Emmaus Life Sciences, Inc. Quarterly report pursuant to Section 13 or 15(d)

NOTES PAYABLE (Tables)

3 Months Ended

Mar. 31, 2020

Notes payable consisted of the following at March 31, 2020 and December 31, 2019 (in thousands):

Year Issued	Interest Rate Range	Term of Notes	Conversion Price			Principal Outstanding March 31, 2020		Discount Amount March 31, 2020		Carrying Amount March 31, 2020		Shares Underlying March 31, 2020
Notes payable
2013	10%	Due on demand		—		$	925	$	—	$	925		—
2019	11%	Due on demand - 6 months		—			2,835		—		2,835		—
2020	11%	Due on demand		—			194		—		194		—
						$	3,954	$	—	$	3,954	$	—
		Current				$	3,954	$	—	$	3,954		—
Notes payable - related parties
2016	10%	Due on demand		—		$	20	$	—	$	20		—
2019	10%	Due on demand		—			14		—		14		—
						$	34	$	—	$	34		—
		Current				$	34	$	—	$	34		—
Convertible debentures
2019	10%	18 months	$2.00-$9.52		(a)	$	9,200	$	2,406	$	6,794		4,638,333
						$	9,200	$	2,406	$	6,794		4,638,333
		Current				$	8,000	$	2,092	$	5,908		4,033,333
		Non-current				$	1,200	$	314	$	886		605,000
Convertible note payable
2020	12%	3 years	$	10.00	(b)	$	3,150	$	—	$	3,150		316,467
						$	3,150	$	—	$	3,150		316,467
		Current				$	3,150	$	—	$	3,150		316,467
		Total				$	16,338	$	2,406	$	13,932		4,954,800

Year Issued	Interest Rate Range	Term of Notes	Conversion Price			Principal Outstanding December 31, 2019		Discount Amount December 31, 2019		Carrying Amount December 31, 2019		Shares Underlying Notes December 31, 2019
Notes payable
2013	10%	Due on demand		—		$	920	$	—	$	920		—
2019	11%	Due on demand - 6 months		—			2,829		—		2,829		—
						$	3,749	$	—	$	3,749	$	—
		Current				$	3,749	$	—	$	3,749		—
Notes payable - related parties
2016	10%	Due on demand		—		$	20	$	—	$	20		—
2018	11%	Due on demand		—			159		—		159		—
2019	10%	Due on demand		—			14		—		14		—
						$	193	$	—	$	193		—
		Current				$	193	$	—	$	193		—
Convertible debentures
2019	10%	18 months	$2.00-$9.52		(a)	$	10,200	$	3,185		7,015		1,080,415
						$	10,200	$	3,185	$	7,015		1,080,415
		Current				$	10,200	$	3,185	$	7,015		1,080,415
Convertible note payable
2018	10%	2 years	$	10.00	(b)	$	3,000	$	5	$	2,995		363,876
						$	3,000	$	5	$	2,995		363,876
		Current				$	3,000	$	5	$	2,995		363,876
		Total				$	17,142	$	3,190	$	13,952		1,444,291

^(a)	^{The notes are convertible to Emmaus Life Sciences, Inc. shares}^.

^(b)	^{The notes are convertible to EMI Holding, Inc. shares}^.

As of March 31, 2020, future contractual principal payments due on notes payable were as follows:

The fair values as of agreement date and the anti-dilution adjustments date were based upon following assumptions:

	February 28, 2020 (Anti-dilution adjustment date)			February 21, 2020 (Amendment date)
Exercise price	$	2.00		$	3.00
Common stock fair value	$	1.60		$	1.89
Volatility		93.00	%		92.00	%
Risk-free rate		0.86	%		1.29	%
Expected life (in years)		3.54			3.56

The following table sets forth the fair value of the conversion feature liabilities as of March 31, 2020 and December 31, 2019 (in thousands):

	Three Months Ended		Year ended
Conversion feature liabilities — Amended and Restated 10% Senior Secured Convertible Debentures	March 31, 2020		December 31, 2019
Balance, beginning of period	$	1	$	—
Fair value at issuance date		—		132
Fair value at debt modification date		118		—
Change in fair value included in the statement of comprehensive (income) loss		29		(131	)
Balance, end of period	$	148	$	1

The fair values as of March 31, 2020, the February 21, 2020 modification date and December 31, 2019 were based upon following assumptions:

	March 31, 2020			February 21, 2020 (Modification date)			December 31, 2019
Stock price	$	1.20		$	1.89		$	1.97
Conversion price	$	2.00		$	3.00		$	9.52
Selected yield		21.09	%		19.12	%		16.77	%
Expected volatility (peer group)		90	%		65	%		50	%
Expected life (in years)		1.06			1.16			0.81
Expected dividend yield		—			—			—
Risk‑free rate	Term structure			Term structure			Term structure