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, 2022

Notes payable consisted of the following at December 31, 2022 and 2021 (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, 2022		Unamortized Discount December 31, 2022		Carrying Amount December 31, 2022			Shares Underlying 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

Year Issued	Interest Rate Range	Term of Notes	Conversion Price			Principal Outstanding December 31, 2021		Unamortized Discount December 31, 2021		Carrying Amount December 31, 2021			Shares Underlying Notes December 31, 2021
Notes payable
2013	10%	Due on demand		—		$	869	$	—	$	869			—
2021	11%	Due on demand - 2 years		—			3,030		—		3,030			—
						$	3,899	$	—	$	3,899			—
		Current				$	2,399	$	—	$	2,399			—
		Non-current				$	1,500	$	—	$	1,500			—
Notes payable - related parties
2020	12%	Due on demand		—			100		—		100			—
2021	12%	Due on demand		—			700		—		700			—
						$	800	$	—	$	800			—
		Current				$	800	$	—	$	800			—
Convertible notes payable
2020	12%	3 years	$	10.00	(a)		3,150		—		3,150			316,756
2021	2%	3 years	$	1.48	(b)		14,490		4,332		10,158			9,856,343
						$	17,640	$	4,332	$	13,308			10,173,099
		Current				$	14,490	$	4,332	$	10,158			9,856,343
		Non-current				$	3,150	$	—	$	3,150			316,756
		Grand Total				$	22,339	$	4,332	$	18,007			10,173,099

(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, 2022, future contractual principal payments due on notes payable were as follows (in thousands):


Year Ending
2023		26,514
2024		383
2025		—
2026		—
2027		3,521
Total	$	30,418

Schedule of fair value based upon assumptions

The fair values as of December 31, 2022 and December 31, 2021 were based upon following assumptions:


	December 31, 2022			December 31, 2021
Principal outstanding (South Korean won)	KRW 26.5 billion			KRW 30 billion
Stock price	KRW 1,015			KRW 2,925
Expected life (in years)		7.79			8.79
Selected yield		13.50	%		10.50	%
Expected volatility (Telcon common stock)		78.50	%		81.31	%
Risk-free interest rate (South Korea government bond)		3.74	%		2.19	%
Expected dividend yield		0.00	%		0.00	%
Conversion price	KRW1,068(US$0.85)			KRW2,847(US$2.39)

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, 2022 and December 31, 2021 (in thousands):


Convertible promissory notes	December 31, 2022			December 31, 2021
Balance, beginning of period	$	7,507		$	—
Fair value at issuance date		—			5,594
Change in fair value included in the statement of operations		(4,259	)		1,913
Balance, end of period	$	3,248		$	7,507

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

Schedule of fair value based upon assumptions

The fair value as of December 31, 2022 and December 31, 2021 was based on upon following assumptions:


Convertible promissory notes	December 31, 2022			December 31, 2021
Stock price	$	0.26		$	1.67
Conversion price	$	0.37		$	1.48
Select yield		27.50	%		21.99	%
Expected volatility		50	%		50	%
Time until maturity (in years)		1.16			2.16
Dividend yield	—			—
Risk-free rate		4.68	%		0.77	%