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)

6 Months Ended

Jun. 30, 2023

Notes payable consisted of the following at June 30, 2023 and December 31, 2022 (in thousands except for number of underlying shares):


Year Issued	Interest Rate Range	Term of Notes	Conversion Price			Principal Outstanding June 30, 2023		Unamortized Discount June 30, 2023		Carrying Amount June 30, 2023			Underlying Shares June 30, 2023
Notes payable
2013	10%	Due on demand		—		$	691	$	—	$	691			—
2022	10%-28%	Due on demand - 15 month		—			2,663		38		2,625			—
2023	11%-60%	Due on demand - 32 weeks					5,176		30		5,146			—
						$	8,530	$	68	$	8,462			—
		Current				$	8,530	$	68	$	8,462			—
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		—			4,976		159		4,871	(c)		—
2023	10%	Due on demand					227		—		227
						$	6,003	$	159	$	5,898			—
		Current				$	2,482	$	—	$	2,482			—
		Non-current				$	3,521	$	159	$	3,416			—
Convertible notes payable
2021	2%	3 years	$	0.29	(b)		12,640		1,484		11,156			48,981,102
2023	13%	6 month	$	10.00	(a)		3,150		—		3,150			316,682
						$	15,790	$	1,484	$	14,306			49,297,784
		Current				$	15,790	$	1,484	$	14,306			49,297,784
Convertible notes payable - related parties
2023	10%	1 - 2 years	$	0.50			1,000		—		1,000			2,089,863
						$	1,000	$	—	$	1,000			2,089,863
		Current				$	1,000	$	—	$	1,000			2,089,863
		Total				$	31,323	$	1,711	$	29,666			51,387,647


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			Underlying Shares 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

(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. The note holders are entitled to call for redemption of the convertible notes payable at any time. Accordingly, the notes are classified as current liabilities.

(c)

Includes $55,000 and $63,000 of the fair value of embedded derivative as of June 30, 2023 and December 31, 2022, respectively.

Schedule of future contractual principal payments of notes payable

As of June 30, 2023, future contractual principal payments due on notes payable were as follows (in thousands):


Year Ending
2023 (six months)	$	25,499	(a)
2024		2,303
2025		1,200
2027		2,321
Total	$	31,323

(a)

Includes 12.6 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 June 30, 2022 and December 31, 2022 was based upon following assumptions:


	June 30, 2023			December 31, 2022
Principal outstanding (South Korean won)	KRW 23.6 billion			KRW 26.5 billion
Stock price	KRW1,158			KRW 1,015
Expected life (in years)		7.30			7.79
Selected yield		12.75	%		13.50	%
Expected volatility (Telcon common stock)		79.70	%		78.50	%
Risk-free interest rate (South Korea government bond)		3.69	%		3.74	%
Expected dividend yield		—			—
Conversion price	KRW1,068(US$0.81)			KRW1,068(US$0.85)

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

Schedule of Fair Value Based upon Assumptions

The fair value as of June 30, 2023 and December 31, 2022 was based upon following assumptions:


Convertible promissory notes	June 30, 2023			December 31, 2022
Stock price	$	0.23		$	0.26
Conversion price	$	0.29		$	0.37
Selected yield		27.54	%		27.50	%
Expected volatility		50	%		50	%
Time until maturity (in years)		0.67			1.16
Dividend yield	—			—
Risk-free rate		5.45	%		4.68	%

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 June 30, 2023 and December 31, 2022 (in thousands):


Convertible promissory notes	June 30, 2023		December 31, 2022
Balance, beginning of period	$	3,248	$	7,507
Change in fair value included in the statement of operations		969		(4,259	)
Balance, end of period	$	4,217	$	3,248