Debt

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Debt

Note 10 — Debt

The fair value and face value principal outstanding of the Senior Convertible Notes as of the dates indicated are as follows:

	Contractual Maturity Date	Stated Interest Rate			Conversion Price per Share		Face Value Principal Outstanding		Fair Value
April 2022 Senior Convertible Note	April 4, 2025		7.875	%	$	75.00	$	17,602	$	18,800
September 2022 Senior Convertible Note	September 8, 2025		7.875	%	$	75.00		8,782		13,600
Lucid March 2023 Senior Convertible Note	March 21, 2025		7.875	%	$	5.00		10,936		13,140
Balance as of March 31, 2024							$	37,320	$	45,540

	Contractual Maturity Date	Stated Interest Rate			Conversion Price per Share		Face Value Principal Outstanding		Fair Value
April 2022 Senior Convertible Note	April 4, 2025		7.875	%	$	75.00	$	17,602	$	19,000
September 2022 Senior Convertible Note	September 6, 2025		7.875	%	$	75.00		9,062		11,250
Lucid March 2023 Senior Convertible Note	March 21, 2025		7.875	%	$	5.00		11,019		13,950
Balance as of December 31, 2023							$	37,683	$	44,200

The changes in the fair value of debt during the three month period ended March 31, 2024 is as follows:

	April 2022 Senior Convertible Note			September 2022 Senior Convertible Note			Lucid March 2023 Senior Convertible Note			Sum of Balance Sheet Fair Value Components			Other Income (expense)
Fair Value - December 31, 2023	$	19,000		$	11,250		$	13,950		$	44,200		$	—
Installment repayments – common stock		—			(280	)		(83	)		(363	)		—
Non-installment payments – common stock		—			(24	)		(436	)		(460	)		—
Change in fair value		(200	)		2,654			(291	)		2,163			(2,163	)
Fair Value at March 31, 2024	$	18,800		$	13,600		$	13,140		$	45,540
Other Income (Expense) - Change in fair value – three month period ended March 31, 2024													$	(2,163	)

The changes in the fair value of debt during the three month period ended March 31, 2023 is as follows:

	April 2022 Senior Convertible Note			September 2022 Senior Convertible Note		Lucid March 2023 Senior Convertible Note		Sum of Balance Sheet Fair Value Components			Other Income (expense)
Fair Value - December 31, 2022	$	22,000		$	11,650	$	—	$	33,650		$	—
Face value principal – issue date		—			—		11,111		11,111			—
Fair value adjustment – issue date		—			—		789		789			(789	)
Installment repayments – common stock		(1,335	)		—		—		(1,335	)		—
Non-installment payments – common stock		(166	)		—		—		(166	)		—
Change in fair value		251			—		—		251			(251	)
Fair Value at March 31, 2023	$	20,750		$	11,650	$	11,900	$	44,300
Other Income (Expense) - Change in fair value – three month period ended March 31, 2023											$	(1,040	)

Note 10 — Debt - continued

PAVmed - Senior Secured Convertible Notes

The Company entered into a Securities Purchase Agreement (“SPA”) dated March 31, 2022, with an accredited institutional investor (“Investor”, “Lender”, and /or “Holder”), wherein, the Company agreed to sell, and the Investor agreed to purchase an aggregate of $50.0 million face value principal of debt - comprised of: an initial issuance of $27.5 million face value principal; and up to an additional $22.5 million of face value principal (upon the satisfaction of certain conditions). The debt was issued in a registered direct offering under the Company’s effective shelf registration statement.

Under the SPA, the Company issued a Senior Secured Convertible Note dated April 4, 2022, referred to herein as the “April 2022 Senior Convertible Note”, with such note having a $27.5 million face value principal, a 7.875% annual stated interest rate, a contractual conversion price of $75.00 per share of the Company’s common stock (subject to standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction), and a contractual maturity date of April 4, 2024, which maturity date the investor agreed to extend by one year, to April 4, 2025. The April 2022 Senior Convertible Note may be converted into shares of common stock of the Company at the Holder’s election.

Under the same SPA, the Company issued an additional Senior Secured Convertible Note dated September 8, 2022, referred to herein as the “September 2022 Senior Convertible Note”, with such note having a $11.25 million face value principal, a 7.875% annual stated interest rate, a contractual conversion price of $75.00 per share of the Company’s common stock (subject to standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction), and a contractual maturity date of September 6, 2024, which maturity date the investor agreed to extend by one year, to September 8, 2025. The September 2022 Senior Convertible Note may be converted into shares of common stock of the Company at the Holder’s election.

The Company has agreed to reduce temporarily, and the Investor has consented to reducing temporarily, the contractual conversion price under the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note to equal to 82.5% of the two lowest VWAPs during the last 10 trading days preceding the date of conversion, subject to a conversion floor price of $1.00, during the period from April 23, 2024 through May 7, 2024 (which period has been extended to August 6, 2024); provided that the aggregate amount of conversions under the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note during such period may not exceed $2,000.

The Company is subject to financial covenants requiring: (i) a minimum of $8.0 million of available cash at all times; (ii) the ratio of (a) the outstanding principal amount of the total senior convertible notes outstanding, accrued and unpaid interest thereon and accrued and unpaid late charges to (b) the Company’s average market capitalization over the prior ten trading days, to not exceed 30% (the “Debt to Market Cap Ratio Test”); and (iii) the Company’s market capitalization to at no time be less than $75 million (the “Market Cap Test” and, together with the Debt to Market Cap Ratio Test, the “Financial Tests”). From time to time from and after December 1, 2023 through March 12, 2024, the Company was not in compliance with the Financial Tests. As of March 12, 2024, the Investor agreed to waive any such non-compliance during such time period and thereafter through August 31, 2024.

In the three months ended March 31, 2024, in consideration of the covenant waiver and maturity extensions discussed above, the Company agreed to pay the holder of the notes $2,000 in cash (or in such other form as may be mutually agreed in writing) by April 25, 2024, which has been extended to June 15, 2024. The covenant waiver and maturity extension fee was recognized as debt modification expense on the Company’s unaudited condensed consolidated statement of operations, and currently included in accrued expenses and other current liabilities on the Company’s unaudited condensed consolidated balance sheets as of March 31, 2024.

The April 2022 Senior Convertible Note and September 2022 Senior Convertible Note installment payments may be made in shares of PAVmed common stock at a conversion price that is the lower of the contractual conversion price and 82.5% of the two lowest VWAPs during the last 10 trading days preceding the date of conversion, subject to a conversion price floor of $2.70. The notes are also subject to certain provisions that may require redemption upon the occurrence of certain events, including an event of default, a change of control, or certain equity issuances.

In the three month period ended March 31, 2024, approximately $280 of principal repayments along with approximately $24 of interest expense thereon, were settled through the issuance of 112,461 shares of common stock of the Company, with such shares having a fair value of approximately $307 (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company). In addition the Company paid $198 in cash related to acceleration floor payments on these notes related to the conversion price being below $2.70, which is included in debt extinguishment loss on the Company’s unaudited condensed consolidated statements of operations. The conversions and cash paid resulted in a debt extinguishment loss of $202 in the three month period ended March 31, 2024. Subsequent to March 31, 2024, as of May 9, 2024, approximately $280 of principal repayments along with approximately $24 of interest expense thereon, was settled through the issuance of 112,597 shares of common stock of the Company, with such shares having a fair value of approximately $260, and cash payment related to floor acceleration payment of $199 (with such fair value measured as the respective conversion date quoted closing price of the common stock of the Company).

Note 10 — Debt - continued

Lucid Diagnostics - Senior Secured Convertible Note

Lucid Diagnostics entered into a Securities Purchase Agreement (“Lucid SPA”) dated March 13, 2023, with an accredited institutional investor (“Investor”, “Lender”, and /or “Holder”), wherein, Lucid agreed to sell, and the Investor agreed to purchase an aggregate of $11.1 million face value principal of debt. The debt was issued in a registered direct offering under Lucid’s effective shelf registration statement.

Under the SPA dated March 13, 2023, Lucid issued a Senior Secured Convertible Note dated March 21, 2023, referred to herein as the “Lucid March 2023 Senior Convertible Note”, with such note having a $11.1 million face value principal, a 7.875% annual stated interest rate, a contractual conversion price of $5.00 per share of Lucid’s common stock (subject to standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction), and a contractual maturity date of March 21, 2025. The Lucid March 2023 Senior Convertible Note may be converted into shares of common stock of Lucid at the Holder’s election.

The Lucid March 2023 Senior Convertible Note proceeds were $9.925 million after deducting a $1.186 million lender fee and offering costs. The lender fee and offering costs were recognized as of the March 21, 2023 issue date as a current period expense in other income (expense) in the Company’s unaudited condensed consolidated statement of operations.

During the period from March 21, 2023 to September 20, 2023, Lucid was required to pay interest expense only (on the $11.1 million face value principal), at 7.875% per annum, computed on a 360 day year. Lucid paid in cash interest expense of $24 for the three month period ended March 31, 2023.

Commencing September 21, 2023, and then on each of the successive first and tenth trading day of each month thereafter through to and including March 14, 2025 (each referred to as an “Installment Date”); and on the March 21, 2025 maturity date, Lucid is required to make a principal repayment of $292 together with accrued interest thereon, with such 38 payments referred to herein as the “Installment Amount”, settled in shares of common stock of Lucid, subject to customary equity conditions, including minimum share price and volume thresholds, or at the election of Lucid, in cash, in whole or in part.

Note 10 — Debt - continued

In addition to the Installment Amount repayments, the Holder may elect to accelerate the conversion of future Installment Amount repayments, and interest thereon, subject to certain restrictions, as defined, utilizing the then current conversion price of the most recent Installment Date conversion price.

The payment of all amounts due and payable under this senior convertible note is guaranteed by Lucid’s subsidiaries; and the obligations under this senior convertible note are secured by all of the assets of Lucid and its subsidiaries.

Lucid is subject to certain customary affirmative and negative covenants regarding the rank of the note, along with the incurrence of further indebtedness, the existence of liens, the repayment of indebtedness and the making of investments, the payment of cash in respect of dividends, distributions or redemptions, the transfer of assets, the maturity of other indebtedness, and transactions with affiliates, among other customary matters.

Lucid is subject to financial covenants requiring: (i) a minimum of $5.0 million of available cash at all times; (ii) the ratio of (a) the outstanding principal amount of the total senior convertible notes outstanding, accrued and unpaid interest thereon and accrued and unpaid late charges to (b) Lucid’s average market capitalization over the prior ten trading days, as of the last day of any fiscal quarter commencing with September 30, 2023, to not exceed 30%; and (iii) Lucid’s market capitalization to at no time be less than $30 million. As of March 31, 2024, the Company was in compliance, and as of the date hereof, the Company is in compliance, with these financial covenants.

The Lucid March 2023 Senior Convertible Note installment payments may be made in shares of Lucid Diagnostics common stock at a conversion price that is the lower of the contractual conversion price and 82.5% of the two lowest VWAPs during the last 10 trading days preceding the date of conversion, subject to a conversion price floor of $0.30. The notes are also subject to certain provisions that may require redemption upon the occurrence of an event of default, a change of control, or certain equity issuances.

In the three month period ended March 31, 2024, approximately $83 of principal repayments along with approximately $436 of interest expense thereon, were settled through the issuance of 543,298 shares of common stock of Lucid, with such shares having a fair value of approximately $686 (with such fair value measured as the respective conversion date quoted closing price of the common stock of Lucid). The conversions resulted in a debt extinguishment loss of $167 in the three month period ended March 31, 2024. Subsequent to March 31, 2024, as of May 9, 2024, approximately $612 of principal repayments along with approximately $110 of interest expense thereon, was settled through the issuance of 1,139,851 shares of common stock of Lucid, with such shares having a fair value of approximately $1,037 (with such fair value measured as the respective conversion date quoted closing price of the common stock of Lucid).

During the three month periods ended March 31, 2024 and 2023, the Company recognized debt extinguishment losses in total of approximately $369 and $525, respectively, in connection with issuing common stock for principal repayments on convertible debt mentioned above.

See Note 9, Financial Instruments Fair Value Measurements, for a further discussion of fair value assumptions.