Picard Medical, Inc. has issued three unsecured convertible notes to accredited investors for an aggregate principal amount of $1.0 million, a move that introduces a defined path for equity dilution capped at 250,000 shares. The company reported the transaction in a Form 8-K filed with the Securities and Exchange Commission on September 30, 2026, detailing terms that allow holders to convert debt into common stock at a price no lower than $4.00 per share.
The notes bear interest at 3.0% per annum, calculated on a 360-day year basis, and mature on September 30, 2027. Each holder may elect to convert the outstanding balance, which includes unpaid principal and accrued interest, into fully paid and non-assessable shares of Picard Medical common stock. The conversion price is determined by the higher of $4.00 or the closing price of the stock on the trading day immediately preceding the delivery of a conversion notice. Because of this floor, the $1.0 million principal is convertible into a maximum of 250,000 shares, excluding any additional shares issuable for accrued interest.
Alongside each share issued upon conversion, Picard Medical will issue a pre-funded warrant to purchase one additional share of common stock at an exercise price of $0.0001 per share. These warrants have a two-year term and become exercisable 60 days after issuance. Consequently, converting the full principal at the floor price would result in the issuance of up to 250,000 shares of common stock and warrants for up to an additional 250,000 shares. The company noted that such conversions may dilute the interests of existing stockholders.
The agreement includes specific restrictions to manage ownership concentration and regulatory compliance. Holders are prohibited from converting notes to the extent that they and their affiliates would beneficially own more than 4.99% of the company's outstanding common stock. Furthermore, Picard Medical will not issue shares upon conversion or warrant exercise if doing so would cause the total issuance under the notes and warrants to exceed 19.99% of the total outstanding shares as of the issuance date, unless the company first obtains required stockholder approval.
The company retains an option to convert the notes early if it consummates an equity financing resulting in aggregate gross cash proceeds of at least $10.0 million before the maturity date. In such an event, the conversion price would be the higher of $4.00 or the price per share at which the new common stock is sold in that financing. The notes are subject to applicable requirements of the NYSE American Company Guide, under which Picard Medical's common stock is listed.
Picard Medical expects to rely on Section 4(a)(2) of the Securities Act for the issuance of pre-funded warrants and Section 3(a)(9) for securities issued upon conversion or exercise, provided applicable exemption conditions are met. The full text of the form of note and warrant is filed as Exhibit 4.1 and Exhibit 4.2, respectively, to the Form 8-K.