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

NOTES PAYABLE (Tables)

9 Months Ended

Sep. 30, 2020

Notes payable consisted of the following at September 30, 2020 and December 31, 2019 (in thousands):

Year Issued	Interest Rate Range	Term of Notes	Conversion Price			Principal Outstanding September 30, 2020		Discount Amount September 30, 2020		Carrying Amount September 30, 2020		Shares Underlying September 30, 2020
Notes payable
2013	10%	Due on demand		—		$	947	$	—	$	947		—
2019	11%	Due on demand - 6 months		—			2,867		—		2,867		—
2020	1% - 11%	Due on demand - 2 years		—			993		—		993		—
						$	4,807	$	—	$	4,807		—
		Current				$	4,452	$	—	$	4,452		—
		Non-current				$	355	$	—	$	355		—
Notes payable - related parties
2016	10%	Due on demand		—			20	$	—	$	20		—
2019	10%	Due on demand					14		—	$	14		—
2020	12%	Due on demand		—			782		—	$	782		—
						$	816	$	—	$	816		—
		Current				$	816	$	—	$	816		—
Convertible debentures
2019	10%	18 months	$2.00-$9.52		(a)		8,700	$	2,491	$	6,209		4,387,986
						$	8,700	$	2,491	$	6,209		4,387,986
		Current				$	8,700	$	2,491	$	6,209		4,387,986
Convertible note payable
2020	12%	3 years	$	10.00	(b)		3,150	$	—	$	3,150		316,637
						$	3,150	$	—	$	3,150		316,637
		Non-current				$	3,150	$	—	$	3,150		—
		Total				$	17,473	$	2,491	$	14,982		4,704,623

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) These debentures are convertible into Emmaus Life Sciences, Inc. shares.

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

As of September 30, 2020, future contractual principal payments due on notes payable were as follows:

The fair values as of September 30, 2020, the February 21, 2020 modification date and December 31, 2019 were based upon following assumptions:

	September 30, 2020			February 21, 2020 (Modification date)			December 31, 2019
Stock price	$	0.97		$	1.89		$	1.97
Conversion price	$	2.00		$	3.00		$	9.52
Selected yield		17.06	%		19.12	%		16.77	%
Expected volatility (peer group)		113	%		65	%		50	%
Expected life (in years)		0.92			1.16			0.81
Expected dividend yield		—			—			—
Risk‑free rate	Term structure			Term structure			Term structure

The following table sets forth the fair value of the conversion feature liabilities as of September 30, 2020 and December 31, 2019 (in thousands):

	Nine Months Ended			Year ended
Conversion feature liabilities - Amended and Restated 10% Senior Secured Convertible Debentures	September 30, 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 loss		(51	)		(131	)
Balance, end of period	$	68		$	1