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

Quarterly report pursuant to Section 13 or 15(d)

SELECTED FINANCIAL STATEMENT CAPTIONS - LIABILITIES

SELECTED FINANCIAL STATEMENT CAPTIONS - LIABILITIES

9 Months Ended

Sep. 30, 2023

SELECTED FINANCIAL STATEMENT CAPTIONS - LIABILITIES

NOTE 6 — SELECTED FINANCIAL STATEMENT - LIABILITIES

Accounts payable and accrued expenses consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023		December 31, 2022
Accounts payable:
Clinical and regulatory expenses	$	680	$	361
Professional fees		723		626
Selling expenses		1,542		1,363
Manufacturing costs		770		650
Non-employee director compensation		693		484
Other vendors		397		301
Total accounts payable		4,805		3,785
Accrued interest payable, related parties		590		144
Accrued interest payable		2,726		2,381
Accrued expenses:
Payroll expenses		1,310		1,263
Government rebates and other rebates		5,131		5,536
Due to customers		844		—
Other accrued expenses		879		440
Total accrued expenses		8,164		7,239
Total accounts payable and accrued expenses	$	16,285		13,549

Other current liabilities consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023		December 31, 2022
Trade discount	$	3,300	$	1,200
Unearned revenue (a)		10,000		10,000
Other current liabilities		1,100		1,717
Total other current liabilities	$	14,400	$	12,917

(a) Represents the fee payable to Telcon pursuant to the distributor agreement. See Note 3 for additional details.

Other long-term liabilities consisted of the following at September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023		December 31, 2022
Trade discount	$	17,205	$	21,682
Other long-term liabilities		35		32
Total other long-term liabilities	$	17,240	$	21,714

On June 12, 2017, the Company entered into an API Supply Agreement with Telcon pursuant to which Telcon advanced to the Company approximately $31.8 million as an advance trade discount in consideration of the Company’s agreement to purchase from Telcon the Company’s estimated annual target for bulk containers of PGLG. On July 12, 2017, the Company entered into a raw material supply agreement with Telcon which revised certain items of the API Supply Agreement (the “revised API Agreement”). The Company purchased $674,000 and $20,000 of PGLG from Telcon in nine months ended September 30, 2023 and September 30, 2022, respectively, of which $681,000 and $644,000 were reflected in accounts payable as of September 30, 2023 and December 31, 2022, respectively. The revised API Agreement provided for an annual API purchase target of $5 million and a target “profit” (i.e., gross margin) to Telcon of $2.5 million. To the extent these targets are not met, which management refers to as a “target shortfall,” Telcon may be entitled to payment of the target shortfall or to settle the target shortfall by exchange of principal and interest on the Telcon convertible bond and proceeds thereof that are pledged as a collateral to secure the Company’s obligations under the API Supply Agreement and the revised API Agreement. See Note 5 for information regarding the settlement in the nine months ended September 30, 2023 and 2022 of the target shortfall.