Four months after issuing Senior Convertible Notes, PAVmed Inc. (PAVM), a medical device firm, had already run afoul of the agreement’s covenants. In addition to maintaining at least $8 million in cash, PAVmed agreed its Debt to Market Cap Ratio would not exceed 30%. In its latest quarterly filing, PAVmed revealed it had violated the Debt to Market Cap Ratio covenant as of June 30, 2022.

It’s not the first time PAVmed has violated the covenants required of the April 2022 Senior Convertible Notes. The filing also reveals additional breaches though doesn’t specifically quantify the violations:

“The Company is currently in compliance with these financial covenants, although from time to time since the date of issuance of the April 2022 Senior Convertible Note through August 10, 2022 (including, in the case of the Debt to Market Cap Ratio Test, as of June 30, 2022), the Company was not in compliance with the Financial Tests.”

In return for a waiver, the holder of the April 2022 Senior Convertible Note was permitted to convert up to $5 million of the face value principal of the April 2022 Senior Convertible Note at $0.18 per share. PAVmed shares traded at $1.82 on August 10th, the date of the conversion. The note holder received the shares at a 90.1% discount.

The convertible note was settled through the issuance of more than 3 million shares, or approximately 3.4% of shares outstanding, with a fair value of $5.46 million.