DEF: Modular Medical Schedules Annual Meeting, Seeks Shareholder Approval

Modular Medical, Inc. has issued a proxy statement for its upcoming Annual Meeting of Shareholders on October 23, 2026, detailing proposals for director elections, equity plan amendments, and auditor ratification.

Summary

• Modular Medical, Inc. is holding its Annual Meeting of Shareholders on October 23, 2026, via a live audio webcast.
• Key proposals include the election of six directors, an amendment to the 2017 Equity Incentive Plan to increase available shares by 2,500,000, and the ratification of Farber Hass Hurley LLP as the independent registered public accounting firm for fiscal year ending March 31, 2027.
• The company highlights substantial doubt about its ability to continue as a going concern in its recent quarterly report, necessitating future capital raises.
• Shareholders of record as of September 10, 2026, are entitled to vote.
• The proxy materials were first mailed to shareholders on or about October 2, 2026.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing as slightly negative due to the ongoing concerns about the company's ability to continue as a going concern and the need for future capital raises, which implies potential dilution for existing shareholders.

Positives

• The company is holding its annual shareholder meeting to ensure corporate governance and shareholder engagement.
• The proposed amendment to the equity incentive plan aims to attract, motivate, and retain employees and directors, which is crucial for business growth.
• The company is seeking to ratify its independent auditor, indicating a commitment to financial transparency.
• Several directors and executive officers have significant experience in the medical device and finance industries.

Negatives

• The company continues to face substantial doubt regarding its ability to continue as a going concern, as noted in its latest quarterly report.
• Future capital raises are anticipated, which will likely result in significant dilution for existing shareholders.
• Several directors and officers have had late filings for Section 16(a) reports, indicating potential administrative oversight issues.
• The company's Total Shareholder Return (TSR) has been significantly negative (-90.49% in fiscal 2026 and -52.71% in fiscal 2025).

Risks

• Substantial doubt exists regarding the company's ability to continue as a going concern.
• The need for future capital raises may lead to significant dilution of existing shareholder equity.
• The proposed increase in equity incentive shares could further dilute existing shareholders if not managed effectively.
• The company's negative TSR indicates poor historical stock performance.
• Potential for broker non-votes on director elections and equity plan amendments due to lack of shareholder instructions.

Future Outlook

The company anticipates needing to raise additional capital through debt or equity arrangements in the foreseeable future, expecting significant dilution from these financing activities. The proposed increase in the equity incentive plan shares is intended to provide adequate shares for at least the next two years, but further amendments or new plans may be required as the business grows.

Management Comments

• "Your vote is very important. We encourage you to read all of the information in the proxy statement and vote your shares as soon as possible."
• "Whether or not you plan to attend, you can be sure your shares are represented at the Annual Meeting by promptly submitting your proxy by the Internet, by telephone or by mail."
• "On behalf of the Board of Directors, thank you for your continued confidence and investment in the Company."

Industry Context

StockSavvy.ai notes that the medical device industry, particularly in areas like diabetes management, often requires significant capital investment for research, development, and commercialization. Companies in this sector frequently utilize equity-based compensation to attract and retain specialized talent, especially when facing financial challenges or seeking to manage cash burn.

Comparison to Industry Standards

• The proposed increase of 2,500,000 shares under the 2017 Equity Incentive Plan represents approximately 0.2% of current outstanding shares and 0.2% of fully diluted shares. This level of dilution for equity awards is common in early-stage or growth-oriented medical device companies aiming to incentivize key personnel.
• The company's reliance on equity compensation, as detailed in the Summary Compensation Table, aligns with industry practices for attracting talent in competitive fields like medical technology, though the absolute dollar amounts are modest compared to larger, more established companies.
• The presence of multiple independent directors on key committees (Audit, Compensation, Nominating & Governance) is a standard corporate governance practice for publicly traded companies, including those in the medical device sector.

Corporate Governance

Related Party Transactions

• Manchester Explorer purchased shares in a November 2024 public offering and a March 2025 private placement.
• Mr. Besser purchased units in the March 2025 private placement.
• Two Board members participated in the March 2025 private placement and a December 2025 offering.
• A promissory note was issued to Mr. Besser in February 2026 for a $350,000 revolving credit facility, which was paid in full in March 2026.
• A family member of an executive officer was an employee until March 15, 2026, receiving compensation and stock options.
• A second family member of an executive officer consulted and became an employee in 2025, receiving compensation and stock options.

Stakeholder Impact

• Shareholders: Potential dilution from future capital raises and equity awards; opportunity to vote on key company matters.
• Employees: Continued incentive and retention through equity awards, subject to dilution.
• Directors: Compensation structure includes retainers and equity awards; some directors are not standing for re-election.
• Auditors: Continued engagement of Farber Hass Hurley LLP, subject to shareholder ratification.

Next Steps

• Shareholders will vote on the election of directors, the amendment to the 2017 Equity Incentive Plan, and the ratification of the independent auditor at the Annual Meeting.
• The Board expects to appoint a lead independent director after the Annual Meeting.
• The company will continue to seek capital through debt or equity arrangements.

Key Dates

Recommendation

While the company is seeking shareholder approval for critical items like equity incentives and auditor ratification, the persistent 'substantial doubt' about its going concern status and the clear expectation of significant future dilution weigh heavily. The negative TSR further supports caution. A 'hold' recommendation reflects the potential for recovery if the company successfully navigates its financial challenges and commercializes its products, balanced against the significant risks and dilution concerns.

Keywords

Proxy Statement, Annual Meeting, Equity Incentive Plan, Director Election, Auditor Ratification, Shareholder Vote, Going Concern, Capital Raise