Modular Medical Inc

This proposal asks shareholders to approve an amendment to the Articles of Incorporation to authorize a board-discretionary reverse stock split at a ratio between 1-for-5 and 1-for-40 to be implemented within one year. Management is pursuing shareholder approval to provide the board flexibility to select the specific ratio and timing if necessary to regain or maintain compliance with Nasdaq’s $1.00 minimum bid-price requirement after receiving a Nasdaq deficiency notice. The filing explains that the board may exercise this authority only following shareholder approval, but that under Nevada law the board could effect a reverse split without shareholder approval in certain circumstances; thus the shareholder vote primarily provides an endorsement and practical flexibility. The company frames the Reverse Split as a defensive and remedial tool to avoid delisting, preserve listing liquidity and reduce the risk of being categorized as a penny stock, while retaining the current authorized share count (so authorized shares would not be reduced). The risks and downsides disclosed include potential failure to achieve a sustained $1.00 price, possible reduced liquidity and odd-lot effects, higher transaction costs, and anti-takeover implications because maintaining authorized shares post-split could facilitate future defensive issuances. The board recommends a FOR vote because it believes the Reverse Split could materially improve the company’s ability to remain listed and protect shareholder value by reducing delisting risk; however, it acknowledges there is no guarantee the split will achieve the intended results and that other listing requirements could still cause delisting. For an analyst, important contextual factors include the company’s Nasdaq deficiency history and extension request, the trade-off between immediate pricing improvement and potential long-term liquidity impacts, and the anti-takeover and dilution considerations created by preserving authorized but unissued shares.

Management asks shareholders to increase authorized common shares to 250 million to provide the Board immediate flexibility for capital raises, equity compensation, acquisitions and other corporate transactions. The company reports it currently has a shortage of authorized but unissued shares given outstanding warrants and awards, creating a practical need to replenish the authorization to permit planned financing and grant activity without delay. The Board frames the amendment as a routine corporate housekeeping measure that reduces friction and cost associated with repeatedly seeking shareholder approval for incremental increases tied to financings or strategic opportunities. The company discloses potential negative consequences: dilution to existing shareholders’ economic and voting interests and possible anti-takeover effects if the increased pool is used defensively. For a sophisticated analyst, the key trade-offs are the company’s near-term capital needs and dilution expectations versus the operational benefits of ready access to shares for financing and incentives; the company’s statement that it would have approximately 143 million unissued shares post-amendment highlights substantial headroom but also potential for significant future issuance. The Board recommends FOR, arguing the change is necessary for business flexibility though it explicitly acknowledges dilution and anti-takeover risks that investors should weigh against the necessity of future financings and equity-based retention in a capital-constrained biotech/device issuer.

This management proposal seeks shareholder approval to add 3,000,000 shares to the company’s existing 2017 Equity Incentive Plan to preserve the ability to grant equity awards to employees, consultants and non-employee directors. Management justifies the increase by citing difficulties hiring and retaining talent amid substantial going-concern uncertainty and expected dilution from future capital raises; the added pool is intended to last roughly two years under company projections. The company quantifies the existing reserve, outstanding awards and the incremental dilution represented by 3,000,000 shares (about 4.0% of current outstanding shares and ~2.9% of fully diluted shares as of the Record Date), which is useful for dilution modeling. The board emphasizes that without approval it may be forced to rely on cash-settled awards or seek additional shareholder votes later, both of which could increase cash burn or delay compensation. The recommendation to approve balances investor dilution concerns against operational needs to attract and retain talent critical for product commercialization and to execute future financings; the disclosure of going-concern risk and recent financings contextualizes urgency. For analysts, key considerations include the interaction of plan share usage with imminent capital raises (which will increase fully diluted share count), historical grant pacing and repricing risk, and governance protections (or lack thereof) around pacing and limits on awards; management’s disclosures suggest a pragmatic need, but investors should model dilution scenarios and consider vesting/recoupment provisions in future awards.

This non-binding advisory proposal asks shareholders to approve the company’s disclosed executive compensation for named executive officers. Management frames the program as designed to attract, motivate and retain leadership while aligning pay with shareholder interests through a pay-for-performance philosophy; the Compensation Committee will consider the vote outcome when setting future pay. The company also notes it conducts say-on-pay every three years and that the prior shareholder vote supported a three-year frequency. For analysts, the advisory nature means the vote won’t force immediate change, but a negative vote could pressure the board and compensation committee to revise pay practices, particularly given the company’s going-concern disclosures and need to conserve cash. Key evaluation points include the balance of cash vs. equity pay, magnitude of awards relative to peers, and how compensation aligns with material milestones (FDA clearances, commercialization) during an expected capital-raising period. The Board recommends a FOR vote but will consider shareholder feedback in future compensation determinations.