Picard Medical (NYSE: PMI) runs low on cash, flags going concern risk
Picard Medical, Inc. (PMI) reported sharp topline growth but a severely weakened balance sheet for the six months ended June 30, 2026. Revenue rose to $4.1 million from $2.7 million, driven mainly by U.S. product sales and the addition of rental revenue, while gross profit improved to $0.9 million from a gross loss.
Operating expenses increased to $10.0 million, leading to a net loss of $13.3 million. Total assets fell to $9.2 million from $22.5 million, and cash and cash equivalents (including restricted cash) dropped from $11.5 million to $0.04 million. Management states there is substantial doubt about the company’s ability to continue as a going concern and indicates it must raise additional debt or equity financing to fund operations.
The company materially reduced its Senior Secured Note, cutting unpaid principal from $15.0 million to $1.4 million through cash repayments and share settlements, and exchanged certain warrants for new equity-classified warrants. Revenue remains highly concentrated in one customer, and PMI also discloses an ongoing securities class action under the Securities Act of 1933, which it plans to defend.
Positive
- Six‑month revenue grew to $4.1 million from $2.7 million, an increase of roughly 50%, with U.S. revenue representing 96% of total sales.
- Gross profit for the six months improved to $0.9 million from a gross loss of $0.5 million, reflecting better relationship between revenues and cost of revenues.
- Unpaid principal on the Senior Secured Note was reduced from $15.0 million to $1.4 million, cutting its fair value from $5.4 million to $0.6 million through cash repayments and share settlements.
Negative
- Net loss for the six months was $13.3 million, with operating expenses of $10.0 million and significant financing‑related charges.
- Cash, cash equivalents, and restricted cash declined from $11.5 million at year‑end 2025 to $0.04 million at June 30, 2026, indicating acute liquidity pressure.
- Management concludes there is substantial doubt about PMI’s ability to continue as a going concern for at least twelve months without additional financing.
- Customer concentration is high: a single customer accounted for $3.3 million or 81% of six‑month revenue and 92% of accounts receivable.
- Inventory net of reserves decreased to $6.0 million from $7.3 million, with the allowance for excess and obsolete inventory rising to $3.4 million, signaling product and demand risk.
Filing Explained
A post-quarter note conversion issued 84,005 shares, while the 1-for-50 reverse split was already effective July 31.
Picard Medical filed an unaudited Form 10-Q for the period ended
The 1-for-50 reverse stock split became effective on
On
The filing also reports $0.5 million of interest-free related-party loans borrowed in July and August, with repayment tied to the company receiving $1.0 million; the next report will show how that obligation and the post-quarter share issuances are reflected.
Key Figures
Key Terms
going concern financial
Senior Secured Note financial
warrant liability financial
fair value option financial
temporary equity financial
embedded derivatives financial
FAQ
How did Picard Medical (PMI) perform financially in the first half of 2026?
What is the liquidity position of Picard Medical (PMI) as of June 30, 2026?
Does Picard Medical (PMI) face going concern risks?
How much debt did Picard Medical (PMI) reduce on its Senior Secured Note in 2026?
How concentrated is Picard Medical’s (PMI) customer base?
What were Picard Medical’s (PMI) revenue trends by geography and product type?
What legal proceedings did Picard Medical (PMI) disclose in this 10-Q?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from __________ to __________
Commission File Number
PICARD MEDICAL, INC.
(Exact name of registrant as specified in its charter)
| | | |
| (State or other jurisdiction of | (IRS Employer |
(Address of principal executive offices and zip code)
(
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbols | Name of Each Exchange on Which Registered | ||
| | | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| | ☒ | Smaller reporting company | |
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 17, 2026, there were
PICARD MEDICAL, INC.
TABLE OF CONTENTS
| Page |
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| PART I. FINANCIAL INFORMATION |
||
| Item 1. |
Financial Statements |
1 |
| Unaudited Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 |
1 | |
| Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2026 and 2025 |
2 |
|
| Unaudited Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2026 and 2025 |
3 |
|
| Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 |
4 |
|
| Notes to Financial Statements (Unaudited) |
5 |
|
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
23 |
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
29 |
| Item 4. |
Controls and Procedures |
29 |
| PART II. OTHER INFORMATION |
||
| Item 1. |
Legal Proceedings |
30 |
| Item 1A. |
Risk Factors |
30 |
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities |
30 |
| Item 3. |
Defaults Upon Senior Securities |
30 |
| Item 4. |
Mine Safety Disclosures |
30 |
| Item 5. |
Other Information |
30 |
| Item 6. |
Exhibits |
31 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (the “Form 10-Q”) includes statements that are, or may be deemed to be, “forward-looking statements” within the meaning of the U.S. federal securities laws, are statements of future expectations and other forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “opportunity,” “plan,” “potential,” “predict,” “projected,” “should,” “strategy,” “suggests,” “targets,” “will,” “will be” or “would” or similar expressions or the negatives thereof, or other variations thereof, or comparable terminology, or by discussions of strategy, plans or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Form 10-Q and include statements regarding the intentions, beliefs or current expectations of our management teams concerning, among other things, their respective results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which they operate.
You are cautioned that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this Form 10-Q. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Form 10-Q, those results or developments may not be indicative of results or developments in subsequent periods.
By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance and our actual financial condition, results of operations and cash flows. The development of the industry in which we operate may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements contained in this Form 10-Q.
These statements are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those anticipated by such statements. You should not place undue reliance on these forward-looking statements in deciding whether to invest in our securities. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Factors that could cause such differences in actual results include:
| ● |
Loss of, reduced purchases by, or delayed payments from any of our customers, which are concentrated among a limited number of heart transplant centers, hospitals, surgeons, and their distributors; |
| ● |
Our concentration risk due to reliance on a limited number of products, and the material impact that any disruption in production, quality, regulator status, safety, or market acceptance of these products could have on our business; |
| ● |
Manufacturing of our products is complex, highly manual, and concentrated, which exposes us to risks related to workforce constraints, training timelines, equipment failures, natural disasters, or noncompliance with U.S. Food and Drug Administration ("FDA") regulation; |
| ● |
Our reliance on single- or limited-source suppliers for many critical components, including valves and drive parts, and lack of secondary sources, which could cause shortages and/or require new regulatory clearances or approvals; |
| ● |
Changes in regulatory policy, including new requirements, could lead to delays or denials for new research, expansions, or product upgrades; |
| ● |
Delays or failure to obtain certification under EU Medical Devices Regulation would limit or prevent our growth in European markets; |
| ● |
Clinical studies necessary for approvals, expansions, and updates are costly, lengthy, and uncertain; difficulties with site qualification, enrollment, protocol adherence, adverse events or inconclusive results may prevent or delay approvals; |
| ● |
Device malfunctions or quality issues could lead to field actions, corrections, recalls, investigations, enforcement, reputational harm, and substantial costs, which we may be unable to remediate promptly or effectively; |
| ● |
We could face significant penalties, sanctions, litigation exposure, and reputational damage if our products are misused; |
| ● |
Physician adoption requires education, clinical evidence, and perceived advantages over alternatives; reluctance to adopt total artificial heart therapy may limit demand and financial support; |
| ● |
Competitive products that are more effective, convenient, or less costly from larger companies with greater resources and relationships could reduce demand for our products; |
| ● |
Profit margin improvement depends on successful product enhancements, and delays or setbacks could constrain profitability even if revenues grow; |
| ● |
Insurance coverage and reimbursements are uncertain and vary by payer and country; insufficient coverage would adversely affect utilization and revenues; |
| ● |
Our industry is heavily regulated and subjects us to evolving and complex healthcare, privacy, and other laws, in addition to the compliance and obligations of being a public company, and can result in civil, criminal, and administrative penalties or business restrictions; |
| ● |
International expansion exposes us to risks including political and economic instability, sanctions, tariffs, export controls, currency fluctuations, local regulatory requirements, limited recourse to protect intellectual property, and challenges overseeing distributors; |
| ● |
Significant product-liability risk is inherent in life-sustaining implantable medical devices, and our insurance coverage may be insufficient or unavailable on acceptable terms, and adverse claims could materially impact our financial condition; |
| ● |
Our reliance on information technology systems and third-party service exposes us to cybersecurity risks, which could disrupt operations, compromise sensitive data, trigger regulatory scrutiny, and lead to significant costs; |
| ● |
Many aspects of our technology are no longer protected by patents and rely on trade secrets and contractual protections, which may be breached or independently developed by others; |
| ● |
Intellectual property disputes could be costly, divert management attention, require licenses or redesigns, or restrict our ability to market products; |
| ● |
Acquisitions, if pursued, involve integration, operational, and financial risks and may not achieve anticipated benefits, which could dilute stockholders, increase leverage, or require significant management attention and resources; |
| ● |
Exposure to credit risk from hospital and distributor receivables, particularly in certain international markets, can increase bad-debt expense and reduce cash collections; |
| ● |
Tax laws could limit our net operating loss carryforwards and increase our cash tax liabilities in future profitable periods; |
| ● |
Significant volatility in our financial results as a result of the Company's election to account for its Senior Secured Note (as defined below) at fair value, as well as the classification of associated warrants as liabilities; |
| ● |
As a newly public company, emerging growth company, and smaller reporting company, we face increased costs to establish effective internal controls and comply with evolving disclosure and governance requirements, which may result in our inability to maintain the Company's NYSE American listing. Furthermore, compliance failures could harm our reputation and stock price; |
| ● |
There can be no assurance that we will be able to comply with the continued listing standards of the NYSE; |
| ● |
The market price of our common stock may be volatile, an active trading market may not develop or be sustained, and/or future equity or debt financings, conversions, or other securities issuances could cause substantial dilution and further volatility; |
| ● |
Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements; |
| ● |
We have been, and may in the future be, subject to securities class action or derivative litigation; and |
| ● |
Any other risk set forth in Part I, Item 1A. Risk Factors of our Form 10-K, filed with the SEC on March 30, 2026. |
We undertake no obligations to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events, other than as required by law.
The forward-looking statements are based on plans, estimates and projections as they are currently available to our management, and neither undertakes any obligation, and neither expects, to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this Form 10-Q.
PART I – FINANCIAL INFORMATION
| ITEM 1. FINANCIAL STATEMENTS. |
PICARD MEDICAL, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| June 30, 2026 | December 31, 2025 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable | ||||||||
| Inventory, net | ||||||||
| Due from related parties | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Finance lease right-of-use assets, net | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities, Temporary Equity, and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Current portion of finance lease liability | ||||||||
| Current portion of operating lease liability | ||||||||
| Loans from related parties | ||||||||
| Senior secured note | ||||||||
| Warrant liability | ||||||||
| Accrued interest | ||||||||
| Other accrued liabilities | ||||||||
| Total current liabilities | ||||||||
| Finance lease liability, net of current portion | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 7) | ||||||||
| Temporary equity: | ||||||||
| Preferred stock, $0.0001 par value; 30,000,000 shares authorized; 0 Series A-1 issued and outstanding as of June 30, 2026 and December 31, 2025; liquidation value $0 as of June 30, 2026 and December 31, 2025 | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, $0.0001 par value; 300,000,000 shares authorized; 2,055,277 and 1,474,024 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Stockholders’ equity | ||||||||
| Total liabilities, temporary equity, and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PICARD MEDICAL, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(In thousands, except share and per share data)
| Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues, net: | ||||||||||||||||
| Products | $ | $ | $ | | $ | |||||||||||
| Rentals | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of revenues: | ||||||||||||||||
| Products | ||||||||||||||||
| Rentals | ||||||||||||||||
| Total cost of revenues | ||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Derivative loss | ( | ) | ( | ) | ||||||||||||
| Change in fair value of senior secured note and warrant liability | ||||||||||||||||
| Loss on settlement of debt | ( | ) | ( | ) | ||||||||||||
| Loss on warrant exchange | ( | ) | ( | ) | ||||||||||||
| Other income | ||||||||||||||||
| Total other income (expenses), net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Undeclared Series A-1 preferred dividends | ( | ) | ( | ) | ||||||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share—basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares of common stock outstanding—basic and diluted |
|
| ||||||||||||||
| Comprehensive Loss: | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Foreign currency translation adjustments, net of tax | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PICARD MEDICAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY EQUITY
AND STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands, except share data)
| Accumulated | ||||||||||||||||||||||||||||||||
| Series A-1 | Additional | Other | ||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-In | Accumulated | Comprehensive | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Income | Total | |||||||||||||||||||||||||
| Balances as of December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| Common Stock issued to settle debt | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Stock options exercised | ||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Translation adjustment | - | - | ||||||||||||||||||||||||||||||
| Balances as of March 31, 2026 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Common Stock issuance - May, 2026 | ||||||||||||||||||||||||||||||||
| Common Stock issued with convertible note | ||||||||||||||||||||||||||||||||
| Extinguishment of Warrant Liability | - | - | ||||||||||||||||||||||||||||||
| Common Stock issued to settle debt | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Stock options exercised | ||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Translation adjustment | - | - | ||||||||||||||||||||||||||||||
| Balances as of June 30, 2026 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||
| Series A-1 | Additional | Other | ||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-In | Accumulated | Comprehensive | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Income | Total | |||||||||||||||||||||||||
| Balances as of December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Common Stock issuance | - | - | ||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances as of March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Common Stock issuance | - | - | ||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances as of June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PICARD MEDICAL, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
| Six Months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of right of use asset | ||||||||
| Amortization of discount on debt issued | ||||||||
| Derivative loss | ||||||||
| Change in fair value of senior secured note and warrant liability | ( | ) | ||||||
| Provision for excess and obsolete inventory | ||||||||
| Stock-based compensation | ||||||||
| Loss on settlement of debt | ||||||||
| Loss on warrant exchange | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ||||||||
| Prepaid expenses and other assets | ||||||||
| Accounts payable | ||||||||
| Accrued expenses and other liabilities | ( | ) | ||||||
| Operating lease obligation | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of plant, property and equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from loans from related parties | ||||||||
| Proceeds from issuance of notes payable | ||||||||
| Repayment of loans from related parties | ( | ) | ( | ) | ||||
| Issuance of convertible notes | ||||||||
| Stock option exercise | ||||||||
| Repayment of notes payable | ( | ) | ||||||
| Repayment of convertible notes | ( | ) | ||||||
| Proceeds from issuance of common stock and warrants | ||||||||
| Proceeds from issuance of Common Stock | ||||||||
| Repayment of finance lease obligations | ( | ) | ( | ) | ||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | ) | ||||||
| Cash, cash equivalents, and restricted cash at beginning of the period | ||||||||
| Cash, cash equivalents, and restricted cash at end of the period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Non-cash financing activities: | ||||||||
| Issuance of shares for settlement of debt | $ | $ | ||||||
| Derivative liability recognized on issuance of convertible notes | $ | $ | ||||||
| Repayment of related party loan through settlement of related party receivable | $ | $ | ||||||
| Extinguishment of warrants | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PICARD MEDICAL, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 1. | DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND MANAGEMENT’S PLAN |
Description of Business
Picard Systems, Inc. was originally incorporated in the state of Delaware on April 8, 2021, for the purpose of investing in and acquiring medical device companies, including SynCardia Systems, LLC (“SynCardia”) and its fully consolidated subsidiaries SynCardia Systems Australia Pty Ltd. ("SynCardia Australia") and SynCardia Systems Europe, GmbH (“SynCardia GmbH”). On September 27, 2021, Picard Systems, Inc. acquired all of the authorized and outstanding membership units of SynCardia and it changed its name to Picard Medical, Inc. (“PMI”, or collectively, the “Company”).
The Company is engaged in the business of designing, manufacturing, production, supply, marketing, and sale of medical device products, including the SynCardia total artificial heart for patients (“SynCardia TAH”). The SynCardia TAH is an implantable system designed to assume the full function of a failed human heart in patients suffering from advanced heart failure. SynCardia has one operating subsidiary, SynCardia GmbH, which was formed to facilitate the sale and distribution of SynCardia’s products throughout Europe.
Basis of Presentation and Consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements. These condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2025, and the related notes which provide a more complete discussion of the Company’s accounting policies and certain other information. The condensed consolidated balance sheet as of December 31, 2025, was derived from the Company’s audited financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s condensed consolidated financial position as of June 30, 2026, and its results of operations, changes in temporary equity and stockholders’ equity (deficit) and cash flows for the six months ended June 30, 2026 and 2025. The results of operations for the six months ended June 30, 2026, are not necessarily indicative of the results to be expected for the year ending December 31, 2026, or for any other future annual or interim period.
The condensed consolidated financial statements include the financial statements of PMI and its subsidiaries. All intercompany transactions and account balances between PMI and its subsidiaries have been eliminated in consolidation.
On July 21, 2026, PMI filed a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware, to effect a reverse stock split of the Company’s issued and outstanding common stock, par value $
Going Concern, Liquidity and Management’s Plans
The Company has evaluated whether there are any conditions and events considered in the aggregate that raise substantial doubt about its ability to continue as a going concern for at least twelve months from the date of this report, and the near term thereafter. The Company has incurred operating losses and negative cash flows from operations for the six months ended June 30, 2026, and SynCardia has a history of operating losses dating back to its inception. The Company expects that operating losses and negative cash flows from operations will continue into the foreseeable future, and the Company will need to raise additional debt and/or equity financing to fund operations until it generates positive cash flows from operations.
To date, the Company’s available liquidity and operations have been financed primarily through the issuance of common stock, preferred stock, and debt. For the year ended December 31, 2025, the Company raised $
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities in the financial statements and accompanying notes. These estimates are based on information available through the date of the issuance of the financial statements and actual results and outcomes could differ from these estimates and assumptions. Areas requiring significant estimates and assumptions by the Company include, but are not limited to:
| ● | Provisions for income taxes and related valuation allowances and tax uncertainties; |
| ● | Recoverability of long-lived assets and their related estimated useful lives; |
| ● | Accruals for estimated liabilities; |
| ● | Valuation of inventory; |
| ● | Valuation of leased assets; |
| ● | Valuation of stock-based compensation; |
| ● | Valuation of senior secured note; and |
|
| ● | Valuation of warrants. |
Foreign Currency Translation
The functional currency of the Company’s subsidiaries in Germany and Australia is their respective local currency. Assets and liabilities are translated into U.S. dollars, the reporting currency, at the exchange rate on the balance sheet date. Revenues and expenses are translated into U.S. dollars at the average rates of exchange prevailing during each reporting period. Foreign currency translation adjustments resulting from this process are reported as an element of comprehensive loss, net of income taxes, on the condensed consolidated statements of operations and comprehensive loss. Transactions executed in different currencies are translated at spot rates and resulting foreign exchange transaction gains and losses are charged to income.
Cash and Cash Equivalents
The Company considers all highly liquid debt investments with a remaining maturity of 90 days or less when purchased to be cash and cash equivalents. The Company places its cash in commercial banks. Accounts in the United States are secured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. From time to time, the Company’s total deposits at commercial banks exceed the balances insured. The Company has not experienced any losses in these accounts and believes it is not exposed to any significant credit risk in this area.
Restricted Cash
Restricted cash as of December 31, 2025, represents cash set aside by the Company to comply with the minimum liquidity requirement in our senior secured note due 2028 (the “Senior Secured Note”) by and between the Company and High Trail Special Situations LLC (“High Trail”, "Note Holder"). In March 2026, the Company used $
Financial Instruments and Concentrations of Credit and Business Risk
Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash, cash equivalents and accounts receivable.
Fair Value of Financial Instruments
Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Financial instruments include cash and cash equivalents, accounts receivable, notes receivable, accounts payable, notes payable, derivative liabilities and accrued liabilities. The Company has elected the fair value option for its Senior Secured Note in accordance with ASC 825, “Financial Instruments”. Under this election, the Senior Secured Note is recognized at fair value at issuance and subsequently remeasured at fair value at each reporting date with changes in fair value recognized in earnings.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
Fair Value Measurements
Assets and liabilities recorded at fair value on a recurring basis in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with inputs used to measure their fair values. The accounting guidance also establishes a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity.
The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows:
Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
Level 2 — Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and
Level 3 — Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.
Accounts Receivable and Allowance for Credit Losses
The Company’s accounts receivable represents amounts considered to be collectible that are owed by its customers. Credit is extended based on evaluation of customers’ financial condition and, generally, collateral is not required. An allowance for credit losses is maintained for expected lifetime losses resulting from the inability of customers to pay, evaluated collectively for accounts with similar risk profiles and individually for unique, high-risk accounts. Expected credit losses are estimated by considering historical experience, current conditions, and reasonable forecasts. After exhausting all collection efforts on past due accounts, an account is written off against the allowance for credit losses. Any collections on accounts previously written off are recorded as income in the period of collection. Based on management's assessment of historical loss data, current economic conditions, and forecasts, expected credit losses are immaterial; consequently, no allowance for credit losses has been recorded.
Inventory, net
Inventory is stated at the lower of cost, determined using the first in, first out basis, or net realizable value. Inventory consists primarily of raw material components used in the manufacturing of SynCardia TAHs and related equipment as well as work-in-process inventory related primarily to SynCardia TAHs. Finished goods consist primarily of SynCardia TAHs and related equipment located at medical centers trained and certified in the implantation of the SynCardia TAH and appropriate patient aftercare (“Centers”). Work-in-process and finished goods include the cost of all direct material, labor, and overhead costs. Inventory write-downs are recorded based on excess and obsolete exposures, determined primarily by future demand forecasts. These write-downs are measured as the difference between the cost of the inventory and net realizable value based upon assumptions about future demand and charged to the provision for inventory, which is a component of cost of sales. In addition, a liability is recorded for firm, noncancelable, and unconditional purchase commitments with contract manufacturers and suppliers for quantities that exceed forecasts of future demand. As of June 30, 2026, the Company had
Property and Equipment
Property and equipment are recorded at cost, net of accumulated depreciation. Improvements, renewals, and extraordinary repairs that materially extend the useful life of the asset are capitalized; other repairs and maintenance charges are expensed as incurred.
Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Depreciation begins at the time the asset is placed in service. Upon sale or retirement of assets, the cost and related accumulated depreciation are removed from the condensed consolidated balance sheets, and the resulting gain or loss is reflected in operating expenses in the period realized.
The useful lives of the property and equipment are as follows:
| TAH-Driver equipment (years) | |||
| Laboratory equipment (years) | |||
| Office and computer equipment (years) | |||
| Leasehold improvements | Shorter of remaining lease term or estimated useful life |
Intangible Assets, net
Intangible assets comprise developed technology and trade name. Intangible assets are carried at cost less accumulated amortization. Amortization is computed using the straight-line method over useful lives of twelve years for developed technology and five years for trade name.
Goodwill
Goodwill is subject to an annual impairment test, or earlier if indicators of potential impairment exist. The annual impairment test is performed as of December 31 of each year. The Company has the option to perform a qualitative assessment by examining relevant events and circumstances which could have a negative impact on goodwill, including macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, and other relevant events specific to the Company. If, after assessing the totality of events or circumstances described above, the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying value, the Company will perform a quantitative impairment test. Upon performing the quantitative impairment test, if the fair value of the reporting unit is less than its carrying amount, goodwill is impaired and the excess of the reporting unit’s carrying value over the fair value is recognized as an impairment loss; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. For the purpose of completing its impairment test, the Company performs either a qualitative or a quantitative analysis on a reporting unit basis. All of the goodwill is expected to be deductible for income tax purposes.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
Quantitative impairment tests consider both the income approach and the market approach to estimate a reporting unit’s fair value. The income and market valuation approaches consider a number of factors that include, but are not limited to, prospective financial information, growth rates, residual values, discount rates and comparable multiples from publicly traded companies in the Company’s industry and require it to make certain assumptions and estimates regarding industry economic factors and the future profitability of the business. As of June 30, 2026 and December 31, 2025, the Company has assessed
Impairment of Long-Lived Assets
The Company evaluates long-lived assets, primarily property and equipment, right-of-use lease assets, developed technology and trade name, for impairment on an annual basis, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When the Company determines that it is probable that undiscounted future cash flows will not be sufficient to recover an asset’s carrying amount, the asset is written down to its fair value. Assets to be disposed of by sale, if any, are reported at the lower of the carrying amount or fair value less cost to sell. As of June 30, 2026 and December 31, 2025, the Company has assessed
Revenue Recognition
The Company generates revenue from the sale of its SynCardia TAH, rental of Freedom Drivers, and from training and certification services, which are required before the first time a transplant center may purchase a SynCardia TAH. Revenue includes sales and services to Centers located in the United States as well as Centers domiciled in foreign countries.
The Company recognizes revenue when it transfers control of promised goods or services to its customers, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition, the Company performs the following five steps:
| (i) | identification of the promised goods or services in the contract; |
| (ii) | determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; |
| (iii) | measurement of the transaction price, including the constraint on variable consideration; |
| (iv) | allocation of the transaction price to the performance obligations based on estimated selling prices; and |
| (v) | recognition of revenue when (or as) the Company satisfies each performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. |
Product Revenues
The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied, which generally occurs, for SynCardia TAH kits, upon the transfer of control in accordance with the contractual terms and conditions of the sale. The majority of the Company’s revenue associated with SynCardia TAH kits are recognized at a point in time when the SynCardia TAH kit is shipped to the customer. The Company only offers assurance-type standard warranties that do not represent separate performance obligations. The Company records amounts billed to customers for reimbursement of shipping and handling costs within revenue. Shipping and handling costs associated with outbound freight after control over a SynCardia TAH kit has transferred to a customer are accounted for as fulfillment costs and are included in cost of revenues. Sales taxes and other usage-based taxes are excluded from revenue. The Company gives certain discounts to product distributors based on a contracted amount on the sale of its products. Discounts applied to invoices are not associated with future purchases and solely relate to the product invoiced. As a result, the invoice and transaction price are recorded net of any discounts. The amount of consideration to which the entity will be entitled in exchange for transferring the promised goods or services to a customer is estimated using the expected value method. Product revenue is billed at the point of sale upon shipment and typically collected within 30 days.
Rental Revenues
Rental revenues primarily consist of rental fees charged to customers who rent the Company’s driver. Rental revenue is earned over the period of usage which begins when a patient is discharged from a hospital and is recognized when it becomes likely that we will receive payment. Rental revenue is billed at month end and typically collected within 30 days.
Professional Services Revenues
Professional services revenues primarily consist of training and certification services. The Company’s professional services revenue is recognized when the services are performed. Professional services revenue is billed upon completion of services and typically collected within 30 days.
Contracts with Multiple Performance Obligations
From time to time, the Company has contracts with customers that contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The Company accounts for individual goods and services separately if they are distinct performance obligations, which often requires significant judgment based upon knowledge of the products and/or services, the solution provided and the structure of the sales contract. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis for those performance obligations with stable observable prices. The Company determines the standalone selling prices based on its overall pricing objectives, taking into consideration market conditions and other factors, including the value of the contracts, pricing when certain services are sold on a standalone basis, the products sold, customer demographics, geographic locations, and the volume of services purchased. As of June 30, 2026 and December 31, 2025, there were
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
Returns
The Company does not offer rights of return for its products and services in the normal course of business.
Contract Balances
The Company’s contract liabilities, if any, consist of advance payments for systems as well as deferred revenue on service obligations (see Note 5). As of June 30, 2026 and December 31, 2025, there was
Practical Expedients
The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss.
Payment Terms
Payment terms vary by customer but typically provide for the customer to pay within 30 days. Therefore, customer payment terms are for 12 months or less and do not include significant financing components. The Company performs credit evaluations of customers and evaluates the need for allowances for potential credit losses based on historical experience, as well as current and expected general economic conditions.
Cost of revenues
Cost of revenues includes product costs, labor, overhead, inbound freight, and other product-related costs including maintenance costs, excess inventory, and obsolescence charges.
Shipping and Handling Fees and Costs
The Company includes shipping and handling fees billed to customers as part of net sales and shipping and handling costs associated with the outbound freight are included in cost of sales.
Research and Development Costs
Included in research and development costs are wages, stock-based compensation and benefits of employees performing research and development, and other operational costs related to the Company’s research and development activities, including facility-related expenses, allocation of corporate costs, and external costs of outside contractors.
Comprehensive Income (Loss)
Comprehensive income (loss) consists of net income (loss), and foreign currency translation adjustments, net of tax, which are recorded within other comprehensive income (loss).
Income Taxes
The Company calculates its provision for income tax on the basis of the tax laws enacted at the balance sheet date. The Company uses an asset and liability approach for financial accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Management makes an assessment of the likelihood that the resulting deferred tax assets will be realized. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company records unrecognized tax benefits, where appropriate, for all uncertain income tax positions. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. Due to the Company’s historical operating performance and net losses, the net deferred tax assets have been fully offset by a valuation allowance.
Net Loss Per Share
Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period, without consideration of potential shares of common stock.
Diluted net loss per share is calculated by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding plus common share equivalents from conversion of dilutive stock options using the treasury method and Series A-1 Preferred Stock (as defined below in Footnote 9) and Convertible Notes (as defined below in Footnote 8) using the as-converted method, except when antidilutive. In the event of a net loss, the effects of all potentially dilutive shares are excluded from the diluted net loss per share calculation as their inclusion would be antidilutive.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
Stock-Based Compensation
The Company measures the fair value of all stock-based awards, including stock options, on the grant date and records the fair value of these awards to compensation expense over the service period. The Company has elected to account for forfeitures as they occur. The fair value of stock option awards is estimated using the Black-Scholes valuation model, which considers several variables and assumptions in estimating the fair value of stock-based awards. These assumptions include:
| ● | per share fair value of the underlying common stock; |
| ● | risk-free interest rate; |
| ● | expected term; |
| ● | expected stock price volatility over the expected term; and |
| ● | expected annual dividend yield. |
The Company calculates the expected term using the simplified method, or the arithmetic average of the original contractual term and the average vesting term, for “plain vanilla” stock option awards. The risk-free interest rate is based on the yield available on U.S. Treasury zero-coupon issues similar in duration to the expected term of the stock-based award. PMI is a newly public company with limited stock trading history; therefore, it uses the weighted average of the historic volatilities of the stock price of similar publicly traded peer companies, with extra weighting attached to those companies most similar in terms of size, financial leverage, and business activity. The Company utilizes a dividend yield of zero, as it has no history or plan of declaring dividends on its common stock.
Leases
The Company records operating leases as right-of-use assets and operating lease liabilities in its condensed consolidated balance sheets for all operating leases with terms exceeding one year. Right-of-use assets represent the right to use an underlying asset for the lease term, including extension options considered reasonably certain to be exercised, and operating lease liabilities represent obligations to make lease payments. Right-of-use assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term. To the extent that lease agreements do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available at the lease commencement date to determine the present value of lease payments. The expense for operating lease payments is recognized on a straight-line basis over the lease term and is included in operating expenses in the Company’s condensed consolidated statement of operations. The Company has elected to not separate lease and non-lease components of its operating leases.
Segment Information
Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) who is the Company’s interim chief executive officer, chief accounting officer, and chief operating officer, in deciding how to allocate resources and assess the Company’s financial and operational performance. The CODM evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated and aggregated basis. Accordingly, the Company has determined that it operates in one operating and reportable segment.
The Company internally reports the following segment financial information, on a consolidated basis, to its CODM: revenue by product and rentals, cost of revenues by product and rentals, and gross profit. Gross profit is the measure of segment profitability used by the CODM to assess performance and allocate resources and is presented on the condensed consolidated statements of operations and comprehensive loss. The CODM also reviews the disaggregation of revenue by geography that is presented in Note 5. There are no segment operating expenses that require disclosure other than the expense categories presented on the condensed consolidated statements of operations and comprehensive loss. The measure of segment assets is reported on the condensed consolidated balance sheets as total assets.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which applies to all public business entities. This standard is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted. The Company expects to adopt this standard for the period beginning after December 15, 2026.
The Company has reviewed all newly issued accounting pronouncements and concluded that they either are not applicable to the Company’s operations, or no material effect is expected on its condensed consolidated financial statements as a result of future adoption.
| 3. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
The following tables present information about the Company’s financial liabilities that are measured at fair value on a recurring basis and the fair value hierarchy of the valuation (in thousands):
| June 30, 2026 | ||||||||||||||||
| Quoted Prices | Significant | Significant | ||||||||||||||
| in Active Markets | Observable | Unobservable | ||||||||||||||
| for Identical Assets | Inputs | Inputs | ||||||||||||||
| Category Class | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| Senior Secured Note (unpaid principal of $1,367) | $ | $ | $ | $ | ||||||||||||
| Warrant Liability | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| December 31, 2025 | ||||||||||||||||
| Quoted Prices | Significant | Significant | ||||||||||||||
| in Active Markets | Observable | Unobservable | ||||||||||||||
| for Identical Assets | Inputs | Inputs | ||||||||||||||
| Category Class | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
| Senior Secured Note (unpaid principal of $15,000) | $ | $ | $ | $ | ||||||||||||
| Warrant Liability | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The fair value of the Senior Secured Note at issuance and as of June 30, 2026, has been determined using a discounted cash flow model. The fair value of the Warrant (as defined below in Footnote 8) liabilities at issuance and as of June 30, 2026, was measured using a Monte Carlo simulation model.
| 3. | FAIR VALUE OF FINANCIAL INSTRUMENTS (cont.) |
The significant unobservable inputs that are included in the valuation model of the Senior Secured Note and Warrants liability at issuance, at the date of the Warrant Exchange, and as of June 30, 2026, were as follows:
| Input Range | ||||||||
| Senior Secured Note | Warrant Liability | |||||||
| Significant Unobservable Inputs: | ||||||||
| Discount rate | - | |||||||
| Term to expiration (in years) | ||||||||
| Calibration discount | 61.5% | - | ||||||
| No exercise window (in years) | - | 0.19-0.21 | ||||||
| Volatility | - | 82.5%95.5% | ||||||
| Risk-free rate | - | 3.65%4.14% | ||||||
The following table provides a rollforward of the aggregate fair values of the Senior Secured Note and Warrant liability for the six months ended June 30, 2026 (in thousands):
| Senior Secured Note | Warrant Liability | |||||||
| Balance as of December 31, 2025 | $ | $ | ||||||
| Change in fair value | ( | ) | ||||||
| Cash payments on Notes Payable | ( | ) | ||||||
| Loss on settlement of debt | ||||||||
| Extinguishment of liability due to Warrant Exchange | ( | ) | ||||||
| Settlement of Notes Payable via common stock issuance | ( | ) | ||||||
| Balance as of June 30, 2026 | $ | $ | ||||||
The decrease in the fair value of the Senior Secured Note and Warrant liability during the six months ended June 30, 2026, was primarily driven by changes in valuation assumptions, including the Company’s stock price and volatility.
The following table provides a rollforward of the aggregate fair values of the Senior Secured Note and Warrant liability for the three months ended June 30, 2026 (in thousands):
| Senior Secured Note | Warrant Liability | |||||||
| Balance as of March 31, 2026 | $ | $ | ||||||
| Change in fair value | ( | ) | ( | ) | ||||
| Cash payments on Notes Payable | ( | ) | ||||||
| Loss on settlement of debt | ||||||||
| Extinguishment of liability due to Warrant Exchange | ( | ) | ||||||
| Settlement of Notes Payable via common stock issuance | ( | ) | ||||||
| Balance as of June 30, 2026 | $ | $ | ||||||
During the six months ended June 30, 2026, the Company made $
These transactions are reflected in the overall change in fair value presented above. The warrant liability is remeasured at fair value at each reporting date, with changes in fair value recognized in the condensed consolidated statements of operations and comprehensive loss.
The Company has certain non-financial assets, primarily intangible assets, and goodwill, which are measured at fair value on a nonrecurring basis and are adjusted to fair value only to the extent that an impairment charge is recognized. The Company estimates the fair value of these assets using primarily unobservable inputs; therefore, these are considered Level 3 fair value measurements.
| 4. | CERTAIN BALANCE SHEET COMPONENTS |
| (a) | Inventory, Net |
Inventory, net of provisions for potentially excess, obsolete, or impaired goods, consists of the following (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| $ | $ | |||||||
| Allowance for excess and obsolete inventory | ( | ) | ( | ) | ||||
| Inventory, net | $ | $ | ||||||
| (b) | Property and Equipment, Net |
Property and equipment, net consists of the following (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||
| Equipment | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Leasehold improvements | ||||||||
| Total cost | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense was $
| 4. | CERTAIN BALANCE SHEET COMPONENTS (cont.) |
| (c) | Intangible Assets, Net |
Intangible assets consist of the following (in thousands):
| June 30, 2026 | ||||||||||||
| Gross | Net | |||||||||||
| Carrying | Accumulated | Carrying | ||||||||||
| Amount | Amortization | Value | ||||||||||
| Developed Technology | $ | $ | ( | ) | $ | |||||||
| Trade Name | ( | ) | ||||||||||
| Total | $ | $ | ( | ) | $ | |||||||
| December 31, 2025 | ||||||||||||
| Gross | Net | |||||||||||
| Carrying | Accumulated | Carrying | ||||||||||
| Amount | Amortization | Value | ||||||||||
| Developed Technology | $ | $ | ( | ) | $ | |||||||
| Trade Name | ( | ) | ||||||||||
| Total | $ | $ | ( | ) | $ | |||||||
Amortization expense for the six months ended June 30, 2026 was $
As of June 30, 2026, developed technology and trade name had remaining lives of
| June 30,2026 | ||||
| 2026 (six months remaining) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
| (d) | Other Accrued Liabilities |
Other accrued liabilities consist of the following (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||
| Accrued compensation | $ | $ | ||||||
| Accrued clinical and manufacturing expenses | ||||||||
| Accrued professional and consulting services | ||||||||
| Other liabilities, current portion | ||||||||
| Total other accrued liabilities, current portion | $ | $ | ||||||
Accrued compensation includes sales commissions, payroll, employee paid time off, and employee and executive officer bonuses. Accrued clinical and manufacturing expenses represent royalties payable under a ten-year worldwide licensing agreement related to intellectual property covering the design and production of valves used in the SynCardia TAH and service costs on drivers returned, mostly from customers outside the U.S. The sums due to the vendor are secured by the license agreement, which is expired. Accrued professional and consulting services represent payables related to legal, accounting, and valuation services provided in preparation of the Company’s period end reporting. At the end of 2023, the Company’s management made the decision to terminate its sales and distribution agreement with State of the Art Medical Products, Inc. In connection with the termination of the agreement, the Company agreed to pay a termination penalty of $
| 5. | REVENUE |
Disaggregation of Revenue
The Company believes that the nature, amount, timing, and uncertainty of its revenue and cash flows and how they are affected by economic factors are most appropriately depicted by (i) geographic region, based on the shipping location of the customer, and (ii) type of product or service provided.
| 5. | REVENUE (cont.) |
Total revenue based on the disaggregation criteria described above is as follows (dollars in thousands):
| Six Months Ended June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| % of | % of | |||||||||||||||
| Revenue | revenue | Revenue | revenue | |||||||||||||
| Revenue by geographic area | ||||||||||||||||
| United States | $ | % | $ | % | ||||||||||||
| Europe | % | % | ||||||||||||||
| Rest of the world | % | % | ||||||||||||||
| Total | $ | % | $ | % | ||||||||||||
| Revenue by type | ||||||||||||||||
| Products | $ | % | $ | % | ||||||||||||
| Rentals | % | % | ||||||||||||||
| Total | $ | % | $ | % | ||||||||||||
Revenue from products includes related services, which represented less than
Contract assets. As of June 30, 2026 and December 31, 2025, there were
Remaining Performance Obligations. Remaining Performance Obligations (“RPO”) comprise deferred revenue plus unbilled contract revenue. As of June 30, 2026 and December 31, 2025, there was
| 6. | CONCENTRATIONS |
Customers accounting for more than 10% of revenue in any of the periods presented are summarized as follows (in thousands, except percentages):
| Six Months Ended June 30, | ||||||||||||||||
| 2026 | 2025 | |||||||||||||||
| Customer A | $ | % | $ | % | ||||||||||||
| Customer C | $ | % | $ | % | ||||||||||||
| Customer E | $ | % | $ | % | ||||||||||||
| Customer F | $ | % | $ | % | ||||||||||||
As of June 30, 2026, Customer A accounted for $
As of December 31, 2025, Customer A accounted for $
Concentrations of revenues derived from foreign countries are disclosed in Note 5.
Long-lived assets by geographic areas are as follows (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||
| United States | $ | $ | ||||||
| Foreign, principally in Europe | ||||||||
| Property and equipment, net | $ | $ | ||||||
| 7. | COMMITMENTS AND CONTINGENCIES |
| (a) | Leases |
The Company has one master lease for office and manufacturing facilities which is considered an operating lease. The Company obtained the right of use of real estate located in Tucson, Arizona, in February 2015 under a lease which was subsequently renewed until January 31, 2027, with no option to renew. The lease currently requires monthly payments of approximately $
| 7. | COMMITMENTS AND CONTINGENCIES (cont.) |
Right-of-use assets acquired under finance and operating leases consist of the following (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||
| Finance leases: | ||||||||
| Office equipment | $ | $ | ||||||
| Finance lease right-of-use assets, net | $ | $ | ||||||
| Operating Leases: | ||||||||
| Facilities | $ | $ | ||||||
| Operating lease right-of-use assets, net | $ | $ | ||||||
As of June 30, 2026, the company had three finance leases for office equipment with a weighted average discount rate of
As of June 30, 2026 and December 31, 2025, the weighted average discount rate for the one operating lease was
The following table summarizes the Company’s undiscounted cash payment obligations for its operating and finance lease liabilities with initial terms of more than twelve months as of June 30, 2026 (in thousands):
| Operating Leases | Finance Lease | |||||||
| 2026 (six months remaining) | $ | 206 | $ | 43 | ||||
| 2027 | ||||||||
| Undiscounted total | ||||||||
| Less: imputed interest | ( | ) | ||||||
| Present value of future minimum payments | ||||||||
| Current portion of lease liability | ( | ) | ( | ) | ||||
| Lease liability, net of current portion | $ | $ | ||||||
Certain operating lease agreements for facilities include non-lease costs, such as common area maintenance, which are recorded as variable lease costs. Cash paid for amounts included in the measurement of operating lease liabilities totaled $
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Operating lease cost | $ | $ | ||||||
| Short-term lease cost | ||||||||
| Variable lease cost | ||||||||
| Total operating lease cost | $ | $ | ||||||
Cash paid under finance leases totaled $
| (b) | China Corporation |
In July 2023, the Company granted SynCardia Medical (Beijing), Inc. (“SynCardia Beijing”) exclusive distribution rights of its products in mainland China, Hong Kong, Macau, and Taiwan. Contingent on the Company becoming publicly traded on a stock exchange, it would be committed to contribute approximately $
As of June 30, 2026, the Company had not consummated the contemplated investment, and SynCardia Beijing continued to operate solely as an independent distributor. The agreement remains in effect; however, the Company is monitoring international and market conditions and intends to proceed when such conditions have stabilized and are supportive of the planned investment. Accordingly, no amounts related to this arrangement have been recognized in the Company’s condensed consolidated financial statements as of and for the six months ended June 30, 2026.
| (c) | Indemnifications |
In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend indemnified parties for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company currently has directors’ and officers’ insurance.
| 7. | COMMITMENTS AND CONTINGENCIES (cont.) |
| (d) | Litigation |
From time to time the Company may be involved in claims arising in connection with its business. Based on information currently available, the Company believes that the amount, or range, of reasonably possible losses in connection with any pending actions against it in excess of established reserves, in the aggregate, not to be material to its consolidated financial condition or cash flows. However, losses may be material to the Company’s operating results for any particular future period, depending on the level of income or loss for such period.
On February 2, 2026, a putative securities class action captioned Louie v. Picard Medical, Inc., et al., Case No. 5:26-CV-01024, was filed in the United States District Court for the Northern District of California, San Jose Division. The complaint named PMI as a defendant, along with certain of its current and former officers and directors and other third parties, and purported to assert claims under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b‑5 promulgated thereunder. On May 15, 2026, the Court appointed Roger Wiegley and Sobhy Abdelhady as Lead Plaintiffs (“Lead Plaintiffs”) and The Rosen Law Firm, P.A. as lead counsel.
On July 28, 2026, Lead Plaintiffs and Named Plaintiff Nicholas Boldery filed an Amended Complaint ("Amended Complaint"), dropping their claims under the Securities Exchange Act of 1934 (Sections 10(b) and 20 (a)) and instead alleging claims under Sections 11 and 15 of the Securities Act of 1933 concerning material omissions in the IPO registration statement regarding market structure or stock price manipulation risks.
PMI believes the claims against the Company and its officers and directors are without merit and intends to defend this matter vigorously. Given the early stage of the proceedings, the outcome is inherently uncertain, PMI cannot reasonably estimate a possible loss or range of loss. The Company will continue to evaluate developments in this litigation each reporting period and record an accrual for loss contingencies when, and to the extent, required by applicable accounting standards.
| 8. | DEBT |
Senior Secured Note
In December 2025, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with High Trail ("Note Holder") pursuant to which PMI agreed to issue and sell the Senior Secured Note and warrants to purchase shares of our common stock (the "HT Warrants"). An initial $
| ● | Monthly partial redemption payments starting on February 1, 2026, of $ |
| ● | A requirement that the Company maintains a minimum liquidity amount of $ |
| ● | A first priority lien on all tangible and intangible assets of the Company until the outstanding total principal is satisfied. |
| ● | A default interest rate of |
| ● | In connection with a fundamental change, as defined in the Securities Purchase Agreement, a repurchase price of |
The Company issued
Upon issuance, the Company elected to account for the Senior Secured Note under the fair value option. The primary reason for electing the fair value option is for simplification and cost-benefit considerations of accounting for the Senior Secured Note at fair value in its entirety versus bifurcation of the embedded features. Under the fair value election, debt issuance costs are expensed as incurred, and the debt liability is subsequently valued at fair market value during each reporting period until settlement. The fair value of the Senior Secured Note at issuance and as of December 31, 2025, amounted to $
On May 5, 2026, the Company entered into a Warrant Issuance and Exchange Agreement wherein the existing HT Warrants were surrendered and exchanged for new warrants to purchase
In connection with the May 2026 Offering (see Note 9), certain adjustment provisions in the PA warrants were triggered, resulting in the placement agent owning an aggregate of
Convertible Notes
Between May and September 2023, the Company issued $
| 8. | DEBT (cont.) |
Between April 2024 and May 2025, the Company issued an additional $
In March, 2026, the Company entered into unsecured promissory notes with Fannet Technologies, Inc. (“Fannet Note”) and Anchor Investment, LLC (“Anchor Note”) in principal amounts of $
In April 2026, the Company entered into a securities purchase agreement with Quick Capital, LLC (“Quick Capital”), pursuant to which the Company issued a convertible promissory note in the principal face amount of $
| 9. | TEMPORARY EQUITY AND STOCKHOLDER’S EQUITY |
| (a) | Redeemable Convertible Preferred Stock |
In September 2021, the Company amended the Articles of Incorporation (as amended, the "Articles of Incorporation") to allow for the issuance of
| ● | Dividend Provision: The holders of the preferred stock in preference to the holders of common stock are entitled to receive, if and when declared by the board of directors, dividends at the rate of |
| ● | Conversion Rights: All holders of the Company’s preferred stock have a right to convert the outstanding balances of preferred shares at any time following the date of issuance into a number of fully paid shares of common stock, as specified in the Articles of Incorporation. The conversion rate is the original issue price for the relevant shares divided by the conversion price of the relevant shares, subject to anti-dilution adjustments. In the event of a sale of shares in a public offering resulting in gross proceeds of $ |
| ● | Liquidation Preferences: In the event of any liquidation, dissolution, winding-up or sale or merger of the Company, whether voluntarily or involuntarily, each holder of Preferred Stock is entitled to receive, in preference to the holders of common stock, a per-share amount equal to the original issue price, plus all declared but unpaid dividends. As of June 30, 2026, the redemption preference on liquidation would be approximately $ |
| ● | Voting Rights: Each holder of outstanding shares of Preferred Stock is entitled to the number of votes equal to the number of whole shares of Common Stock into which the shares of Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Holders of Preferred Stock vote together with the holders of Common Stock on an as-converted-to-Common-Stock-basis and not as a separate class. |
In July 2025, Hunniwell Picard I exercised the option to convert all of its Series A-1 Preferred Stock to
| (b) | Common Stock |
The Company is authorized to issue
The holders of common stock are entitled to one vote per share at all meetings of stockholders, provided that they may not vote to amend the Certificate of Incorporation relating to the terms of any outstanding series of Preferred Stock if the holders of that series are entitled to vote thereon. The number of authorized shares of common stock may only be changed by the affirmative vote of the holders of a majority of shares outstanding. There are no sinking fund provisions applicable to the common stock.
| 9. | TEMPORARY EQUITY AND STOCKHOLDER’S EQUITY (cont.) |
The Company had shares of common stock reserved for issuance as follows:
| June 30, 2026 | December 31, 2025 | |||||||
| Issued Warrants | ||||||||
| Options issued and outstanding | ||||||||
| Available for future grants of equity awards | ||||||||
| Total | ||||||||
| (c) | Common Stock Issuance |
In March 2025, the Company entered into subscription agreements with certain investors for the sale of
In April 2025, the Company entered into subscription agreements with certain investors for the sale of
In February and March 2026, the Company issued a total of
In February, March, and April 2026, a total of
In April, May, and June 2026, the Company issued a total of
In May 2026, the Company completed a public offering where it sold an aggregate (i)
In June 2026, the Company issued a total of
| 10. | SHARE BASED COMPENSATION |
In September 2021, the Company’s board of directors approved the adoption of the 2021 Equity Incentive Plan, under which the Company is authorized to issue incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, other stock awards and performance awards that may be settled in cash, stock, or other property. On October 10, 2025, the Company’s stockholders approved an amendment to the Company’s 2021 Equity Incentive Plan (as amended, the “Plan”) to (i) increase the aggregate number of shares of Common Stock available under the Plan to a total of
The aggregate number of shares of common stock authorized for issuance under the Plan is
A summary of stock option transactions for the six months ended June 30, 2026, is as follows:
| Shares Available | Number of Options | Weighted Average | ||||||||||
| For Grant | Outstanding | Exercise Price | ||||||||||
| Balance as of December 31, 2025 | $ | |||||||||||
| Granted | ( | ) | ||||||||||
| Exercised | ( | ) | ||||||||||
| Cancelled | ( | ) | $ | |||||||||
| Balance as of June 30, 2026 | $ | |||||||||||
As of June 30, 2026, there were
As of June 30, 2025, there were
In February 2026, the Company granted
| Stock Price | $ | |||
| Expected dividend yield | % | |||
| Expected stock price volatility | | |||
| Risk-free interest rate | 3.66%-4.26% | |||
| Expected term (years) |
| 10. | SHARE BASED COMPENSATION (cont.) |
A summary of stock option transactions is as follows (in thousands):
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cost of revenue | $ | $ | ||||||
| Research and development | ||||||||
| Selling, general and administrative | ||||||||
| Total stock-based compensation | $ | $ | ||||||
As of June 30, 2026, the unrecognized stock-based compensation cost related to outstanding stock options that are expected to vest was $
As of June 30, 2025, the unrecognized stock-based compensation cost related to outstanding stock options that are expected to vest was $
| 11. | INCOME TAXES |
The primary differences between the federal statutory income tax rate and the Company’s effective tax rate are due to permanent differences such as meals and entertainment expenses that are non-deductible for tax, state income taxes, the net change in valuation allowance, and other non-taxable items.
The tax effects of temporary differences and carryforwards that gave rise to significant portions of the deferred tax assets and liabilities for the six months ended June 30, 2026 and 2025, were net operating loss carryforwards, accruals and reserves, credits, fixed assets, and other items.
As of December 31, 2025, a full valuation allowance was provided for the tax benefits that may not be realized and is still in effect as of June 30, 2026. Management believes, based on a variety of factors, it is more likely than not that the deferred income tax assets will not be fully realized.
| 12. | NET LOSS PER SHARE |
Basic and diluted net loss per share is shown in the condensed consolidated statements of operations and comprehensive loss.
No adjustment has been made to the net loss for charges related to the Convertible Notes, Series A-1 Preferred Stock, and Warrants as the effect would be anti-dilutive due to the Company’s net loss. The following outstanding stock options, warrants, and shares issuable upon conversion of the Convertible Notes and the Series A-1 Preferred Stock were not considered in the computation of diluted net loss per share attributable to holders of common stock as they had antidilutive effects:
The
| Six Months Ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Shares of common stock issuable upon exercise of common stock options | ||||||||
| Shares of common stock issuable upon exercise of issued warrants | ||||||||
| Shares of common stock issuable upon conversion of Convertible Notes | ||||||||
| Shares of common stock issuable upon conversion of Series A-1 Preferred Stock | ||||||||
| Total shares of common stock excluded from denominator for diluted earnings per share computation | ||||||||
| 13. | RETIREMENT PLANS |
The Company maintains a 401(k) Plan for the benefit of eligible employees in the United States. The 401(k) Plan includes a cash or deferred arrangement pursuant to Section 401(k) of the Internal Revenue Code sponsored by the Company to provide eligible employees with an opportunity to defer compensation and have such deferred amounts contributed to the 401(k) Plan on a pre-tax basis, subject to certain limitations. The Company, at the discretion of the Board of Directors, may make contributions of cash to match deferrals of compensation by participants in the 401(k) Plan. To date, the Company has made
| 14. | RELATED PARTY TRANSACTIONS |
Related Party Notes
On various dates in January, March, and June 2025, the Company borrowed an aggregate of $
In November 2025, the Company borrowed $
In February 2026, the Company borrowed $
The term Collateral in the above loans refers to all assets of the Company, including without limitation all of the Company’s right, title, and interest in assets, whether now owned or hereafter acquired or arising and wherever located.
Stock Based Compensation
In May 2026, the Company granted
| 15. | SUBSEQUENT EVENTS |
In connection with the issuance of the condensed consolidated financial statements for the six months ended June 30, 2026, the Company has evaluated subsequent events through the date the condensed consolidated financial statements were issued.
Convertible Note Payable
In July 2026, the Company issued a note amounting to $
Related Party Loans
On various dates in July and August 2026, the Company borrowed a total of $
Senior Secured Note
In July 2026, the Company issued
Reverse Stock Split
On July 31, 2026, the Company completed a 50 for 1 reverse split of the Company’s common stock. Pursuant to the Reverse Stock Split, every
All share and per share amounts in the financial statements have been retrospectively adjusted for all periods presented to reflect the stock split.
NYSE American Compliance Plan Acceptance
On July 22, 2026, the Company received a letter from the NYSE American LLC ("NYSE American") stating that the NYSE American has accepted the Company's plan (the "Compliance Plan") to regain compliance with the NYSE American’s continued listing standards, specifically Sections 1003(a)(i) and (ii) since, as previously disclosed in Current Reports on Form 8-K filed on May 11, 2026 and May 21, 2026, the Company reported (i) stockholders’ equity of $
The NYSE American’s acceptance allows the Company to continue its listing on the NYSE American, subject to the Company achieving the milestones set forth in the Compliance Plan and being subject to quarterly review by the NYSE American. The Company is subject to a maximum period of 18 months from the original notice of noncompliance to regain compliance.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion and analysis of our financial condition and results of operations. The following should be read in conjunction with our financial statements and accompanying notes. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those projected, forecasted, or expected in these forward-looking statements as a result of various factors, including, but not limited to, those discussed below and elsewhere in this Form 10-Q. See “Cautionary Statement Regarding Forward-Looking Statements” in this report, and the risk factors set forth in Part I, Item 1A. Risk Factors in our Form 10-K, filed with the SEC on March 30, 2026.
Overview
PMI functions as a holding company and owns 100% of the membership interests of SynCardia. Business operations are carried out by and through SynCardia, and accordingly most of the information set forth in this Quarterly Report on Form 10-Q relates to the business of SynCardia. SynCardia is a medical technology company that manufactures and sells the only U.S. Food and Drug Administration (“FDA”) and Health Canada approved SynCardia TAH, which fully replaces the function of a failing human heart. To date, more than 2,100 SynCardia TAHs have been implanted in patients across 27 countries, and the SynCardia TAH is an established bridge to heart transplantation for patients with biventricular heart failure, also referred to as end-stage heart failure, in the U.S. and around the globe. We are also pursuing additional research and advancements in medical technology, including the next-generation Emperor Total Artificial Heart (“Emperor TAH”), which is designed to combine the proven SynCardia TAH ventricles with the Company’s next-generation electromechanical Emperor Drive System. The Emperor TAH is being developed as a platform to a fully implantable total artificial heart and eliminate the need for external drivers. The Emperor TAH is subject to additional development and regulatory review.
During the second quarter of 2026, we continued development of the Emperor TAH program, including the successful completion of a series of acute in vivo implant studies evaluating the latest iteration of the Emperor TAH and the presentation of new in vivo Emperor data at the American Society for Artificial Internal Organs (“ASAIO”) 2026 Annual Conference. We also presented new clinical outcomes research involving patients supported with the SynCardia TAH at ASAIO 2026.
Subsequent to June 30, 2026, we publicly presented the integrated architecture of the Emperor TAH platform for the first time at the 48th Annual International Conference of the IEEE Engineering in Medicine and Biology Society (“IEEE EMBC 2026”). The presentation provided the biomedical engineering community with a detailed view of the Emperor platform and its electromechanical drive architecture. We believe the presented architecture has the potential to be a platform for a first-of-a-kind fully implantable total artificial heart. We continue to pursue development of the Emperor platform, with our longer-term objective of building the world’s first fully artificial heart.
The currently approved SynCardia TAH System consists of an implant including: (i) left and right artificial ventricles; (ii) external pneumatic drivers that power the implant; and (iii) drivelines that connect the external driver to the implant. The implantation procedure follows routine surgical techniques used by cardiothoracic surgeons performing heart transplantation. The system provides immediate and complete cardiac output by replacing both ventricles and all four heart valves. The SynCardia TAH is powered by pneumatic drivers available for in-hospital use, the Companion 2 Driver, and for in-home use, the Freedom Driver. These systems generate true pulsatile flow using a redundant pneumatic pump assembly, restoring full hemodynamics and giving patients time to stabilize, recover, and ultimately receive a heart transplant. Patients supported by the SynCardia TAH may be discharged from the hospital using the portable Freedom Driver.
Implantation of the SynCardia TAH is covered by the U.S. Centers for Medicare and Medicaid Services under National Coverage Determination 20.9.1 and is generally reimbursed under Diagnosis Related Group 001, the highest reimbursement category for cardiac procedures. Hospital reimbursement varies based on case complexity and institutional adjustments. Because reimbursement is determined primarily by the procedure rather than the specific device used, hospitals evaluate mechanical circulatory support technologies based on clinical suitability and overall cost effectiveness within the applicable reimbursement framework. We currently have SynCardia TAH inventory available to support near-term customer requirements.
Loss of Controlled Company Status
Following the May 2026 Offering, Hunniwell Picard I LLC no longer controls a majority of the voting power of the outstanding common stock of PMI, causing the Company to cease being a "controlled company" within the meaning of applicable rules of NYSE American. The Company is now subject to compliance with the independence requirements regarding board composition, compensation committee membership, and nominating committee membership. While PMI currently complies with all other Section 303A corporate governance requirements, the Company will transition to a majority independent board by May 6, 2027, and expects to achieve full compliance within that deadline.
NYSE Notice
On May 8, 2026, the Company received a notice of noncompliance from NYSE Regulation (“NYSE Notice”) stating that it was not in compliance with Section 1003(a)(ii) in the NYSE American Company Guide (the “Company Guide”) since the PMI reported stockholders’ equity of $3.8 million as of December 31, 2025, and had net losses in three of its four most recent fiscal years then ended (the "Stockholders' Equity Rule"). In order to maintain our listing on the NYSE American, the NYSE American requested that PMI submit a plan of compliance (the “Compliance Plan”) by June 7, 2026, advising of actions it has taken or will take to regain compliance with Section 1003(a)(ii) of the Company Guide by November 8, 2027. Subsequently, PMI timely filed the Plan with NYSE American. On July 22, 2026, we received a letter from the NYSE American stating that PMI's Compliance Plan had been accepted.
The NYSE American’s acceptance allows us to continue to be listed on the NYSE American, subject to PMI achieving the milestones set forth in the Compliance Plan and being subject to quarterly review by the NYSE American. We are subject to a maximum period of 18 months from the original notice of noncompliance to regain compliance, which date is November 8, 2027.
Components of Our Results of Operations
Revenues
We generate revenue from the sale of our SynCardia TAH for patients, rental of Freedom Drivers, and from training and certification services, which are required before the first time a transplant center may deploy a SynCardia TAH. Revenue includes sales and services Centers located in the U.S. as well as Centers domiciled in foreign countries.
Cost of Revenues
Cost of revenues includes product costs, labor, overhead, inbound freight, and other product-related costs including excess inventory and obsolescence charges.
Research and Development
Research and development expenses include wages, stock-based compensation and benefits of employees performing research and development, and other operational costs related to our research and development activities, including facility-related expenses, allocation of corporate expenses, and external costs of outside contractors. While research and development supply expense are isolated by product, personnel are not. Research and development personnel do not work on current product production, therefore labor expense is not isolated by product.
Selling, General and Administrative
Selling, general and administrative expenses consist primarily of personnel-related expenses for executives, human resources, finance, and other general and administrative employees, including salary and stock-based compensation, professional services costs, and allocation of facility and overhead costs.
Our general and administrative expenses will increase in the future in connection with ongoing costs of operating as a public company, including expanding headcount and increased fees for directors and outside advisors. We expect to incur significant costs to comply with corporate governance, internal controls, and similar requirements applicable to public companies. Additionally, we expect to incur increased costs associated with establishing sales, marketing, and revenue growth.
Other Income (Expenses), net
Other income (expenses), net primarily consists of interest expense, changes in fair value of senior secured note and warrant liabilities, and loss on settlement of debt.
Provision for Income Taxes
We are subject to U.S. federal and state income taxes and foreign taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets, and liabilities and changes in tax laws. Provision for income taxes primarily relates to state income taxes.
Results of Operations
Comparison of Six Months Ended June 30, 2026 and 2025
The following table summarizes Picard’s results of operations (in thousands, except percentages) (unaudited):
| Six Months Ended June 30, | Change |
|||||||||||||||
| 2026 |
2025 |
$ |
% | |||||||||||||
| Revenues, net: |
||||||||||||||||
| Products |
$ | 3,878 | $ | 2,744 | $ | 1,134 | 41 | % | ||||||||
| Rentals |
226 | - | 226 | 100 | % | |||||||||||
| Total revenues |
4,104 | 2,744 | 1,360 | 50 | % | |||||||||||
| Cost of revenues: |
||||||||||||||||
| Products |
2,157 | 2,119 | 38 | 2 | % | |||||||||||
| Rentals |
1,056 | 1,110 | (54 | ) | -5 | % | ||||||||||
| Total cost of revenues |
3,213 | 3,229 | (16 | ) | -0 | % | ||||||||||
| Gross profit (loss) |
891 | (485 | ) | 1,376 | -284 | % | ||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development costs |
3,269 | 1,551 | 1,718 | 111 | % | |||||||||||
| Selling, general and administrative expenses |
6,762 | 4,731 | 2,031 | 43 | % | |||||||||||
| Total operating expenses, net |
10,031 | 6,282 | 3,749 | 60 | % | |||||||||||
| Operating loss |
(9,140 | ) | (6,767 | ) | (2,373 | ) | 35 | % | ||||||||
| Other income and expense: |
||||||||||||||||
| Interest expense |
(94 | ) | (2,982 | ) | 2,888 | -97 | % | |||||||||
| Derivative gain (loss) |
- | (2,505 | ) | 2,505 | 100 | % | ||||||||||
| Change in fair value of senior secured note and warrant liability | 5,741 | - | 5,741 | 100 | % | |||||||||||
|
Loss on settlement of debt
|
(9,284 | ) | - | (9,284 | ) | -100 | % | |||||||||
| Loss on warrant exchange | (505) | - | (505 | ) | -100 | % | ||||||||||
| Other income | 13 | - | 13 | 100 | % | |||||||||||
| Total other income (expenses), net |
(4,129 | ) | (5,487 | ) | 1,358 | -25 | % | |||||||||
| Loss before income taxes |
(13,269 | ) | (12,254 | ) | (1,015 | ) | 8 | % | ||||||||
| Provision for income tax |
(7 | ) | (31 | ) | 24 | -77 | % | |||||||||
| Net loss |
$ | (13,276 | ) | $ | (12,285 | ) | $ | (991 | ) | 8 | % | |||||
Revenues
Total revenues increased by $1.4 million, or 50%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. This increase is due to an increase in U.S. product sales of $1.5 million, an increase in rest of world sales of $0.2 million, offset by a $0.4 million decrease in Europe sales.
Cost of Revenues
Total cost of revenues decreased by $0.02 million, or 0%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025.
Research and Development Expenses
Research and development expenses increased by $1.7 million, or 111%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was primarily attributable to increased activity and phase scheduling in the new product research. We do not track expenses by product candidate. While research and development supply expense are isolated by product, personnel are not. Research and Development personnel do not work on current product production, therefore labor expense is not isolated by product.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $2.0 million, or 43%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was primarily attributable to a $1.2 million increase in stock based compensation expenses, a $0.2 million in franchise tax fees, a $0.1 million increase in employee benefits and a $0.5 million increase in professional and legal expenses.
Total Other Income (Expenses)
Total other expenses decreased by $1.4 million, or 25%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The decrease was attributed to the increase of loss on settlement of debt and loss on Warrant Exchange, offset by changes in fair value of the Senior Secured Note and warrant liabilities.
Comparison of Three Months Ended June 30, 2026 and 2025
The following table summarizes Picard’s results of operations (in thousands, except percentages) (unaudited):
| Three Months Ended June 30, | Change |
|||||||||||||||
| 2026 |
2025 |
$ |
% | |||||||||||||
| Revenues, net: |
||||||||||||||||
| Products |
$ | 2,935 | $ | 2,131 | $ | 804 | 38 | % | ||||||||
| Rentals |
19 | - | 19 | 100 | % | |||||||||||
| Total revenues |
2,954 | 2,131 | 823 | 39 | % | |||||||||||
| Cost of revenues: |
||||||||||||||||
| Products |
1,720 | 1,551 | 169 | 11 | % | |||||||||||
| Rentals |
618 | 707 | (89 | ) | -13 | % | ||||||||||
| Total cost of revenues |
2,338 | 2,258 | 80 | 4 | % | |||||||||||
| Gross profit (loss) |
616 | (127 | ) | 743 | -585 | % | ||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development costs |
1,374 | 743 | 631 | 85 | % | |||||||||||
| Selling, general and administrative expenses |
3,871 | 2,651 | 1,220 | 46 | % | |||||||||||
| Total operating expenses |
5,245 | 3,394 | 1,851 | 55 | % | |||||||||||
| Operating loss |
(4,629 | ) | (3,521 | ) | (1,108 | ) | 31 | % | ||||||||
| Other income and expense: |
||||||||||||||||
| Interest expense |
(89 | ) | (2,427 | ) | 2,338 | -96 | % | |||||||||
| Derivative gain (loss) |
- | (776 | ) | 776 | 100 | % | ||||||||||
| Change in fair value of senior secured note and warrant liability | 2,743 | - | 2,743 | 100 | % | |||||||||||
|
Loss on settlement of debt
|
(3,186 | ) | - | (3,186 | ) | -100 | % | |||||||||
| Loss on warrant exchange | (505 | ) | - | (505 | ) | -100 | % | |||||||||
| Other income (expense), net |
13 | 13 | 100 | % | ||||||||||||
| Total other expenses, net |
(1,024 | ) | (3,203 | ) | 2,179 | -68 | % | |||||||||
| Gain (Loss) before income taxes |
(5,653 | ) | (6,724 | ) | 1,071 | -16 | % | |||||||||
| Provision for income tax |
(7 | ) | - | (7 | ) | -100 | % | |||||||||
| Net loss |
$ | (5,660 | ) | $ | (6,724 | ) | $ | 1,064 | -16 | % | ||||||
Revenues
Total revenues increased by $0.8 million, or 39%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. This increase is due to an increase in U.S. sales of $0.8 million.
Cost of Revenues
Total cost of revenues increased by $0.08 million, or 4%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase in cost of revenues for the three months ended June 30, 2026, was mainly due to $0.17 million increase in product manufacturing costs, offset by a $0.09 million decrease in rental costs. Rental revenue and rental cost are not directly correlated. Rental costs are mainly related to machine maintenance to maintain reliability and are incurred on a time schedule that is dependent on the amount of time the Freedom Driver is actually used. The Freedom Driver may be used for multiple patients before maintenance service is required. Rental revenue is earned when a patient is discharged from a hospital with a Freedom Driver. Rental Revenue is recognized when it becomes likely that we will receive payment. The timing differences between usage and payment receipt generally do not correlate to the cost of service maintenance, resulting in negative gross margins. Our total cost of revenue as a percentage of total sales for the three months ended June 30, 2026 and 2025, was 79% and 106%, respectively.
Research and Development Expenses
Research and development expenses increased by $0.6 million, or 85%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was primarily attributable to increased activity and phase scheduling in the new product research. We do not track expenses by product candidate. While research and development supply expense are isolated by product, personnel are not. Research and Development personnel do not work on current product production, therefore labor expense is not isolated by product.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $1.2 million, or 46%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase was primarily attributable to a $1.2 million increase in stock based compensation expense.
Total Other Income (Expenses)
Total other expenses decreased by $2.2 million, or 68%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The decrease was attributed to the increase of loss on settlement of debt, offset by changes in fair value of Senior Secured Note and warrant liabilities.
Liquidity and Capital Resources
Funding Requirements and Going Concern
We have incurred operating losses since inception, including net losses of $13.3 million and $12.3 million for the six months ended June 30, 2026 and 2025, respectively. While we already have FDA-approved products that are generating commercial revenue, the business needs to scale up in order to offset a large, fixed overhead cost from our site in Tucson, Arizona. Moreover, we are also investing heavily in the development of updates and next generation devices; therefore, we expect to continue to incur significant expenses and operating losses for the foreseeable future. Furthermore, we expect to incur additional expenses with transitioning to, and operating as, a public company.
Until such time as we can sufficiently grow product and rental revenue, we expect to finance our cash needs through a combination of equity and debt financing, or other capital sources, including related parties. To the extent that we raise additional capital through the future sale of equity or debt, the ownership interest of our stockholders will be diluted. The terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. If we are unable to raise sufficient funds through equity or debt financing, we may be required to delay, limit, curtail or terminate our product development or future growth efforts. Additionally, we may never become profitable, or if we do, may not be able to sustain profitability on a recurring basis.
We have considered that our long-term operations anticipate continuing net losses and the need for potential debt or equity financing. However, there can be no assurances that additional funding or other sources of capital will be available on terms acceptable to us, or at all. If additional capital is not secured when required, we may need to delay or curtail our operations until such funding is received. If we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, financial condition and results of operations could be materially adversely affected. As a result of these conditions, we have concluded that there is substantial doubt over our ability to continue as a going concern as conditions and events, considered in the aggregate, indicate it is probable we will be unable to meet our obligations as they become due within one year after the date that the financial statements included in this filing are issued. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to increase sales and raise additional funds and financing. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in Part I, Item 1A. Risk Factors of our Form 10-K filed March 30, 2026.
Sources of Liquidity
To date, we have funded our operations primarily with the proceeds from Series A-1 Preferred Stock, loans from related parties, convertible notes and cash received from, in exchange for shares of common stock, or loans payable from other investors. In September 2025, the Company consummated our Initial Public Offering.
In December 2025, the Company entered into a Securities Purchase Agreement pursuant to which the Company issued $15.0 million aggregate principal amount of Senior Secured Note due 2028, with the right to issue up to an additional $35.0 million in subsequent closings.
In May 2026, the Company completed the May 2026 Offering, in which it sold an aggregate (i) 333,333 shares of its Common Stock, or in lieu thereof, for certain purchasers, prefunded warrants, (ii) Series A Common Warrants to purchase up to 333,333 shares of common stock, and (iii) Series B Common Warrants to purchase up to 333,333 shares of common stock for a combined offering price of $15.0 per share for gross proceeds of $5.0 million. Net proceeds from the May 2026 Offering were $3.06 million after deduction of $0.94 million of offering costs with $1.0 million in a cashless transaction to settle the principal of the Company’s Senior Secured Note.
Cash Flows
The following table shows a summary of our cash flows (in thousands):
| Six Months Ended June 30, |
||||||||
| 2026 |
2025 |
|||||||
| Net cash used in operating activities |
$ | (5,152 | ) | $ | (4,782 | ) | ||
| Net cash used in investing activities |
$ | (26 | ) | $ | - | |||
| Net cash provided by (used in) financing activities |
$ | (6,276 | ) | $ | 5,112 | |||
Net cash used in operating activities
Net cash used in operating activities of $5.2 million for the six months ended June 30, 2026, was primarily attributable to $ 13.3 million net loss, and $5.7 million net changes in fair value of the Senior Secured Note and warrant liability, offset by $9.3 million non-cash loss on settlement of debt, $0.9 million increase in accounts payable and accrued expenses, $1.5 million in stock based compensation, a $0.5 million increase in the loss on warrant exchange, $0.6 million in provision for excess and obsolete inventory, $0.7 million in inventory, $0.2 million in prepaid and other current asset.
Net cash used in operating activities of $4.8 million for the six months ended June 30, 2025, was primarily attributable to $12.3 million net loss, offset by $2.5million in embedded derivative loss, $0.6 million in increased inventory, $2.4 million amortization of discount on debt issued, $0.2 million amortization of ROU asset, and $1.8 million increase in accounts payable and accrued expenses.
Net cash used in investing activities
Net cash used in investing activities was $0.03 million and $0 million for the six months ended June 30, 2026 and 2025, respectively.
Net cash provided by (used in) financing activities
Net cash used in financing activities was $6.3 million for the six months ended June 30, 2026, primarily consisting of repayment of $9.5 million of notes payable, $0.9 million of repayments of loans from related parties, and $0.03 million repayments of finance lease obligations, offset by $0.7 million of proceeds from related party loans, and $0.06 million of stock option exercise, $3.1 million of proceeds from issuance of Common stock and warrants.
Net cash provided by financing activities was $5.1 million for the six months ended June 30, 2025, which primarily consisted of net proceeds of $2.0 million from the issuance of convertible notes, $1.5 million from the issuance of common stock, and $1.6 million net of related party loans.
Off-Balance Sheet Arrangements
As of June 30, 2026 and December 31, 2025, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires our management to make judgments, assumptions and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. We evaluate these judgments, assumptions and estimates for changes that would affect the reported amounts. These estimates are based on management’s historical industry experience and on various other judgments and assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these judgments, assumptions and estimates. A discussion of recent accounting pronouncements and our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 2 “Summary of Significant Accounting Policies” to our condensed consolidated financial statements included in this quarterly report. None of those policies are deemed to be critical accounting policies nor critical accounting estimates.
Emerging Growth Company Status
Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Exchange Act for complying with new or revised accounting standards applicable to public companies. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates for such new or revised standards. We may elect to comply with public company effective dates at any time, and such election would be irrevocable pursuant to Section 107(b) of the JOBS Act.
We are also a “smaller reporting company” as defined in Regulation S-K under the Securities Act and may elect to take advantage of certain of the scaled disclosures available to smaller reporting companies. We may be a smaller reporting company even after we are no longer an “emerging growth company.”
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Accounting Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our management, including our Chief Executive Officer and Chief Accounting Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2026. Based upon their evaluation, our Chief Executive Officer and Chief Accounting Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were not effective due to the material weaknesses in internal control over financial reporting described below. Thus, there remains a reasonable possibility that a material misstatement of the Company’s interim financial statements will not be prevented or detected on a timely basis. This does not include an evaluation by the Company’s registered public accounting firm regarding the Company’s internal control over financial reporting.
Management’s evaluation was based on the following material weaknesses in our internal control over financial reporting which existed as of June 30, 2026, and which continue to exist:
| ● |
Lack of segregation of duties due to limited accounting personnel. |
| ● |
Lack of a formal review process that includes multiple levels review over financial disclosure and reporting processes. |
Our management will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
Remediation Plan
Management continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively.
The remediation actions planned include:
| ● |
Retain additional accounting personnel with public company financial reporting, technical accounting, SEC compliance, and strategic financial advisory experience to achieve adequate segregation of duties; |
| ● |
Implement multiple level reviews over financial disclosure and reporting processes; |
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives of ensuring that information we are required to disclose in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Accounting Officer, as appropriate, to enable timely decisions regarding required disclosures, and is recorded, processed, summarized, and reported within the time periods specified in the rules and forms promulgated by the SEC. Our management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and there is no assurance that our disclosure controls and procedures will operate effectively under all circumstances.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
PMI is subject from time to time to various claims, lawsuits, and other legal and administrative proceedings (including those described below). Some of these claims, lawsuits and other proceedings may involve highly complex issues that are subject to substantial uncertainties and could result in damages, fines and penalties, non-monetary sanctions, or other relief. The Company intends to recognize provisions for claims or pending litigation when it determines that an unfavorable outcome is probable, and the amount of loss can be reasonably estimated. Due to the inherent uncertain nature of litigation, the ultimate outcome or actual cost of settlement may materially vary from estimates. For additional information, see “Risk Factors – Litigation Related to Trading of Our Securities” in our annual report on Form 10-K, filed with the SEC on March 30, 2026.
On February 2, 2026, a putative securities class action captioned Louie v. Picard Medical, Inc., et al., Case No. 5:26-CV-01024, was filed in the United States District Court for the Northern District of California, San Jose Division. The complaint named PMI as a defendant, along with certain of its current and former officers and directors and other third parties, and purported to assert claims under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b‑5 promulgated thereunder. On May 15, 2026, the Court appointed Roger Wiegley and Sobhy Abdelhady as Lead Plaintiffs (“Lead Plaintiffs”) and The Rosen Law Firm, P.A. as lead counsel.
On July 28, 2026, Lead Plaintiffs and Named Plaintiff Nicholas Boldery filed an Amended Complaint ("Amended Complaint"), dropping their claims under the Securities Exchange Act of 1934 (Sections 10(b) and 20 (a)) and instead alleging claims under Sections 11 and 15 of the Securities Act of 1933 concerning material omissions in the IPO registration statement regarding market structure or stock price manipulation risks.
PMI believes the claims against the Company and its officers and directors are without merit and intends to defend this matter vigorously. Given the early stage of the proceedings, the outcome is inherently uncertain, PMI cannot reasonably estimate a possible loss or range of loss. The Company will continue to evaluate developments in this litigation each reporting period and record an accrual for loss contingencies when, and to the extent, required by applicable accounting standards.
ITEM 1A. RISK FACTORS
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in Part I, Item 1A. Risk Factors of our Form 10-K, filed with the SEC on March 30, 2026. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. Except for as set forth below, as of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in Part I, Item 1A. Risk Factors of our Form 10-K, filed with the SEC on March 30, 2026, except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
There can be no assurance that we will be able to comply with the continued listing standards of the NYSE.
On May 8, 2026, we received the NYSE Notice from the NYSE indicating we were no longer in compliance with the Section 1003(a)(ii) in the Company Guide since the Company reported stockholders’ equity of $3.8 million as of December 31, 2025, and had net losses in three of its four most recent fiscal years then ended (the "Stockholders' Equity Rule"). The Company timely submitted its Compliance Plan, advising of actions it has taken or will take to regain compliance with Section 1003(a)(ii) of the Guide by November 8, 2027. On July 22, 2026, PMI received a letter from the NYSE American stating that the PMI's Compliance Plan had been accepted. There can be no guarantee that the Company’s Compliance Plan or that the Company will meet requirements of its quarterly reviews and/or regain compliance by the November 8, 2027, deadline.
If the NYSE delists our common stock from trading on its exchange and we are not able to list such securities on another national securities exchange, we expect such securities could be quoted on an over-the-counter market. If this were to occur, we and our stockholders could face significant material adverse consequences including:
| ● |
A limited availability of market quotations for our common stock; |
| ● |
Reduced liquidity for our common stock; |
| ● |
A limited amount of news and analyst coverage; and |
| ● |
A decreased ability to obtain additional financing in the future. |
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS FROM REGISTERED SECURITIES
On May 5, 2026, the Company entered into a Warrant Issuance and Exchange Agreement wherein the existing HT Warrants were surrendered and exchanged for new warrants to purchase 200,000 shares of Common Stock at an exercise price of $17.50 per share, subject to certain adjustments as provided in the warrant agreement. The new warrants are exercisable at any time on or after the original issuance date and on or prior to 5:00 p.m. (New York City time) on the five-year anniversary of such date. The new warrants may be exercised by means of a “cashless exercise” at any time when there is no effective registration statement available for the resale of the shares underlying the new warrants.
.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| Exhibit No. |
Description |
|
| 1.1 | Placement Agency Agreement, dated May 5, 2026, by and between the Company and the Placement Agent (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May 11, 2026). | |
| 3.1 | Certificate of Amendment, dated July 21, 2026 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 22, 2026). | |
| 4.1 | Form of Series A Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May 11, 2026). | |
| 4.2 | Form of Series B Warrant (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on May 11, 2026). | |
| 4.3 | Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, filed with the SEC on May 11, 2026). | |
| 4.4 | Warrant to Purchase Shares of Common Stock, dated May 5, 2026 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2026). | |
| 4.5 | Convertible Promissory Note, dated as of April 7, 2026, issued by the Company in favor of the Buyer (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 13, 2026). | |
| 10.1 | Form of Purchase Agreement, dated May 5, 2026, by and among the Company. and the Purchasers named therein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May 11, 2026). | |
| 10.2 | Warrant Issuance and Exchange Agreement, dated as of May 5, 2026, by and between Picard Medical, Inc. and the investor signatory thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May 5, 2026). | |
| 10.3 | Securities Purchase Agreement, dated April 7, 2026, by and between the Company and the Buyer (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on April 13, 2026). | |
| 31.1 |
Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
| 31.2 |
Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
| 32.1** |
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
| 32.2** |
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
| 101.INS |
Inline XBRL Instance Document |
|
| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
|
| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
| 101.LAB |
Inline XBRL Taxonomy Extension Labels Linkbase Document |
|
| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
| 104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| ** |
These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| PICARD MEDICAL, INC. |
||
| By: |
/s/ Richard Fang |
|
| Name: |
Richard Fang | |
| Title: |
Interim Chief Executive Officer and Director |
|
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Quarterly Report has been signed below by the following persons in the capacities and on the dates indicated.
| Signature |
Position |
Date |
||
| /s/ Richard Fang | Interim Chief Executive Officer and Director |
August 19, 2026 |
||
| Richard Fang | (Principal Executive Officer) |
|||
| /s/ Georgina Smith |
Chief Accounting Officer |
August 19, 2026 |
||
| Georgina Smith |
(Chief Accounting Officer and Principal Financial Officer) |