Emmaus Life Sciences, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

SELECTED FINANCIAL STATEMENT LIABILITIES

SELECTED FINANCIAL STATEMENT LIABILITIES

12 Months Ended

Dec. 31, 2021

Payables And Accruals [Abstract]

SELECTED FINANCIAL STATEMENT LIABILITIES

NOTE 6—SELECTED FINANCIAL STATEMENT LIABILITIES

Accounts payable and accrued expenses consisted of the following (in thousands):

	December 31, 2021		December 31, 2020
Accounts payable:
Clinical and regulatory expenses	$	534	$	262
Professional fees		477		252
Selling expenses		932		395
Manufacturing cost		378		596
Other vendors		262		518
Total accounts payable		2,583		2,023
Accrued interest payable, related parties		91		41
Accrued interest payable		579		627
Accrued expenses:
Payroll expenses		1,097		1,053
Government rebates and other rebates		4,371		2,659
Due to equity method investee		—		545
Other accrued expenses		468		512
Total accrued expenses		5,936		4,769
Total accounts payable and accrued expenses	$	9,189	$	7,460

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

	As of December 31,
	2021		2020
Trade discount	$	3,000	$	2,000
Other current liabilities		1,404		699
Total other current liabilities	$	4,404	$	2,699

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

	As of December 31,
	2021		2020
Trade discount	$	23,148	$	24,453
Unearned revenue		10,000		10,000
Other long-term liabilities		25		17
Total other long-term liabilities	$	33,173	$	34,470

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 $0.4 million and $2.2 million of PGLG from Telcon during years ended December 31, 2021, and 2020, respectively, of which $382,000 and $208,000 were reflected in accounts payable as of December 31, 2021 and 2020, 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, Telcon may be entitled to payment of the shortfall or to offset the shortfall against the Telcon convertible bond and proceeds there of that are pledged as a collateral to secure our obligations. See Note 11 and Note 14 for additional details.