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Note 13 - Share-based Compensation | 12 Months Ended
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Dec. 31, 2025
Notes to Financial Statements |
Share-Based Payment Arrangement [Text Block] | 13. Share-Based Compensation Amended and Restated 2019 Omnibus Incentive Plan The DiaMedica Therapeutics Inc. Amended and Restated 2019 Omnibus Incentive Plan (as amended from time to time, the 2019 Plan) was adopted by the Board of Directors (Board) on March 14, 2019 and approved by our shareholders at our 2019 Annual General Meeting of Shareholders held on May 22, 2019. Subsequent amendments to the plan, comprised principally of increasing the authorized shares under the plan, were approved by our shareholders at our 2022 and 2024 Annual General Meetings of Shareholders. The 2019 Plan permits the Board, or a committee or subcommittee thereof, to grant to the Company’s eligible employees, non-employee directors and certain consultants non-statutory and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units (RSUs), deferred stock units (DSUs), performance awards, non-employee director awards and other share-based awards. We grant options to purchase common shares under the 2019 Plan at no less than the fair market value of the underlying common shares as of the date of grant. Options granted to employees and non-employee directors have a maximum term of ten years and generally vest over one to four years. Options granted to non-employees have a maximum term of five years and generally vest over one year. Subject to adjustment as provided in the 2019 Plan, the maximum number of the Company’s common shares authorized for issuance under the 2019 Plan is 7,000,000 shares. As of December 31, 2025, options to purchase an aggregate of 5,402,444 common shares were outstanding and 164,770 common shares were reserved for issuance upon settlement of DSUs under the 2019 Plan. 2021 Employment Inducement Incentive Plan On December 3, 2021, the Board adopted the DiaMedica Therapeutics Inc. 2021 Employment Inducement Incentive Plan (Inducement Plan) to facilitate the granting of equity awards as an inducement material to new employees joining the Company. The Inducement Plan was adopted without shareholder approval pursuant to Nasdaq Listing Rule 5635(c)(4) and is administered by the Compensation Committee of the Board of Directors. The Board reserved 1,000,000 common shares of the Company for issuance under the Inducement Plan, which permits the grant of non-statutory options, stock appreciation rights, restricted stock awards, restricted stock units, performance awards and other share-based awards, to eligible recipients. The only persons eligible to receive awards under the Inducement Plan are individuals who are new employees and satisfy the standards for inducement grants under Nasdaq Listing Rule 5635(c)(4) or 5635(c)(3), as applicable. Also, on December 3, 2021, the Compensation Committee adopted a form of notice of option grant and option award agreement for use under the Inducement Plan, which contains terms substantially identical to the form of notice of option grant and option award agreement for use under the shareholder-approved 2019 Plan. The Inducement Plan has a term of 10 years. The share reserve under the Inducement Plan may be increased at the discretion of and approval by the Board and, on July 31, 2025, the Board increased the number of common shares reserved for issuance under the plan to 2,000,000. As of December 31, 2025, options to purchase an aggregate of 1,100,000 common shares were outstanding under the Inducement Plan. Prior stock option plan Our Board of Directors ceased granting awards under the DiaMedica Therapeutics Inc. Stock Option Plan, Amended and Restated November 6, 2018 (Prior Plan) upon receipt of the shareholder approval of the 2019 Plan. Awards outstanding under the Prior Plan remain outstanding in accordance with and pursuant to the terms thereof. Options granted under the Prior Plan have terms similar to those used under the 2019 Plan. As of December 31, 2025, options to purchase an aggregate of 362,410 common shares were outstanding under the Prior Plan. Prior deferred stock unit plan Our Board of Directors ended participation in the DiaMedica Therapeutics Inc. Amended and Restated Deferred Stock Unit Plan (Prior DSU Plan) upon receipt of the shareholder approval of the 2019 Plan. Awards outstanding under the Prior DSU Plan remain outstanding in accordance with and pursuant to the terms thereof. As of December 31, 2025, there were 9,745 common shares reserved for issuance upon settlement of DSUs outstanding under the Prior DSU Plan. Stock options Share-based compensation expense for each of the periods presented is as follows (in thousands):
|  | December 31, 2025 |  |  | December 31, 2024 |
General and administrative |  | $ | 2,526 |  |  | $ | 1,464 |
Research and development |  |  | 1,320 |  |  |  | 621 |
Total share-based compensation |  | $ | 3,846 |  |  | $ | 2,085 |
We recognize share-based compensation for options awards based on the fair value of each award as estimated using the Black-Scholes option valuation model. Ultimately, the actual expense recognized over the vesting period will only be for those options that actually vest. A summary of option activity is as follows (in thousands except share and per share amounts):
|  | Shares Underlying Options |  |  | Weighted Average Exercise Price Per Share |  |  | Aggregate Intrinsic Value |
Balances as of December 31, 2023 |  |  | 3,871,013 |  |  | $ | 3.61 |  |  | $ | 832 |
Granted |  |  | 1,864,775 |  |  |  | 3.03 |  |  |  |  |
Forfeited |  |  | (531,350 | ) |  |  | 2.96 |  |  |  |  |
Expired/cancelled |  |  | (395,000 | ) |  |  | 5.08 |  |  |  |  |
Exercised |  |  | (117,000 | ) |  |  | 2.19 |  |  |  |  |
Balances as of December 31, 2024 |  |  | 4,692,438 |  |  | $ | 3.33 |  |  | $ | 10,243 |
Granted |  |  | 3,433,416 |  |  |  | 4.88 |  |  |  |  |
Forfeited |  |  | (830,747 | ) |  |  | 3.80 |  |  |  |  |
Exercised |  |  | (415,253 | ) |  |  | 2.43 |  |  |  |  |
Expired/cancelled |  |  | (15,000 | ) |  |  | 5.02 |  |  |  |  |
Balances as of December 31, 2025 |  |  | 6,864,854 |  |  | $ | 4.11 |  |  | $ | 26,479 |
A summary of the status of our unvested shares underlying options during the year ended and as of December 31, 2025 is as follows:
|  | Shares Underlying Options |  |  | Weighted Average Grant Date Fair Value Per Share |
Unvested as of December 31, 2024 |  |  | 2,371,983 |  |  | $ | 2.18 |
Granted |  |  | 3,433,416 |  |  |  | 3.30 |
Vested |  |  | (1,143,530 | ) |  |  | 2.28 |
Forfeited |  |  | (801,372 | ) |  |  | 2.57 |
Unvested as of December 31, 2025 |  |  | 3,860,497 |  |  | $ | 3.06 |
Information about stock options outstanding, vested and expected to vest as of December 31, 2025, is as follows:
|  |  |  |  | Outstanding, Vested and Expected to Vest |  |  | Options Vested and Exercisable |
Per Share Exercise Price |  |  | Shares |  |  | Weighted Average Remaining Contractual Life (Years) |  |  | Weighted Average Exercise Price |  |  | Options Exercisable |  |  | Weighted Average Remaining Contractual Life (Years) |
$1.00 | - | $1.99 |  |  |  | 51,443 |  |  |  | 7.1 |  |  | $ | 1.64 |  |  |  | 42,989 |  |  |  | 1.66 |
$2.00 | - | $2.99 |  |  |  | 2,278,895 |  |  |  | 6.7 |  |  |  | 2.73 |  |  |  | 1,515,350 |  |  |  | 2.70 |
$3.00 | - | $3.99 |  |  |  | 311,893 |  |  |  | 4.7 |  |  |  | 3.56 |  |  |  | 247,519 |  |  |  | 3.66 |
$4.00 | - | $4.99 |  |  |  | 2,917,069 |  |  |  | 7.7 |  |  |  | 4.32 |  |  |  | 808,626 |  |  |  | 4.51 |
$5.00 | - | $5.99 |  |  |  | 549,287 |  |  |  | 7.6 |  |  |  | 5.16 |  |  |  | 256,787 |  |  |  | 5.03 |
$6.00 | - | $16.00 |  |  |  | 756,267 |  |  |  | 8.5 |  |  |  | 7.14 |  |  |  | 133,086 |  |  |  | 7.97 |
|  |  |  |  |  | 6,864,854 |  |  |  | 7.3 |  |  | $ | 4.11 |  |  |  | 3,004,357 |  |  |  | 3.68 |
The cumulative grant date fair value of employee options vested during the years ended December 31, 2025 and 2024 was $2.6 million and $1.5 million, respectively. A total of 415,253 and 117,000 options were exercised during the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, total compensation expense related to unvested employee stock options not yet recognized was $10.6 million, which is expected to be allocated to expenses over a weighted-average period of 3.1 years. The assumptions used in calculating the fair value under the Black-Scholes option valuation model are set forth in the following table for options issued by the Company for the years ended December 31, 2025 and 2024:
|  | 2025 |  |  | 2024 |
Common share fair value |  | $4.07 | – | $8.67 |  |  | $2.40 | – | $5.38 |
Risk-free interest rate |  | 3.7 | – | 4.4% |  |  | 3.8 | – | 4.5% |
Expected dividend yield |  |  | 0% |  |  |  |  | 0% |  |
Expected option life (years) |  | 5.0 | – | 5.6 |  |  | 5.5 | – | 5.7 |
Expected stock price volatility |  | 75.7 | – | 83.3% |  |  | 83.0 | – | 124.1% |
Deferred stock units and restricted stock units Under our non-employee director compensation program, non-employee directors may elect to receive RSUs or DSUs in lieu of all or a portion of the annual cash retainers payable to such director. Each RSU or DSU represents the right to receive one common share. These recipients receive a number of RSUs or DSUs equal to the amount of the elected portion of the annual cash retainers divided by the 10-trading day average closing sale price of our common shares as determined on the third business day prior to the anticipated grant date of the award. These annual RSU and DSU grants vest quarterly over one year, conditioned on continuous service. The cost of the RSUs and DSUs is measured and recognized based on the fair market value of our common shares on the date of grant. RSUs will be settled immediately upon vesting and DSU awards will be settled following a separation from service by such director. There were 174,515 and 284,886 vested DSUs outstanding under our share-based compensation plans as of December 31, 2025 and 2024, respectively. During 2025, 35,215 common shares were issued upon the vesting and settlement of RSUs. During 2024, 23,660 common shares were issued upon the vesting and settlement of RSUs. There were no unvested DSUs or RSUs as of December 31, 2025 and 2024.

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