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, 2022

Payables And Accruals [Abstract]

SELECTED FINANCIAL STATEMENT LIABILITIES

NOTE 6—SELECTED FINANCIAL STATEMENT LIABILITIES

Accounts payable and accrued expenses as of December 31, 2022 and 2021 consisted of the following (in thousands):


	December 31, 2022		December 31, 2021
Accounts payable:
Clinical and regulatory expenses	$	361	$	534
Professional fees		626		477
Selling expenses		1,363		932
Manufacturing costs		650		378
Non-employee board member compensation		484		136
Other vendors		301		262
Total accounts payable		3,785		2,719
Accrued interest payable, related parties		144		91
Accrued interest payable		2,381		579
Accrued expenses:
Payroll expenses		1,263		1,097
Government rebates and other rebates		5,536		4,371
Other accrued expenses		440		332
Total accrued expenses		7,239		5,800
Total accounts payable and accrued expenses	$	13,549	$	9,189

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


	As of December 31
	2022		2021
Trade discount	$	1,200	$	3,000
Unearned revenue		10,000		—
Other current liabilities		1,717		1,404
Total other current liabilities	$	12,917	$	4,404

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


	As of December 31
	2022		2021
Trade discount	$	21,682	$	23,148
Unearned revenue		—		10,000
Other long-term liabilities		32		25
Total other long-term liabilities	$	21,714	$	33,173

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 $0.6 million and $0.4 million of PGLG from Telcon during years ended December 31, 2022, and 2021, respectively, of which $644,000 and $382,000 were reflected in accounts payable and accrued expenses as of December 31, 2022 and 2021, 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 year ended December 31, 2022 of the target shortfall for 2021 and 2020.