a market leader in this field, the introduction and rapid adoption of the Freestyle Libre by Abbott Labs has made CGM easier and more

affordable, expanded the product category, and doubled the market size. The Freestyle Libre product is a more affordable, easier to use

and smaller version of the popular Dexcom, Inc. (Dexcom) CGM product. Now for the first time, there is an easy, less painful, i.e., no

more finger sticks, way for patients to have the data they need to understand more about their glucose levels and their insulin requirements.

Access to such data has motivated patients to ask their diabetes clinician how they can achieve better glycemic control and made them

more comfortable with using technology and wearables to treat their diabetes. Pumps offer a clear pathway to better control and better

overall care. We believe that the insulin pump market is ready for a similar transition as that experienced in the CGM space. MODD1 pump

represents a new and better offering to assist and induce a wide variety of patients to make the transition and bridge the void to superior

control by becoming a “pumper.”

4

We believe the present pump marketplace is approximately

a $1.9 billion market, comprising 33% of T1D pumpers and a small group of T2D pumpers. Seagrove Partners estimates in its 2021 report

that 28% of T1D patients and 25% of T2D patients would adopt technology that was easier to use, access and pay for. We believe the total

addressable market approximates $3 billion, assuming revenue of $4,128 per patient, per year. We expect to spend approximately 15% of

our total revenue on discounts and free samples to encourage adoption of our pump product.

We are dedicated to helping all people with diabetes

gain access to high quality care. We aim to help people with diabetes - especially Almost Pumpers and the historically underserved communities

- gain access to insulin pump technology by making it affordable and easy to use.

Diabetes Care is at an Inflection Point

We believe that the insulin pump market stands

at a crossroads as a confluence of events makes the timing for a new product introduction ideal.

2020 was a very difficult year in diabetes. Between

COVID-19 and a loss of glycemic control during quarantines and isolation, deaths from diabetes rose by 17% in 2020 versus the prior year.

This was sharpest among the young who saw deaths rise 29% in the 25-44 year old demographic. This has created a pain point and a desire

to find new and better solutions and has raised awareness among patients, caregivers, payors, and policy makers.

COVID-19 also encouraged (and required) trial

and adoption of telehealth models and a great many people have found them to their liking with a high proportion of patients and of health

care providers (HCPs) that want to continue to use these technologies. We expect much of this shift and newfound comfort with distance

care models to persist and believes that this can provide a patient acquisition and engagement model for insulin pumps and diabetes care,

especially for pumps optimized for free trial and easy learning.

At the same time, reimbursement for patch pumps

has been increasingly moving to a pharmacy benefits manager (PBM) model, which simplifies reimbursement which will further aid in a “frictionless

launch.” This represents a fundamental shift in the insulin pump market, making onboarding rapid and simplifying a previously complex

and time-consuming “insurance journey.”

We believe these CGM users are increasingly interested

in adopting technology and wearables to manage their diabetes. We believe they are a natural market for a new type of pump if it can meet

their needs and address their objections and that the conjunction of the above trends represents a unique opportunity in the insulin pump

market’s history.

Diabetes technology companies understand that

we are at a turning point with new markets (T2D, T1D that are currently not using technologies). This can be seen with increased discussion

around this topic during recent national diabetes conferences, as well as but also an increase in marketing promotion. For example, Dexcom

purchased a $5.5 million 30-second commercial advertisement during the 2021 Super Bowl.

All these recent changes support the high proportion

of T1D and T2D intensively treated with insulin that are considered as Almost Pumpers, a number that may grow in the coming years and that

may be more reachable with adequate marketing strategies.

Our Insulin

Pump

Instead of building complex, bespoke, and difficult

to manufacture and maintain pumping and control systems, we began with the technology and the user in mind. Using proprietary methods

of insulin measurement, we were able to eschew complex mechanisms and instead built a product candidate using only parts from high volume

consumer electronics manufacturing lines, breaking the cost vs functionality curve that has existed in the insulin pump space and representing

the first truly modern insulin pump design. This is a new kind of product for a new kind of patient.

The production models of our low-cost insulin

pump have passed many of the tests required to submit to the FDA for 510(k) clearance to market them in the United States, and we are

in the process of completing and demonstrating that we can pass the formal tests. A good part of our focus has shifted to implementing

the operational capability to manufacture production models of our pump product in low volume and ensure that this manufacturing flow

can be successfully outsourced to a tier-one contract manufacturer with the ability to scale to higher volumes at lower cost. We continue

to devote substantial time and resources to better understand the needs and preferences of Almost Pumpers and the specific patient/provider/payor

requirements to motivate change from MDI. By making the bolus delivery at meals simple we believe we will drive improved outcomes.

5

MODD1 has several

distinguishing features:

1 - The pump has a simple button to press to deliver

insulin as the patient requires it. The electronic pump uses a simple motor and rotating cam to motivate the insulin into the patient

along with a low power Bluetooth and near-field communication (NFC) chips to optionally allow the patient to communicate with their smart

phone, tablet, or other mobile computing platform. Our mobile device application will be included in our 510(k) submission and will be

a part of our introductory product.

2 - The pump snaps together with a three-day disposable

cartridge that is patient filled with insulin for delivery. It includes the power source and a simple coin cell that allows it to run

through the 80-hour life of the cartridge.

3 - There is an infusion set (not shown) that

contains a soft 6 mm cannula and an introducer for insertion into the skin and removal of the needle used to transfer insulin to the body.

4 - MODD1 comes with a variety of methods for

the patient to wear the pump. Options include: a base plate with adhesive (shown) for attaching to the body that has features for holding

the pump to the patient; overwraps to hold the product candidate to the patient; and a velcro strap with a base plate suitable for wrapping

around the arm or leg of the patient.

The system will deliver a small continuous rate

called a basal that will provide approximately 50% of the total daily dose required and the user will use the on-pump button to administer

boluses, typically before and after meals.

The objective is to make the product candidate

simple to acquire and take home, simple to learn and most importantly, simple to use to expand the pump market, drive adoption and ultimately

better clinical outcomes.

Technological Advantages

The adoption of new ultra-high volume technologies

will result in far easier manufacturing scale up as parts sourcing and assembly processes are far easier. The MODD1 was designed from

the beginning for mass manufacturing processes and “lights out” or near lights out production assembly lines whereby a minimal

number of workers will be required in our production facility. This advantage is compounded by the high availability and already optimized

cost reduction in its components. This has resulted in a cost of goods, estimated on the competitors’ announced margins and sales,

50% lower than our closest patch pump competitor.

6

The adoption of modern, miniaturized technologies

has led to numerous other advantages as well. Our MODD1 pump is smaller in overall volume than Insulet’s popular Omnipod product

and has a lower profile to the skin. Despite this, it holds a full 3mL (300 units) of insulin in line with full sized pumps such as Tandem

and Medtronic, 50% more than the 2mL reservoir in the Omnipod. We believe that this volume advantage over other patch pumps will be significant

as 24% of type 1 and over 50% of the rapidly growing type 2 market require more than 2mL of insulin every three days (the expected wear

time of patch pumps).

In addition, our new pumping modality will provide

what we believe is the most even (and thus closest to the function of a healthy pancreas) delivery of basal insulin in the industry. Basal

rate can be delivered almost continuously while other pumps are delivering micro-boluses every 5 minutes for the Omnipod, Tandem and Medtronic

pumps. We plan to demonstrate the impact of our system on glycemic control in a future clinical study.

The technology allows the patient to simply add

insulin and operate. The battery is included in each cartridge and the device is operated without a controller. Nothing needs charging.

MODD1 has been made push button simple to appeal to a wider audience of users.

This new technology has also made the MODD1 lighter

than existing offerings. Compared to the Insulet Omnipod, MODD1 weighs 20 grams (vs. 26 grams) empty and 23 grams (vs. 28 grams) fully

filled (despite carrying 50% more insulin), a reduction of 23% and 18%, respectively. Also, unlike existing patch pumps, the MODD1 can

be removed from the needle and taken off and replaced later if the user desires. This avoids loss of insulin in a pump due to accidental

dislodging of the soft canula, an issue that users have expressed considerable dissatisfaction with on other patch pumps.

Our approach to the care of diabetes can be further

enhanced by leveraging the MODD1 single-pumping chamber technology and reusable pump approach to apply to dual (or more) chamber pumping

solutions. We believe that such multi-chamber pumps will be integral to the realization of high time-in-range artificial pancreas solutions

that require no human intervention because of the application of, for instance, drugs to raise glucose levels coupled with drugs to lower

glucose. They will be the next step forward from the cumbersome and awkward solutions today that require the user to announce meals, count

and input carbohydrates, and adjust delivery for exercise and sleep to prevent overdosing of insulin. Instead, if a user overdosed insulin,

the user would simply pump in a drug to release sugar stores to raise it up. We believe that a pre-filled peel and stick patch pump with

the ability to function in a fully autonomous closed loop system with a CGM device, which is measuring and transmitting glucose-level

information, represents the next generation of diabetes care. We believe that we have demonstrated our technology and are securing intellectual

property protection on our approach.

We believe this technology, especially in dual

chamber, will open up numerous applications outside of diabetes where medication compliance of complex therapy regimes is difficult. Example

applications would include weight loss, fertility, and simplifying the delivery of complex multi-drug cocktails, especially those with

diverse and challenging dosing schedules.

7

Our Solution

Our proposed pump is being designed and developed

to address the aforementioned shortcomings of the existing pump market and to appeal to: (i) the substantial group of “Almost-Pumpers”

who may be interested in using an insulin pump, but have not done so because of the complexity, cost or cumbersome nature of existing

products, and (ii) people who are using one of the currently available insulin pumps but are dissatisfied with such products. We believe

that, owing to our new proprietary technology, our proposed insulin pump will be the simplest and least expensive product on the market

and the easiest for providers to prescribe.

Our current pump has been built to test what we

believe to be our novel approach to insulin pumps. By providing a pump that we believe will establish industry standards in terms of technology,

simplicity to understand, ease of use and price, we believe our proposed pump will offer the vast majority of benefits afforded by more

expensive and complex pumps but remain accessible to a substantially greater percentage of diabetes sufferers requiring daily insulin

therapy.

We believe people generally will not use technology

that intimidates them. In addition, we believe that physicians are hesitant to prescribe such technology due to the level of training

and support required with the present pump product offerings. We believe mass-market products, such as is intended for our proposed pump,

must be “user friendly” and affordable. We believe this approach is fundamentally different from that applied to the existing

pump market today, where most pumps are continuously adding complex features appealing to super users and leaving the other people with

diabetes further behind.

Our current goal is to successfully design, develop

and obtain all required regulatory approvals for our proposed insulin pump, and, thereafter, commercialize the finished product. Our long-term

goal is to become a leading provider of insulin pump therapy by focusing on both consumer and clinical needs.

To achieve our above stated immediate and current

goals, we intend to pursue the following business strategies:

● Use of innovative proprietary technology.

Based upon the substantial experience of Paul

DiPerna, our President, Chief Financial Officer, Treasurer and Chairman of our Board of Directors, in engineering design and innovative

technology in the medical device industry and, in particular, with the invention, market vision and technical development of insulin pumps,

we have generated proprietary technology that has been incorporated into our proposed insulin pump. We believe this technology allowing

for a two-part, yet small enough to wear, pump product, along with simplified mechanics for pumping, will greatly assist us in creating

a simpler, user-friendly pump. We believe the proposed design, engineering and technology being incorporated into our proposed pump will

make it substantially simpler and more affordable than those currently available. These features, together with the safety and reliability

of our proposed pump, are designed to create the next generation of insulin pumps that will feature important and well-differentiated

attributes compared to those currently available and make it available to consumers across mostly all socioeconomic groups in the United

States and around the world.

● Keep costs low during our design and development process.

To attempt to ensure that we have sufficient funds

to design, develop, and obtain all required regulatory approvals for our proposed insulin pump without having to sacrifice quality and

efficiency, we intend to maintain a tight budget and limit expenditures where possible. We believe this will be possible because of the

extensive knowledge and experience of Mr. DiPerna, not only in the diabetes industry and more specifically in the insulin pump device

market, but also his experience in designing and developing insulin pumps and other medical devices and his ability to manage a small,

focused development team. We currently expect that various other expenses, such as product scale up, and sales and marketing costs, will

not be incurred until such time as development work is completed and regulatory approvals obtained.

8

To attempt to ensure our proposed insulin pump

is “state of the art,” functional, and efficient, as well as to conserve funds, substantially all of our employees will initially

be hand-picked engineers under the leadership of Mr. DiPerna. We believe that there is a strong pool of engineers with significant applicable

experience and knowledge who we will be able to initially employ on a contract and/or outsource basis to help us design and develop our

proposed insulin pump. We believe by hiring such persons on an out-source basis, we will save substantial resources and by having Mr.

DiPerna lead and focus the team on technological and mechanical aspects of our proposed insulin pump, we believe our team will be well

guided, focused, cost efficient, and able to efficiently design and develop our product candidate that we believe can eventually be a

competitive and popular choice for people with insulin requiring diabetes.

Commercialization

Strategy: Overcoming the Insurance Hurdles

Our goal is to

establish MODD1 as the best option for new pump patients as we expand the market into the Almost Pumpers (Type 1 and Type 2) and the newly

motivated CGM users. We seek to grow the market by providing first-line insulin pump therapy that is well suited to meet the needs of

both diabetes patients requiring insulin and their clinicians.

o 20% discount vs Insulet (PODD) will drive preferred status;

o Designed to use Pharmacy Benefit Manager (PBM) codes as a disposable;

9

Europe represents another large potential market for MODD1, as approximately

60 million people in Europe live with diabetes. $161 billion is spent annually on diabetes healthcare costs in Europe based on data from

a Seagrove Partners 2023 study. At present, cost containment is restricting pump uptake across Europe. Current pump usage hovers between

10% and 20% in many markets. Single payor healthcare systems across Europe traditionally attempt to contain costs in the short term and

seek low price technologies with moderate medical benefits. We anticipate MODD1 will offer a rebalance of this risk/reward strategy in

that payors will incur only minor incremental short-term costs with the benefit of longer -term cost savings associated with reliable

pump use. We intend to employ a partnership strategy across Europe following in-house managed regulatory and pricing activities in the

major markets (e.g., UK) and more cost receptive markets (e.g., Nordics). We are targeting European and United Kingdom approval towards

late 2024.

Marketing

MODD1 tackles the most significant barriers to

pump use-access and affordability-and makes it easier for clinicians, caregivers and individuals to manage diabetes care. We believe that

MODD1 will be the only insulin pump that patients can take home immediately from the doctor’s office. Our commercialization plan

will drive adoption and is designed to expand the market and is intended to do the following:

● Facilitate patient trials. To facilitate patient trials, we intend to:

o Designed to use existing PBM codes as a disposable

o No new reimbursement code: Reimbursed at launch

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Tie-in with telehealth.

In recent years, telehealth has gone mainstream,

and patients and providers have become comfortable with it. There are only 4,000 patient-facing endocrinologists in the United States.

The treatment of diabetes will be significantly enhanced with telehealth to drive more volume and clinical enhancements through their

practices. Telemedicine is a force multiplier for a small group of doctors to better serve a large market. MODD1 was designed to be affordable

enough for free sampling and trial, and simple enough for self-guided user training. We believe that by combining telehealth support with

MODD1, we will decrease the burden of diabetes care and improve the lives of people with diabetes.

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Pre-Launch/Trial

We intend to initiate a “soft launch”

following FDA clearance of the MODD1 device. Our plan is to select a group of clinicians who are well trained, experienced and have the

support infrastructure to take on initial patients and monitor them carefully to provide clinical feedback on our performance to further

refine our product candidate and support infrastructure prior to full commercial launch. Many of these clinicians will have been those

who assisted in the development of the MODD1 offering.

We intend to continue to modify, refine and finalize

our system to best meet:

Manufacturing

Our pump product comprises the pump, a disposable

cartridge that holds the insulin reservoir, a baseplate that affixes the pump product to the user’s body and the infusion set, which

includes a cannula to infuse the insulin into the body. We intend to manufacture the pump, the cartridge and the baseplate and purchase

the infusion set from third parties. Prior to shipment, our pump product will be packaged with an infusion set. In connection therewith:

We have commenced working with a tier-one medical

product contract manufacturer to develop the tooling equipment required to produce the components used in our product and to prepare for

the transfer to its facility. As discussed above, we are in the process of implementing the cartridge assembly tooling equipment in our

facility. Prior to product launch, we expect to transfer the cartridge automation equipment to this contract manufacturer in early 2024

to verify and validate into our manufacturing process. The contract manufacturer would perform all manufacturing responsibilities to ensure

compliance with FDA regulations. To date, we have entered into a development agreement with this contract manufacturer for these development

activities, but we have not yet entered into a contract manufacturing agreement.

FDA Clearance

The FDA requires us to meet all applicable regulations

for insulin pumps, a subcategory of infusion pumps, which are generally considered Class II devices by the FDA. The design of the MODD1

pump has been completed, units have been built and testing is underway to verify that the design meets all FDA requirements prior to submission.

There are 17 specific tests required to submit for 510(k) clearance. One of the more important tests addresses insulin stability, and

we must demonstrate that our MODD1 pump does not damage the insulin molecules during infusion. We have performed preliminary tests on

insulin stability to increase the likelihood that we will pass these tests. In an earlier version of our pump product candidate, we experienced

issues demonstrating insulin stability. To address those issues, we began working with a medical product contract manufacturer to develop

a full commercial version of our product utilizing alternative component parts. In addition, we must demonstrate: i) biocompatibility,

meaning that we don’t use materials that compromise long-term patient safety, ii) occlusion detection, meaning that our device will

inform the patient of a lack of insulin delivery and iii) cybersecurity controls to ensure that our product has adequate security protection

to ensure it cannot be hacked by a third party. Appropriate design control and standard operating procedures have been implemented to

allow us, when testing is completed, to submit for clearance under the premarket notification (or 510(k)) process. To achieve this, we

will continue to work closely with our regulatory consultants to complete, finalize and file our submission to the FDA for 510(k) clearance

and all other documentation necessary to obtain marketing authorization of our insulin pump.

12

We have

engaged the FDA in three pre-submission conferences to ensure that we understand and meet the FDA’s requirements, expectations

and standards with regard to clearance of our product candidate. At these meetings, our team, including our FDA regulatory consultant,

received FDA comments and guidance regarding our proposed submission during the pre-market notification period for 510(k) clearance (including

any suggested modifications to the device description, indications for use or summary of supporting data contained in the notification);

We are currently

preparing our premarket notification, which will be part of our FDA submission. The purpose of the premarket notification is to

demonstrate that our insulin pump is substantially equivalent to an insulin pump that has: i) previously been cleared and approved for

use by the FDA and ii) legally marketed to the public and generally safe and effective for its intended use. We are also preparing other

parts of our submission to the FDA, which will include the relevant results of our performance and human factor tests relating to, among

other things, user effectiveness, sterility, pump efficiency and shipping compatibility demonstrating the accuracy and usability of our

insulin pump, which we believe will satisfy the mandates of the FDCA and any applicable performance standards.

Commercialization Steps

To commercialize our product, we must successfully

complete a number of material steps including:

o FDA requirements for 510(k) clearance;

As with any medical device attempting to enter

and successfully compete with existing products in an established and competitive marketplace, we will face significant hurdles to accomplish

the above steps to commercialization including:

13

Looking Forward

Going forward, we expect to continue to evolve

the MODD1 pumps and their capabilities and functionality both in response to patient needs and as part of our current platform roadmap.

● AID control functionality is added via an “ACE” designation on the pump.

● Any approved algorithm controller can drive insulin delivery in “auto” mode.

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Employees

As of March 31, 2023,

we had 38 employees all of whom are located in the United States and 37 of whom are full-time employees, consisting of 34 in research

and development and manufacturing operations and 4 in general and administrative functions.

Competition

Today, in the United States, only three companies

are commercializing insulin pumps to T1D patients and insulin treated T2D patients:

Older insulin pumps are also still being

used by a minority of patients previously provided by Roche or Animas though these pumps are not commercialized any longer. To a lesser

extent, the pumps described below are also used in small numbers.

Medtronic pump and infusion set Tandem pump and infusion set

These three insulin pump offerings are vying for

the attention of the most motivated and well insured in hope of converting them away from their reliance on MDI. The t:slim X2 and Minimed

770G each have a ~$5,000 list price that is covered through Durable Medical Equipment (DME) reimbursement and daily consumables, which

comprise cartridge, tubing and set for each three-day period, as well. These products have controllers integrated into the pump, making

them cumbersome and bulky, along with long (> 20 inch) tubing between the pump and the cannular site. The Omnipod is the third offering,

a patch pump that attaches to your body for 72 hours and uses a separate controller to manage the insulin delivery process. Insurance

coverage for Omnipod can be provided via DME but also via Pharmacy Benefit (PB). The Omnipod patch pump is more expensive per day and

less accurate than other insulin pumps, according to a Mende 2022 study. Around 33% of people living with T1D are currently using insulin

pumps; of these, the vast majority are using one of these three offerings, a statistic that has not changed significantly over the last

5+ years.

All of these pump products require extensive training

to initiate, two to four hours per day to use and manage on an ongoing basis. We believe this level of sophistication and effort along

with the cost and awkwardness of these products contribute to the limited uptake.

Although there are purely mechanical pumps available

to patients with a small percentage of T2D patients using the Mannkind V-Go patch pump, a fixed basal rate and a button to deliver small

boluses. This pump is simple to use though gives little performance decision to the user (no possibility to change the basal rate, no

possibility to stop bolus doses, small reservoir, pump that needs to be changed every day, etc.). The last available patch pump is provided

by Cequr, called Simplicity, a bolus only delivery option without basal delivery that is yet to be commercially available.

15

In the future, Medtronic intends to launch a new

version of their insulin pump, the Minimed 780G, already available in some European countries with an advanced algorithm, but no obvious

change in hardware. Tandem is currently developing a patch pump called Mobi, coupled with an algorithm with potential launch expected

in 2024. The Mobi is expected to have a small 2mL reservoir and would be controlled by a separate unit, similar to the current Omnipod

product. Insulet has also launched the Omnipod 5, a similar patch pump to their offering today, that includes an AID algorithm.

Approximately 79% of the people who rely upon

MDI choose to not administer a shot outside of their house, which creates a poorly controlled group. MODD1 is designed to focus upon

a segment of these people and mobilize them via a simple, easy to use, affordable product.

Intellectual Property

Our success depends in part on our ability to

obtain patents and trademarks, maintain trade secret and know-how protection, enforce our proprietary rights against infringers, and operate

without infringing on the proprietary rights of third parties. Because of the length of time and expense associated with developing new

products and bringing them through the regulatory approval process, the health care industry places considerable emphasis on obtaining

patent protection and maintaining trade secret protection for new technologies, products, processes, know-how, and methods.

As of March 31, 2023, we held three U.S. utility

and no foreign patents, and we also held 22 pending applications in the United States and abroad. The patents and patent applications

cover various aspects of our technology, including our proprietary fluid movement technology and associated features of our insulin delivery

methodology. There can be no assurance that the pending patent applications will result in the issuance of patents, that patents issued

to or licensed by us will not be challenged or circumvented by competitors, or that these patents will be found to be valid or sufficiently

broad to protect our technology or provide us with a competitive advantage.

Government Regulation

Our operations are subject to comprehensive federal,

state, and local laws and regulations in the jurisdictions in which we or our research and development partners do business. The laws

and regulations governing our business and interpretations of those laws and regulations and are subject to frequent change. Our ability

to operate profitably will depend in part upon our ability, and that of our research and development partners and affiliates, to operate

in compliance with applicable laws and regulations. The laws and regulations relating to medical products and healthcare services that

apply to our business and that of our partners and affiliates continue to evolve, and we must, therefore, devote significant resources

to monitoring developments in legislation, enforcement, and regulation in such areas. As the applicable laws and regulations change, we

are likely to make conforming modifications in our business processes from time to time. We cannot provide assurance that a review of

our business by courts or regulatory authorities will not result in determinations that could adversely affect our operations or that

the regulatory environment will not change in a way that restricts our operations.

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FDA Regulation

In the United States, medical devices are strictly

regulated by the FDA. Under the FDCA, a medical device is defined as “an instrument, apparatus, implement, machine, contrivance,

implant, in vitro reagent, or other similar or related article, including a component, part or accessory which is, among other things:

intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in

man or other animals; or intended to affect the structure or any function of the body of man or other animals, and which does not achieve

its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being

metabolized for the achievement of any of its primary intended purposes.” This definition provides a clear distinction between a

medical device and other FDA regulated products such as drugs. If the primary intended use of a medical product is achieved through chemical

action or by being metabolized by the body, the product is usually a drug or biologic. If not, it is generally a medical device.

We are currently developing an insulin pump delivery

system, which is regulated by the FDA as a medical device under the FDCA, as implemented and enforced by the FDA. The FDA regulates the

development, testing, manufacturing, labeling, packaging, storage, installation, servicing, advertising, promotion, marketing, distribution,

import, export, and market surveillance of our medical devices.

Device Premarket Regulatory Requirements

Source: SEC EDGAR (public domain) · 10-K for the period ended 2023-03-31, filed 2023-06-26 · accession 0001213900-23-051688

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