Annual report pursuant to Section 13 and 15(d)

NOTES PAYABLE (Tables)

v3.21.1
NOTES PAYABLE (Tables)
12 Months Ended
Dec. 31, 2020
Schedule of notes payable

Notes payable consisted of the following at December 31, 2020 and 2019 (in thousands except for conversion price and shares):

 

Year

Issued

 

Interest Rate

Range

 

 

Term of Notes

 

Conversion

Price

 

 

Principal

Outstanding

December 31,

2020

 

 

Discount

Amount

December 31,

2020

 

 

Carrying

Amount

December 31,

2020

 

 

Shares

Underlying

Notes

December 31, 2020

 

 

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

 

 

 

 

$

969

 

 

$

 

 

$

969

 

 

 

 

 

$

920

 

 

$

 

 

$

920

 

 

 

 

2019

 

11%

 

 

Due on demand

 

 

 

 

 

2,899

 

 

 

 

 

 

2,899

 

 

 

 

 

 

2,829

 

 

 

 

 

 

2,829

 

 

 

 

2020

 

11%

 

 

Due on demand

 

 

 

 

 

942

 

 

 

 

 

 

942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

4,810

 

 

$

 

 

$

4,810

 

 

 

 

 

$

3,749

 

 

$

 

 

$

3,749

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

$

4,588

 

 

$

 

 

$

4,588

 

 

 

 

 

$

3,749

 

 

$

 

 

$

3,749

 

 

 

 

 

 

 

 

 

 

Non-current

 

 

 

 

 

$

222

 

 

$

 

 

$

222

 

 

 

 

 

$

 

 

$

 

 

$

 

 

 

 

Notes payable - related party

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

10% - 11%

 

 

Due on demand

 

 

 

 

$

20

 

 

$

 

 

$

20

 

 

 

 

 

$

20

 

 

 

 

 

$

20

 

 

 

 

2018

 

11%

 

 

Due on demand

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

159

 

 

 

 

 

 

159

 

 

 

 

2019

 

10%

 

 

Due on demand

 

 

 

 

 

14

 

 

 

 

 

 

14

 

 

 

 

 

 

14

 

 

 

 

 

 

14

 

 

 

 

2020

 

12%

 

 

Due on demand

 

 

 

 

 

100

 

 

 

 

 

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

134

 

 

$

 

 

$

134

 

 

 

 

 

$

193

 

 

$

 

 

$

193

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

$

134

 

 

$

 

 

$

134

 

 

 

 

 

$

193

 

 

$

 

 

$

193

 

 

 

 

Convertible debentures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

10%

 

 

18 months

 

$2.00-$9.52

 

 

$

7,200

 

 

$

1,720

 

 

$

5,480

 

 

 

3,630

 

(a)

$

10,200

 

 

$

3,185

 

 

$

7,015

 

 

 

1,080,415

 

 

 

 

 

 

 

 

 

 

 

 

 

$

7,200

 

 

$

1,720

 

 

$

5,480

 

 

 

3,630

 

 

$

10,200

 

 

$

3,185

 

 

$

7,015

 

 

 

1,080,415

 

 

 

 

 

 

 

Current

 

 

 

 

 

$

7,200

 

 

$

1,720

 

 

$

5,480

 

 

 

 

 

 

$

10,200

 

 

$

3,185

 

 

$

7,015

 

 

 

 

Convertible notes payable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2018

 

6% - 10%

 

 

Due on demand - 2 years

 

$

10.00

 

 

 

3,150

 

 

$

 

 

 

3,150

 

 

 

316,723

 

(b)

 

3,000

 

 

 

5

 

 

 

2,995

 

 

 

363,876

 

 

 

 

 

 

 

 

 

 

 

 

 

$

3,150

 

 

$

 

 

$

3,150

 

 

 

316,723

 

 

$

3,000

 

 

$

5

 

 

$

2,995

 

 

 

363,876

 

 

 

 

 

 

 

Non-current

 

 

 

 

 

$

3,150

 

 

$

 

 

$

3,150

 

 

 

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

Grand Total

 

 

 

 

 

$

15,294

 

 

$

1,720

 

 

$

13,574

 

 

$

320,353

 

 

$

17,142

 

 

$

3,190

 

 

$

13,952

 

 

$

1,444,291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) The notes are convertible into Emmaus Life Sciences, Inc. shares.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b) This note is convertible into EMI Holdings Inc. shares.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule of future contractual principal payments of notes payable

As of December 31, 2020, future contractual principal payments due on notes payable were as follows (in thousands):

Year Ending

December 31, 2020

 

2021

$

11,922

 

2022

 

222

 

2023

 

3,150

 

Total

$

15,294

 

 

Schedule of fair value based upon assumptions

The fair values as of October 16, 2020 and December 31, 2020 were based upon following assumptions:

 

 

 

 

December 31, 2020

 

 

At Issuance

 

Principal outstanding (South Korean won)

 

KRW 30 billion

 

 

KRW 30 billion

 

Stock price

 

KRW 6,060

 

 

KRW 7,210

 

Expected life (in years)

 

 

9.79

 

 

 

10.00

 

Selected yield

 

 

10.50

%

 

 

13.00

%

Expected volatility (Telcon common stock)

 

 

85.80

%

 

 

86.90

%

Risk-free interest rate (South Korea government bond)

 

 

1.72

%

 

 

1.50

%

Expected dividend yield

 

 

0.00

%

 

 

0.00

%

Conversion price

 

KRW 6,028

 

 

KRW 9,232

 

Senior Secured Convertible Debentures [Member]  
Schedule of fair value of conversion feature liabilities

The following table presents the change in fair value of the warrants as of December 31, 2020 (in thousands):

Warrant liability—Wealth Threshold

 

December 31, 2020

 

Balance, beginning of period

 

$

 

Fair value at issuance date

 

 

1,425

 

Change in fair value included in the statement of comprehensive income (loss)

 

 

(437

)

Balance, end of period

 

$

988

 

Schedule of fair value based upon assumptions

The fair value of the warrant derivative liabilities was determined using the Black-Scholes Merton model and was based upon following assumptions:

 

 

December 31, 2020

 

 

At Issuance

 

Exercise price

 

$

2.05

 

 

$

2.05

 

Stock price

 

$

1.68

 

 

$

1.23

 

Risk‑free interest rate

 

 

0.31

%

 

 

0.33

%

Expected volatility (peer group)

 

 

101.00

%

 

 

94.00

%

Expected life (in years)

 

 

4.46

 

 

 

5.00

 

Expected dividend yield

 

 

 

 

Number outstanding

 

 

1,250,000

 

 

 

1,250,000

 

Conversion Feature Liabilities [Member] | Senior Secured Convertible Debentures [Member]  
Schedule of fair value based upon assumptions The fair values as of December 31, 2020, the February 21, 2020 modification date and December 31, 2019 and as of the Merger date were based upon following assumptions:

 

 

December 31, 2020

 

 

February 21, 2020

(Modification date)

 

 

December 31, 2019

 

Stock price

 

$

1.23

 

 

$                                   1.89

 

 

$

1.97

 

Conversion price

 

$

2.00

 

 

$                                   3.00

 

 

$

9.52

 

Selected yield

 

 

10.48

%

 

 

19.12

%

 

 

16.77

%

Expected volatility (peer group)

 

 

95.00

%

 

 

65.00

%

 

 

50.00

%

Expected life (in years)

 

 

0.67

 

 

1.16

 

 

 

0.81

 

Expected dividend yield

 

 

 

 

 

 

Risk-free rate

 

Term structure

 

 

Term structure

 

 

Term structure

 

 

Other Current Liabilities [Member] | Conversion Feature Liabilities [Member] | Senior Secured Convertible Debentures [Member]  
Schedule of fair value of conversion feature liabilities The following table sets forth the fair value of the conversion feature liabilities, which is included in the other current liabilities as of December 31, 2020 and 2019 (in thousands):

 

Conversion feature liabilities—Amended and Restated 10% Senior Secured Convertible Debentures

 

December 31, 2020

 

 

December 31, 2019

 

Balance, beginning of period

 

$

1

 

 

$

 

Fair value at issuance date

 

 

 

 

 

132

 

Fair value at modification date

 

 

118

 

 

 

 

Change in fair value

 

 

(112

)

 

 

(131

)

Balance, end of period

 

$

7

 

 

$

1