Note 9 — Debt

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

The changes in the fair value of debt during the three and six months ended June 30, 2026 is as follows:

The changes in the fair value of debt during the three and six months ended June 30, 2025 is as follows:
 

PAVmed - Senior Secured Convertible Notes

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. On November 15, 2024, the Company entered into an Exchange Agreement (the “Debt Exchange Agreement”) with the holder of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note (as defined below). As described below, the April 2022 Senior Convertible Note was satisfied in full in connection with the consummation in January 2025 of the transactions contemplated by the Debt Exchange Agreement.

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 $2,250.00 per share (which conversion price, in connection with the Exchange, was reduced to $32.04 per share as of January 17, 2025) of the Company’s common stock. 

Concurrent with the Series D Preferred Stock Offering (as defined in Note 11, Preferred Stock), the Company redeemed all 16,962 shares of Series C Preferred Stock outstanding and refinanced all $8,415 in principal and interest of its September 2022 Senior Convertible Note, in consideration of a cash payment to the holder of approximately $22,346 (which was made using proceeds from the sale of the Series D Preferred Stock), the issuance to the holder of an amended and restated 2022 Note (the “2026 Note”) with a principal amount of $15.0 million face value principal and granted the holder the right to receive from the Company 300,000 common shares of Lucid ("Rights").

The total consideration transferred in the concurrent transactions was $37,721, consisting of (i) cash consideration of $22,346, (ii) the fair value of the 2026 Note of $15,000, and (iii) the fair value of the Rights of $375 (discussed below). The total consideration was allocated between the extinguishment of the September 2022 Senior Convertible Note and the redemption of the Series C Preferred Stock based on their relative fair values at the redemption date. The relative fair values were determined on February 3, 2026, based on 132.5% of the principal and interest outstanding of the September 2022 Senior Convertible Note and 132.5% of the stated value of the Series C Preferred Stock. The relative fair values were determined to be approximately 30% for the September 2022 Senior Convertible Note and 70% for the Series C Preferred Stock. 

The September 2022 Senior Convertible Note, which had an estimated fair value of $11,149, was allocated total consideration of approximately $11,261, including approximately $112 of the Rights value allocation, resulting in a debt extinguishment loss of $3,422 during the six months ended June 30, 2026. The Series C Preferred Stock, which had an estimated fair value of $26,197, was allocated total consideration of approximately $26,460, including approximately $263 of the Rights value allocation. The excess of the consideration allocated to the Series C Preferred Stock redemption over its carrying value of $6,689 was recognized as a deemed dividend to preferred stockholders in the period and included in the calculation of net income (loss) attributable to common stockholders for purposes of net earnings (loss) per share in the accompanying unaudited condensed consolidated statements of operations for six months ended June 30, 2026.

The key terms of the 2026 Note are as follows:

The 2026 Note accrues interest at a rate of 15.0% per annum, payable in cash quarterly in arrears, and matures on February 3, 2029 (the “2026 Note Maturity Date”), subject to the right of the noteholders to extend the 2026 Note maturity date under certain circumstances. The 2026 Note is required to be senior to all the Company’s other indebtedness, other than certain permitted indebtedness. The 2026 Note is secured by all existing and future assets of the Company and its subsidiaries (but not any existing or future assets of the Company’s subsidiary Lucid), pursuant to the existing security agreement by and between the Company and the Holder.

At any time, the Company may redeem all, but not less than all, of the 2026 Note, in cash, at a price equal to the sum of the Conversion Amount (as defined below) plus the amount of additional interest that would accrue under the 2026 Note assuming that the original outstanding principal of the 2026 Note remained outstanding through and including the 2026 Note Maturity Date (or, if earlier, the twenty-four month anniversary of such date) (the “Make-Whole Amount”).

 In connection with a Change of Control (as defined in the 2026 Note), a noteholder may require us to redeem all, or any portion, of the 2026 Note, in cash, at a price equal to the sum of the Conversion Amount plus the Make-Whole Amount. In connection with an Event of Default (as described below), the noteholder may require the Company to redeem all or any portion of the 2026 Note, in cash, at a price equal to 115% of the sum of the Conversion Amount plus the Make-Whole Amount. Upon the occurrence of certain Events of Default related to bankruptcy, the Company shall immediately redeem all of the 2026 Note, in cash, at the same redemption price.

The 2026 Note provides for certain Events of Default, including, among other things, any breach of the covenants described below and any failure of both Lishan Aklog, M.D., the Company’s Chairman and Chief Executive Officer, to serve as its Chief Executive Officer and Dennis McGrath, the Company’s President and Chief Financial Officer, to serve as its Chief Executive Officer or Chief Financial Officer.

Under the 2026 Note, the Company is subject to certain customary affirmative and negative covenants regarding the rank of the 2026 Note, the incurrence of 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, transactions with affiliates, changes in collateral and controlled accounts, among other customary matters. The Company also is subject to financial covenants requiring that (i) the amount of the Company’s available cash will equal or exceed $5.0 million as of each Measurement Date (as defined in the 2026 Note) (or, for any Measurement Date on or after July 1, 2026, $8.0 million) (the “Minimum Cash Covenant”), and (ii) as of each Measurement Date, the ratio of (a) the outstanding value of the 2026 Note to (b) the average VWAP of the shares of Lucid’s common stock held by the Company for the preceding 10 business days, will not exceed 65% (or, for any Measurement Date on or after July 1, 2026, 50%), provided that in no event shall the value of the shares of Lucid’s common stock held by the Company have a value of less than $20.0 million. Effective as of June 30, 2026, the Company and the Holder agreed to amend the Minimum Cash Covenant under the 2026 Note to provide that the amount of the Company’s available cash will equal or exceed $2.5 million as of each Measurement Date (or, for any Measurement Date on or after September 15, 2026, $8.0 million), provided that the amendment will be deemed null and void unless by August 25, 2026, the Company is able to deposit $5 million in a blocked account formed for the benefit of the Holder. Accordingly, the Company was in compliance with all covenants under the 2026 Note as of June 30, 2026. 

Any portion of the principal amount of the 2026 Note, plus accrued and unpaid interest and any late charges thereon or other charges due (the “Conversion Amount”), is convertible at any time, in whole or in part, at the noteholder’s option, into shares of the Company’s common stock at an initial fixed conversion price of $450.00 per share, subject to certain adjustments. A noteholder will not have the right to convert any portion of the 2026 Note, to the extent that, after giving effect to such conversion, the noteholder (together with certain of its affiliates and other related parties) would beneficially own in excess of 4.99% of the shares of the Company’s common stock outstanding immediately after giving effect to such conversion. The noteholder may from time to time increase the maximum percentage to 9.99%, provided that any such increase will not be effective until the 61st day after delivery of a notice to us of such increase.

In addition, under the 2026 Note, the Company granted the Holder the right to receive from the Company 300,000 shares of Lucid’s common stock (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events), upon the earliest of (x) the Maturity Date, (y) the date the 2026 Note no longer remains outstanding and (z) such earlier date as the Company shall notify the Holder in writing, subject to certain beneficial ownership limitations. The obligation is indexed to the fair value of Lucid’s common stock and will be settled in shares. At issuance, the Company recognized a liability related to an obligation to settle 300,000 shares of Lucid. The liability is subsequently measured at fair value, based on the quoted market price of the subsidiary’s common stock (Level 1 input within the fair value hierarchy), with changes in fair value recognized in earnings.

As of the issuance date, the fair value of the Rights was $375, included in rights liability, on the accompanying unaudited condensed consolidated balance sheets, based on Lucid’s stock price of $1.25 per share. As of  June 30, 2026, the fair value of the Rights decreased to $321, based on a stock price of $1.07 per share. The Company recognized a $54 decrease for the change in fair value of the Rights which is included in change in fair value - rights liability, in the accompanying unaudited condensed consolidated statements of operations for six months ended June 30, 2026.

Debt Exchange Agreement

On November 15, 2024, the Company entered into the Debt Exchange Agreement with the holder of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note. The Debt Exchange Agreement provided for the exchange of $22.3 million in principal amount of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note and interest thereon for 22,347 shares of Series C Convertible Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”), of the Company. On January 17, 2025, the parties consummated the transactions contemplated by the Debt Exchange Agreement. Following consummation of the transactions contemplated by the Debt Exchange Agreement, the April 2022 Senior Convertible Note was satisfied in full, and the outstanding principal balance of the remaining September 2022 Senior Convertible Note was approximately $6.6 million.

On November 20, 2024, the Company entered into a Securities Purchase Agreement (the “Series C Securities Purchase Agreement”) with the Holder of the April 2022 Senior Convertible Note and the September 2022 Senior Convertible Note. The Series C Securities Purchase Agreement provided for the purchase of 2,653 shares of Series C Preferred Stock at a price of $1,000 per share, with the purchase price to be satisfied through the cancellation of $2.6 million of certain unsecured debt obligations owed by the Company to the holder (the “Purchase”). On January 24, 2025, after satisfaction of all conditions to closing, the parties consummated the Purchase.

Concurrent with the Series D Preferred Stock Offering, the Debt Exchange Agreement was terminated and the September 2022 Senior Convertible Note, as amended by the Debt Exchange Agreement, was amended and restated in its entirety by the issuance of the 2026 Note. 

During the six months ended June 30, 2025, the Company recognized debt extinguishment losses in total of approximately $58, in connection with the Company issuing shares of its common stock for principal repayments on convertible debt mentioned above.

See Note 8, Financial Instruments Fair Value Measurements, for a further discussion of fair value assumptions.