Modified souls were created through Project Spearhead, in an attempt to even the gap between Shinigami and Hollows, as Hollows generally out number Shinigami. The Mod-Souls created varied in their abilities and can be defined by different types. For example, one Mod-Soul may be able to run many times faster than a regular Human while another may be many times stronger than normal. Kon, the Mod-Soul accidentally ending up in Ichigo's possession, has enhanced leg-strength, which makes him a Underpod type of Mod-Soul.
The Mod-Souls, just like regular artificial souls, are condensed into tiny, candy-like orbs. However, their originally intended purpose was to be placed into corpses to achieve their function as soldiers to combat Hollows. To fit with this purpose, they are also more independent than regular artificial souls.
The Mod-Souls were exterminated after the experiment was halted due to ethical reasons, since they were intended to be used to reanimate Human corpses to be used as weapons against Hollows. Kon was somehow mixed into a batch of Gikongan that contained normal artificial souls and shipped to Kisuke Urahara's shop, where Rukia and Ichigo obtained him and unknowingly let him loose. Despite a standing order to dispose of all modified souls, they kept Kon and placed him into the body of a lion plushie. Rukia and Ichigo use Kon to possess Ichigo's body when his soul is expelled from his body to fight as a Shinigami.
Additionally, Urahara created three additional Mod-Souls (Ririn, Kurōdo, and Noba) and installed them with Bount detectors.