Quarterly report pursuant to Section 13 or 15(d)

NOTES PAYABLE (Tables)

v3.22.2.2
NOTES PAYABLE (Tables)
9 Months Ended
Sep. 30, 2022
Schedule of notes payable

Notes payable consisted of the following at September 30, 2022 and December 31, 2021 (in thousands except for number of 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 September 30, 2022

 

 

Unamortized Discount September 30, 2022

 

 

Carrying

Amount September 30, 2022

 

 

Underlying Shares September 30, 2022

 

 

Notes payable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

10%

 

 

Due on demand

 

 

 

 

$

692

 

 

$

 

 

$

692

 

 

 

 

 

2021

 

11%

 

 

Due on demand - 2 years

 

 

 

 

 

2,719

 

 

 

 

 

 

2,719

 

 

 

 

 

2022

 

11%-36%

 

 

Due on demand - 7 month

 

 

 

 

 

2,243

 

 

 

19

 

 

 

2,224

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

5,654

 

 

$

19

 

 

$

5,635

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

$

5,654

 

 

$

19

 

 

$

5,635

 

 

 

 

 

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

 

 

 

 

 

5,501

 

 

 

135

 

 

 

5,361

 

(c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

6,301

 

 

$

135

 

 

$

6,161

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

$

2,780

 

 

$

 

 

$

2,780

 

 

 

 

 

 

 

 

 

 

 

Non-current

 

 

 

 

 

$

3,521

 

 

$

135

 

 

$

3,381

 

 

 

 

 

Convertible notes payable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020(a)

 

12%

 

 

3 years

 

$

10.00

 

 

 

3,150

 

 

 

 

 

 

3,150

 

 

 

320,067

 

 

2021(b)

 

2%

 

 

3 years

 

$

0.37

 

 

 

14,315

 

 

 

3,119

 

 

 

11,196

 

 

 

41,112,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

17,465

 

 

$

3,119

 

 

$

14,346

 

 

 

41,432,198

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

$

17,465

 

 

$

3,119

 

 

$

14,346

 

 

 

41,432,198

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

$

29,421

 

 

$

3,273

 

 

$

26,143

 

 

 

41,432,198

 

 

 

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

 

 

Underlying Shares

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(a)

 

12%

 

 

3 years

 

$

10.00

 

 

 

3,150

 

 

 

 

 

 

3,150

 

 

 

316,756

 

 

2021(b)

 

2%

 

 

3 years

 

$

1.48

 

 

 

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

 

 

 

 

 

 

 

 

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.

 

(c)

Includes $41,000 of the fair value of embedded derivative.

 

Schedule of future contractual principal payments of notes payable

As of September 30, 2022, future contractual principal payments due on notes payable were as follows (in thousands):

 

Year Ending

 

 

 

 

2022 (three months)

$

25,900

 

(a)

2025

 

1,200

 

 

2027

 

2,321

 

 

Total

$

29,421

 

 

 

(a)

Includes $14.3 million principal amount of convertible notes subject to redemption at any time at the election of the holders.

 

Schedule of Fair Value Based upon Assumptions

The fair value as of September 30, 2022 and December 31, 2021 was based upon following assumptions:

 

 

 

September 30, 2022

 

 

December 31, 2021

 

Principal outstanding (South Korean won)

 

KRW 26.5 billion

 

 

KRW 30 billion

 

Stock price

 

KRW1,075

 

 

KRW2,925

 

Expected life (in years)

 

 

8.04

 

 

 

8.79

 

Selected yield

 

 

16.75

%

 

 

10.50

%

Expected volatility (Telcon common stock)

 

 

78.80

%

 

 

81.31

%

Risk-free interest rate (South Korea government bond)

 

 

4.14

%

 

 

2.19

%

Expected dividend yield

 

 

 

 

 

 

Conversion price

 

KRW1,150 (US$0.80)

 

 

KRW2,847 (US$2.39)

 

Conversion Feature Liabilities [Member] | Convertible Promissory Notes [Member]  
Schedule of Fair Value Based upon Assumptions

The fair value as of September 30, 2022 and December 31, 2021was based upon following assumptions:

Convertible promissory notes

 

September 30, 2022

 

 

December 31, 2021

 

Stock price

 

$

0.17

 

 

$

1.67

 

Conversion price

 

$

0.37

 

 

$

1.48

 

Selected yield

 

 

30.93

%

 

 

21.99

%

Expected volatility

 

 

50

%

 

 

50

%

Time until maturity (in years)

 

 

1.41

 

 

 

2.16

 

Dividend yield

 

 

 

 

Risk-free rate

 

 

4.12

%

 

 

0.77

%

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 September 30, 2022 and December 31, 2021 (in thousands)

 

Convertible promissory notes

 

September 30, 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

 

 

(3,235

)

 

 

1,913

 

Balance, end of period

 

$

4,272

 

 

$

7,507