Picard Medical (PMI) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01We have a history of significant losses. If we do not achieve and sustain profitability, our financial condition could suffer
2. 02All of our revenue is generated from a limited number of products, and any decline in the sales of these products or failure to gain market acceptance of these products will negatively impact our business
3. 03the shell and diaphragm portions of the SynCardia TAH are constructed with a proprietary formulation of Segmented Polyurethane Solution (“SPUS”) with raw chemicals from qualified suppliers, and we may not obtain FDA approval for our efforts to source these raw chemicals from different suppliers
4. 04We rely on specialized suppliers and service providers for components of the SynCardia TAH and do not have second-source suppliers for the majority of components
5. 05suppliers may encounter financial hardships unrelated to our demand, which could inhibit their ability to fulfill orders and meet requirements
6. 06The future demand for our current products and future products is unproven. Our current products and future products may not be accepted by hospitals, surgeons or patients, and may not become commercially successful
7. 07If we fail to develop and retain a direct sales force and effective network of international distributors, we may be unable to achieve expected growth targets and our business could suffer
8. 08Reliance on distributors and third parties to market and sell our products could negatively impact our business
9. 09We operate in a market segment that is subject to rapid technological change. If our competitors are able to develop and market technologies or products that are safer, more effective, less costly, easier to use or otherwise more attractive than our products, our business will be adversely impacted
10. 10greater experience in resources for conducting research and development, clinical studies, manufacturing, preparing regulatory submissions, obtaining regulatory clearance or approval, and marketing approved products
11. 11Our future success depends on our ability to develop, receive regulatory approval (including long term indication) for, and introduce new products or product enhancements that will be accepted by the market in a timely manner
12. 12provide adequate training to potential users of our products; and
13. 13If we are unable to successfully complete the pre-clinical studies or clinical trials necessary to support premarket approval applications or PMA supplements, our ability to obtain approvals for new products will be limited
14. 14not meeting the statistical endpoints
15. 15Premarket approvals for our therapeutic medical devices could be denied or significantly delayed
16. 16If third-party payors do not continue to provide adequate coverage and reimbursement for the use of our products, it is unlikely that our products will be widely used, and our revenues will be negatively impacted
17. 17Our manufacturing operations, research and development activities, and corporate headquarters are currently based at a single location, which may subject us to a variety of risks
18. 18Product liability claims could damage our reputation or adversely affect our business
19. 19Product deficiencies could result in field actions, recalls, substantial costs and write-downs; these could also lead to the delay or termination of planned studies or future clinical trials, if any, and harm our reputation and our business and financial results
20. 20Any claims related to improper handling, storage or disposal of hazardous chemicals and biomaterials could be time-consuming and costly to address
21. 21Our international operations subject us to certain operating risks, which could adversely impact our results of operations and financial condition
22. 22In addition, several of the countries in which we sell our products are, to some degree, subject to political, economic, or social instability, and certain of such countries are or may in the future become the subject of U.S. or international sanctions
23. 23Changes in U.S. and international trade policies, particularly with respect to China, may adversely impact our business and operating results
24. 24We are subject to credit risk from our accounts receivable related to our product sales, which include sales within foreign countries that have recently experienced economic turmoil
25. 25Changes in U.S. and foreign tax laws could have a material adverse effect on our business, cash flow, results of operations or financial conditions
26. 26Our ability to use net operating loss carryforwards and certain other tax attributes may be subject to limitations
27. 27Our ability to maintain our competitive position depends on our ability to attract and retain highly qualified personnel
28. 28If we acquire other companies or businesses, we will be subject to risks that could hurt our business
29. 29Failure to protect our information technology infrastructure against cyber-based attacks, network security breaches, service interruptions, or data corruption could significantly disrupt our operations and adversely affect our business and operating results
30. 30Failure to protect the product and patient from cybersecurity risks associated with using the device could endanger patient safety and our ability to market the product

Risks Related to Regulation of Our Industry

1. 31Our business is subject to extensive government regulations that could make it more expensive and time-consuming to introduce new or improved products
2. 32Occupational Safety and Health Administration requirements
3. 33We are required to comply with medical device reporting, or MDR, requirements and must report certain malfunctions, deaths, and serious injuries associated with our products, which can result in voluntary corrective actions or agency enforcement actions
4. 34Our employees, independent contractors, principal investigators, consultants, commercial partners, and suppliers may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements
5. 35Our operations are, and will continue to be, directly and indirectly affected by various federal, state, and foreign healthcare laws, including, but not limited to, those described below
6. 36In Europe, we voluntarily withdrew our CE certificate under CE MDD in 2022 and terminated our relationship with our CE notified body to migrate from CE MDD to CE MDR, and failure to reinstate our CE certificate under CE MDR or could have a material adverse effect on our business
7. 37Prior weaknesses in our CE MDD regulatory regime and compliance with developing European Union medical device regulations, including the CE MDD, may limit our ability to market or sell products in European markets or to introduce new products into European markets

Risks Related to Our Intellectual Property

1. 38Many aspects of the SynCardia TAH are no longer protected by patents, and we may be unable to, in the long term, protect our products from competition through other means
2. 39redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive and/or infeasible
3. 40If we cease our commercial ties or contractual arrangements with either Bimba or Heitek Automation, we will be required to source crucial components for the C2 and Freedom Driver from an alternative supplier, which could have a negative impact on our business and operations if one is not found
4. 41We may be subject to claims that we or our employees have inadvertently or intentionally used or disclosed trade secrets or other proprietary information of former employers of our employees

Risks Related to Ownership of Our Securities

1. 42Our share price may be volatile, and purchasers of our securities could incur substantial losses
2. 43the other risks described in this “ Risk Factors ” section
3. 44Our 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 included in this Registration Statement for the fiscal year ended December 31, 2025
4. 45We do not intend to pay cash dividends for the foreseeable future. As a result, your ability to achieve a return on your investment will depend on appreciation in the market price of our common stock
5. 46Future issuances of common stock, or the perception that future issuances may occur, may cause the market price of common stock to decline, regardless of our operating performance
6. 47The exercise of outstanding warrants and stock options, and the sale of common stock upon exercise thereof, may adversely affect the trading price of our securities
7. 48The influx of any of these shares into the public market could potentially have a negative effect on the trading price of our common stock
8. 49We could be subject to securities class action or derivative litigation
9. 50Litigation Related to Trading of Our Securities
10. 51If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of common stock may decrease
11. 52An active trading market may not develop or be sustained
12. 53If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our common stock share price and trading volume could decline
13. 54Our Charter designates specific courts as the exclusive forum for substantially all stockholder litigation matters, which could limit the ability of our stockholders to obtain a favorable forum for disputes with us or our directors, officers or employees