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

Quarterly report pursuant to Section 13 or 15(d)

NOTES PAYABLE (Tables)

NOTES PAYABLE (Tables)

3 Months Ended

Mar. 31, 2024

Notes payable consisted of the following at March 31, 2024 and December 31, 2023 (in thousands except for number of underlying shares):


Year Issued	Interest Rate Range	Term of Notes	Conversion Price			Principal Outstanding March 31, 2024		Unamortized Discount March 31, 2024		Carrying Amount March 31, 2024		Underlying Shares March 31, 2024
Notes payable
2013	10%	Due on demand		—		$	661	$	—	$	661		—
2022	10%-12%	Due on demand		—			1,264		—		1,264		—
2023	11%-40%	Due on demand - 32 weeks		—			4,428		33		4,395		—
2024	30%	2 month		—			1,400		—		1,400		—
						$	7,753	$	33	$	7,720		—
		Current				$	7,753	$	33	$	7,720		—
Notes payable - related parties
2020	12%	Due on demand		—			100		—		100		—
2021	12%	Due on demand		—			700		—		700		—
2022	10%-12%	Due on demand - 5 years		—			3,716		90		3,626		—
2023	10%-60%	Due on demand - 2 month		—			577		—		577
						$	5,093	$	90	$	5,003		—
		Current				$	2,772	$	—	$	2,772		—
		Non-current				$	2,321	$	90	$	2,231		—
Convertible notes payable
2021	10%	Due on demand	$	0.13	(b)		1,380		—		1,380		12,605,099
2023	12%	6 months	$	10.00	(a)		3,150		—		3,150		347,535
2023	10%	1 year	$	0.29			1,000		2		998		3,645,725
2024	10%	1 year	$	0.13			11,060		—		11,060		86,627,725
						$	16,590	$	2	$	16,588		103,226,084
		Current				$	16,590	$	2	$	16,588		103,226,084
		Total				$	29,436	$	125	$	29,311		103,226,084


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		Underlying Shares 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			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
		Total				$	30,563	$	617	$	29,946	$	116,906,234

(a)

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

(b)

The stated interest for the notes was 2%. As the loan is default as of March 31, 2024, the default interest rate is applicable.

Schedule of future contractual principal payments of notes payable

As of March 31, 2024, future contractual principal payments due on notes payable were as follows (in thousands):


Year Ending
2024 (nine months)	$	27,115
2025		—
2026		—
2027		2,321
Total	$	29,436

Schedule of fair value of conversion feature liabilities

The following table presents the assumptions used on the recent dates on which options were granted by the Company. 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 2024		January 2023
Stock Price	$	0.11	$	0.31
Exercise Price	$	0.15	$	4.50
Expected term	5-5.75 years		5-6 years
Risk-Free Rate	3.80-3.81%		3.51-3.53%
Dividend Yield	—		—
Volatility	127.39-136.00%		108.16-116.40%

Schedule of Fair Value Based upon Assumptions

The fair value as of March 31, 2024 and December 31, 2023 was based upon following assumptions:


	March 31, 2024			December 31, 2023
Principal outstanding (South Korean won)	KRW 23.6 billion			KRW 23.6 billion
Stock price	KRW804			KRW 873
Expected life (in years)		6.54			6.79
Selected yield		12.75	%		12.25	%
Expected volatility (Telcon common stock)		71.10	%		71.90	%
Risk-free interest rate (South Korea government bond)		3.37	%		3.16	%
Expected dividend yield		—			—
Conversion price	KRW705(US$0.53)			KRW705(US$0.54)

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

Schedule of Fair Value Based upon Assumptions

The fair value as of March 31, 2024 and December 31, 2023 was based upon following assumptions:


Convertible promissory notes	March 31, 2024			December 31, 2023
Stock price	$	0.11		$	0.10
Conversion price	$	0.13		$	0.13
Selected yield		27.28	%		27.23	%
Expected volatility		50	%		50	%
Time until maturity (in years)		0.90			0.16
Dividend yield	—			—
Risk-free rate		5.10	%		5.51	%

Conversion Feature Liabilities [Member] | Smart Start Convertible Note [Member]

Schedule of Fair Value Based upon Assumptions

The fair value of conversion feature liability is determined using a convertible bond lattice model. The model produces an estimated fair value based on changes in the price of the underlying common stock over successive period of time. The following table presents the assumptions used to value the conversion features:


Smart Start Convertible Note	March 31, 2024			March 5, 2024
Stock price	$	0.11		$	0.10
Conversion price	$	0.29		$	0.29
Selected yield		28.20	%		25.75	%
Expected volatility		50	%		50	%
Time until maturity (in years)		0.43			0.50
Dividend yield	—			—
Risk-free rate		5.40	%		5.35	%

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

Schedule of fair value of conversion feature liabilities

The following table sets forth the fair value of the conversion feature liability as of March 31, 2024 and December 31, 2023 (in thousands):


Convertible promissory notes	March 31, 2024		December 31, 2023
Balance, beginning of period	$	451	$	3,248
Change in fair value included in the statement of operations		907		(2,797	)
Balance, end of period	$	1,358	$	451