Emmaus Life Sciences, Inc. Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

SELECTED FINANCIAL STATEMENT LIABILITIES

SELECTED FINANCIAL STATEMENT LIABILITIES

12 Months Ended

Dec. 31, 2024

Payables and Accruals [Abstract]

SELECTED FINANCIAL STATEMENT LIABILITIES

NOTE 6—SELECTED FINANCIAL STATEMENT LIABILITIES

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


	As of December 31,
	2024		2023
Accounts payable:
Clinical and regulatory expenses	$	452	$	696
Professional fees		904		721
Selling expenses		1,553		1,498
Manufacturing costs		706		914
Non-employee director compensation		966		766
Other vendors		594		518
Total accounts payable		5,175		5,113
Accrued interest payable, related parties		1,145		542
Accrued interest payable		2,874		3,122
Accrued expenses:
Payroll expenses		323		1,270
Government rebates and other rebates		7,229		5,881
Due to customers		15		844
Other accrued expenses		165		179
Total accrued expenses		7,732		8,174
Total accounts payable and accrued expenses	$	16,926		16,951

Other current liabilities consisted of the following (in thousands):


	As of December 31
	2024		2023
Trade discount	$	5,000	$	3,000
Unearned revenue (a)		10,000		10,000
Other current liabilities		1,557		1,681
Total other current liabilities	$	16,557	$	14,681

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

Other long-term liabilities consisted of the following (in thousands):


	As of December 31
	2024		2023
Trade discount	$	13,421	$	17,324
Other long-term liabilities		44		39
Total other long-term liabilities	$	13,465	$	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”). As of December 31, 2024 and 2023, the total trade discounts were $18.4 million and $20.3 million, respectively. The Company purchased $0.4 million and $0.8 million of PGLG from Telcon during years ended December 31, 2024, and 2023, respectively, of which $588,000 and $754,000 were reflected in accounts payable and accrued expenses as of December 31, 2024 and 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 in the years ended December 31, 2024 and 2023 of the target shortfall.