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

3 Months Ended

Mar. 31, 2024

SELECTED FINANCIAL STATEMENT CAPTIONS - LIABILITIES

NOTE 6 — SELECTED FINANCIAL STATEMENT - LIABILITIES

Accounts payable and accrued expenses consisted of the following at March 31, 2024 and December 31, 2023 (in thousands):


	March 31, 2024		December 31, 2023
Accounts payable:
Clinical and regulatory expenses	$	670	$	696
Professional fees		861		721
Selling expenses		1,807		1,498
Manufacturing costs		891		914
Non-employee director compensation		839		766
Other vendors		1,497		1,292
Total accounts payable		6,565		5,887
Accrued interest payable, related parties		587		542
Accrued interest payable		2,516		3,122
Accrued expenses:
Payroll expenses		1,251		1,270
Government rebates and other rebates		7,181		5,881
Due to customers		—		844
Other accrued expenses		87		179
Total accrued expenses		8,519		8,174
Total accounts payable and accrued expenses	$	18,187		17,725

Other current liabilities consisted of the following at March 31, 2024 and December 31, 2023 (in thousands):


	March 31, 2024		December 31, 2023
Trade discount	$	3,500	$	3,000
Unearned revenue (a)		10,000		10,000
Other current liabilities		1,358		1,681
Total other current liabilities	$	14,858	$	14,681

(a) Refer to Note 3 for information regarding to the unearned revenue.

Other long-term liabilities consisted of the following at March 31, 2024 and December 31, 2023 (in thousands):


	March 31, 2024		December 31, 2023
Trade discount	$	16,928	$	17,324
Other long-term liabilities		39		39
Total other long-term liabilities	$	16,967	$	17,363

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 $125,000 and $310,000 of PGLG from Telcon for three months ended March 31, 2024 and three months ended March 31, 2023, respectively, of which $904,000 and $962,000 were reflected in accounts payable as of March 31, 2024 and December 31, 2023, 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 of the target shortfall for the year ended December 31, 2023.