Emmaus Life Sciences, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

NOTES PAYABLE (Tables)

NOTES PAYABLE (Tables)

12 Months Ended

Dec. 31, 2023

Notes payable consisted of the following at December 31, 2023 and 2022 (in thousands except for conversion price and underlying shares) excluding the revolving line of credit agreement with related party discussed below:


Year Issued	Interest Rate Range	Term of Notes	Conversion Price			Principal Outstanding December 31, 2023		Unamortized Discount December 31, 2023		Carrying Amount December 31, 2023			Shares Underlying Notes December 31, 2023
Notes payable
2013	10%	Due on demand		—		$	709	$	—	$	709			—
2022	10% - 12%	Due on demand		—			1,284		—		1,284			—
2023	10% - 57%	Due on demand - 56 months		—			6,337		115		6,222			—
						$	8,330	$	115	$	8,215			—
		Current				$	8,330	$	115	$	8,215			—
Notes payable - related parties
2020	12%	Due on demand		—			100		—		100			—
2021	12%	Due on demand		—			700		—		700			—
2022	6%-12%	Due on demand - 5 years		—			3,716		95		3,621			—
2023	10%-60%	Due on demand - 2 months		—			927		—		927			—
						$	5,443	$	95	$	5,348			—
		Current				$	3,122	$	—	$	3,122			—
		Non-current				$	2,321	$	95	$	2,226			—
Convertible notes payable
2021	2%	3 years	$	0.13	(b)		12,640		407		12,233			113,009,154
2023	13%	Due on demand	$	10.00	(a)		3,150		—		3,150			337,326
2023	10%	1 year	$	0.29			1,000		—		1,000			3,559,754
						$	16,790	$	407	$	16,383			116,906,234
		Current				$	16,790	$	407	$	16,383			116,906,234
		Grand Total				$	30,563	$	617	$	29,946			116,906,234

Year Issued	Interest Rate Range	Term of Notes	Conversion Price			Principal Outstanding December 31, 2022		Unamortized Discount December 31, 2022		Carrying Amount December 31, 2022			Shares Underlying Notes December 31, 2022
Notes payable
2013	10%	Due on demand		—		$	763	$	—	$	763			—
2021	11%	Due on demand - 2 years		—			2,843		—		2,843			—
2022	10% - 28%	Due on demand - 15 months		—			3,696		108	$	3,588			—
						$	7,302	$	108	$	7,194			—
		Current				$	6,919	$	105	$	6,814			—
		Non-current				$	383	$	3	$	380			—
Notes payable - related parties
2020	12%	Due on demand		—			100		—		100			—
2021	12%	Due on demand		—			700		—		700			—
2022	6%-12%	Due on demand - 5 years		—			5,026		175		4,913	(c)		—
						$	5,826	$	175	$	5,713			—
		Current				$	2,305	$	—	$	2,367			—
		Non-current				$	3,521	$	175	$	3,346			—
Convertible notes payable
2020	12%	3 years	$	10.00	(a)		3,150		—		3,150			326,655
2021	2%	3 years	$	0.37	(b)		14,140		2,635		11,505			41,318,094
						$	17,290	$	2,635	$	14,655			41,644,749
		Current				$	17,290	$	2,635	$	14,655			41,644,749
		Grand Total				$	30,418	$	2,918	$	27,562			41,644,749

(a)

This note is convertible into shares of EMI Holding, Inc., a wholly owned subsidiary of Emmaus Life Sciences, Inc.

(b)

The notes are convertible into shares of common stock of Emmaus Life Sciences, Inc. Beginning February 28, 2022, the note holders became entitled to call for redemption of the convertible notes payable at any time. Accordingly, the notes are classified as current liabilities at December 31, 2022.

(c)

Includes $62,000 of the fair value of embedded derivative.

Schedule of future contractual principal payments of notes payable

As of December 31, 2023, future contractual principal payments due on notes payable were as follows (in thousands):


Year Ending
2024		28,242
2025		—
2026		—
2027		2,321
Total	$	30,563

Schedule of fair value of conversion feature liabilities

The risk‑free interest rate is based on the implied yield available on U.S. Treasury issues with a term approximating the expected life of the options depending on the date of the grant and expected life of the respective options.


	January 12, 2023
Stock price	$	0.31
Exercise price	$	4.50
Expected term	5-6 years
Risk-free rate	3.51-3.53%
Dividend yield	—
Volatility	108.16-116.40%

Schedule of Fair Value Based Upon Assumptions

The fair values as of December 31, 2023 and December 31, 2022 were based upon following assumptions:


	December 31, 2023			December 31, 2022
Principal outstanding (South Korean won)	KRW 23.6 billion			KRW 26.5 billion
Stock price	KRW 873			KRW 1,015
Expected life (in years)		6.79			7.79
Selected yield		12.25	%		13.50	%
Expected volatility (Telcon common stock)		71.90	%		78.50	%
Risk-free interest rate (South Korea government bond)		3.16	%		3.74	%
Expected dividend yield		0.00	%		0.00	%
Conversion price	KRW705(US$0.54)			KRW1,068(US$0.85)

Conversion Feature Liabilities [Member] | Level 3 [Member]

Schedule of fair value of conversion feature liabilities

The following table sets forth the fair value of the conversion feature liability as of December 31, 2023 and December 31, 2022 (in thousands):


Convertible promissory notes	December 31, 2023			December 31, 2022
Balance, beginning of year	$	3,248		$	7,507
Change in fair value included in the statement of operations		(2,797	)		(4,259	)
Balance, end of year	$	451		$	3,248

Conversion Feature Liabilities [Member] | Convertible Promissory Notes [Member]

Schedule of Fair Value Based Upon Assumptions

The fair value as of December 31, 2023 and December 31, 2022 was based on upon following assumptions:


Convertible promissory notes	December 31, 2023			December 31, 2022
Stock price	$	0.10		$	0.26
Conversion price	$	0.13		$	0.37
Select yield		27.23	%		27.50	%
Expected volatility		50	%		50	%
Time until maturity (in years)		0.16			1.16
Dividend yield	—			—
Risk-free rate		5.51	%		4.68	%