{"url_path":"/sec/modd/10-k/2026/item-1","section_key":"item-1","section_title":"Item 1 BUSINESS","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-29","source_url":"https://www.sec.gov/Archives/edgar/data/1074871/0001213900-26-073223-index.html","accession_number":"0001213900-26-073223","cik":"0001074871","ticker":"MODD","issuer_name":"Modular Medical, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1074871/0001213900-26-073223-index.html","primary_entity_key":"0001074871","primary_entity_name":"Modular Medical, Inc."},"word_count":11945,"has_tables":true,"body_markdown":"ITEM 1. BUSINESS\n\n \n\nOverview\n\n \n\nWe are a medical device company focused on the design, development,\nand commercialization of innovative insulin pumps using modernized technology to increase pump adoption in the diabetes marketplace. Through\nthe creation of an innovative two-part patch pump, we seek to fundamentally alter the trade-offs between cost and complexity and access\nto the higher standards of care that presently require considerable motivation from the patient to use the available insulin pump offerings.\nBy simplifying and streamlining the user experience from the initial introduction of the patient to our product, prescription assistance,\nestablishing insurance reimbursement, streamlined training and day-to-day use with strong clinical support, we seek to expand the wearable\ninsulin delivery device market beyond the highly motivated “super users” to expand the category into the mass market. Our\nproduct seeks to serve both the type 1 and the rapidly growing, especially in terms of device adoption, type 2 diabetes markets for those\nindividuals requiring multiple daily doses of insulin. In January 2024, we submitted a 510(k) premarket notification to the United States\nFood and Drug Administration, or the FDA, for our initial insulin pump product, the MODD1, and, in September 2024, we received FDA clearance\nto market and sell our MODD1 pump in the United States. In August 2025, we announced the first human use of our MODD1 pump delivering\ninsulin to a human patient. In addition, in August 2025, we announced our next-generation patch pump, branded as Pivot™, and began\nconverting our cartridge manufacturing line to Pivot production. Our Pivot product is a tubeless insulin delivery system that integrates\nthe infusion set under the removable pump into a true tubeless patch. The Pivot is expected to provide us with cost and usability improvements\nand improved manufacturability, allowing our marketing to be focused on low cost, ease of use and learnability. We submitted a 510(k)\npremarket notification to the FDA for our Pivot product in November 2025, and, in April 2026, we received FDA clearance to market and\nsell our Pivot pump in the United States. We do not intend to commercialize our MODD1 product. In June 2026, we announced commercial availability,\nand commenced initial shipments of, our Pivot insulin delivery system in the United States. We intend to expand commercial activities\nacross metropolitan markets by late 2026. We also intend to obtain *Conformite Europeenne*, or CE, mark clearance for our Pivot product,\nwhich would allow us to market and sell in Europe and certain other international markets. We expect to obtain CE mark clearance by the\nsecond quarter of 2027.\n\n \n\n*Differentiation*\n\n \n\nWe believe that there are a number of shortcomings and issues with\ncurrently available insulin pumps that prevent a substantial number of people, estimated to be almost two-thirds of individuals with diabetes,\nwho require insulin on a daily basis from choosing an insulin pump to treat their diabetes. We believe that, by tailoring our insulin\npump to address such factors, we can expand the scope and adoption rate of insulin pump usage by the less capable, less motivated sector\nof the market. We believe that to achieve broader market acceptance, an insulin pump must be easier to learn to use, be less time-consuming\nto operate, more intuitive to both patients and physicians, and meet the standards for coverage by insurance providers so that co-payments\nrequired from patients are affordable and the hurdles to insurance coverage are significantly reduced.\n\n \n\nAmong\nthe more prominent issues are:\n\n \n\n●*Complexity:*\nMany existing pumps are highly complex and require significant technical expertise to use effectively. We believe such pumps were designed\nfor “super users,” who have high levels of motivation and technical competence. The complexity of pumps can be daunting to\nless technically inclined, less motivated users.\n\n \n\n●*Cumbersome*:\nWe believe that a majority of existing pumps are bulky and difficult to manage, requiring a means of carrying the pump around and up\nto 48 inches of tubing to the injection site to connect the catheter to a pump. The tubing and the cartridge, which holds the insulin,\nmust be replaced every few days. This requires users to carry spare parts and other equipment adding to the difficulty of using the pump.\nIn comparison, our product only requires a cartridge change every few days.\n\n \n\n●*Cost*:\nCosts associated with insulin pump therapy can be high and prohibitive, especially for those on fixed or limited incomes. These costs\nvary by pump and insurance coverage, but multi-thousand-dollar upfront payments, often with substantial co-payments in addition to possible\nadditional co-payments on consumables, can easily place current pumps out of reach for many patients. The leading patch pump on the market\ntoday also discards all the electronics required for pumping and communication every three\ndays, creating a higher cost architecture and significant waste. We believe the reusability of our product will provide us with a significant\ncost advantage in the marketplace with our reusable pumping system.\n\n  \n\n1 \n\n \n\n \n\n●*Outdated\nstyle*: Consumer electronics devices have evolved in both form and function. Diabetes pumps have not experienced similar progress.\nWe believe that consumers will be more receptive of products designed with the user experience in mind and that many have low tolerance\nfor complex, difficult procedures for use and maintenance of products.\n\n \n\n●*Pump\nmechanism limitations*: Traditional pumps generally utilize a syringe and plunger mechanism to deliver insulin. We believe this design\nlimits the ability to reduce the size of the pump, and also potentially exposes the user to the unintended delivery of the full volume\nof insulin within the pump, which can cause hypoglycemia or death. We believe that the fear of adverse health events due to technical\nmalfunctions related to traditional pump mechanism limitations deters the adoption of insulin pump therapy.\n\n \n\nOur\nteam has substantial knowledge of the diabetes industry and experience in developing, obtaining marketing authorization for, and bringing\ninsulin pumps to market. Based on this experience, we believe that our innovative insulin pump, using a new and proprietary method of\npumping insulin, can address most or all of these shortcomings. It provides a state-of-the-art insulin pump capable of both basal (steady\nflow) and bolus (mealtime dosing) insulin disbursement. It also has been designed considering a natural migration path to multi-chamber/multi-liquid\npumps, potentially offering an exciting array of new therapies to patients with diabetes and other conditions.\n\n \n\nWith the commercial launch of our Pivot pump, our goal is to become\nthe leader in expanding access to insulin pump technology to a wider portion of people with diabetes by delivering an affordable, easy-to-use\nsolution — not just for the highly motivated “super users,” but “diabetes care for the rest of us.” \n\n \n\nWhile our initial target market is people with Type 1 diabetes, we\nbelieve there is a substantial opportunity to penetrate the Type 2 marketplace, through our Pivot product, which would be the only 3 milliliter,\ntubeless removable patch pump on the market. People with Type 2 diabetes tend to use more insulin than the present pump offerings can\nhold, requiring more frequent changes of the pump and incurring higher expense.\n\n \n\nThe\nPivot is a high-precision pump, which we believe represent the best choice for new pump patients because it is affordable, easy to learn\nand use, and has a revolutionary design and internal technology that enable precision with low-cost manufacture and high reproducibility.\n\n \n\nKey\nfeatures include:\n\n \n\n●Three\nparts — one reusable, two disposable (the cartridge and the set) — snap together to form the working system;\n\n \n\n●One\nbutton interface, easy to learn and use;\n\n \n\n●Phone\nsoftware for those who want to access more information on the product;\n\n \n\n●90-day\nreusable, 3-day disposable;\n\n \n\n●Removable\nsystem;\n\n \n\n●No\nexternal controller required, no charging, no battery replacement; and\n\n \n\n●Slim\nprofile, lighter weight.\n\n \n\n2 \n\n \n\n \n\n*Diabetes\nClassifications and Therapies*\n\n \n\nDiabetes is typically classified as either Type 1 or Type 2:\n\n \n\n●Type\n1 diabetes, or T1D, is an auto-immune condition characterized by the body’s nearly complete inability to produce insulin. It is\nfrequently diagnosed during childhood or adolescence, although it can sometimes have onset in adulthood. Individuals with T1D require\ndaily insulin therapy to survive.\n\n \n\n●Type\n2 diabetes, or T2D, represents over 90% of all individuals diagnosed with diabetes and is characterized by the body’s inability\nto either properly utilize insulin or produce sufficient insulin. Initially, many people with T2D attempt to manage their condition with\nimprovements in diet and exercise and/or the use of oral medications and/or injection of glucagon-like peptide-1 (GLP-1) drugs. However,\nas their diabetes advances, patients often progress to requiring insulin therapies such as once-daily long-acting insulin and ultimately\nto intensified mealtime rapid-acting insulin therapy. This represents an important portion of the diabetes market with an estimated 1.6\nmillion individuals with T2D intensively treated with insulin currently in the United States.\n\n \n\nGlucose,\nthe primary source of energy for cells, must be maintained at certain levels in the blood in order to permit optimal cell function and\nhealth. The brain works on pure glucose, and, when sufficient glucose is available, the brain allows insulin to be released that allows\nthe cells to absorb glucose. In people with diabetes, blood glucose levels are not well controlled by the brain due to the shortage of\ninsulin. Frequently, blood glucose levels become very high, a condition known as hyperglycemia, or very low, a condition called hypoglycemia.\nHyperglycemia can lead to serious long-term complications, including blindness, kidney disease, nervous system disorders, occlusive vascular\ndiseases, lower-limb amputation, stroke, cardiovascular disease, and death. Hypoglycemia can lead to confusion or loss of consciousness,\noften requiring a visit to the emergency room or, in certain cases, result in seizures, coma, and/or death.\n\n \n\nAll people with T1D, which is our primary market,\nrequire daily insulin. According to the Seagrove 2026 Diabetes Blue Book, there are approximately 4.2 million potential users for insulin\npumps, 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\nas “insulin-requiring people with diabetes.”\n\n \n\nCurrently,\nthere are two primary therapies available for insulin-requiring people with diabetes: multiple daily insulin injections directly into\nthe body through syringes or insulin pens (a type of syringe), referred to as Multiple Daily Injection, or MDI therapy, or the use of\nan insulin pump to deliver mealtime insulin boluses to help with glucose absorption after carbohydrate consumption and a continuous subcutaneous\ninsulin infusion, or CSII therapy, into the body. Generally, CSII therapy is considered to provide a number of advantages over MDI therapy,\nprimarily an improvement in glycemic control, as measured by certain diabetes management tests such as hemoglobin A1c (HbA1c) measure\nand more recently Time in Range (TIR) where a continuous glucose measuring device is used to calculate this test.\n\n \n\nNotwithstanding\nthese advantages, we believe the difficulty in use resulting from the complexity and cumbersome design of available insulin pumps, as\nwell as high and often prohibitive costs for both the patient and insurance provider, has resulted not only in dissatisfaction among\nmany existing pump users. We believe the cost and complexity to the user has severely limited the adoption rate of insulin pumps by a\nlarge segment of the diabetes population using MDI therapy, whom we refer to in this Report as “Almost Pumpers.”\n\n \n\nWe define “Almost Pumpers” as insulin-requiring people\nwith diabetes who are aware of pumps and their potential benefits but because of past experiences, pump shortcomings, cost, complexity,\nand time and learning required to adopt and utilize currently available insulin pumps, continue to receive their daily insulin through\nMDI therapy. We undertook one-on-one interviews with over 200 of these individuals to understand their past experiences on or considering\npumps, existing pump shortcomings, the cost and insurance challenges, complexity to learn and time and complexity to operate that drives\nthem to remain on MDI. With this detailed understanding, we brought a series of prototype models to them to react to, so we could refine\nthe design and include features that would motivate them to be able to use this technology to better care for their diabetes. Our pump\noffering has been well received by these individuals and our clinical advisors, as applicable for this sector of the marketplace.\n\n \n\n3 \n\n \n\n \n\nOur research, along with marketplace data provided by Seagrove in 2026,\nestimates that 43% of Americans with T1D have an insulin pump and 28% of Americans with T1D (44% of those who currently utilize MDI) can\nbe classified as having an interest in pump adoption and meeting the American Diabetes Association guidelines of glucose control if their\nobjections to the currently available suite of products can be overcome. They do not want to closely manage their glucose levels and incur\nthe associated time and effort involved; however, they understand, or are advised by their clinical care team, that they need to do more\nto achieve a reasonable level of glucose. They are the Almost Pumpers. We have developed what we believe to be the most technologically\nadvanced delivery system overcome the objections and provide motivation for this market. We believe that there are four addressable hurdles\nto adoption:\n\n \n\n●Usability:\nthe device needs to be easy to learn and to operate;\n\n \n\n●Affordability:\nwe will focus on overcoming copay and insurance hurdles rather than leaving the “insurance journey” to the clinician and\npatient;\n\n \n\n●Accessibility\nand Education: we will seek to engage patients to sample this new technology by supplying clinicians with free samples and simple training\nto allow people to see first-hand the typical barriers to adoption that have been overcome; and\n\n \n\n●Service\nand Support: where we will answer their questions and concerns during this diabetes experience.\n\n \n\nWe believe this conversion process, engaging people to try and thereby\nreceive the benefits of our technology will substantially increase adoption of insulin pumps among with patients with T1D and T2D who\nremain reliant upon MDI. Diabetes is a disease that appears randomly throughout the world. Therefore, we cannot segment the market by\nsocioeconomics, education or level of care. We intend to create an insulin pump that appeals to all Almost Pumpers.\n\n \n\nMarket\n\n \n\nThe International Diabetes Federation estimated\nthat, in 2025, approximately 357 million people were diagnosed with diabetes worldwide, and, by 2045, this number will increase to approximately\n456 million people.\n\n \n\nAn estimated 34 million people in the United\nStates live with diabetes. Within this group, T1D accounts for approximately 2.1 million people with the remainder being T2D. All people\nwith T1D require daily insulin. However, of the approximately 32.2 million people with T2D, about 2.1 million of them require MDI therapy\nto manage their diabetes. This represents a large and growing market with the effects of diabetes accounting for roughly 25% of all healthcare\ndollars spent annually in the United States.\n\n \n\nInsulin\npumps have been shown to provide a higher level of care for insulin-dependent people with diabetes and result in better glycemic control,\nfewer comorbidities, fewer trips to the emergency room, and higher overall quality of life. They also result in lower overall costs to\nthe healthcare system, reducing typical expense per patient year from approximately $27,000 to $17,000.\n\n \n\nDespite\nthese 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\ninsulin currently use an insulin pump, for a total of approximately 670,000 current users, with only a slow increase of insulin pump\nuse. The remaining 68% of individuals with T1D and virtually all with T2D rely on MDI therapy for glucose control. Decades of advances\nin technology advances have left these non-pumpers at a significant disadvantage from a control perspective versus their “pumping”\ncounterparts.\n\n \n\nWe\nhave identified a large segment of the market that we refer to as “Almost Pumpers.” Almost Pumpers are those insulin-requiring\npeople with diabetes (T1D or T2D) who feel that they would adopt the pump if it were less expensive, less time consuming, less technically\nintimidating, and if there was no separate controller. We believe that they represent approximately 32% of the T1D market correlating\nto a $1.9 billion market opportunity.\n\n \n\n4 \n\n \n\n \n\nInsulin\npumps on the market today require a substantial amount of time to manage the therapy, have high out-of-pocket costs that place these\ntechnologies out of reach for a large part of the population, and are feature-heavy with complex systems, which we believe have hampered\nadoption and intimidated many users. The most commonly used insulin pumps today require extensive training and hours of daily management.\nThe average pump user must go through 42 steps of setup and refill process every 72 hours to “stay on track.” Our product\nonly requires nine steps for setup and refill every 72 hours.\n\n \n\n \n\nThe current reluctance to adopt the insulin pump\nhas had serious consequences on the healthcare system. In the United States, people living with T1D have struggled to attain glycemic\ntargets. According to the American Diabetes Association, only 23% of U.S. adults and 17% of children with T1D achieved the ADA A1c goal\n(<7.0%). Further, according to a study published in JAMA Internal Medicine, researchers found no significant improvements in diabetes\ncare between 2005 and 2016, with persistent gaps in care related to socioeconomic status.\n\n \n\nAnother transition in the care of diabetes is the measuring of glucose\nfrom finger-stick tests to continuous glucose monitoring, or CGM, sensors, which are wearable devices. These sensors are placed under\nthe skin and give a reading every five minutes of the user’s glucose level. While Dexcom has been a market leader in this field,\nthe introduction and rapid adoption of the Freestyle Libre by Abbott Labs has made CGM easier and more affordable, expanded the product\ncategory, and doubled the market size. The Freestyle Libre product is a more affordable, easier to use and smaller version of the popular\nDexcom, Inc. (Dexcom) CGM product. Now, for the first time, there is an easy, less painful, i.e., no more finger sticks, way for patients\nto have the data they need to understand more about their glucose levels and their insulin requirements. Access to such data has motivated\npatients to ask their diabetes clinician how they can achieve better glycemic control and made them more comfortable with using technology\nand wearables to treat their diabetes. Pumps offer a clear pathway to better control and better overall care. We believe that the insulin\npump market is ready for a similar transition as that experienced in the CGM space. We believe our Pivot pump represents a new and better\noffering, which can assist and induce a wide variety of patients to make the transition and overcome the objections to superior control\nby becoming a “pumper.”\n\n \n\nWe believe the present pump marketplace is approximately\na $1.9 billion market, comprising 33% of T1D pumpers and a small group of T2D pumpers. Seagrove surveyed clinicians, and, in a 2021 report,\nestimated that 28% of T1D patients and 25% of T2D patients would adopt technology that was easier to use, learn and access and eligible\nfor insurance reimbursement. We believe this represents a total addressable market of approximately $3 billion for us, assuming prescription\ncartridge revenue of approximately $4,100 per patient, per year.\n\n \n\n5 \n\n \n\n \n\nWe\nare dedicated to helping all people with diabetes gain access to high quality care. We aim to help people with diabetes — especially\nAlmost Pumpers and the historically underserved communities — gain access to insulin pump technology by making it affordable and\neasy to use.\n\n \n\nDiabetes\nCare is at an Inflection Point\n\n \n\nWe\nbelieve that the insulin pump market stands at a crossroads as a confluence of events makes the timing for a new product introduction\nideal.\n\n \n\nAt\nthe same time, reimbursement for patch pumps has been increasingly moving to a pharmacy benefits manager (PBM) model, which simplifies\nreimbursement and will further aid in a “frictionless launch.” This represents a fundamental shift in the insulin pump market,\nmaking onboarding rapid and simplifying a previously complex and time-consuming “insurance journey.”\n\n \n\nWe\nbelieve these CGM device users are increasingly interested in adopting technology and wearables to manage their diabetes. We believe\nCGM 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\nof the above trends represents a unique opportunity in the insulin pump market’s history. The CGM device provides glucose-level\ndata, and, as necessary, the user can respond to address any issues with a simple button push on a pump to deliver their insulin versus\ntaking out a syringe and injecting glucose.\n\n \n\nDiabetes\ntechnology companies understand that we are at a turning point with new markets (T2D, T1D that are currently not using technologies).\nThis can be seen with increased discussion around this topic during recent national diabetes conferences, as well as an increase in marketing\npromotion.\n\n \n\nAll\nthese recent changes support the high proportion of T1D and T2D intensively treated with insulin that we consider to be Almost Pumpers,\nand we expect the number of Almost Pumpers to grow in the coming years and be more reachable with appropriate marketing strategies.\n\n \n\nOur\nInsulin Pump\n\n \n\nInstead\nof building complex, bespoke, and difficult to manufacture and maintain pumping and control systems, we began with the technology and\nthe user in mind. Using proprietary methods of insulin measurement, we were able to eschew complex mechanisms and instead built a product,\nour MODD1, using only parts from high volume consumer electronics manufacturing lines, breaking the cost vs functionality curve that\nhas existed in the insulin pump space and representing the first truly modern insulin pump design. We consider this to be a new kind\nof product for a new kind of patient.\n\n \n\nIn September 2024, we received clearance from the FDA to market and\nsell our MODD1 product in the United States, and, in August 2025, we demonstrated the first human use of our MODD1 pump delivering insulin\nto a human patient. We announced our next-generation patch pump, branded as Pivot, in August 2025, and we began converting our cartridge\nmanufacturing line to Pivot production. Our Pivot product is a tubeless insulin delivery system that integrates the set into a true tubeless\npatch. The Pivot is expected to provide us with cost and usability improvements and improved manufacturability, allowing our marketing\nto 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\nthe United States. We do not intend to commercialize our MODD1 product. In June 2026, we announced commercial availability of, and commenced\ninitial shipments of, our Pivot insulin delivery system in the United States, and we intend to expand commercial activities across metropolitan\nmarkets by late 2026.\n\n \n\nWe\nhave established our initial production line with our manufacturing partner, Phillips Medisize, a Molex company, a large tier-one medical\ndevice manufacturer, which will manage and operate our production for human use. We believe that Phillips Medisize will be able to rapidly\nscale our production to higher volumes at lower cost. We continue to devote substantial time and resources, including exhibiting at major\ndiabetes conferences, to better understand the needs and preferences of Almost Pumpers and the specific patient/provider/payor requirements\nto motivate change from MDI therapy. By making the bolus delivery at meals simple, we believe we will drive improved health outcomes.\n\n \n\n6 \n\n \n\n \n\nOur\nPivot product has several distinguishing features:\n\n \n\n \n\n(1)The\npump has a simple button to press to deliver insulin as the patient requires it. The electronic pump uses a simple motor for rotating\na cam to motivate the insulin into the patient along with low power Bluetooth and near-field communication (NFC) chips to optionally\nallow the patient to communicate with a smart phone, tablet, or other mobile computing device.\n\n \n\n(2)The\npump snaps together with a three-day disposable cartridge, which the patient fills with insulin for delivery. It includes a simple coin\ncell, which allows it to run through the 80-hour life of the cartridge.\n\n \n\n(3)The\ninfusion set is built into the adhesive pad that the pump attaches to and the needle can be safely removed and discarded by the user\nafter application. Despite this true patch form factor, the pump is removable by the user during the three days of wear.\n\n \n\nThe\nsystem will deliver a small continuous rate called a basal that will provide approximately 50% of the total daily dose required, and\nthe user will use the on-pump button to administer boluses, typically before and after meals. The objective is to make the product simple\nto acquire and take home, simple to learn and most importantly, simple to use and live with, to expand the pump market, drive adoption\nand, ultimately, improve clinical outcomes.\n\n \n\nTechnological\nAdvantages\n\n \n\nThe adoption of new ultra-high volume manufacturing technologies will\nresult in far easier production scale up, as parts sourcing and assembly processes are far easier. Our pump products have been designed\nfrom the beginning for mass manufacturing, and we have partnered with Phillips Medisize to establish processes and “lights out”\nor near lights out production assembly lines whereby a minimal number of workers will be required in the production facility. This advantage\nis compounded by the high availability and already optimized cost reduction in its components. When we achieve production scale, we believe\nthis should result in a cost of goods for our Pivot pump, estimated on the competitors’ announced margins and sales, of approximately\n50% lower than our closest patch pump competitor.\n\n \n\nThe adoption of modern, miniaturized technologies has led to numerous\nother advantages, as well. For example, our Pivot pump is smaller in overall volume than Insulet’s popular Omnipod product and has\na 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\nsized pumps such as those offered by Tandem and Medtronic, 50% more than the 2 mL reservoir in the Omnipod. We believe that this volume\nadvantage 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\n2mL of insulin every three days (the expected wear time of patch pumps).\n\n \n\n7 \n\n \n\n \n\nIn\naddition, our new pumping modality will provide what we believe is the most even (and thus closest to the function of a healthy pancreas)\ndelivery of basal insulin in the industry. We intend to demonstrate the impact of our system on glycemic control in a clinical study\nspecifically focused on improved adherence, more bolus deliveries per day and providing the clinicians with clear data on patient use.\n\n \n\nThe\ntechnology allows the patient to simply add insulin and operate. The battery is included in each cartridge, and the device is operated\nwithout a controller. As a result, no charging is required. The Pivot pump has also been made push-button simple to deliver insulin to\nappeal to a wider audience of users.\n\n \n\nThis new technology has made our Pivot pump lighter than existing offerings.\nCompared to the Insulet Omnipod, our Pivot pump weighs 20 grams (vs. 26 grams) empty and 23 grams (vs. 28 grams) fully filled (despite\ncarrying 50% more insulin), reductions of 23% and 18%, respectively. Also, unlike existing patch pumps, our Pivot pump can be removed\nfrom the needle and taken off and replaced later if the user desires. This avoids loss of insulin in a pump due to accidental dislodging\nof the soft canula, an issue for other patch pumps with which users have expressed considerable dissatisfaction.\n\n \n\nOur\napproach to the care of diabetes can be further enhanced by leveraging our single-pumping chamber technology and reusable pump approach\nto apply to dual (or more) chamber pumping solutions. We believe that such multi-chamber pumps will be integral to the realization of\nhigh time-in-range artificial pancreas solutions that require no human intervention because of the application of, for instance, drugs\nto raise glucose levels coupled with drugs to lower glucose. They will be the next step forward from the cumbersome and awkward solutions\ntoday that require the user to announce meals, count and input carbohydrates, and adjust delivery for exercise and sleep to prevent overdosing\nof 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\nthat a pre-filled peel and stick patch pump with the ability to function in a fully autonomous closed loop system with a CGM device,\nwhich is measuring and transmitting glucose-level information, represents the next generation of diabetes care. We believe that we have\ndemonstrated our technology and have secured, and will continue securing, intellectual property protection on our approach.\n\n \n\nWe\nbelieve this technology, especially applied in a dual chamber capacity, will open up numerous applications outside of diabetes where\nmedication compliance of complex therapy regimes is difficult. Example applications would include weight loss, fertility, and simplifying\nthe delivery of complex multi-drug cocktails, especially those with diverse and challenging dosing schedules.\n\n \n\nOur\nSolution\n\n \n\nOur Pivot pump has been designed and developed to address the aforementioned\nshortcomings of the existing pump market and to appeal to: (i) the substantial group of Almost-Pumpers, who may be interested in using\nan insulin pump, but have not done so because of the complexity, cost or cumbersome nature of existing products and (ii) people who are\nusing one of the currently available insulin pumps but are dissatisfied with such products. We believe that, owing to our new proprietary\ntechnology, our Pivot pump is the simplest and least expensive product on the market and the easiest for providers to prescribe.\n\n \n\nOur\ncurrent 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\nestablish industry standards in terms of technology, simplicity to understand, ease of use and price, we believe our Pivot pump will\noffer the vast majority of benefits afforded by more expensive and complex pumps, but it will remain accessible to a substantially greater\npercentage of diabetes sufferers requiring daily insulin therapy.\n\n \n\nWe believe people generally will not use technology that intimidates\nthem, especially for a life-sustaining therapy. In addition, we believe that physicians are hesitant to prescribe such technology due\nto the level of training and support required with the present pump product offerings. It is our belief that broadly-needed medical products,\nsuch as our Pivot pump, must be user-friendly and affordable. We believe this approach is fundamentally different from that applied to\nthe existing pump market today, where most pumps are continuously adding complex features appealing to super users and leaving the other\npeople with diabetes further behind.\n\n \n\nOur current goal is to expand commercialization of our Pivot pump product\nacross metropolitan markets in the United States and obtain all required regulatory approvals to offer the product for sale in multiple\ninternational markets.\n\n \n\nOur\nlong-term goal is to become a leading provider of insulin pump therapy by focusing on both consumer and clinical needs.\n\n \n\n8 \n\n \n\n \n\nTo\nachieve our above stated immediate and current goals, we intend to pursue the following business strategies:\n\n \n\n●*Use\nof innovative proprietary technology.*\n\n \n\nBased on the substantial experience of Paul DiPerna, our President,\nChief Financial Officer, Treasurer and Chairman of our board of directors, in engineering design and innovative technology in the medical\ndevice industry and, in particular, with the invention, market vision and technical development of insulin pumps, we have generated proprietary\ntechnology that has been incorporated into our Pivot insulin pump. We believe this technology allowing for a two-part, yet small enough\nto wear, pump product, along with simplified mechanics for pumping, has greatly assisted us in creating a simpler, user-friendly pump.\nWe believe the completed design, engineering and technology being incorporated into our pump will make it substantially simpler and more\naffordable than those currently available. These features, together with the safety and reliability of our Pivot pump, are designed to\ncreate the next generation of insulin pumps that will feature important and well-differentiated attributes compared to those currently\navailable and make it available to consumers across mostly all socioeconomic groups in the United States and around the world.\n\n \n\n●*Use\nof go-to market commercialization technology.*\n\n \n\nWe\nplan to commercialize our Pivot product line using a highly differentiated go-to-market strategy. Generally, current pumps are marketed\nby a large, direct sales force to end users directly, and the manufacturer provides all training and support, as the current training\nreimbursement offered by insurance providers is inadequate to motivate clinicians to provide such training to patients. We intend to\nemploy a different strategy and utilize i) distributors to target the daily insulin users who are still managed by a primary care physician\nand ii) a small direct sales force to directly engage with diabetes educator practices. Specifically, our direct sales force will engage\nwith larger diabetes educator practices, which currently prescribe a high volume of pumps and deliver a consultative message focused\non those users that indicate a desire to use a pump but have rejected all of the currently available options. We engaged Seagrove to\nconduct a survey of physicians and diabetes educators, and the resulting data suggested that approximately 25% of multiple daily injectors\ncould be receptive to our offering. We believe that the modest 30-minute training requirement for our product, combined with the more\nlimited feature set for our Pivot pump, will incentivize nurse practitioners to identify and train new users who have not been offered\npumps before. This would also allow us to offer virtual or second level training support and not require us to be the primary training\nprovider. In addition, in June 2026, we launched PivotPump.com, a patient-focused website designed to support individuals seeking a simpler\npath to insulin pump therapy. The PivotPump.com website provides accessible, educational content on insulin pump therapy and highlights\nour focus on real-world usability and supporting patients in evaluating and adopting pump-based diabetes care.\n\n \n\nIn June 2026, we announced commercial availability of our Pivot product\nin the United States and commenced initial patient shipments. We intend to expand commercial activities across metropolitan markets by\nlate 2026.\n\n \n\nWe have also begun the process of obtaining *Conformite Europeenne*,\nor CE, mark clearance for our Pivot product, which would allow us to market and sell in European and certain other international markets.\nWe expect to obtain clearance by the second quarter of 2027. Our initial strategy to address European markets is to partner with distributors\nto bring the Pivot to market in those countries that accept the CE mark and have acceptable reimbursement. During fiscal 2026, we hired\na head of international operations in Switzerland, who has significant experience in launching competitive insulin pump systems in Europe.\nWe believe that the combination of our patch pump form factor, lower cost at scale and lower training burden is well suited for European\nmarkets where there are very few physicians or nurses available to provide training. This would allow the Pivot to gain rapid adoption\nin areas where pump penetration is currently much lower than in the United States. We will target other select international markets using\nthe same approach.\n\n \n\nWe\nbelieve the combination of these differentiated approaches will enable us to take reasonable initial market share, while not incurring\nthe significant overhead cost of existing commercialization strategies employed by the incumbents, where competition for users is intense.\n\n \n\n9 \n\n \n\n \n\nManufacturing\n\n \n\nOur\npump product comprises the pump, a disposable cartridge that holds the insulin reservoir, a baseplate that affixes the pump product to\nthe user’s body and the infusion set, which includes a cannula to infuse the insulin into the body. We intend to manufacture the\npump, the cartridge and the baseplate and purchase the infusion set from third parties. Prior to shipment, our pump product will be packaged\nwith an infusion set. In connection therewith:\n\n \n\n●We\nhave installed automation machines in our facility that will be capable of assembling the cartridges at a rate sufficient to supply 6,000\npatients (60,000 cartridges per month), and we plan to have this capacity moved to the Pivot product in 2026. We also have ordered production\nmolding for more than three times this number of users, so we can quickly scale up with demand.\n\n \n\n●Product\npackaging will initially be performed manually by our personnel, while the cartridge automation is being refined. We expect to purchase\nand implement packaging automation equipment as the second phase of automation of the cartridge.\n\n \n\nPhillips\nMedisize, our manufacturing partner, performs all manufacturing operations to ensure compliance with FDA regulations.\n\n \n\nFDA\nClearance\n\n \n\nThe\nFDA requires us to meet all applicable regulations for insulin pumps, a subcategory of infusion pumps, which are generally considered\nClass II devices by the FDA. As discussed above, we have obtained the required FDA clearance for our MODD1 and Pivot insulin pump products.\n\n \n\nCommercialization\nSteps\n\n \n\nTo\ncommercialize our product, we must successfully complete a number of material steps, including:\n\n \n\n●Continue\nto ensure it meets:\n\n \n\n●FDA\nrequirements for 510(k) clearance, including taking such actions, if any, as may be required by the FDA as a condition to granting approval\nand providing 510(k) clearance for our insulin pump;\n\n \n\n●the\ngeneral needs and preferences of our Almost-Pumper target market based on our knowledge of the diabetes industry, information gathered\nfrom our soft launch and other information available and/or obtained by us from Almost Pumpers and their caregivers; and\n\n \n\n●the general guidelines of third-party payors, private and public insurance\ncompanies, preferred provider organizations and other managed care providers with particular focus on the guidelines established by the\nCenter for Medicare and Medicaid Services, or CMS which administers the United States Medicare program, or Medicare. To assist us in making\nsuch modifications and refinements, we have retained independent consultants to focus on ensuring that our products and product candidates\nsatisfy the existing coverage and reimbursement criteria of third-party payors.\n\n \n\n●Transfer\nour manufacturing equipment and process to Phillips Medisize prior to product launch; and\n\n \n\n●Hire\nand retain appropriate sales and marketing personnel to develop, implement and launch a promotional campaign for our insulin pump substantially\nfocused on our target market.\n\n \n\nAs\nwith any medical device attempting to enter and successfully compete with existing products in an established and competitive marketplace,\nwe will face significant hurdles to accomplish the above steps to commercialization including:\n\n \n\n●Obtaining\nany other FDA-required authorizations, in addition to FDA 510(K) clearance, with regard to our product, as required by the Federal Food,\nDrug, and Cosmetic Act, or FDCA, which is administered by the FDA;\n\n \n\n10 \n\n \n\n \n\n●Educating\nendocrinologists, physician’s assistants, nurse practitioners and nurse educators, who typically prescribe pump usage, and certified\ndiabetes educators and dieticians, who provide education and guidance to diabetes patients, as to what we believe to be the superior\nqualities of our products. We attend and exhibit at multiple diabetes industry conferences and trade shows;\n\n \n\n●Demonstrating\nto select general practitioners, who have historically been skeptical of the heightened support inherent in insulin pumps, our product’s\nease of use and convenience;\n\n \n\n●Ensuring\nthat our products do, in fact, meet the needs of Almost Pumpers;\n\n \n\n●Overcoming\nthe historic obstacles and reluctance of Almost Pumpers to using insulin pumps to treat their diabetes; and\n\n \n\n●Ensuring\nthat third-party payors agree to cover all or a substantial portion of the purchase price and recurring costs of the use of our insulin\npump products.\n\n \n\nLooking\nForward\n\n \n\nGoing\nforward, we expect to continue to evolve our Pivot pump and its capabilities and functionality both in response to patient needs and\nas part of our current platform roadmap.\n\n \n\n●With\nfuture Pivot products, we intend to seek to add phone-based control and Alternative Controller Enabled (“ACE”) and Automated\nInsulin Deliver (“AID”) capability to allow integration with popular continuous glucose monitors. We believe this will expand\nour available market to include many existing pumpers. The new model has the same modular design and low-cost components as MODD1 and\nprovides a much desired breakthrough for patients — two-factor command authentication that allows the wearer to use an application\non his/her cell phone as the controller.\n\n \n\n●AID-control\nfunctionality is being developed and will be added via an ACE designation on the pump.\n\n \n\n●Any\napproved AID controller can drive insulin delivery in “auto” mode, when appropriate.\n\n \n\n●CGM\nintegration allows the controller to potentially adjust basal insulin rate for meals and exercise with an approved algorithm.\n\n \n\n●With\nour future Pivot product, we will seek to move to a full-featured, multi-chamber pump optimized for high time-in-range fully autonomous\nclose loop insulin delivery utilizing the form factor and cost advantages of its pumping designs to create an affordable, easy to use\ndrug delivery system to realize the aspiration of true “artificial pancreas” systems. We envision moving to a drug prefill\nmodel, such that cartridges can be filled with insulin or other drugs and shipped cold chain to patients, further simplifying the use\nprocess.\n\n \n\nCompetition\n\n \n\nToday, in the United States, five companies are commercializing insulin\npumps to T1D patients and insulin treated T2D patients and only three have significant market share:\n\n \n\n●Insulet — commercializes a disposable patch pump, which held approximately 43% of the US market in 2026.\n\n \n\n●Tandem — commercializes a durable pump available with or without automated dosing algorithms. In 2026, they held approximately 34% of the US insulin\npump market.\n\n   \n\n ●\nMinimed — commercializes a durable insulin delivery pump and continues to offer a range of older durable pumps. In 2026, they held approximately\n21% of the US insulin pump market.\n\n \n\n11 \n\n \n\n  \n\nThese three insulin pump offerings are vying for\nthe attention of the most motivated and well insured in hope of converting them away from their reliance on MDI. We believe the each of\nthe two leading durable pump products receive in excess of $4,000 through durable medical equipment (DME) and daily consumable insurance\ncoverage reimbursements. Daily consumable reimbursement would also cover on an ongoing basis cartridge, tubing and sets for each three-day\nperiod, as well. These products have controllers integrated into the pump, making them cumbersome and bulky, along with long (greater\nthan 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\nand uses a separate controller to manage the insulin delivery process. Insurance coverage for patch pumps of this type can be provided\nvia DME but is primarily provided through the Pharmacy Benefit (PB). These patch pumps can be more expensive per day and less accurate\nthan other insulin pumps, according to a Mende 2022 study. Around 38% of people living with T1D are currently using insulin pumps; of\nthese, the vast majority are using one of these three offerings, a statistic that has not changed significantly over the last five years.\n\n \n\nAll of these pump products require extensive training\nto 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\nwith the cost and awkwardness of these products contribute to the limited uptake.\n\n \n\nThere are purely mechanical pumps available to\npatients, and a modest percentage of T2D patients use Mannkind’s mechanical patch pump, which provides a fixed basal rate and a\nbutton to deliver small boluses. This pump is simple to use, though gives little performance decision to the user (e.g., no possibility\nto change the basal rate, no possibility to stop bolus doses, small reservoir, pump that needs to be changed every day, etc.). Lastly,\nCequr offers another patch pump, providing a bolus only delivery option without basal delivery or any electronic reporting. Cequr recently\ndisclosed it has slightly more than 15,000 users. Beta Bionics, Inc. launched its durable pump in October 2023 and reported approximately\n35,000 users at the end of 2025. Deka Research and Development Corp. (Deka) received clearance for its durable pump in July of 2023. Deka\nhas launched broadly with a large sales force in the United States, but it has not yet publicly disclosed the number of users.\n\n \n\nMinimed’s flagship durable pump is available\nin some European countries with an advanced algorithm, but there has not been an obvious change in hardware. Tandem is now selling a small,\nno display pump with a small 2mL reservoir that is controlled by a separate unit, similar in concept to existing patch pump controllers.\nInsulet has also launched a new version of its patch pump that includes an AID algorithm and improved low-power Bluetooth.\n\n \n\nApproximately\n79% of the people who rely upon MDI therapy choose to not administer a shot outside of their house, which creates a poorly controlled\ngroup. Our pump products are designed to focus upon a segment of these people and mobilize them via a simple, easy to use, affordable\nproduct.\n\n \n\n12 \n\n \n\n \n\nIntellectual\nProperty\n\n \n\nOur\nsuccess depends in part on our ability to obtain patents and trademarks, maintain trade secret and know-how protection, enforce our proprietary\nrights against infringers, and operate without infringing on the proprietary rights of third parties. Because of the length of time and\nexpense associated with developing new products and bringing them through the regulatory approval process, the health care industry places\nconsiderable emphasis on obtaining patent protection and maintaining trade secret protection for new technologies, products, processes,\nknow-how, and methods.\n\n \n\nAs of June 29, 2026, we held eight U.S. utility\nand six foreign patents, and we have numerous applications pending and in various stages of review by the USPTO and foreign patent agencies.\nThe patents and patent applications cover various aspects of our technology, including our proprietary fluid movement technology and associated\nfeatures of our insulin delivery methodology. There can be no assurance that the pending patent applications will result in the issuance\nof patents, that patents issued to or licensed by us will not be challenged or circumvented by competitors, or that these patents will\nbe found to be valid or sufficiently broad to protect our technology or provide us with a competitive advantage.\n\n \n\nGovernment\nRegulation\n\n \n\nOur\noperations are subject to comprehensive federal, state, and local laws and regulations in the jurisdictions in which we or our research\nand development partners do business. The laws and regulations governing our business and interpretations of those laws and regulations\nand are subject to frequent change. Our ability to operate profitably will depend in part upon our ability, and that of our research\nand development partners and affiliates, to operate in compliance with applicable laws and regulations. The laws and regulations relating\nto medical products and healthcare services that apply to our business and that of our partners and affiliates continue to evolve, and\nwe must, therefore, devote significant resources to monitoring developments in legislation, enforcement, and regulation in such areas.\nAs the applicable laws and regulations change, we are likely to make conforming modifications in our business processes from time to\ntime. We cannot provide assurance that a review of our business by courts or regulatory authorities will not result in determinations\nthat could adversely affect our operations or that the regulatory environment will not change in a way that restricts our operations.\n\n \n\n*FDA\nRegulation*\n\n \n\nIn\nthe United States, medical devices are strictly regulated by the FDA. Under the FDCA, a medical device is defined as “an instrument,\napparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component, part\nor accessory which is, among other things: intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation,\ntreatment, or prevention of disease, in man or other animals; or intended to affect the structure or any function of the body of man\nor other animals, and which does not achieve its primary intended purposes through chemical action within or on the body of man or other\nanimals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes.” This definition\nprovides a clear distinction between a medical device and other FDA regulated products such as drugs. If the primary intended use of\na medical product is achieved through chemical action or by being metabolized by the body, the product is usually a drug or biologic.\nIf not, it is generally a medical device.\n\n \n\nWe\nhave developed an insulin pump delivery system, which is regulated by the FDA as a medical device under the FDCA, as implemented and\nenforced by the FDA. The FDA regulates the development, testing, manufacturing, labeling, packaging, storage, installation, servicing,\nadvertising, promotion, marketing, distribution, import, export, and market surveillance of medical devices.\n\n \n\n*Device\nPremarket Regulatory Requirements*\n\n \n\nBefore\nbeing introduced into the U.S. market, each medical device must obtain marketing clearance or approval from the FDA through the\npremarket notification (or 510(k)) process, the *de novo*classification process, or the premarket approval, or PMA, process,\nunless they are determined to be Class I devices or to otherwise qualify for an exemption from one of these available forms of\npremarket review and authorization by the FDA. Under the FDCA, medical devices are classified into one of three classes —\nClass I, Class II or Class III — depending on the degree of risk associated with each medical device and the extent of control\nneeded to provide reasonable assurance of safety and effectiveness. Classification of a device is important because the class to\nwhich a device is assigned determines, among other things, the necessity and type of FDA review required prior to marketing the\ndevice. Class I devices are those for which reasonable assurance of safety and effectiveness can be maintained through adherence to\ngeneral controls which include compliance with the applicable portions of the FDA’s Quality System Regulation (the\n“QSR”), as well as regulations requiring facility registration and product listing, reporting of adverse medical events,\nand appropriate, truthful and non-misleading labeling, advertising, and promotional materials. The Class I designation also applies\nto devices for which there is insufficient information to determine that general controls are sufficient to provide reasonable\nassurance of the safety and effectiveness of the device or to establish special controls to provide such assurance, but that are not\nlife-supporting or life-sustaining or for a use which is of substantial importance in preventing impairment of human health, and\nthat do not present a potential, unreasonable risk of illness or injury.\n\n \n\n13 \n\n \n\n \n\nClass\nII devices are those for which general controls alone are insufficient to provide reasonable assurance of safety and effectiveness and\nthere is sufficient information to establish “special controls.” These special controls can include performance standards,\npost-market surveillance requirements, patient registries and FDA guidance documents describing device-specific special controls. While\nmost Class I devices are exempt from the premarket notification requirement, most Class II devices require a premarket notification prior\nto commercialization in the United States; however, the FDA has the authority to exempt Class II devices from the premarket notification\nrequirement under certain circumstances. As a result, manufacturers of most Class II devices must submit premarket notifications to the\nFDA 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\nsuch devices. To obtain 510(k) clearance, manufacturers must submit to the FDA adequate information demonstrating that the proposed device\nis “substantially equivalent” to a “predicate device” that is already on the market. A predicate device is a\nlegally marketed device that is not subject to PMA, meaning, (i) a device that was legally marketed prior to May 28, 1976 (“pre-amendments\ndevice”) 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)\na device that was found substantially equivalent through the 510(k) process. If the FDA agrees that the device is substantially equivalent\nto the predicate device identified by the applicant in a premarket notification submission, the agency will grant 510(k) clearance for\nthe new device, permitting the applicant to commercialize the device. Premarket notifications are subject to user fees, unless a specific\nexemption applies.\n\n \n\nIf\nthere is no adequate predicate to which a manufacturer can compare its proposed device, the proposed device is automatically classified\nas a Class III device. In such cases, a device manufacturer must then fulfill the more rigorous PMA requirements or can request a risk-based\nclassification determination for its device in accordance with the de novo classification process.\n\n \n\nDevices\nthat are intended to be life sustaining or life supporting, devices that are implantable, devices that present a potential unreasonable\nrisk of harm or are of substantial importance in preventing impairment of health, and devices that are not substantially equivalent to\na predicate device and for which safety and effectiveness cannot be assured solely by the general controls and special controls are placed\nin Class III. Such devices generally require FDA approval through the PMA process, unless the device is a pre-amendments device not yet\nsubject to a regulation requiring premarket approval. The PMA process is more demanding than the 510(k) process. For a PMA, the manufacturer\nmust demonstrate through extensive data, including data from preclinical studies and one or more clinical trials, that the device is\nsafe and effective for its proposed indication. The PMA must also contain a full description of the device and its components, a full\ndescription of the methods, facilities and controls used for manufacturing, and proposed labeling. Following receipt of a PMA submission,\nthe FDA determines whether the application is sufficiently complete to permit a substantive review. If the FDA accepts the application\nfor review, it has 180 days under the FDCA to complete its review and determine whether the proposed device can be approved for commercialization,\nalthough in practice, PMA reviews often take significantly longer, and it can take up to several years for the FDA to issue a final decision.\nBefore approving a PMA, the FDA generally also performs an on-site inspection of manufacturing facilities for the product to ensure compliance\nwith the QSR.\n\n \n\nThe\n*de novo* classification process allows a manufacturer whose novel device is automatically classified into Class III to request\ndown-classification of its device to Class I or Class II, on the basis that the device presents low or moderate risk, as an alternative\nto following the typical Class III device pathway requiring the submission and approval of a PMA application. The FDA has confirmed our\nMODD1 product qualifies as a 510(k) eligible device and does not require a *de novo*classification.\n\n \n\nClinical\ntrials are almost always required to support PMAs and are sometimes required to support 510(k) and *de novo*classification\nsubmissions. In our case, usability studies of our intended users are required and have been completed. All clinical investigations\nof devices to determine safety and effectiveness must be conducted in accordance with the FDA’s investigational device\nexemption, or IDE, regulations that govern investigational device labeling, prohibit promotion of investigational devices, and\nspecify recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. If the device presents a\n“significant risk,” as defined by the FDA, the agency requires the study sponsor to submit an IDE application to the\nFDA, which must become effective prior to commencing human clinical trials. The IDE will automatically become effective 30 days\nafter receipt by the FDA, unless the FDA denies the application or notifies the sponsor that the investigation is on hold and may\nnot begin until the sponsor provides supplemental information about the investigation that satisfies the agency’s concerns. If\nthe FDA determines that there are deficiencies or other concerns with an IDE that require modification of the study, the FDA may\npermit a clinical trial to proceed under a conditional approval. The FDA may also notify the sponsor that the study is approved as\nproposed or approved with specific requested modification. Furthermore, the agency may withdraw approval of an IDE under certain\ncircumstances. In addition, the study must be approved by, and conducted under the oversight of, an institutional review board, or\nIRB, for each clinical site. If the device presents a non-significant risk to the patient according to criteria established by the\nFDA as part of the IDE regulations, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more\nIRBs without separate authorization from the FDA, but must still comply with abbreviated IDE requirements, such as monitoring the\ninvestigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements.\n\n \n\n14 \n\n \n\n \n\n*Post-Marketing\nRestrictions and Enforcement*\n\n \n\nAfter\na device is placed on the market, numerous regulatory requirements apply. These include, but are not limited to:\n\n \n\n●submitting\nand updating establishment registration and device listings with the FDA;\n\n \n\n●compliance\nwith the QSR, which requires manufacturers to follow stringent design, testing, control, documentation, record maintenance, including\nmaintenance of complaint and related investigation files, and other quality assurance controls during the manufacturing process;\n\n \n\n●unannounced\nroutine or for-cause device facility inspections by the FDA, which may include our suppliers’ facilities; and\n\n \n\n●labeling\nregulations, which prohibit the promotion of products for uncleared or unapproved (or “off-label”) uses and impose other\nrestrictions relating to promotional activities;\n\n \n\n●corrections\nand removal reporting regulations, which require that manufacturers report to the FDA field corrections or removals if undertaken to\nreduce a risk to health posed by a device or to remedy a violation of the FDCA that may present a risk to health; and\n\n \n\n●post-market\nsurveillance regulations, which apply to certain Class II or III devices when necessary to protect the public health or to provide additional\nsafety and effectiveness data for the device.\n\n \n\nIn\naddition, under the FDA medical device reporting, or MDR, regulations, medical device manufacturers are required to report to the FDA\ninformation that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would\nlikely cause or contribute to death or serious injury if the malfunction of the device or a similar device of such manufacturer were\nto recur. The decision to file an MDR involves a judgment by the manufacturer. If the FDA disagrees with the manufacturer’s determination,\nthe FDA can take enforcement action.\n\n \n\nThe\nMDR requirements also extend to health-care facilities that use medical devices in providing care to patients, or “device user\nfacilities,” which include hospitals, ambulatory surgical facilities, nursing homes, outpatient diagnostic facilities, or outpatient\ntreatment facilities, but not physician offices. A device user facility must report any device-related death to both the FDA and the\ndevice manufacturer, or any device-related serious injury to the manufacturer (or, if the manufacturer is unknown, to the FDA) within\n10 days of the event. Device user facilities are not required to report device malfunctions that would likely cause or contribute to\ndeath or serious injury if the malfunction were to recur but may voluntarily report such malfunctions through MedWatch, the FDA’s\nSafety Information and Adverse Event Reporting Program.\n\n \n\nThe\nFDA also has the authority to require the recall of commercialized medical device products in the event of material deficiencies or\ndefects in design or manufacture. The authority to require a recall must be based on an FDA finding that there is a reasonable\nprobability that the device would cause serious adverse health consequences or death. Manufacturers may, under their own initiative,\nrecall a product if any distributed devices fail to meet established specifications, are otherwise misbranded or adulterated under\nthe FDCA, or if any other material deficiency is found. The FDA requires that certain classifications of recalls be reported to the\nFDA within ten working days after the recall is initiated.\n\n \n\n15 \n\n \n\n \n\nThe\nfailure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following\nsanctions:\n\n \n\n●warning\nletters, fines, injunctions or civil penalties;\n\n \n\n●recalls,\ndetentions or seizures of products;\n\n \n\n●operating\nrestrictions;\n\n \n\n●delays\nin the introduction of products into the market;\n\n \n\n●total\nor partial suspension of production;\n\n \n\n●delay\nor refusal of the FDA or other regulators to grant 510(k) clearance, PMA approvals, or other marketing authorization to new products;\n\n \n\n●withdrawals\nof marketing authorizations; or\n\n \n\n●in\nthe most serious cases, criminal prosecution.\n\n \n\nTo\nensure compliance with regulatory requirements, medical device manufacturers are subject to market surveillance and periodic, pre-scheduled\nand unannounced inspections by the FDA, and these inspections may include the manufacturing facilities of subcontractors.\n\n \n\n*Federal\nTrade Commission Regulatory Oversight*\n\n \n\nOur\nadvertising for our products and services will be subject to federal truth-in-advertising laws enforced by the Federal Trade Commission\n(the “FTC”) as well as comparable state consumer protection laws. Under the Federal Trade Commission Act (the “FTC\nAct”), the FTC is empowered, among other things, to (a) prevent unfair methods of competition and unfair or deceptive acts or practices\nin or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; and (c) gather and compile information\nand conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce. The FTC\nhas very broad enforcement authority, and failure to abide by the substantive requirements of the FTC Act and other consumer protection\nlaws can result in administrative or judicial penalties, including civil penalties, injunctions affecting the manner in which we would\nbe able to market services or products in the future, or criminal prosecution.\n\n \n\n*Healthcare\nLaw and Regulation*\n\n* *\n\n*United\nStates*\n\n \n\nWe\nwill have to comply with various U.S. federal and state laws, rules and regulations pertaining to healthcare fraud and abuse, including\nanti-kickback laws and physician self-referral laws, rules and regulations. Violations of the fraud and abuse laws are punishable by\ncriminal and civil sanctions, including, in some instances, exclusion from participation in federal and state healthcare programs, including\nMedicare and Medicaid. These laws include the following:\n\n \n\n●the\nfederal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or\nproviding remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or\nthe purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal healthcare\nprogram such as Medicare and Medicaid;\n\n \n\n●the\nfederal False Claims Act imposes civil penalties, and provides for civil whistleblower or\nqui tam actions, against individuals or entities for knowingly presenting, or causing to\nbe presented, to the federal government, claims for payment that are false or fraudulent\nor making a false statement to avoid, decrease or conceal an obligation to pay money to the\nfederal government;\n\n \n\n16 \n\n \n\n \n\n●the\nfederal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal\nand civil liability for executing a scheme to defraud any healthcare benefit program or making\nfalse statements relating to healthcare matters;\n\n \n\n●HIPAA,\nas amended by the Health Information Technology for Economic and Clinical Health Act and\nits implementing regulations, also imposes obligations, including mandatory contractual terms,\nwith respect to safeguarding the privacy, security and transmission of individually identifiable\nhealth information;\n\n \n\n●the\nfederal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any\nmaterially false statement in connection with the delivery of or payment for healthcare benefits, items or services;\n\n \n\n●the\nfederal transparency requirements under the Physician Payments Sunshine Act require manufacturers of FDA-approved drugs, devices, biologics\nand medical supplies covered by Medicare or Medicaid to report, on an annual basis, to the Department of Health and Human Services information\nrelated to payments and other transfers of value to physicians, teaching hospitals, and certain advanced non-physician health care practitioners\nand physician ownership and investment interests; and\n\n \n\n●analogous\nstate and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements\nand claims involving healthcare items or services reimbursed by nongovernmental third-party payors, including private insurers.\n\n \n\nSome\nstate laws require pharmaceutical or medical device companies to comply with the relevant industry’s voluntary compliance guidelines\nand the relevant compliance guidance promulgated by the federal government in addition to requiring drug and device manufacturers to\nreport information related to payments to physicians and other health care providers or marketing expenditures.\n\n \n\nState\nand foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other\nin significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. We also may be subject to, or may in\nthe future become subject to, U.S. federal and state, and foreign laws and regulations imposing obligations on how we collect, use, disclose,\nstore and process personal information. Our actual or perceived failure to comply with such obligations could result in liability or\nreputational harm and could harm our business. Ensuring compliance with such laws could also impair our efforts to maintain and expand\nour customer base and thereby decrease our future revenues.\n\n \n\nThe\nEuropean Union approves the use of medical devices in a very different way. They have similar regulations and requirements to adhere\nto, however, a Notified Body, in the form of a private company, will represent their interests and is required to have sufficient expertise\nto review all applications and the company’s internal processes to ensure the safety of the product for which approval is being\nrequested. We have identified a Notified Body to represent us, and we are following our FDA submission process with regard to preparing\nthe materials and processes required to meet the regulations and gain clearance.\n\n \n\n*European\nUnion*\n\n* *\n\nEEA\n\n \n\nIn the European Economic Area, or EEA, which is\ncomprised of the 27 member states of the European Union plus Norway, Iceland and Liechtenstein, manufacturers of medical devices need\nto comply with the Essential Requirements laid out in Annex I to the EU Medical Devices Directive (Council Directive 93/42/EEC) or with\nthe General Safety and Performance Requirements (GSPR) of the new EU Medical Devices Regulation (EU 2017/745). Compliance with these requirements\nis a prerequisite to be able to affix the CE mark to medical devices, without which they cannot be marketed or sold in the EEA. To demonstrate\ncompliance with the Essential Requirements and the GSPR and obtain the right to affix the CE mark, manufacturers of medical devices must\nundergo a conformity assessment procedure, which varies according to the type of medical device and its classification. Except for low-risk\nmedical devices (Class I with no measuring function and which are not sterile), where the manufacturer can issue an EC Declaration of\nConformity based on a self-assessment of the conformity of its products with the Essential Requirements and the GSPR, a conformity assessment\nprocedure requires the intervention of a Notified Body, which is an organization designated by a competent authority of an EEA country\nto conduct conformity assessments. Depending on the relevant conformity assessment procedure, the Notified Body would audit and examine\nthe Technical File and the quality system for the manufacture, design and final inspection of the devices. The Notified Body issues a\nCE Certificate of Conformity following successful completion of a conformity assessment procedure conducted in relation to the medical\ndevice and its manufacturer and their conformity with the Essential Requirements and GSPR. This Certificate entitles the manufacturer\nto affix the CE mark to its medical devices after having prepared and signed a related EC Declaration of Conformity. As a general rule,\ndemonstration of conformity of medical devices and their manufacturers with the Essential Requirements and GSPR must be based, among other\nthings, on the evaluation of clinical data supporting the safety and performance of the products during normal conditions of use. Specifically,\na manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use, that the known and\nforeseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance,\nand that any claims made about the performance and safety of the device are supported by suitable evidence.\n\n \n\n17 \n\n \n\n \n\nAll\nmanufacturers placing medical devices into the market in the EEA must comply with the EU Medical Device Vigilance System. Under this\nsystem, incidents must be reported to the relevant authorities of the member states of the EEA, and manufacturers are required to take\nField Safety Corrective Actions, or FSCAs, to reduce a risk of death or serious deterioration in the state of health associated with\nthe use of a medical device that is already placed on the market. An incident is defined as any malfunction or deterioration in the characteristics\nand/or performance of a device, as well as any inadequacy in the labeling or the instructions for use which, directly or indirectly,\nmight lead to or might have led to the death of a patient or user or of other persons or to a serious deterioration in their state of\nhealth. An FSCA may include the recall, modification, exchange, destruction or retrofitting of the device. FSCAs must be communicated\nby the manufacturer or its legal representative to its customers and/or to the end users of the device through Field Safety Notices.\nWhere appropriate, our products commercialized in Europe are CE marked and classified as either Class I or Class II.\n\n \n\nIn\n2017, the European Parliament passed the Medical Devices Regulation, which repeals and replaces the EU Medical Devices Directive. Unlike\ndirectives, which must be implemented into the national laws of the EEA member states, the regulations would be directly applicable (i.e.,\nwithout the need for adoption of EEA member State laws implementing them) in all EEA member states and are intended to eliminate current\ndifferences in the regulation of medical devices among EEA member States. The Medical Devices Regulation, among other things, is intended\nto establish a uniform, transparent, predictable and sustainable regulatory framework across the EEA for medical devices and in vitro\ndiagnostic devices and ensure a high level of safety and health while supporting innovation.\n\n \n\nThe\nMedical Device Regulation became applicable on May 26, 2021. Devices lawfully placed on the market pursuant to the EU Medical Devices\nDirective prior to May 26, 2021 may generally continue to be made available on the market or put into service until May 26, 2026. The\nMedical Devices Regulation, among other things:\n\n \n\n●strengthens\nthe rules on placing devices on the market and reinforces surveillance once they are available;\n\n \n\n●establishes\nexplicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed\non the market;\n\n \n\n●improves\nthe traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number;\n\n \n\n●sets\nup a central database to provide patients, healthcare professionals and the public with comprehensive information on products available\nin the EU; and\n\n \n\nstrengthens\nrules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before\nthey are placed on the market.\n\n \n\nAvailable\nInformation\n\n \n\nOur\nannual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or\nfurnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as section 16 reports on Form 3, 4, or\n5, are available free of charge on our website at *www.modular-medical.com*. as soon as it is reasonably practicable after they\nare filed or furnished with the SEC. Our Code of Business Conduct and Ethics and the charters for the Audit Committee, Compensation\nCommittee and Nominating and Governance Committee are also available on our website. The Code of Business Conduct and charters are\nalso available in print to any stockholder upon request without charge. Requests for such documents should be directed to Modular\nMedical, Inc., 10740 Thornmint Road, San Diego CA 92127, Attn. CFO. Our Internet website and the information contained on it or\nconnected to it are not part of, or incorporated by, reference into this Report. Our filings with the SEC are also available on the\nSEC’s website at *http://www.sec.gov*.\n\n  \n\nCorporate\nInformation\n\n \n\nWe\nare a Nevada corporation, and Quasuras, Inc., a Delaware corporation, is our only subsidiary. Our corporate headquarters and operating\nfacilities are located at 10740 Thornmint Road, San Diego, CA 92127. Our telephone number is (858) 800-3500. We maintain a website at\n*www.modular-medical.com*.\n\n \n\nEmployees\n\n \n\nAs of March 31, 2026, we had 51 employees, all located in the United States\nof which 50 of are full-time, consisting of 42 in research and development and manufacturing operations, six in general and administrative\nfunctions and three in sales and marketing.\n\n \n\n18"}