Picard Medical, Inc. Stock Compensation Disclosure
| 10. | SHARE BASED COMPENSATION |
On September 26, 2021, the Company’s board of directors approved the adoption of the 2021 Equity Incentive Plan (the “2021 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.
The aggregate number of shares of common stock authorized for issuance under the 2021 Plan is 8,394,360 shares, which may be increased through an amendment to the 2021 Plan adopted by the board of directors. The number of shares authorized is subject to standard adjustments in the event of a stock split, stock dividend or other extraordinary dividend, or other similar change in the Company’s common stock or capital structure. Awards that expire or are cancelled generally become available for issuance again under the 2021 Plan. Awards have a maximum term of years from the grant date and generally vest over years, but may vest over varying periods, as specified by the Company’s board of directors for each grant. On October 10, 2025, the Company’s stockholders approved an amendment to the Company’s 2021 Equity Incentive Plan (the “Amended Incentive Plan”) to (i) increase the aggregate number of shares of Common Stock available under the 2021 Equity Incentive Plan to a total of 18,000,000 shares, (ii) include warrant as a type of awards issuable under the Amended Incentive Plan, and (iii) to ratify the 2021 Equity Incentive Plan.
A summary of stock option transactions is as follows:
| Shares Available For Grant | Number of Options Outstanding | Weighted Average Exercise Price | ||||||||||
| Balance at December 31, 2024 | 1,183,618 | 7,210,742 | $ | 0.49 | ||||||||
| Approved pool increase | 9,605,640 | - | - | |||||||||
| Granted | (837,036 | ) | 837,036 | 2.14 | ||||||||
| Forfeited | 107,323 | (107,323 | ) | 0.23 | ||||||||
| Cancelled | 384,021 | (384,021 | ) | 0.83 | ||||||||
| Balance at December 31, 2025 | 10,443,566 | 7,556,434 | $ | 0.44 | ||||||||
As of December 31, 2025, there were 7,556,434 options outstanding, with a weighted average exercise price of $0.44, a weighted average remaining term of 7.08 years, and an aggregate intrinsic value of $8.6 million. Of these, 5,204,064 were vested, with a weighted average exercise price of $0.43, a weighted average remaining term of 6.61 years and an aggregate intrinsic value of $6.8 million.
On May 30, 2025, the Company granted 833,588 stock options with a post stock split exercise price of $2.11 and a term of 10 years. The options vest over a period of 4 years. The Company measures the fair value of all stock-based awards on the grant date and records the fair value of these awards to compensation expense over the vesting period. The fair market value of the May 30, 2025, stock-based awards was determined using the Black-Scholes option pricing model which used the following assumptions:
| Stock Price | ||
| Expected dividend yield | ||
| Expected stock price volatility | 189% | |
| Risk-free interest rate | 4.69% | |
| Expected term (years) | 6.08 |
On September 29, 2025, the Company granted 3,448 stock options with an exercise price of $8.70 and a term of 10 years. The options vest over a period of 4 years. The Company measures the fair value of all stock-based awards on the grant date and records the fair value of these awards to compensation expense over the vesting period. The fair market value of the September 29, 2025, stock-based awards was determined using the Black-Scholes option pricing model which used the following assumptions:
| Stock Price |
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| Expected dividend yield |
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| Expected stock price volatility |
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| Risk-free interest rate |
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| Expected term (years) | 6.08 |
Total stock-based compensation recognized for options was as follows (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cost of revenue | $ | 58 | $ | 12 | ||||
| Research and development | 61 | 13 | ||||||
| Selling, general and administrative | 635 | 861 | ||||||
| Total stock-based compensation | $ | 754 | $ | 886 | ||||
As of December 31, 2025, the unrecognized stock-based compensation cost related to outstanding stock options that are expected to vest was $1.6 million, which the Company expects to recognize over an estimated weighted average period of 2.52 years.
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.