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, 2024

SELECTED FINANCIAL STATEMENT CAPTIONS - LIABILITIES

NOTE 6 — SELECTED FINANCIAL STATEMENT - LIABILITIES

Accounts payable and accrued expenses consisted of the following at September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024		December 31, 2023
Accounts payable:
Clinical and regulatory expenses	$	677	$	696
Professional fees		975		721
Selling expenses		2,477		1,498
Manufacturing costs		837		914
Non-employee director compensation		945		766
Other vendors		578		518
Total accounts payable		6,489		5,113
Accrued interest payable, related parties		823		542
Accrued interest payable		3,531		3,122
Accrued expenses:
Payroll expenses		599		1,270
Government rebates and other rebates		7,010		5,881
Due to customers		—		844
Other accrued expenses		255		179
Total accrued expenses		7,864		8,174
Total accounts payable and accrued expenses	$	18,707		16,951

Other current liabilities consisted of the following at September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024		December 31, 2023
Trade discount	$	4,500	$	3,000
Due to Telcon (a)		10,000		10,000
Other current liabilities		1,150		1,681
Total other current liabilities	$	15,650	$	14,681

(a) Refer to Note 3 for information regarding to due to Telcon.

Other long-term liabilities consisted of the following at September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024		December 31, 2023
Trade discount	$	13,627	$	17,324
Other long-term liabilities		49		39
Total other long-term liabilities	$	13,676	$	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 $448,000 and $674,000 of PGLG from Telcon for nine months ended September 30, 2024 and 2023, respectively, of which $591,000 and $754,000 were reflected in accounts payable as of September 30, 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 2022 and 2023.