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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended September 30, 2024
OR
|
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No.: 001-35527
EMMAUS LIFE SCIENCES, INC.
(Exact name of Registrant as specified in its charter)
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Delaware |
|
87-0419387 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
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21250 Hawthorne Boulevard, Suite 800, Torrance, California |
|
90503 |
(Address of principal executive offices) |
|
(Zip code) |
(310) 214-0065
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
None |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
☐ |
Accelerated filer |
☐ |
Non-accelerated filer |
☒ |
Smaller reporting company |
☒ |
Emerging growth company |
☐ |
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|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The registrant had 63,865,571 shares of common stock, par value $0.001 per share, outstanding as of November 18, 2024.
EMMAUS LIFE SCIENCES, INC.
For the Quarterly Period Ended September 30, 2024
TABLE OF CONTENTS
Item 1. Financial Statements
EMMAUS LIFE SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
|
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|
|
|
|
|
|
|
|
|
As of |
|
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
ASSETS |
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,255 |
|
|
$ |
2,547 |
|
Accounts receivable, net |
|
|
4,938 |
|
|
|
4,010 |
|
Due from factoring of accounts receivable |
|
|
54 |
|
|
|
1,514 |
|
Inventories, net |
|
|
1,610 |
|
|
|
1,711 |
|
Prepaid expenses and other current assets |
|
|
1,347 |
|
|
|
1,727 |
|
Total current assets |
|
|
9,204 |
|
|
|
11,509 |
|
Property and equipment, net |
|
|
49 |
|
|
|
59 |
|
Right of use assets |
|
|
1,719 |
|
|
|
2,337 |
|
Investment in convertible bond |
|
|
16,059 |
|
|
|
20,978 |
|
Other assets |
|
|
312 |
|
|
|
296 |
|
Total assets |
|
$ |
27,343 |
|
|
$ |
35,179 |
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
18,707 |
|
|
$ |
16,951 |
|
Operating lease liabilities, current portion |
|
|
2,329 |
|
|
|
1,639 |
|
Conversion feature derivative, notes payable |
|
|
523 |
|
|
|
451 |
|
Other current liabilities |
|
|
15,650 |
|
|
|
14,681 |
|
Warrant derivative liabilities |
|
|
30 |
|
|
|
65 |
|
Notes payable, current portion, net of discount |
|
|
7,915 |
|
|
|
8,215 |
|
Notes payable to related parties |
|
|
2,772 |
|
|
|
3,122 |
|
Convertible notes payable, net of discount |
|
|
16,205 |
|
|
|
16,383 |
|
Total current liabilities |
|
|
64,131 |
|
|
|
61,507 |
|
Operating lease liabilities, less current portion |
|
|
1,076 |
|
|
|
1,839 |
|
Other long-term liabilities |
|
|
13,676 |
|
|
|
17,363 |
|
Notes payable to related parties, net of discount |
|
|
2,241 |
|
|
|
2,226 |
|
Total liabilities |
|
|
81,124 |
|
|
|
82,935 |
|
STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
Preferred stock, par value $0.001 per share, 15,000,000 shares authorized, none issued or outstanding |
|
|
— |
|
|
|
— |
|
Common stock, par value $0.001 per share, 250,000,000 shares authorized, 63,865,571 and 61,845,963 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively |
|
|
64 |
|
|
|
62 |
|
Additional paid-in capital |
|
|
225,867 |
|
|
|
225,333 |
|
Net loan receivable from EJ Holdings |
|
|
(16,869 |
) |
|
|
(16,869 |
) |
Accumulated other comprehensive loss |
|
|
(2,016 |
) |
|
|
(160 |
) |
Accumulated deficit |
|
|
(260,827 |
) |
|
|
(256,122 |
) |
Total stockholders’ deficit |
|
|
(53,781 |
) |
|
|
(47,756 |
) |
Total liabilities & stockholders’ deficit |
|
$ |
27,343 |
|
|
$ |
35,179 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
EMMAUS LIFE SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except share and per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
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|
2024 |
|
|
2023 |
|
|
2024 |
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|
2023 |
|
REVENUES, NET |
|
|
$ |
5,478 |
|
|
$ |
5,018 |
|
|
$ |
13,361 |
|
|
$ |
22,530 |
|
COST OF GOODS SOLD |
|
|
|
394 |
|
|
|
214 |
|
|
|
892 |
|
|
|
1,151 |
|
GROSS PROFIT |
|
|
|
5,084 |
|
|
|
4,804 |
|
|
|
12,469 |
|
|
|
21,379 |
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
|
146 |
|
|
|
414 |
|
|
|
520 |
|
|
|
1,023 |
|
Selling |
|
|
|
1,318 |
|
|
|
1,497 |
|
|
|
4,886 |
|
|
|
6,345 |
|
General and administrative |
|
|
|
2,799 |
|
|
|
2,869 |
|
|
|
8,400 |
|
|
|
11,826 |
|
Total operating expenses |
|
|
|
4,263 |
|
|
|
4,780 |
|
|
|
13,806 |
|
|
|
19,194 |
|
INCOME (LOSS) FROM OPERATIONS |
|
|
|
821 |
|
|
|
24 |
|
|
|
(1,337 |
) |
|
|
2,185 |
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment |
|
|
|
— |
|
|
|
(647 |
) |
|
|
— |
|
|
|
(647 |
) |
Change in fair value of warrant derivative liabilities |
|
|
|
38 |
|
|
|
589 |
|
|
|
35 |
|
|
|
1,034 |
|
Change in fair value of conversion feature derivative, notes payable |
|
|
|
2,277 |
|
|
|
3,069 |
|
|
|
(70 |
) |
|
|
2,100 |
|
Realized loss on investment in convertible bond |
|
|
|
— |
|
|
|
— |
|
|
|
(544 |
) |
|
|
(297 |
) |
Net loss on equity method investment |
|
|
|
— |
|
|
|
(381 |
) |
|
|
— |
|
|
|
(1,347 |
) |
Gain on restructured debt |
|
|
|
— |
|
|
|
— |
|
|
|
1,032 |
|
|
|
— |
|
Foreign exchange loss |
|
|
|
(117 |
) |
|
|
(821 |
) |
|
|
(11 |
) |
|
|
(3,227 |
) |
Interest and other income |
|
|
|
145 |
|
|
|
181 |
|
|
|
427 |
|
|
|
514 |
|
Interest expense |
|
|
|
(1,338 |
) |
|
|
(1,909 |
) |
|
|
(4,214 |
) |
|
|
(5,204 |
) |
Total other income (expense) |
|
|
|
1,005 |
|
|
|
81 |
|
|
|
(3,345 |
) |
|
|
(7,074 |
) |
INCOME (LOSS) BEFORE INCOME TAXES |
|
|
|
1,826 |
|
|
|
105 |
|
|
|
(4,682 |
) |
|
|
(4,889 |
) |
Income tax provision (benefit) |
|
|
|
(1 |
) |
|
|
38 |
|
|
|
23 |
|
|
|
53 |
|
NET INCOME (LOSS) |
|
|
|
1,827 |
|
|
|
67 |
|
|
|
(4,705 |
) |
|
|
(4,942 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on debt securities available for sale (net of tax) |
|
|
|
1,397 |
|
|
|
(1,614 |
) |
|
|
(2,064 |
) |
|
|
(249 |
) |
Reclassification adjustment for loss included in net loss |
|
|
|
— |
|
|
|
— |
|
|
|
197 |
|
|
|
403 |
|
Foreign currency translation adjustment |
|
|
|
(19 |
) |
|
|
225 |
|
|
|
11 |
|
|
|
962 |
|
Other comprehensive income (loss) |
|
|
|
1,378 |
|
|
|
(1,389 |
) |
|
|
(1,856 |
) |
|
|
1,116 |
|
COMPREHENSIVE INCOME (LOSS) |
|
|
$ |
3,205 |
|
|
$ |
(1,322 |
) |
|
$ |
(6,561 |
) |
|
$ |
(3,826 |
) |
NET INCOME (LOSS) PER COMMON SHARE - BASIC |
|
|
$ |
0.03 |
|
|
$ |
0.00 |
|
|
$ |
(0.07 |
) |
|
$ |
(0.09 |
) |
NET LOSS PER COMMON SHARE - DILUTED |
|
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.07 |
) |
|
$ |
(0.09 |
) |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - BASIC |
|
|
|
63,865,571 |
|
|
|
53,637,554 |
|
|
|
63,025,296 |
|
|
|
52,414,903 |
|
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - DILUTED |
|
|
|
162,726,685 |
|
|
|
138,375,065 |
|
|
|
63,025,296 |
|
|
|
52,414,903 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
EMMAUS LIFE SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(In thousands, except share and per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
Additional paid-in |
|
|
Loan receivable from |
|
|
Accumulated other comprehensive |
|
|
Accumulated |
|
|
Total stockholders' |
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
EJ Holdings |
|
|
loss |
|
|
deficit |
|
|
deficit |
|
Balance, January 1, 2024 |
|
61,845,963 |
|
|
$ |
62 |
|
|
$ |
225,333 |
|
|
$ |
(16,869 |
) |
|
$ |
(160 |
) |
|
$ |
(256,122 |
) |
|
$ |
(47,756 |
) |
Share-based compensation |
|
— |
|
|
|
— |
|
|
|
170 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
170 |
|
Unrealized loss on debt securities available for sale (net of tax) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,728 |
) |
|
|
— |
|
|
|
(1,728 |
) |
Foreign currency translation effect |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
18 |
|
|
|
— |
|
|
|
18 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,348 |
) |
|
|
(4,348 |
) |
Balance, March 31, 2024 |
|
61,845,963 |
|
|
|
62 |
|
|
|
225,503 |
|
|
|
(16,869 |
) |
|
|
(1,870 |
) |
|
|
(260,470 |
) |
|
|
(53,644 |
) |
Convertible notes converted to shares |
|
2,019,608 |
|
|
|
2 |
|
|
|
307 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
309 |
|
Share-based compensation |
|
— |
|
|
|
— |
|
|
|
29 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
29 |
|
Unrealized loss on debt securities available for sale (net of tax) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,733 |
) |
|
|
— |
|
|
|
(1,733 |
) |
Reclassification adjustment for loss included in net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
197 |
|
|
|
— |
|
|
|
197 |
|
Foreign currency translation effect |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12 |
|
|
|
— |
|
|
|
12 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,184 |
) |
|
|
(2,184 |
) |
Balance, June 30, 2024 |
|
63,865,571 |
|
|
|
64 |
|
|
|
225,839 |
|
|
|
(16,869 |
) |
|
|
(3,394 |
) |
|
|
(262,654 |
) |
|
|
(57,014 |
) |
Share-based compensation |
|
— |
|
|
|
— |
|
|
|
28 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
28 |
|
Unrealized gain on debt securities available for sale (net of tax) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,397 |
|
|
|
— |
|
|
|
1,397 |
|
Foreign currency translation effect |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(19 |
) |
|
|
— |
|
|
|
(19 |
) |
Net income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,827 |
|
|
|
1,827 |
|
Balance, September 30, 2024 |
|
63,865,571 |
|
|
$ |
64 |
|
|
$ |
225,867 |
|
|
$ |
(16,869 |
) |
|
$ |
(2,016 |
) |
|
$ |
(260,827 |
) |
|
$ |
(53,781 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
Additional paid-in |
|
|
Loan receivable from |
|
|
Accumulated other comprehensive |
|
|
Accumulated |
|
|
Total stockholders' |
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
EJ Holdings |
|
|
loss |
|
|
deficit |
|
|
deficit |
|
Balance January 1, 2023 |
|
49,583,501 |
|
|
$ |
50 |
|
|
$ |
220,815 |
|
|
$ |
— |
|
|
$ |
(2,619 |
) |
|
$ |
(252,337 |
) |
|
$ |
(34,091 |
) |
Fair value of warrants including down-round protection adjustments |
|
— |
|
|
|
— |
|
|
|
41 |
|
|
|
— |
|
|
|
— |
|
|
|
(41 |
) |
|
|
— |
|
Convertible note converted to shares |
|
1,351,351 |
|
|
|
1 |
|
|
|
499 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
500 |
|
Share-based compensation |
|
— |
|
|
|
— |
|
|
|
37 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
37 |
|
Unrealized loss on debt securities available for sale (net of tax) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(544 |
) |
|
|
— |
|
|
|
(544 |
) |
Foreign currency translation effect |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
186 |
|
|
|
— |
|
|
|
186 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,451 |
) |
|
|
(3,451 |
) |
Balance, March 31, 2023 |
|
50,934,852 |
|
|
|
51 |
|
|
|
221,392 |
|
|
|
— |
|
|
|
(2,977 |
) |
|
|
(255,829 |
) |
|
|
(37,363 |
) |
Convertible notes converted to shares |
|
2,702,702 |
|
|
|
3 |
|
|
|
997 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,000 |
|
Share-based compensation |
|
— |
|
|
|
— |
|
|
|
26 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
26 |
|
Unrealized gain on debt securities available for sale (net of tax) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,909 |
|
|
|
— |
|
|
|
1,909 |
|
Reclassification adjustment for loss included in net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
403 |
|
|
|
— |
|
|
|
403 |
|
Foreign currency translation effect |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
551 |
|
|
|
— |
|
|
|
551 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,558 |
) |
|
|
(1,558 |
) |
Balance, June 30, 2023 |
|
53,637,554 |
|
|
|
54 |
|
|
|
222,415 |
|
|
|
— |
|
|
|
(114 |
) |
|
|
(257,387 |
) |
|
|
(35,032 |
) |
Share-based compensation |
|
— |
|
|
|
— |
|
|
|
24 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
24 |
|
Unrealized loss on debt securities available for sale (net of tax) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,614 |
) |
|
|
— |
|
|
|
(1,614 |
) |
Foreign currency translation effect |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
225 |
|
|
|
— |
|
|
|
225 |
|