Item 1A Risk Factors 19
Item 1B Unresolved Staff Comments 39
Item 1C Cybersecurity 39
Item 2 Properties 40
Item 3 Legal Proceedings 40
Item 4 Mine Safety Disclosures 40
Part II
Item 6 Reserved 42
Item 7A Quantitative and Qualitative Disclosures about Market Risk 45
Item 8 Financial Statements and Supplementary Data F-1
Item 9A Controls and Procedures 46
Item 9B Other Information 47
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 47
Part III
Item 10 Directors, Executive Officers and Corporate Governance 48
Item 11 Executive Compensation 54
Item 14 Principal Accountant Fees and Services 61
Part IV
Signatures 65
i
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION
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;
ii
● 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.
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 ended 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.
Note
Regarding Reverse Stock Split
We
effected a reverse stock split of our outstanding common stock at a ratio of 1-for-30, effective as of March 31, 2026, for the purpose
of complying with Nasdaq Listing Rule 5550(a)(2). We have reflected the reverse stock split herein, unless otherwise indicated.
iii
PART
I
ITEM 1.BUSINESS
Overview
We are a 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 an innovative 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 require considerable motivation from the patient to use the available insulin pump offerings.
By simplifying and streamlining the user experience from the initial introduction of the patient to our product, prescription assistance,
establishing insurance reimbursement, streamlined training and day-to-day use with strong clinical support, 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 for those
individuals requiring multiple daily doses of insulin. In January 2024, we submitted a 510(k) premarket notification to the United States
Food and Drug Administration, or the FDA, for our initial insulin pump product, the 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 PivotTM, and began
converting our cartridge manufacturing line to Pivot production. Our Pivot product is a tubeless insulin delivery system that integrates
the infusion set under the removable pump into a true tubeless patch. The Pivot is expected to provide us with cost and usability improvements
and improved manufacturability, allowing our marketing to be focused on low cost, ease of use and learnability. We submitted a 510(k)
premarket notification to the FDA for our Pivot product in November 2025, and, in April 2026, we received FDA clearance to market and
sell our Pivot pump in the United States. We do not intend to commercialize our MODD1 product. In June 2026, we announced commercial availability,
and commenced initial shipments of, our Pivot insulin delivery system in the United States. We intend to expand commercial activities
across metropolitan markets by late 2026. We also intend to obtain Conformite Europeenne, or CE, mark clearance for our Pivot product,
which would allow us to market and sell in Europe and certain other international markets. We expect to obtain CE mark clearance by the
second quarter of 2027.
Differentiation
We believe that there are a number of shortcomings and issues with
currently available insulin pumps that prevent a substantial number of people, estimated to be almost two-thirds of individuals with diabetes,
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 by the less capable, less motivated sector
of the market. 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:
1
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.
With the commercial launch of our Pivot pump, our goal is to become
the leader in expanding access to insulin pump technology to a wider portion of people with diabetes by delivering an affordable, easy-to-use
solution — not just for the highly motivated “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, through our Pivot product, which would be the only 3 milliliter,
tubeless removable patch pump on the market. People with Type 2 diabetes tend to use more insulin than the present pump offerings can
hold, requiring more frequent changes of the pump and incurring higher expense.
The
Pivot is a high-precision pump, which we believe represent the best choice for new pump patients because it is affordable, easy to learn
and 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;
● Phone software for those who want to access more information on the product;
● 90-day reusable, 3-day disposable;
● Removable system;
● No external controller required, no charging, no battery replacement; and
● Slim profile, lighter weight.
2
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. The brain works on pure glucose, and, when sufficient glucose is available, the brain allows insulin to be released that allows
the cells to absorb glucose. In people with diabetes, blood glucose levels are not well controlled by the brain due to the shortage of
insulin. Frequently, blood glucose levels become very high, a condition known as hyperglycemia, or 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 2026 Diabetes Blue Book, there are approximately 4.2 million potential users for insulin
pumps, split evenly between type 1 and type 2. In this Report, we refer to people with T1D and people with T2D who require mealtime insulin
as “insulin-requiring people with diabetes.”
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.
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. We believe the cost and complexity to the user has severely limited the adoption rate of insulin pumps by a
large segment of the diabetes population using MDI therapy, whom we refer to in this Report as “Almost Pumpers.”
We define “Almost Pumpers” as insulin-requiring people
with diabetes who are aware of pumps and their potential benefits but because of past experiences, pump shortcomings, cost, complexity,
and time and learning required to adopt and utilize currently available insulin pumps, continue to receive their daily insulin through
MDI therapy. We undertook one-on-one interviews with over 200 of these individuals to understand their past experiences on or considering
pumps, existing pump shortcomings, the cost and insurance challenges, complexity to learn and time and complexity to operate that drives
them to remain on MDI. With this detailed understanding, we brought a series of prototype models to them to react to, so we could refine
the design and include features that would motivate them to be able to use this technology to better care for their diabetes. Our pump
offering has been well received by these individuals and our clinical advisors, as applicable for this sector of the marketplace.
3
Our research, along with marketplace data provided by Seagrove in 2026,
estimates that 43% 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, or are advised by their clinical care team, that 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 provide 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 with patients with T1D and T2D who
remain reliant upon MDI. Diabetes is a disease that appears randomly 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.
Market
The International Diabetes Federation estimated
that, in 2025, approximately 357 million people were diagnosed with diabetes worldwide, and, by 2045, this number will increase to approximately
456 million people.
An estimated 34 million people in the United
States live with diabetes. Within this group, T1D accounts for approximately 2.1 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 2.1 million of them require MDI therapy
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.
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 approximately $27,000 to $17,000.
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 individuals with T1D and virtually all with T2D rely on MDI therapy 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 or 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 market opportunity.
4
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, which 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. According to the American Diabetes Association, only 23% of U.S. adults and 17% of children 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. We believe our Pivot pump represents a new and better
offering, which can assist and induce a wide variety of patients to make the transition and overcome the objections to superior control
by becoming a “pumper.”
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 surveyed clinicians, and, in a 2021 report,
estimated that 28% of T1D patients and 25% of T2D patients would adopt technology that was easier to use, learn and access and eligible
for insurance reimbursement. We believe this represents a total addressable market of approximately $3 billion for us, assuming prescription
cartridge revenue of approximately $4,100 per patient, per year.
5
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.
At
the same time, reimbursement for patch pumps has been increasingly moving to a pharmacy benefits manager (PBM) model, which simplifies
reimbursement and 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 device users are increasingly interested in adopting technology and wearables to manage their diabetes. We believe
CGM device users 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. The CGM device provides glucose-level
data, and, as necessary, the user can respond to address any issues with a simple button push on a pump to deliver their insulin versus
taking out a syringe and injecting glucose.
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 an increase in marketing
promotion.
All
these recent changes support the high proportion of T1D and T2D intensively treated with insulin that we consider to be Almost Pumpers,
and we expect the number of Almost Pumpers to grow in the coming years and be more reachable with appropriate 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,
our MODD1, 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. We consider this to be a new kind
of product for a new kind of patient.
In September 2024, we received clearance from the FDA to market and
sell our MODD1 product in the United States, and, in August 2025, we demonstrated the first human use of our MODD1 pump delivering insulin
to a human patient. We announced our next-generation patch pump, branded as Pivot, in August 2025, and we began converting our cartridge
manufacturing line to Pivot production. Our Pivot product is a tubeless insulin delivery system that integrates the set into a true tubeless
patch. The Pivot is expected to provide us with cost and usability improvements and improved manufacturability, allowing our marketing
to be focused on low cost, ease of use and learnability. In April 2026, we received FDA clearance to market and sell our Pivot pump in
the United States. We do not intend to commercialize our MODD1 product. In June 2026, we announced commercial availability of, and commenced
initial shipments of, our Pivot insulin delivery system in the United States, and we intend to expand commercial activities across metropolitan
markets by late 2026.
We
have established our initial production line with our manufacturing partner, Phillips Medisize, a Molex company, a large tier-one medical
device manufacturer, which will manage and operate our production for human use. We believe that Phillips Medisize will be able to rapidly
scale our production to higher volumes at lower cost. We continue to devote substantial time and resources, including exhibiting at major
diabetes conferences, to better understand the needs and preferences of Almost Pumpers and the specific patient/provider/payor requirements
to motivate change from MDI therapy. By making the bolus delivery at meals simple, we believe we will drive improved health outcomes.
6
Our
Pivot product has several distinguishing features:
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 simple
to acquire and take home, simple to learn and most importantly, simple to use and live with, to expand the pump market, drive adoption
and, ultimately, improve clinical outcomes.
Technological
Advantages
The adoption of new ultra-high volume manufacturing technologies will
result in far easier production scale up, as parts sourcing and assembly processes are far easier. Our pump products have been designed
from the beginning for mass manufacturing, and we have partnered with Phillips Medisize to establish processes and “lights out”
or near lights out production assembly lines whereby a minimal number of workers will be required in the production facility. This advantage
is compounded by the high availability and already optimized cost reduction in its components. When we achieve production scale, we believe
this should result in a cost of goods for our Pivot pump, estimated on the competitors’ announced margins and sales, of approximately
50% lower than our closest patch pump competitor.
The adoption of modern, miniaturized technologies has led to numerous
other advantages, as well. For example, our Pivot pump is smaller in overall volume than Insulet’s popular Omnipod product and has
a lower profile to the skin. Despite this, our Pivot pump holds a full 3 milliliter, or mL, (300 units) of insulin, in line with full
sized pumps such as those offered by Tandem and Medtronic, 50% more than the 2 mL 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).
7
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. We intend to demonstrate the impact of our system on glycemic control in a clinical study
specifically focused on improved adherence, more bolus deliveries per day and providing the clinicians with clear data on patient use.
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. As a result, no charging is required. The Pivot pump has also been made push-button simple to deliver insulin to
appeal to a wider audience of users.
This new technology has made our Pivot pump lighter than existing offerings.
Compared to the Insulet Omnipod, our Pivot pump weighs 20 grams (vs. 26 grams) empty and 23 grams (vs. 28 grams) fully filled (despite
carrying 50% more insulin), reductions of 23% and 18%, respectively. Also, unlike existing patch pumps, our Pivot pump 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 for other patch pumps with which users have expressed considerable dissatisfaction.
Our
approach to the care of diabetes can be further enhanced by leveraging our 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 have secured, and will continue securing, intellectual property protection on our approach.
We
believe this technology, especially applied in a dual chamber capacity, 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.
Our
Solution
Our Pivot pump has been 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 Pivot pump is 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 Pivot pump will
offer the vast majority of benefits afforded by more expensive and complex pumps, but it will 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, especially for a life-sustaining therapy. 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. It is our belief that broadly-needed medical products,
such as our Pivot 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 expand commercialization of our Pivot pump product
across metropolitan markets in the United States and obtain all required regulatory approvals to offer the product for sale in multiple
international markets.
Our
long-term goal is to become a leading provider of insulin pump therapy by focusing on both consumer and clinical needs.
8
To
achieve our above stated immediate and current goals, we intend to pursue the following business strategies:
● Use of innovative proprietary technology.
Based on 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 Pivot insulin pump. We believe this technology allowing for a two-part, yet small enough
to wear, pump product, along with simplified mechanics for pumping, has greatly assisted us in creating a simpler, user-friendly pump.
We believe the completed design, engineering and technology being incorporated into our pump will make it substantially simpler and more
affordable than those currently available. These features, together with the safety and reliability of our Pivot 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.
● Use of go-to market commercialization technology.
We
plan to commercialize our Pivot product line using a highly differentiated go-to-market strategy. Generally, current pumps are marketed
by a large, direct sales force to end users directly, and the manufacturer provides all training and support, as the current training
reimbursement offered by insurance providers is inadequate to motivate clinicians to provide such training to patients. We intend to
employ a different strategy and utilize i) distributors to target the daily insulin users who are still managed by a primary care physician
and ii) a small direct sales force to directly engage with diabetes educator practices. Specifically, our direct sales force will engage
with larger diabetes educator practices, which currently prescribe a high volume of pumps and deliver a consultative message focused
on those users that indicate a desire to use a pump but have rejected all of the currently available options. We engaged Seagrove to
conduct a survey of physicians and diabetes educators, and the resulting data suggested that approximately 25% of multiple daily injectors
could be receptive to our offering. We believe that the modest 30-minute training requirement for our product, combined with the more
limited feature set for our Pivot pump, will incentivize nurse practitioners to identify and train new users who have not been offered
pumps before. This would also allow us to offer virtual or second level training support and not require us to be the primary training
provider. In addition, in June 2026, we launched PivotPump.com, a patient-focused website designed to support individuals seeking a simpler
path to insulin pump therapy. The PivotPump.com website provides accessible, educational content on insulin pump therapy and highlights
our focus on real-world usability and supporting patients in evaluating and adopting pump-based diabetes care.
In June 2026, we announced commercial availability of our Pivot product
in the United States and commenced initial patient shipments. We intend to expand commercial activities across metropolitan markets by
late 2026.
We have also begun the process of obtaining Conformite Europeenne,
or CE, mark clearance for our Pivot product, which would allow us to market and sell in European and certain other international markets.
We expect to obtain clearance by the second quarter of 2027. Our initial strategy to address European markets is to partner with distributors
to bring the Pivot to market in those countries that accept the CE mark and have acceptable reimbursement. During fiscal 2026, we hired
a head of international operations in Switzerland, who has significant experience in launching competitive insulin pump systems in Europe.
We believe that the combination of our patch pump form factor, lower cost at scale and lower training burden is well suited for European
markets where there are very few physicians or nurses available to provide training. This would allow the Pivot to gain rapid adoption
in areas where pump penetration is currently much lower than in the United States. We will target other select international markets using
the same approach.
We
believe the combination of these differentiated approaches will enable us to take reasonable initial market share, while not incurring
the significant overhead cost of existing commercialization strategies employed by the incumbents, where competition for users is intense.
9
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:
Phillips
Medisize, our manufacturing partner, performs all manufacturing operations to ensure compliance with FDA regulations.
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. As discussed above, we have obtained the required FDA clearance for our MODD1 and Pivot insulin pump products.
Commercialization
Steps
To
commercialize our product, we must successfully complete a number of material steps, including:
● Continue to ensure it meets:
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:
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● Ensuring that our products do, in fact, meet the needs of Almost Pumpers;
Looking
Forward
Going
forward, we expect to continue to evolve our Pivot pump and its capabilities and functionality both in response to patient needs and
as part of our current platform roadmap.
Competition
Today, in the United States, five companies are commercializing insulin
pumps to T1D patients and insulin treated T2D patients and only three have significant market share:
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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. We believe the each of
the two leading durable pump products receive in excess of $4,000 through durable medical equipment (DME) and daily consumable insurance
coverage reimbursements. Daily consumable reimbursement would also cover on an ongoing basis cartridge, tubing and sets for each three-day
period, as well. These products have controllers integrated into the pump, making them cumbersome and bulky, along with long (greater
than 20 inch) tubing between the pump and the cannular site. The third offering is a patch pump that attaches to the body for 72 hours
and uses a separate controller to manage the insulin delivery process. Insurance coverage for patch pumps of this type can be provided
via DME but is primarily provided through the Pharmacy Benefit (PB). These patch pumps can be more expensive per day and less accurate
than other insulin pumps, according to a Mende 2022 study. Around 38% 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 five years.
All of these pump products require extensive training
to initiate and two to four hours per day to use and manage on an ongoing basis. We believe this level of sophistication and effort combined
with the cost and awkwardness of these products contribute to the limited uptake.
There are purely mechanical pumps available to
patients, and a modest percentage of T2D patients use Mannkind’s mechanical patch pump, which provides 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 (e.g., no possibility
to change the basal rate, no possibility to stop bolus doses, small reservoir, pump that needs to be changed every day, etc.). Lastly,
Cequr offers another patch pump, providing a bolus only delivery option without basal delivery or any electronic reporting. Cequr recently
disclosed it has slightly more than 15,000 users. Beta Bionics, Inc. launched its durable pump in October 2023 and reported approximately
35,000 users at the end of 2025. Deka Research and Development Corp. (Deka) received clearance for its durable pump in July of 2023. Deka
has launched broadly with a large sales force in the United States, but it has not yet publicly disclosed the number of users.
Minimed’s flagship durable pump is available
in some European countries with an advanced algorithm, but there has not been an obvious change in hardware. Tandem is now selling a small,
no display pump with a small 2mL reservoir that is controlled by a separate unit, similar in concept to existing patch pump controllers.
Insulet has also launched a new version of its patch pump that includes an AID algorithm and improved low-power Bluetooth.
Approximately
79% of the people who rely upon MDI therapy choose to not administer a shot outside of their house, which creates a poorly controlled
group. Our pump products are designed to focus upon a segment of these people and mobilize them via a simple, easy to use, affordable
product.
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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 June 29, 2026, we held eight U.S. utility
and six foreign patents, and we have numerous applications pending and in various stages of review by the USPTO and foreign patent agencies.
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.
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
have developed 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 medical devices.
Device
Premarket Regulatory Requirements
Before
being introduced into the U.S. market, each medical device must obtain marketing clearance or approval from the FDA through the
premarket notification (or 510(k)) process, the de novo classification process, or the premarket approval, or PMA, process,
unless they are determined to be Class I devices or to otherwise qualify for an exemption from one of these available forms of
premarket review and authorization by the FDA. Under the FDCA, medical devices are classified into one of three classes —
Class I, Class II or Class III — depending on the degree of risk associated with each medical device and the extent of control
needed to provide reasonable assurance of safety and effectiveness. Classification of a device is important because the class to
which a device is assigned determines, among other things, the necessity and type of FDA review required prior to marketing the
device. Class I devices are those for which reasonable assurance of safety and effectiveness can be maintained through adherence to
general controls which include compliance with the applicable portions of the FDA’s Quality System Regulation (the
“QSR”), as well as regulations requiring facility registration and product listing, reporting of adverse medical events,
and appropriate, truthful and non-misleading labeling, advertising, and promotional materials. The Class I designation also applies
to devices for which there is insufficient information to determine that general controls are sufficient to provide reasonable
assurance of the safety and effectiveness of the device or to establish special controls to provide such assurance, but that are not
life-supporting or life-sustaining or for a use which is of substantial importance in preventing impairment of human health, and
that do not present a potential, unreasonable risk of illness or injury.
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Class
II devices are those for which general controls alone are insufficient to provide reasonable assurance of safety and effectiveness and
there is sufficient information to establish “special controls.” These special controls can include performance standards,
post-market surveillance requirements, patient registries and FDA guidance documents describing device-specific special controls. While
most Class I devices are exempt from the premarket notification requirement, most Class II devices require a premarket notification prior
to commercialization in the United States; however, the FDA has the authority to exempt Class II devices from the premarket notification
requirement under certain circumstances. As a result, manufacturers of most Class II devices must submit premarket notifications to the
FDA under Section 510(k) of the FDCA (21 U.S.C. § 360(k)) in order to obtain the necessary clearance to market or commercially distribute
such devices. To obtain 510(k) clearance, manufacturers must submit to the FDA adequate information demonstrating that the proposed device
is “substantially equivalent” to a “predicate device” that is already on the market. A predicate device is a
legally marketed device that is not subject to PMA, meaning, (i) a device that was legally marketed prior to May 28, 1976 (“pre-amendments
device”) and for which a PMA is not required, (ii) a device that has been reclassified from Class III to Class II or I or (iii)
a device that was found substantially equivalent through the 510(k) process. If the FDA agrees that the device is substantially equivalent
to the predicate device identified by the applicant in a premarket notification submission, the agency will grant 510(k) clearance for
the new device, permitting the applicant to commercialize the device. Premarket notifications are subject to user fees, unless a specific
exemption applies.
If
there is no adequate predicate to which a manufacturer can compare its proposed device, the proposed device is automatically classified
as a Class III device. In such cases, a device manufacturer must then fulfill the more rigorous PMA requirements or can request a risk-based
classification determination for its device in accordance with the de novo classification process.
Devices
that are intended to be life sustaining or life supporting, devices that are implantable, devices that present a potential unreasonable
risk of harm or are of substantial importance in preventing impairment of health, and devices that are not substantially equivalent to
a predicate device and for which safety and effectiveness cannot be assured solely by the general controls and special controls are placed
in Class III. Such devices generally require FDA approval through the PMA process, unless the device is a pre-amendments device not yet
subject to a regulation requiring premarket approval. The PMA process is more demanding than the 510(k) process. For a PMA, the manufacturer
must demonstrate through extensive data, including data from preclinical studies and one or more clinical trials, that the device is
safe and effective for its proposed indication. The PMA must also contain a full description of the device and its components, a full
description of the methods, facilities and controls used for manufacturing, and proposed labeling. Following receipt of a PMA submission,
the FDA determines whether the application is sufficiently complete to permit a substantive review. If the FDA accepts the application
for review, it has 180 days under the FDCA to complete its review and determine whether the proposed device can be approved for commercialization,
although in practice, PMA reviews often take significantly longer, and it can take up to several years for the FDA to issue a final decision.
Before approving a PMA, the FDA generally also performs an on-site inspection of manufacturing facilities for the product to ensure compliance
with the QSR.
The
de novo classification process allows a manufacturer whose novel device is automatically classified into Class III to request
down-classification of its device to Class I or Class II, on the basis that the device presents low or moderate risk, as an alternative
to following the typical Class III device pathway requiring the submission and approval of a PMA application. The FDA has confirmed our
MODD1 product qualifies as a 510(k) eligible device and does not require a de novo classification.
Clinical
trials are almost always required to support PMAs and are sometimes required to support 510(k) and de novo classification
submissions. In our case, usability studies of our intended users are required and have been completed. All clinical investigations
of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s investigational device
exemption, or IDE, regulations that govern investigational device labeling, prohibit promotion of investigational devices, and
specify recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. If the device presents a
“significant risk,” as defined by the FDA, the agency requires the study sponsor to submit an IDE application to the
FDA, which must become effective prior to commencing human clinical trials. The IDE will automatically become effective 30 days
after receipt by the FDA, unless the FDA denies the application or notifies the sponsor that the investigation is on hold and may
not begin until the sponsor provides supplemental information about the investigation that satisfies the agency’s concerns. If
the FDA determines that there are deficiencies or other concerns with an IDE that require modification of the study, the FDA may
permit a clinical trial to proceed under a conditional approval. The FDA may also notify the sponsor that the study is approved as
proposed or approved with specific requested modification. Furthermore, the agency may withdraw approval of an IDE under certain
circumstances. In addition, the study must be approved by, and conducted under the oversight of, an institutional review board, or
IRB, for each clinical site. If the device presents a non-significant risk to the patient according to criteria established by the
FDA as part of the IDE regulations, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more
IRBs without separate authorization from the FDA, but must still comply with abbreviated IDE requirements, such as monitoring the
investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements.
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Post-Marketing
Restrictions and Enforcement
After
a device is placed on the market, numerous regulatory requirements apply. These include, but are not limited to:
In
addition, under the FDA medical device reporting, or MDR, regulations, medical device manufacturers are required to report to the FDA
information that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would
likely cause or contribute to death or serious injury if the malfunction of the device or a similar device of such manufacturer were
to recur. The decision to file an MDR involves a judgment by the manufacturer. If the FDA disagrees with the manufacturer’s determination,
the FDA can take enforcement action.
The
MDR requirements also extend to health-care facilities that use medical devices in providing care to patients, or “device user
facilities,” which include hospitals, ambulatory surgical facilities, nursing homes, outpatient diagnostic facilities, or outpatient
treatment facilities, but not physician offices. A device user facility must report any device-related death to both the FDA and the
device manufacturer, or any device-related serious injury to the manufacturer (or, if the manufacturer is unknown, to the FDA) within
10 days of the event. Device user facilities are not required to report device malfunctions that would likely cause or contribute to
death or serious injury if the malfunction were to recur but may voluntarily report such malfunctions through MedWatch, the FDA’s
Safety Information and Adverse Event Reporting Program.
The
FDA also has the authority to require the recall of commercialized medical device products in the event of material deficiencies or
defects in design or manufacture. The authority to require a recall must be based on an FDA finding that there is a reasonable
probability that the device would cause serious adverse health consequences or death. Manufacturers may, under their own initiative,
recall a product if any distributed devices fail to meet established specifications, are otherwise misbranded or adulterated under
the FDCA, or if any other material deficiency is found. The FDA requires that certain classifications of recalls be reported to the
FDA within ten working days after the recall is initiated.
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