Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 31, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | Emmaus Life Sciences, Inc. | |
Entity Central Index Key | 0000822370 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-35527 | |
Entity Tax Identification Number | 87-0419387 | |
Entity Incorporation State Country Code | DE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Address, Address Line One | 21250 Hawthorne Boulevard | |
Entity Address, Address Line Two | Suite 800 | |
Entity Address, City or Town | Torrance | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 90503 | |
City Area Code | 310 | |
Local Phone Number | 214-0065 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Common Stock, Shares Outstanding | 49,311,864 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 1,032 | $ 1,769 |
Restricted cash | 7 | |
Accounts receivable, net | 1,457 | 2,150 |
Inventories, net | 7,863 | 7,971 |
Investment in marketable securities | 27,007 | 27,929 |
Prepaid expenses and other current assets | 1,170 | 1,402 |
Total current assets | 38,536 | 41,221 |
Property and equipment, net | 141 | 151 |
Equity method investment | 13,005 | 13,325 |
Right of use assets | 4,283 | 4,474 |
Deposits and other assets | 285 | 285 |
Total assets | 56,250 | 59,456 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 10,377 | 11,498 |
Operating lease liabilities | 1,103 | 991 |
Other current liabilities | 957 | 5,748 |
Revolving line of credit to related parties, net | 600 | 600 |
Warrant derivative liabilities | 1,539 | 38 |
Notes payable, current portion | 4,271 | 3,749 |
Notes payable to related parties | 34 | 193 |
Convertible debentures, net of discount | 7,594 | 7,015 |
Convertible note payable, net of discount | 2,995 | |
Total current liabilities | 26,475 | 32,827 |
Operating lease liabilities, less current portion | 3,722 | 3,932 |
Other long-term liabilities | 36,434 | 33,750 |
Notes payable, less current portion | 488 | |
Convertible note payable | 3,150 | |
Total liabilities | 70,269 | 70,509 |
STOCKHOLDERS’ DEFICIT | ||
Preferred stock — par value $0.001 per share, 15,000,000 shares authorized, none issued or outstanding | ||
Common stock — par value $0.001 per share, 250,000,000 shares authorized, 48,987,189 shares and 48,471,446 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | 49 | 48 |
Additional paid-in capital | 216,376 | 215,207 |
Accumulated other comprehensive loss | (51) | (79) |
Accumulated deficit | (230,393) | (226,229) |
Total stockholders’ deficit | (14,019) | (11,053) |
Total liabilities & stockholders’ deficit | $ 56,250 | $ 59,456 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 15,000,000 | 15,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 250,000,000 | 250,000,000 |
Common stock, issued | 48,987,189 | 48,471,446 |
Common stock, outstanding | 48,987,189 | 48,471,446 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||||
REVENUES, NET | $ 4,360,000 | $ 5,493,000 | $ 11,314,000 | $ 10,200,000 | ||
COST OF GOODS SOLD | 446,000 | 264,000 | 924,000 | 523,000 | ||
GROSS PROFIT | 3,914,000 | 5,229,000 | 10,390,000 | 9,677,000 | ||
OPERATING EXPENSES | ||||||
Research and development | 589,000 | 540,000 | 1,206,000 | 1,053,000 | ||
Selling | 1,135,000 | 1,891,000 | 2,203,000 | 3,370,000 | ||
General and administrative | 3,725,000 | 2,682,000 | 7,382,000 | 6,419,000 | ||
Total operating expenses | 5,449,000 | 5,113,000 | 10,791,000 | 10,842,000 | ||
INCOME (LOSS) FROM OPERATIONS | (1,535,000) | 116,000 | (401,000) | (1,165,000) | ||
OTHER INCOME (EXPENSE) | ||||||
Loss on debt extinguishment | (1,425,000) | (1,425,000) | ||||
Change in fair value of warrant derivative liabilities | (101,000) | 854,000 | (76,000) | (84,000) | ||
Change in fair value of embedded conversion option | 35,000 | 6,000 | ||||
Net gains (losses) on investment in marketable securities and long-term investment | (5,631,000) | (10,537,000) | 1,208,000 | (16,994,000) | ||
Loss on equity method investment | (573,000) | (458,000) | (980,000) | (449,000) | ||
Interest and other income | 567,000 | 307,000 | 600,000 | 230,000 | ||
Interest expense | (1,309,000) | (7,827,000) | (3,109,000) | (16,439,000) | ||
Total other expenses | (8,437,000) | (17,661,000) | (3,776,000) | (33,736,000) | ||
LOSS BEFORE INCOME TAXES | (9,972,000) | (17,545,000) | (4,177,000) | (34,901,000) | ||
INCOME TAXES (BENEFIT) | (499,000) | 51,000 | (213,000) | 103,000 | ||
NET LOSS | (9,473,000) | $ 5,509,000 | (17,596,000) | $ (17,408,000) | (3,964,000) | (35,004,000) |
COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS) | ||||||
Foreign currency translation adjustments | (33,000) | $ 61,000 | 6,000 | $ 7,000 | 28,000 | 13,000 |
Other comprehensive income (loss) | (33,000) | 6,000 | 28,000 | 13,000 | ||
COMPREHENSIVE LOSS | $ (9,506,000) | $ (17,590,000) | $ (3,936,000) | $ (34,991,000) | ||
NET LOSS PER COMMON SHARE - BASIC AND DILUTED | $ (0.19) | $ (0.47) | $ (0.08) | $ (0.93) | ||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | 48,987,189 | 37,836,678 | 48,805,829 | 37,656,058 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Deficit [Member] | Accumulated Deficit [Member]Cumulative Effect, Period of Adoption, Adjustment [Member] |
Balance, beginning at Dec. 31, 2018 | $ (21,708) | $ 37 | $ 149,682 | $ (69) | $ (171,358) | ||
Balance, beginning (ASU 2016-02 [Member]) at Dec. 31, 2018 | $ (29) | $ (29) | |||||
Balance, beginning (in shares) at Dec. 31, 2018 | 37,341,393 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Beneficial conversion feature relating to convertible notes | 3,374 | 3,374 | |||||
Exercise of warrants | 5 | 5 | |||||
Exercise of warrants (in shares) | 525 | ||||||
Common stock issued for cash (net of issuance cost) | 2,530 | $ 1 | 2,529 | ||||
Common stock issued for cash (net of issuance cost) (in shares) | 322,920 | ||||||
Conversion of notes payable to common stock | 329 | 329 | |||||
Conversion of notes payable to common stock (in shares) | 85,411 | ||||||
Share-based compensation | 588 | 588 | |||||
Exercise of common stock options | 1 | 1 | |||||
Exercise of common stock options (in shares) | 175 | ||||||
Foreign currency translation effect | 7 | 7 | |||||
Net income (loss) | (17,408) | (17,408) | |||||
Balance, ending at Mar. 31, 2019 | (32,311) | $ 38 | 156,508 | (62) | (188,795) | ||
Balance, ending (in shares) at Mar. 31, 2019 | 37,750,424 | ||||||
Balance, beginning at Dec. 31, 2018 | (21,708) | $ 37 | 149,682 | (69) | (171,358) | ||
Balance, beginning (ASU 2016-02 [Member]) at Dec. 31, 2018 | (29) | (29) | |||||
Balance, beginning (in shares) at Dec. 31, 2018 | 37,341,393 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Foreign currency translation effect | 13 | ||||||
Net income (loss) | (35,004) | ||||||
Balance, ending at Jun. 30, 2019 | (43,161) | $ 38 | 163,248 | (56) | (206,391) | ||
Balance, ending (in shares) at Jun. 30, 2019 | 37,880,211 | ||||||
Balance, beginning at Dec. 31, 2018 | (21,708) | $ 37 | 149,682 | (69) | (171,358) | ||
Balance, beginning (ASU 2016-02 [Member]) at Dec. 31, 2018 | $ (29) | $ (29) | |||||
Balance, beginning (in shares) at Dec. 31, 2018 | 37,341,393 | ||||||
Balance, ending at Dec. 31, 2019 | (11,053) | $ 48 | 215,207 | (79) | (226,229) | ||
Balance, ending (in shares) at Dec. 31, 2019 | 48,471,446 | ||||||
Balance, beginning at Mar. 31, 2019 | (32,311) | $ 38 | 156,508 | (62) | (188,795) | ||
Balance, beginning (in shares) at Mar. 31, 2019 | 37,750,424 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Beneficial conversion feature relating to convertible notes | 5,390 | 5,390 | |||||
Exercise of warrants | 181 | 181 | |||||
Exercise of warrants (in shares) | 53,032 | ||||||
Common stock issued for cash (net of issuance cost) | 731 | 731 | |||||
Common stock issued for cash (net of issuance cost) (in shares) | 76,755 | ||||||
Share-based compensation | 438 | 438 | |||||
Foreign currency translation effect | 6 | 6 | |||||
Net income (loss) | (17,596) | (17,596) | |||||
Balance, ending at Jun. 30, 2019 | (43,161) | $ 38 | 163,248 | (56) | (206,391) | ||
Balance, ending (in shares) at Jun. 30, 2019 | 37,880,211 | ||||||
Balance, beginning at Dec. 31, 2019 | (11,053) | $ 48 | 215,207 | (79) | (226,229) | ||
Balance, beginning (in shares) at Dec. 31, 2019 | 48,471,446 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Common stock issued for cash (net of issuance cost) | 142 | $ 1 | 141 | ||||
Common stock issued for cash (net of issuance cost) (in shares) | 515,743 | ||||||
Fair value of warrants including down-round protection adjustments | 400 | 600 | (200) | ||||
Share-based compensation | 209 | 209 | |||||
Foreign currency translation effect | 61 | 61 | |||||
Net income (loss) | 5,509 | 5,509 | |||||
Balance, ending at Mar. 31, 2020 | (4,732) | $ 49 | 216,157 | (18) | (220,920) | ||
Balance, ending (in shares) at Mar. 31, 2020 | 48,987,189 | ||||||
Balance, beginning at Dec. 31, 2019 | (11,053) | $ 48 | 215,207 | (79) | (226,229) | ||
Balance, beginning (in shares) at Dec. 31, 2019 | 48,471,446 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Foreign currency translation effect | 28 | ||||||
Net income (loss) | (3,964) | ||||||
Balance, ending at Jun. 30, 2020 | (14,019) | $ 49 | 216,376 | (51) | (230,393) | ||
Balance, ending (in shares) at Jun. 30, 2020 | 48,987,189 | ||||||
Balance, beginning at Mar. 31, 2020 | (4,732) | $ 49 | 216,157 | (18) | (220,920) | ||
Balance, beginning (in shares) at Mar. 31, 2020 | 48,987,189 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Share-based compensation | 219 | 219 | |||||
Foreign currency translation effect | (33) | (33) | |||||
Net income (loss) | (9,473) | (9,473) | |||||
Balance, ending at Jun. 30, 2020 | $ (14,019) | $ 49 | $ 216,376 | $ (51) | $ (230,393) | ||
Balance, ending (in shares) at Jun. 30, 2020 | 48,987,189 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (3,964) | $ (35,004) |
Adjustments to reconcile net loss to net cash flows used in operating activities | ||
Depreciation and amortization | 30 | 35 |
Impairment loss on long-term investment | 524 | |
Inventory reserve | 375 | |
Amortization of discount of notes payable and convertible notes payable | 2,102 | 13,771 |
Foreign exchange adjustments on convertible notes and notes payable | (70) | (208) |
Net losses (gains) on equity investment in marketable securities | (1,208) | 16,470 |
Loss on equity method investee | 980 | 449 |
Loss on debt settlement | 1,425 | |
Share-based compensation | 428 | 1,026 |
Change in fair value of warrant derivative liabilities | 76 | 84 |
Change in fair value of embedded conversion option | (6) | |
Net changes in operating assets and liabilities | ||
Accounts receivable | 693 | (364) |
Inventories | (267) | (1,202) |
Prepaid expenses and other current assets | 528 | 149 |
Other non-current assets | 183 | (4,298) |
Income tax receivable and payable | (295) | (113) |
Accounts payable and accrued expenses | (412) | 4,054 |
Deferred revenue | 500 | |
Deferred rent | (287) | |
Other current liabilities | (4,903) | (63) |
Other long-term liabilities | 2,586 | 3,217 |
Net cash flows used in operating activities | (1,719) | (1,260) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Sale of marketable securities | 2,130 | 221 |
Purchases of property and equipment | (13) | (21) |
Loans to equity method investee | (561) | |
Net cash flows provided by investing activities | 1,556 | 200 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from notes payable issued, net of issuance cost and discount | 998 | |
Payments of notes payable | (200) | |
Payments of convertible notes | (1,500) | (3,368) |
Proceeds from exercise of warrants | 142 | 186 |
Proceeds from issuance of common stock | 3,261 | |
Proceeds from conversion of notes payable to common stock | 21 | |
Net cash flows provided by (used in) financing activities | (560) | 100 |
Effect of exchange rate changes on cash | (7) | 2 |
Net decrease in cash, cash equivalents and restricted cash | (730) | (958) |
Cash, cash equivalents and restricted cash, beginning of period | 1,769 | 3,905 |
Cash, cash equivalents and restricted cash, end of period | 1,039 | 2,947 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES | ||
Interest paid | 802 | 549 |
Income taxes paid | 82 | 216 |
NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Warrants issued | $ 1,825 | |
Beneficial conversion feature relating to convertible notes | 8,764 | |
Common stocks issued on exercise of warrants | 186 | |
Conversion of notes payable and accrued interest to common stock | $ 329 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | NOTE 1 — BASIS OF PRESENTATION The accompanying unaudited condensed consolidated interim financial statements of Emmaus Life Sciences, Inc. (formerly, “MYnd Analytics, Inc.”) and its direct and indirect consolidated subsidiaries (collectively, “we,” “our,” “us,” the “Company” or “Emmaus”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) on the basis that the Company will continue as a going concern. All significant intercompany transactions have been eliminated. The Company’s unaudited condensed consolidated interim financial statements contain adjustments, including normal recurring accruals necessary to fairly state the Company’s consolidated financial position, results of operations and cash flows. The consolidated interim financial statements should be read in conjunction with the Annual Report on Form 10-K/A for the year ended December 31, 2020 (the “Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on August 10, 2021. The accompanying condensed consolidated balance sheet at December 31, 2019 has been derived from the audited consolidated balance sheet at December 31, 2019 contained in the Form 10-K/A. The results of operations for the three and six months ended June 30, 2020, are not necessarily indicative of the results to be expected for the full year or any future interim period. Organization and Nature of Operations The Company is a commercial-stage biopharmaceutical company engaged in the discovery, development, marketing and sales of innovative treatments and therapies primarily for rare and orphan diseases. On July 17, 2019, we completed a merger transaction with EMI Holding, Inc., formerly known as Emmaus Life Sciences, Inc. (“EMI”), into a subsidiary of the Company (the “Merger”), with EMI surviving the Merger as a wholly owned subsidiary. Immediately after completion of the Merger, we changed our name to “Emmaus Life Sciences, Inc.” The Merger was treated as a reverse recapitalization under the acquisition method of accounting in accordance with accounting principles generally accepted in the U.S. For accounting purposed, EMI was considered to have acquired us. The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes. In connection with and prior to the Merger, we contributed and transferred to Telemynd, Inc. (“Telemynd”), a newly formed, wholly owned subsidiary of the Company, all or substantially all our historical business, assets and liabilities and our board of directors declared a stock dividend of one share of the Telemynd common stock held by the Company for each outstanding share of our common stock after giving effect to a 1-for-6 reverse stock split of our outstanding shares of common stock. As a result of the spin-off and the Merger, our ongoing business became EMI’s business, which is that of a commercial-stage biopharmaceutical company focused on the development, marketing and sale of innovative treatments and therapies, including those in the rare and orphan disease categories. Principles of consolidation —The consolidated financial statements include the accounts of the Company, EMI and EMI’s wholly‑owned subsidiary, Emmaus Medical, Inc., and Emmaus Medical, Inc.’s wholly‑owned subsidiaries. All significant intercompany transactions have been eliminated. The preparation of the consolidated financial statements requires the use of management estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses for the reported period. Actual results could differ materially from those estimates. Restatement of Prior Period Amounts — In connection with the preparation of our December 31, 2019 consolidated financial statements, we identified the following material errors in our condensed consolidated financial statements as of and for the three months and six months ended June 30, 2019. 1. The misclassification as equity of warrants issued by EMI in October of 2018, which warrants should have been accounted for as liabilities based upon fair value; and 2. The erroneous consolidation as a variable interest entity, or VIE, of EMI’s interest in EJ Holdings, Inc., which should have been accounted for based upon the equity method. 3. The misstatement of the fair value of cashless exercise warrants originally recorded in the Consolidated Statements of Operations and Comprehensive Loss, which fair value should have been recorded in additional paid-in capital in the Consolidated Balance Sheets. 4. In addition to the errors described above, the restated financial statements also include adjustments to correct certain immaterial errors identified during the audit of the Company’s financial statements for the year ended December 31, 2019. EMMAUS LIFE SCIENCES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited) As of June 30, 2019 Previously Reported Adjustment Restated ASSETS CURRENT ASSETS Cash and cash equivalents $ 15,169 $ (12,222 ) (a) $ 2,947 Accounts receivable, net 1,981 301 (c) 2,282 Inventories, net 5,906 — 5,906 Investment in marketable securities 32,890 — 32,890 Prepaid expenses and other current assets 703 (107 ) (a), (c) 596 Total current assets 56,649 (12,028 ) 44,621 Property and equipment, net 145 — 145 Equity method investment — 13,366 (a) 13,366 Right of use assets 4,285 — 4,285 Deposits and other assets 412 — 412 Total other assets 4,697 13,366 18,063 Total assets $ 61,491 $ 1,338 $ 62,829 LIABILITIES AND STOCKHOLDERS’ DEFICIT CURRENT LIABILITIES Accounts payable and accrued expenses $ 11,455 $ 62 (a), (c) $ 11,517 Operating lease liabilities, current portion 857 — 857 Other current liabilities 5,259 2 (c) 5,261 Warrant derivative liabilities — 9,023 (b), (c) 9,023 Notes payable, net of discount 11,163 91 (b) 11,254 Notes payable to related parties 470 — 470 Convertible notes payable, net of discount 13,867 — 13,867 Convertible notes payable to related parties, net of discount 14,180 — 14,180 Total current liabilities 57,251 9,178 66,429 Operating lease liabilities, less current portion 3,781 — 3,781 Other long-term liabilities 35,330 — 35,330 Warrant derivative liabilities 1,200 (1,200 ) (c) — Notes payable, net of discount, less current portion 703 (703 ) (b) — Convertible notes payable, net of discount, less current portion 450 — 450 Total liabilities 98,715 7,275 105,990 STOCKHOLDERS’ DEFICIT Preferred stock — par value $0.001 per share, 20,000,000 shares authorized, none issued or outstanding — — — Common stock — par value $0.001 per share, 250,000,000 shares authorized, 37,880,211 shares outstanding at June 30, 2019 36 2 (d) 38 Additional paid-in capital 153,084 10,164 (b), (e) 163,248 Accumulated other comprehensive income (loss) (56 ) — (56 ) Accumulated deficit (189,503 ) (16,888 ) (e) (206,391 ) Total stockholders’ deficit (36,439 ) (6,722 ) (43,161 ) Noncontrolling interest (785 ) 785 (a) — Total liabilities & stockholders’ deficit $ 61,491 $ 1,338 $ 62,829 (a) EJ Holdings adjustments: the correction of this misstatement resulted in increases of $13.4 million in equity method investment, $172,000 in accounts payable and accrued expenses, and $785,000 in non-controlling interest and decreases of $12.2 million in cash and cash equivalent and $187,000 in prepaid expenses and other current assets. (b) Warrant adjustments: the correction of this misstatement resulted in increases of $7.8 million in warrant derivative current liabilities, and $90,000 in short-term note payable and decreases of $703,000 in long-term notes payable and $9.7 million in additional paid-in capital. (c) Corrections of other misstatement: period adjustment and reclassification of variable consideration resulted in an increase of $301,000 in accounts receivable and a decrease of $110,000 in accounts payable and accrued expenses, a decrease of $10,000 in income tax receivable and an increase of $24,000 in income tax payable; a reclassification of GPB warrants resulted an increase of short-term warrant liability and a decrease of long-term warrant liability of $1.2 million; and correction of tax provision resulted an increase of $90,000 in income tax receivable and a decrease of $24,000 in income tax payable. (d) Retrospective adjustments made to common stock resulted from recapitalization transaction in July 2019. (e) Carryforward impact on 2018 restatement adjustments, including cashless warrant adjustments which resulted in an increase in additional paid-in capital and a decrease in retained earnings of $18.3 million. EMMAUS LIFE SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (In thousands, except share and per share amount) (Unaudited) Three months ended June 30, 2019 Six months ended June 30,2019 Previously Reported Adjustment Restated Previously Reported Adjustment Restated REVENUES, NET $ 5,869 $ (376 ) (c) $ 5,493 $ 11,176 $ (976 ) (c) $ 10,200 COST OF GOODS SOLD 195 69 (c) 264 395 128 (c) 523 GROSS PROFIT 5,674 (445 ) 5,229 10,781 (1,104 ) 9,677 OPERATING EXPENSES Research and development 540 — 540 1,053 — 1,053 Selling 1,903 (12 ) (c) 1,891 3,388 (18 ) (c) 3,370 General and administrative 3,851 (1,169 ) (a), (c) 2,682 7,532 (1,113 ) (a), (c) 6,419 Total operating expenses 6,294 (1,181 ) 5,113 11,973 (1,131 ) 10,842 INCOME (LOSS) FROM OPERATIONS (620 ) 736 116 (1,192 ) 27 (1,165 ) OTHER INCOME (EXPENSE) Change in fair value of warrant derivative liabilities 247 607 (b) 854 199 (283 ) (b) (84 ) Net losses on investment in marketable securities and long-term investment (10,537 ) — (10,537 ) (16,994 ) — (16,994 ) Losses on equity method investment — (458 ) (a) (458 ) — (449 ) (a) (449 ) Interest and other income (loss) 274 33 (a), (c) 307 163 67 (a), (c) 230 Interest expense (8,474 ) 647 (b), (c) (7,827 ) (15,439 ) (1,000 ) (b), (c) (16,439 ) Total other income (expenses) (18,490 ) 829 (17,661 ) (32,071 ) (1,665 ) (33,736 ) LOSS BEFORE INCOME TAXES (19,110 ) 1,565 (17,545 ) (33,263 ) (1,638 ) (34,901 ) INCOME TAXES (BENEFIT) 217 (166 ) (c) 51 217 (114 ) (c) 103 NET LOSS INCLUDING NONCONTROLLING INTERESTS (19,327 ) 1,731 (17,596 ) (33,480 ) (1,524 ) (35,004 ) Net (income) loss attributable to noncontrolling interests 688 (688 ) (a) — 674 (674 ) (a) — NET LOSS ATTRIBUTABLE TO THE COMPANY (18,639 ) 1,043 (17,596 ) (32,806 ) (2,198 ) (35,004 ) COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS) Foreign currency translation adjustments (9 ) 15 (a) 6 (2 ) 15 (a) 13 Other comprehensive income (loss) (9 ) 15 6 (2 ) 15 13 COMPREHENSIVE INCOME (LOSS) (19,336 ) 1,746 (17,590 ) (33,482 ) (1,509 ) (34,991 ) Amounts attributable to noncontrolling interest: Net (income) loss attributable to noncontrolling interest 688 (688 ) (a) — 674 (674 ) (a) — Foreign currency translation adjustments 15 (15 ) (a) — 14 (14 ) (a) — Comprehensive (income) loss attributable to noncontrolling interest 703 (703 ) — 688 (688 ) — COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY $ (18,633 ) $ 1,043 $ (17,590 ) $ (32,794 ) $ (2,197 ) $ (34,991 ) NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.52 ) $ 0.05 $ (0.47 ) $ (0.91 ) $ (0.01 ) $ (0.93 ) WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING 35,857,944 37,836,678 37,836,678 35,857,944 37,656,058 37,656,058 (a) EJ Holdings adjustments: the correction of this misstatement resulted in increases of $33,000 in interest income and $15,000 in foreign currency translation adjustments and decreases of $1.1million in general and administrative expenses, $458,000 in loss on equity method investment, and $688,000 in net loss attributable to noncontrolling interest for three months ended June 30, 2019. The correction of this misstatement resulted in increases of $67,000 in interest income and $14,000 in foreign currency translation adjustments and decreases of $1.1million in general and administrative expense, $449,000 in loss on equity method investment, and $674,000 in net loss attributable to noncontrolling interest for six months ended June 30, 2019. (b) Warrant adjustments: the correction of this misstatement resulted in increases of $647,000 in interest expense and $607,000 in change in fair value of warrant derivative liabilities for the three months ended June 2019. The correction of this misstatement resulted in an increase of $335,000 in interest expense and a decrease of $283,000 in change in fair value of warrant derivative liabilities for six months ended June 30, 2019. ( c ) Corrections of other misstatement: period adjustment of variable consideration resulted in a decrease of $ in revenue s , net; and reclassification of shipping cost and royalty expense to cost of sales resulted in an increase of $ in cost of sales and decreases of $ and $ in selling expense and general and administrative expense, respectively . Corrections of other misstatement for the six months ended June 30, 2019 : period adjustment of variable consideration resulted in a decrease of $ in revenues, net ; reclassification of shipping cost and royalty expense to cost of sales resulted in an increase of $ in cost of sales and decreases of $ and $ in selling expense and general and administrative expense, respectively; correction of stock modification accounting resulted in a decrease of $ 52,000 in general and administrative expense; correction of accounting treatment for convertible notes resulted in an increase of $ 1.3 million in interest expense ; and correction of income tax provision resulted in an decrease of $ 113,000 in income tax provision . EMMAUS LIFE SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 30, 2019 Previously Reported Adjustment Restated CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (33,480 ) $ (1,524 ) $ (35,004 ) Adjustments to reconcile net loss to net cash flows from operating activities Depreciation and amortization 35 — 35 Impairment loss on long-term investment 524 — 524 Amortization of discount of convertible notes and notes payable 12,770 1,001 13,771 Foreign exchange adjustments on convertible notes and notes payable 49 (257 ) (208 ) Net losses (gains) on equity investment in marketable securities 16,470 — 16,470 Loss on equity method investments 449 449 Share-based compensation 974 52 1,026 Change in fair value of warrant derivative liabilities (199 ) 283 84 Net changes in operating assets and liabilities Accounts receivable (630 ) 266 (364 ) Inventories (1,202 ) — (1,202 ) Prepaid expenses and other current assets 69 80 149 Other non-current assets (4,298 ) — (4,298 ) Accounts payable and accrued expenses 3,226 828 4,054 Income tax receivable and payable — (113 ) (113 ) Deferred revenue 500 — 500 Deferred rent (287 ) — (287 ) Other current liabilities 79 (142 ) (63 ) Other long-term liabilities 3,217 — 3,217 Net cash flows provided by (used in) operating activities (2,183 ) 923 (1,260 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (21 ) — (21 ) Sales of marketable securities 221 — 221 Purchase of marketable securities and investment at cost — — — Net cash flows provided by (used in) investing activities 200 — 200 CASH FLOWS FROM FINANCING ACTIVITIES Payments of convertible notes (3,368 ) — (3,368 ) Proceeds from exercise of warrants 186 — 186 Proceeds from issuance of common stock 3,261 — 3,261 Proceeds from conversion of notes payable to common stock 21 — 21 Net cash flows provided by (used in) financing activities 100 — 100 Effect of exchange rate changes on cash (28 ) 30 2 Net increase (decrease) in cash, cash equivalents and restricted cash (1,911 ) 953 (958 ) Cash and cash equivalents, beginning of period 17,080 (13,175 ) 3,905 Cash and cash equivalents, end of period $ 15,169 $ (12,222 ) $ 2,947 SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES Interest paid $ 934 $ (385 ) $ 549 Income taxes paid $ 217 $ (1 ) $ 216 NON-CASH INVESTING AND FINANCING ACTIVITIES Beneficial conversion feature relating to convertible notes $ 8,764 $ — $ 8,764 Common stocks issued on exercise of warrants $ 186 $ — $ 186 Conversion of notes payable and acrued interest to common stock $ 308 $ — $ 329 Initial recognition of right-of-use lease asset $ 2,922 $ — $ 2,922 Refer to the descriptions of the adjustments in the Condensed Consolidated Balance Sheets and Statements of Comprehensive Loss as of and for the three months ended June 30, 2019 and their impact on net loss above. In addition, a cash flow classification adjustment related to EJ Holdings resulted in a net decrease to cash flows used by operating activities of $953,000 for the six months ended June 30, 2019. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” in the Company’s Annual Report on Form 10K/A for the year ended December 31, 2020. There have been no material changes in these policies or their application. Management has considered all recent accounting pronouncements issued since the last audit of the Company’s consolidated financial statements and believes that these recent pronouncements will not have a material effect on the Company’s condensed consolidated financial statements. Restricted cash — Restricted cash includes proceeds received from the sales of shares of Telcon RF Pharmaceutical, Inc., a Korean corporation (formerly, Telcon Inc. and herein “Telcon”) earmarked for the purchase of Telcon convertible bond per the December 23, 2019 agreement with Telcon. See Note 5 for the additional details. Reconciliation of cash, cash equivalent and restricted cash are as follows: Six Month Ended June 30 2020 2019 Cash and cash equivalents $ 1,032 $ 2,947 Restricted cash 7 — Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 1,039 $ 2,947 Net loss per share — In accordance with ASC 260, “Earnings per Share, ” the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding. Dilutive loss per share is computed in a manner similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. As of June 30, 2020 and June 30, 2019, the Company had outstanding potentially dilutive securities exercisable for or convertible into 17,288,829 shares and 17,996,931 shares, respectively, of the Company’s common stock. No potentially dilutive securities were included in the calculation of diluted net loss per share since their effect would be anti-dilutive for all period presented. |
REVENUES
REVENUES | 6 Months Ended |
Jun. 30, 2020 | |
Revenue From Contract With Customer [Abstract] | |
REVENUES | NOTE 3 — REVENUES Revenues disaggregated by category were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Restated 2020 2019 Restated Endari® $ 4,349 $ 5,390 $ 11,063 $ 9,992 Other 11 103 251 208 Revenues, net $ 4,360 $ 5,493 $ 11,314 $ 10,200 The following table summarizes the revenue allowance and accrual activities for the six months ended June 30, 2020 and 2019 (in thousands): Trade Discounts, Allowances and Chargebacks Government Rebates and Other Incentives Returns Total Balance as of December 31, 2019 $ 228 $ 1,354 $ 315 $ 1,897 Provision related to sales in the current year 1,438 1,955 118 3,511 Adjustments related prior period sales 16 (43 ) (43 ) (70 ) Credit and payments made (1,208 ) (1,324 ) — (2,532 ) Balance as of June 30, 2020 $ 474 $ 1,942 $ 390 $ 2,806 Balance as of December 31, 2018 $ 84 $ 798 $ 99 $ 981 Provision related to sales in the current year 649 1,625 121 2,395 Credit and payments made (614 ) (1,135 ) — (1,749 ) Balance as of June 30, 2019, restated $ 119 $ 1,288 $ 220 $ 1,627 The following table summarizes revenues attributable to each of our customers that accounted for 10% or more of our total revenues (as a percentage of total revenues): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Restated 2020 2019 Restated Customer A 55 % 58 % 54 % 61 % Customer B 20 % 25 % 24 % 22 % The Company is party to a distributor agreement with Telcon pursuant to which it granted Telcon exclusive rights to the Company’s prescription grade L-glutamine (“PGLG”) oral powder for the treatment of diverticulosis in South Korea, Japan and China in exchange for Telcon’s payment of a $10 million upfront fee and agreement to purchase from us specified minimum quantities of the finished product. In a related license agreement with Telcon, the Company agreed to use commercially reasonable best efforts to obtain product registration in these territories within three years of obtaining FDA marketing authorization for PGLG in this indication. Telcon has the right to terminate the distributor agreement in certain circumstances for failure to obtain such product registrations, in which event the Company would be obliged to return to Telcon the $10 million upfront fee. The upfront fee of $10 million is included in other long-term liabilities as unearned revenue as of June 30, 2020 and December 31, 2019. Refer Note 11 and Note 13 for additional transaction details. The Company received an upfront payment of $500,000 in connection with entering into a distribution agreement with a strategic partner in 2018 to distribute Endari® in the Middle East and North Africa region. The payment was recorded as unearned revenue and included in other long-term liabilities to be recognized as revenue when the performance obligations are satisfied. The upfront payment of $500,000 is included in other long-term liabilities as unearned revenue as of December 31, 2019. In June 2020, the distribution agreement was terminated and $500,000 up front payment was recognized as other income. |
SELECTED FINANCIAL STATEMENT CA
SELECTED FINANCIAL STATEMENT CAPTIONS - ASSETS | 6 Months Ended |
Jun. 30, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
SELECTED FINANCIAL STATEMENT CAPTIONS - ASSETS | NOTE 4 — SELECTED FINANCIAL STATEMENT CAPTIONS - ASSETS Inventories consisted of the following (in thousands): June 30, 2020 December 31, 2019 Raw materials and components $ 1,500 $ 1,187 Work-in-process 1,836 1,629 Finished goods 4,948 5,204 Inventory reserve (421 ) (49 ) Total $ 7,863 $ 7,971 Prepaid expenses and other current assets consisted of the following (in thousands): June 30, 2020 December 31, 2019 Prepaid insurance $ 271 $ 735 Other prepaid expenses and current assets 899 667 Total $ 1,170 $ 1,402 Property and equipment consisted of the following (in thousands): June 30, 2020 December 31, 2019 Equipment $ 345 $ 335 Leasehold improvements 39 77 Furniture and fixtures 99 95 Total property and equipment $ 483 507 Less: accumulated depreciation (342 ) (356 ) Property and equipment, net $ 141 $ 151 During the three months ended June 30, 2020 and 2019 , depreciation expense s w ere approximately $ 11,000 and $ 14,000 , respectively. During the six months ended June 30, 2020 and 2019 , depreciation expenses w ere approximately $ 23,000 and $ 28,000 , respectively. |
INVESTMENTS
INVESTMENTS | 6 Months Ended |
Jun. 30, 2020 | |
Investments [Abstract] | |
INVESTMENTS | NOTE 5 — INVESTMENTS Equity securities— As of June 30, 2020 and December 31, 2019, the Company held 6,222,837 shares and 6,643,559 shares, respectively, of capital stock of Telcon RF Pharmaceutical, Inc., a Korean corporation (formerly, Telcon Inc. and herein “Telcon”), which were acquired in July 2017 for approximately $31.8 million. As of June 30, 2020, and December 31, 2019, the closing prices per Telecon share on the Korean Securities Dealers Automated Quotations (“KOSDAQ”) were approximately $4.34 and $4.20, respectively. Prior to December 2019, all shares of Telcon common stock were pledged to secure the Company’s obligations under the revised API agreement with Telcon. In December 2019, the API agreement was amended to permit the release of the Telcon shares from the pledge and to permit the Company to sell the shares in exchange for a portion of the net sale proceeds to be used to purchase a 10-year convertible bond of Telcon in the principal amount of approximately $31.8 million to be substituted for the Telcon shares pledged to Telcon to secure the Company’s obligations under the revised API agreement between the Company and Telcon. During the six months ended June 30, 2020, the Company sold 420,772 shares for $2.1 million. Refer to Note 6, 11 and 13 for more information regarding this arrangement. The Company measures all equity investments that do not result in consolidation and are not accounted for under the equity method, at fair value and recognizes any changes in such fair value in earnings. The Company uses quoted market prices to determine the fair value of equity securities with readily determinable fair values. For equity securities without readily determinable fair values, the Company has elected the measurement alternative under which the Company measures these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Management assesses each of these investments on an individual basis. Additionally, on a quarterly basis, management is required to make a qualitative assessment of whether the investment is impaired; however, the Company is not required to determine the fair value of these investments unless impairment indicators existed. When impairment indicators exist, the Company generally uses discounted cash flow analyses to determine the fair value. For the six months ended June 30, 2019, the Company recognized approximately $524,000 in impairment loss on equity securities without readily determinable fair values attributable to an investment in KPS Co., Ltd. As of June 30, 2020 and December 31, 2019, the carrying values of equity securities were included in the following line items in our consolidated balance sheets (in thousands): June 30, 2020 December 31, 2019 Fair Value with Changes Recognized in Income Fair Value with Changes Recognized in Income Marketable securities $ 27,007 $ 27,929 Total equity securities $ 27,007 $ 27,929 Net unrealized loss on marketable securities available-for-sale at June 30, 2020 and June 30, 2019 was approximately $0.8 million and approximately $16.5 million, respectively. Equity method investment – During 2018, the Company and Japan Industrial Partners, Inc., or JIP, formed EJ Holdings to acquire, own and operate an amino acids manufacturing facility in Ube, Japan. As part of the formation, the Company invested approximately $32,000 in exchange for 40% of EJ Holdings voting shares. JIP owns 60% of EJ Holdings voting shares. In October 2018, the Company entered into a loan agreement with EJ Holdings under which the Company made an unsecured loan to EJ Holdings in the amount of $13.6 million. The loan was valued at $13.9 million and $13.8 million as of June 30, 2020 and December 31, 2019, respectively. The loan proceeds were used by EJ Holdings to purchase the Ube facility in December 2019 and pay related taxes. The loan matures on September 30, 2028 and bears interest at the rate of 1% per annum payable annually. The parties also contemplated that the Ube facility will eventually supply the Company with the facility’s output of amino acids, that the operation of the facility will be principally for our benefit and, as such, that major decisions affecting EJ Holdings and the Ube facility will be made by EJ Holdings’ board of directors, a majority of which are representatives of JIP, in consultation with the Company. During the six months ended June 30, 2020, the Company had made additional EJ Holdings is engaged in phasing in the Ube facility, including obtaining FDA and other regulatory approvals for the manufacture of PGLG in accordance with cGMP. EJ Holdings has had no significant revenues since its inception, has depended on loans from the Company to acquire the Ube facility and fund its operations and will continue to be dependent on loans from us or other financing unless and until the Ube facility is activated and EJ Holdings can secure customers for its products. The Company has determined that EJ Holdings is a variable interest entity, or VIE, based upon the facts that the Company provided the loan financing to acquire the Ube facility and the EJ Holdings activities at the facility are principally for the Company’s benefit . JIP, however, owns 60% of EJ Holdings and is entitled to designate a majority of EJ Holdings’ board of directors and its Chief Executive Officer and outside auditors, and, as such, controls the management, business , and operations of EJ Holdings. Accordingly, the Company accounts for its variable interest in EJ Holdings under the equity method. The Company’s share of the losses reported by EJ Holdings are classified as net losses from equity method investment. The investment is evaluated for impairment annually and if facts and circumstances indicate that the carrying value may not be recoverable, an impairment charge would be recorded. The following table sets forth certain financial information of EJ Holdings for the three months ended and the six months ended June 30, 2020 and 2019 (in thousands). Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited) REVENUES, NET $ 61 $ 57 $ 145 $ 114 GROSS PROFIT 61 57 145 114 NET LOSS $ (1,432 ) $ (1,147 ) $ (2,449 ) $ (1,124 ) |
SELECTED FINANCIAL STATEMENT _2
SELECTED FINANCIAL STATEMENT CAPTIONS - LIABILITIES | 6 Months Ended |
Jun. 30, 2020 | |
Payables And Accruals [Abstract] | |
SELECTED FINANCIAL STATEMENT CAPTIONS - LIABILITIES | NOTE 6 — SELECTED FINANCIAL STATEMENT CAPTIONS - LIABILITIES Accounts payable and accrued expenses consisted of the following at June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Accounts payable: Clinical and regulatory expenses $ 311 $ 232 Professional fees 960 1,183 Selling expenses 798 1,303 Manufacturing costs 3,824 4,541 Other vendors 128 18 Total accounts payable 6,021 7,277 Accrued interest payable, related parties 246 42 Accrued interest payable 407 991 Accrued expenses: Payroll expenses 998 891 Government rebates and other rebates 1,943 1,355 Due to EJ Holdings 406 238 Other accrued expenses 356 704 Total accrued expenses 3,703 3,188 Total accounts payable and accrued expenses $ 10,377 $ 11,498 Other long-term liabilities consisted of the following at June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Trade discount $ 26,422 $ 23,242 Unearned revenue 10,000 10,500 Other long-term liabilities 12 8 Total other long-term liabilities $ 36,434 $ 33,750 On June 12, 2017, the Company entered into an API Supply Agreement, as subsequently amended (as so amended, the “API 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 requirements for bulk containers of PGLG. The Company purchased $2.0 million and $2.3 million of PGLG from Telcon in the six months ended June 30, 2020 and June 30, 2019, respectively. As of June 30, 2020 and December 31, 2019, accounts payable to Telcon were $3.7 million. |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 7 — NOTES PAYABLE Notes payable consisted of the following at June 30, 2020 and December 31, 2019 (in thousands): Year Issued Interest Rate Range Term of Notes Conversion Price Principal Outstanding June 30, 2020 Discount Amount June 30, 2020 Carrying Amount June 30, 2020 Shares Underlying June 30, 2020 Notes payable 2013 10% Due on demand — $ 928 $ — $ 928 — 2019 11% Due on demand - 6 months — 2,839 — 2,839 — 2020 1% - 11% Due on demand - 2 years — 992 — 992 — $ 4,759 $ — $ 4,759 — Current $ 4,271 $ — $ 4,271 — Non-current $ 488 $ — $ 488 — Notes payable - related parties 2016 10% Due on demand — $ 20 $ — $ 20 — 2019 10% Due on demand — 14 — 14 — $ 34 $ — $ 34 — Current $ 34 $ — $ 34 — Convertible debentures 2019 10% 18 months $2.00-$9.52 (a) $ 9,200 $ 1,606 $ 7,594 4,638,333 $ 9,200 $ 1,606 $ 7,594 4,638,333 Current $ 9,200 $ 1,606 $ 7,594 4,638,333 Convertible notes payable 2020 12% 3 years $ 10.00 (b) $ 3,150 $ — $ 3,150 — $ 3,150 $ — $ 3,150 — Non-current $ 3,150 $ — $ 3,150 — Total $ 17,143 $ 1,606 $ 15,537 4,638,333 Year Issued Interest Rate Range Term of Notes Conversion Price Principal Outstanding December 31, 2019 Discount Amount December 31, 2019 Carrying Amount December 31, 2019 Shares Underlying Notes December 31, 2019 Notes payable 2013 10% Due on demand — $ 920 $ — $ 920 — 2019 11% Due on demand - 6 months — 2,829 — 2,829 — $ 3,749 $ — $ 3,749 — Current 3,749 — 3,749 — Notes payable - related parties 2016 10% Due on demand — $ 20 $ — $ 20 — 2018 11% Due on demand — 159 — 159 — 2019 10% Due on demand — 14 — 14 — $ 193 $ — $ 193 — Current $ 193 $ — $ 193 — Convertible debentures 2019 10% 18 months $2.00-$9.52 (a) $ 10,200 $ 3,185 $ 7,015 1,080,415 $ 10,200 $ 3,185 $ 7,015 1,080,415 Current $ 10,200 $ 3,185 $ 7,015 1,080,415 Convertible notes payable 2018 10% 2 years $ 10.00 (b) $ 3,000 $ 5 $ 2,995 363,876 $ 3,000 $ 5 $ 2,995 363,876 Current $ 3,000 $ 5 $ 2,995 363,876 Total $ 17,142 $ 3,190 $ 13,952 1,444,291 (a) The notes are convertible to Emmaus Life Sciences, Inc. shares. (b) The notes are convertible to EMI Holding, Inc. shares. The weighted-average stated interest rate of notes payable was 10% as of June 30, 2020 and December 31, 2019. The weighted-average effective annual interest rate of notes payable as of June 30, 2020 and December 31, 2019 was 34% and 66%, respectively, after giving effect to discounts relating to the conversion feature, warrants and deferred financing cost in connection with these notes. As of June 30, 2020, future contractual principal payments due on notes payable were as follows: Year Ending 2020 (six months) $ 9,040 2021 4,732 2022 221 2023 3,150 Total $ 17,143 Immediately prior to the completion of the Merger, all but one of the convertible notes payable were converted into shares of EMI common stock at their respective conversion prices. Upon completion of the Merger, the conversion shares were exchanged for shares of the Company common stock in the same manner as other outstanding shares of common stock of EMI based on the Merger “exchange ratio.” The unconverted convertible note payable is convertible into shares of common stock of EMI at conversion price of $10.00 per share and included in convertible notes payable The Company estimates the total fair value of any beneficial conversion feature and any accompanying warrants in allocating the proceeds from the sale of convertible notes payable. The proceeds allocated to the beneficial conversion feature were determined by taking the estimated fair value of shares underlying the convertible notes less the fair value of the number of shares that would be issued if the conversion rate equaled the fair value of common stock as of the date of issuance. In situations where the notes included both a beneficial conversion feature and a warrant, the proceeds are allocated to the beneficial conversion feature and the warrants based on their relative fair values. The 10% Senior Secured Debentures of EMI make them convertible into shares of common stock of EMI and to provide for adjustments in the conversion shares issuable upon conversion of the Debentures and the conversion price in the event of a merger, reorganization and similar events. Accordingly, upon completion of the Merger the Amended and Restated 10% Senior Secured Convertible Debentures became convertible into shares of common stock of the Company and included in convertible notes payable. The conversion feature of the Amended and Restated 10% Senior Secured Convertible Debentures was separately accounted for at fair value as derivative liabilities under guidance in ASC 815 that is remeasured at fair value on a recurring basis using Level 3 inputs, with any changes in the fair value of the conversion feature liabilities recorded in earnings. The following table sets forth the fair value of the conversion feature liabilities as of June 30, 2020 and December 31, 2019 (in thousands): Six Months Ended Year ended Conversion feature liabilities - Amended and Restated 10% Senior Convertible Debentures June 30, 2020 December 31, 2019 Balance, beginning of period $ 1 $ — Fair value at issuance date — 132 Fair value at debt modification date 118 — Change in fair value included in the statement of comprehensive income (loss) (6 ) (131 ) Balance, end of period $ 113 $ 1 The value and any change in fair value of conversion feature liabilities are determined using a binomial lattice model. The model produces an estimated fair value based on changes in the price of the underlying common stock over successive periods of time. The fair values as of June 30, 2020, the February 21, 2020 modification date and December 31, 2019 were based upon following assumptions: June 30, 2020 February 21, 2020 (Modification date) December 31, 2019 Stock price $ 1.67 $ 1.89 $ 1.97 Conversion price $ 2.00 $ 3.00 $ 9.52 Selected yield 15.73 % 19.12 % 16.77 % Expected volatility (peer group) 100 % 65 % 50 % Expected life (in years) 0.81 1.16 0.81 Expected dividend yield — — — Risk‑free rate Term structure Term structure Term structure See Note 13 for information regarding the prepayment of the Amended and Restated 10% Senior Secured Convertible Debentures. The Company is party to a revolving line of credit agreement with Dr. Niihara, the Company’s Chairman and Chief Executive Officer. Under the agreement, at the Company’s request from time to time, Dr. Niihara may, but is not obligated to, loan or re-loan to the Company up to $1,000,000. Outstanding amounts under the agreement are due and payable upon demand and bear interest, payable monthly, at a variable annual rate equal to the Prime Rate in effect from time to time plus 3%. In addition to the payment of interest, the Company is obligated to pay Dr. Niihara a “tax gross-up” intended to make him whole for federal and state income taxes payable by him with respect to interest paid to him in the previous year. The outstanding balances under the revolving line of credit agreement of $600,000 as of June 30, 2020 and December 31, 2019 were reflected in revolving line of credit, related party on the Consolidated Balance Sheet. With the tax-gross up, the effective annual interest rate on the outstanding balance as of June 30, 2020 was 10.4%. The revolving line of credit agreement will expire on November 22, 2022. Refer to Note 12 for more information regarding this arrangement. On May 8, 2020, the Company received a loan in the amount of $ 797,840 under the Small Business Administration Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loan, which is in the form of a Promissory Note dated April 29, 2020, matures on April 29, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on December 8, 2020 unless the PPP loan is forgiven prior to the date of the first monthly payment or the loan forgiveness process has commenced. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. The loan and accrued interest are forgivable after a specific period as long as the Company uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The Company has applied for PPP loan forgiveness on October 30, 2020. There is no assurance that the loan will be forgiven. The amount of loan forgiveness would be reduced if the Company were to terminate employees or reduce salaries during such period. The PPP loan was included in notes payable on the Condensed Consolidated Balance Sheet. |
STOCKHOLDERS' DEFICIT
STOCKHOLDERS' DEFICIT | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders Equity Note [Abstract] | |
STOCKHOLDERS' DEFICIT | NOTE 8 — STOCKHOLDERS’ DEFICIT Purchase Agreement with GPB —On December 29, 2017, the Company entered into the Purchase Agreement with GPB Debt Holdings II, LLC (“GPB”), pursuant to which the Company issued to GPB a $13 million senior secured convertible promissory note (the “GPB Note”) for an aggregate purchase price of $12.5 million, reflecting a 4.0% original issue discount. In connection with the issuance of GPB Note, the Company issued to GPB a warrant (the “GPB Warrant”) to purchase up to 240,764 of common stock at an exercise price of $10.80 per share, with customary adjustments for stock splits, stock dividends and other recapitalization events. The GPB Warrant became exercisable six months after issuance and has a term of five years from the initial exercise date. The Company determined that under ASC 815-40, GPB Warrant should be separately recognized at fair value as a liability. The warrant liability is remeasured at fair value on a recurring basis using Level 3 inputs and any change in the fair value of the liability is recorded in earnings. The following table presents the change in fair value of the GPB Warrant as of June 30, 2020 and December 31, 2019 (in thousands): Six Months Ended Year Ended June 30, 2020 December 31, 2019 Warrant Liability - GPB Warrants Warrants Balance, beginning of period $ 38 $ 1,399 Change in fair value included in the statement of comprehensive income (loss) 88 (1,361 ) Balance, end of period $ 126 $ 38 The fair value of the warrant derivative liability was determined using the Black-Scholes option pricing model. The value as of the dates set forth in the table above was based on upon following assumptions: June 30, 2020 December 31, 2019 Stock price $ 1.67 $ 1.97 Risk‑free interest rate 0.18 % 1.64 % Expected volatility (peer group) 106.00 % 60.00 % Expected life (in years) 3.00 3.50 Expected dividend yield 0.00 % 0.00 % Number outstanding 252,802 252,802 Purchase Agreement with Holders of 10% Senior Secured Debentures —In October 2018, EMI sold and issued $12.2 million principal amount of 10% Senior Secured Debentures and common stock purchase warrants to purchase an aggregate of up to 1,220,000 shares of EMI common stock to a limited number of accredited investors. EMI’s obligations under the Debentures were secured by a security interest in substantially all EMI assets and guaranteed by EMI’s U.S. subsidiaries. The net proceeds of the sale of the debentures and warrants were used to fund EMI’s original $13.2 million loan to EJ Holdings in October 2018 reflected on the Company’s consolidated balance sheets. As described in Note 7 above, the Debentures were amended and restated in their entirety in conjunction with the Merger. The common stock purchase warrants issued in conjunction with the original Debentures also were amended and restated in their entirety in conjunction with the Merger. The Amended and Restated 10% Senior Secured Convertible Debentures issued in conjunction with the Merger were convertible at the option of each holder into shares of EMI common stock immediately prior to the Merger at a conversion price of $10.00 a share, subject to adjustment for stock splits, merger reorganizations and other customary events. The related amended and restated warrants were exercisable immediately prior to the Merger for an aggregate of 1,460,000 shares of EMI common stock at an initial exercise price of $10.00 per share. The exercise price of the warrants was subject to reduction in connection with a “going public event” such as the Merger based upon the “VWAP” (i.e., volume-weighted average trading price) of the Company common stock at the time of the Merger. Upon completion of the Merger, the amended and restated warrants became exercisable for shares of the Company common stock and Pursuant to the terms of a securities amendment agreement entered into on February 21, 2020, the Amended and Restated were once again amended and restated in their entirety to extend their maturity date to April 21, 2021 and reduce the conversion price thereof to $3.00 per share from $9.52 per share. The related amended and restate common stock purchase warrants also were amended and restated again to reduce the exercise price thereof to $3.00 per share from $5.87 per share. The newly Amended and Restated and related newly amended and restated warrants provide for so-called full-ratchet anti-dilution adjustments in the event we sell or issue shares of common stock or common stock equivalents at an effective price per share less than the conversion price of the debentures or the exercise price of the warrants, subject to certain exceptions. The conversion price of the Amended and Restated Debentures and the exercise price of the related amended and restated warrants were reduced to $2.00 a share as a result of the Company’s sale of 100,000 shares of common stock at a price of $2.00 a share under the Purchase Agreement with Lincoln Park Capital LLC described below and were subsequently reduced again as described in Note 13. The Company evaluated the common stock purchase warrants issued in connection with the original issuance of the 10% Senior Secured Debentures in October 2018 under ASC 815-40 and concluded that the warrants should be separately recognized at fair value as a liability. The liability is remeasured at fair value on a recurring basis using Level 3 input and any changes in fair value is recorded in earnings. In 2019, the D ebentures were amended and restated to be convertible into common stock of EMI immediately prior to completion of the Merger, which resulted in the related warrants being reclassified to equity. Purchase agreement with Holder of a Convertible Promissory Notes - On June 15, 2020, the holder of a convertible promissory note in the principal amount of $3,150,000 agreed to an extension of the maturity date to June 15, 2023 in exchange for an increase in the interest rate on the note from 11% to 12% per annum. In conjunction with this amendment, the Company issued to the holder of note five-year contingent common stock purchase warrants to purchase a total of up to 1,250,000 shares of the Company common stock at an exercise price of $2.05 a share, subject to certain conditions. Under ASC 815-40, the Company concluded that the warrants issued to the note holder should be recognized at fair value as a liability. The warrant liability is remeasured at fair value on a recurring basis using Level 3 input and any changes in the fair value of liability is recorded in earnings. The following table presents the change in fair value of the warrants as of June 30, 2020 (in thousands): Six Months Ended Warrants Derivative Liabilities - convertible promissory note June 30, 2020 Balance, beginning of period $ — Fair value at issuance date 1,425 Change in fair value included in the statement of comprehensive loss (12 ) Balance, end of period $ 1,413 The fair value of the warrant derivative liabilities was determined using the Black-Scholes Merton model and was based upon following assumptions: June 30, 2020 June 15, 2020 (modification date) Exercise price $ 2.05 $ 2.05 Stock price $ 1.67 $ 1.68 Risk‑free interest rate 0.29 % 0.33 % Expected volatility (peer group) 94.00 % 94.00 % Expected life (in years) 4.96 5.00 Expected dividend yield 0.00 % 0.00 % Warrant shares 1,250,000 1,250,000 A summary of outstanding warrants as of June 30, 2020 and December 31, 2019 is presented below: June 30, 2020 December 31, 2019 Warrants outstanding, beginning of period 4,931,099 3,436,431 Assumed as part of Merger — 1,044,939 Granted 1,250,000 500,729 Exercised — (51,000 ) Cancelled, forfeited or expired (115,953 ) — Warrants outstanding, end of period 6,065,146 4,931,099 A summary of outstanding warrants by year issued and exercise price as of June 30, 2020 is presented below: Outstanding Exercisable Year issued and Exercise Price Number of Warrants Issued Weighted-Average Remaining Contractual Life (Years) Weighted-Average Exercise Price Total Weighted-Average Exercise Price Prior to January 1, 2019 $2.00-$10.76 3,439,007 2.12 $ 4.38 3,439,007 $ 4.38 Prior to Jan 1, 2019 Total 3,439,007 3,439,007 At December 31, 2019 $ 6.12 32,391 3.91 $ 6.12 32,391 $ 6.12 $ 12.00 76,575 3.23 $ 12.00 76,575 $ 12.00 $ 14.04 174,999 2.75 $ 14.04 174,999 $ 14.04 $ 31.50 737,975 2.07 $ 31.50 737,975 $ 31.50 $ 36.24 22,333 2.07 $ 36.24 22,333 $ 36.24 $ 60.00 666 0.50 $ 60.00 666 $ 60.00 $ 2.00 256,200 3.21 $ 2.00 256,200 $ 2.00 $ 7.68 75,000 4.05 $ 7.68 75,000 $ 7.68 2019 Total 1,376,139 1,376,139 At June 30, 2020 $ 2.05 1,250,000 4.96 $ 2.05 — $ — Total 6,065,146 4,815,146 Summary of Plans – Upon completion of the Merger, the EMI Amended and Restated 2011 Stock Incentive Plan was assumed by the Company. The 2011 Stock Incentive Plan permits grants of incentive stock options to employees, including executive officers, and other share-based awards such as stock appreciation rights, restricted stock, stock units, stock bonus and unrestricted stock awards to employees, directors, and consultants for up to 9,000,000 shares of common stock . Options granted under the 2011 Stock Incentive Plan expire ten years after grant. Options granted to directors vest in equal quarterly installments and all other option grants vest over a minimum period of three years, in each case, subject to continuous service with the Company. Each stock option outstanding under the 2011 Stock Incentive Plan at the effective time of the Merger was automatically converted into a stock option to purchase a number of shares of the Company’s common stock and at an exercise price calculated based on the exchange ratio in the Merger. The Company also has an Amended and Restated 2012 Omnibus Incentive Compensation Plan under which the Company may grant stock options and other stock awards to selected employees including officers, and to non-employee consultants and non-employee directors. All outstanding stock award under the 2012 Omnibus Incentive Compensation Plan were fully vested prior to the Merger and the Company intends not to make any further awards thereunder. Stock options —During the six months ended June 30, 2020, the Company granted options to purchase 90,000 shares of common stock. During the year ended December 31, 2019, the Company granted stock options to purchase 50,000 shares of Company common stock. All the options are exercisable for ten years from the date of grant and will vest and become exercisable with respect to the underlying shares as follows: as to one‑third two‑thirds . Management has valued stock options at their date of grant utilizing the Black‑Scholes‑Merton Option pricing model. The fair value of the underlying shares was determined by the market value of stock of similar companies and recent arm’s length transactions involving the sale of the Company’s common stock. Prior the Merger, the Company lacked company-specific historical and implied volatility information for its common stock. Therefore, the expected volatility was calculated using the historical volatility of a comparative public traded companies. The following table presents the assumptions used on recent dates on which options were granted by the Company. June 29, 2020 June 19, 2019 Stock Price $ 1.67 $ 10.30 Exercise Price $ 2.05 $ 10.30 Term 5.5-6 years 6 years Risk-Free Rate 0.28% - 0.38% 1.83% Dividend Yield — — Volatility 78.91%-80.49% 67.16 % A summary of outstanding stock options as of June 30, 2020 and December 31, 2019 is presented below. June 30, 2020 December 31, 2019 Number of Options Weighted‑ Average Exercise Price Number of Options Weighted‑ Average Exercise Price Options outstanding, beginning of period 7,245,350 $ 4.68 6,642,200 $ 4.40 Granted or deemed granted 90,000 $ 2.05 636,683 (a) $ 10.10 Exercised — $ — (167 ) $ 5.00 Cancelled, forfeited and expired (142,818 ) $ 5.08 (33,366 ) $ 11.29 Options outstanding, end of period 7,192,532 $ 4.63 7,245,350 $ 4.68 Options exercisable, end of period 6,978,869 $ 4.58 7,001,680 $ 4.47 Options available for future grant 2,302,475 2,167,150 (a) Upon the Merger, the exercise prices of outstanding EMI options and number of shares of the Company common stock underlying the options were adjusted based upon the exchange ratio in the Merger. During the three months ended June 30, 2020 and June 30, 2019, the Company recognized $0.2 million and $0.4 million, respectively, of share-based compensation expense. During the six months ended June 30, 2020 and June 30, 2019, the Company recognized approximately $0.4 million and $1.0 million, respectively, of share-based compensation expense. As of June 30, 2020, there was approximately $1.1 million of total unrecognized compensation expense related to unvested share-based compensation which is expected to be recognized over the weighted-average remaining vesting period of 1.4 years. Purchase Agreement with Lincoln Park Capital Fund, LLC — On February 28, 2020, the Company entered into a Purchase Agreement with Lincoln Park Capital Fund, LLC (“LPC”), pursuant to which the Company may elect to sell to LPC up to $25,000,000 in shares of its common stock, subject to certain limitations and conditions set forth in the Purchase Agreement, including 100,000 initial shares that the Company sold to LPC at a price of $2.00 per share. Pursuant to the Purchase Agreement, on any business day over the 36-month term of the Purchase Agreement the Company has the right at its discretion and subject to certain conditions to direct LPC to purchase up to 20,000 shares of common stock, which amount is subject to increase under certain circumstances based upon increases in the market price of its common stock. The purchase price of the common stock will be based upon the prevailing market price of common stock at the time of the purchase without any fixed discount. In addition, the Company may direct LPC to purchase additional amounts as accelerated purchases and additional accelerated purchases under certain circumstances. Apart from the initial sale of shares described above, the Company is not obliged to sell any shares of common stock pursuant to the Purchase Agreement, and the Company will control the timing and amount of any such sales, but in no event will LPC be required to purchase more than $ 1,000,000 of common stock in any single regular purchase (excluding accelerated or additional accelerated purchases). Concurrently with the execution of the Purchase Agreement on February 28, 2020, the Company entered into a Registration Rights Agreement pursuant to which the Company agreed to file a prospectus supplement pursuant to Rule 424(b) relating to the sale shares of common stock to be issued and sold to LPC under the Purchase Agreement under our effective shelf registration statement or a new registration statement and to use our reasonable best efforts to keep such registration statement effective during the term of the Purchase Agreement. The Purchase Agreement contains customary representations, warranties, indemnification rights and other obligations and agreements of the company and LPC. There are no limitations and conditions to completing future transactions other than a prohibition against entering into a “Variable Rate Transaction” as defined in the Purchase Agreement. There is no upper limit on the price per share that LPC could be obligated to pay for common stock, but shares will only be sold to LPC on a day the Company’s closing price is less than the floor price as set forth in the Purchase Agreement and if the sale of the shares would not result in LPC and its affiliates having beneficial ownership of more than 4.99% of the Company’s total outstanding shares of common stock. The Company has the right to terminate the Purchase Agreement at any time, at no cost or penalty. As consideration for LPC’s commitments under the Purchase Agreement, the Company issued to LPC 415,743 shares of common stock, which valued at $750,000, recorded as an addition to equity for common stock and reduction for cost of capital raised. As of the date of filing of this Quarterly Report, the Company was out of compliance with certain terms and conditions of the Purchase Agreement and unable to utilize the Purchase Agreement. The Company may seek to bring itself into compliance or seek an appropriate waiver from LPC to regain the ability to utilize the Purchase Agreement, but there can be no assurance when or whether the Company may be able to do so. If the Company is able to utilize the Purchase Agreement, whether or to what extent the Company sells shares of common stock to LPC under the Purchase Agreement will depend on a variety of factors to be determined by the company from time to time, including, among others, its net revenue and other results of operations, its working capital and other funding needs, the prevailing market prices of the Company’s common stock and the availability of other sources of funding. |
INCOME TAX
INCOME TAX | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | NOTE 9 — INCOME TAX The quarterly provision for or benefit from income taxes is computed at an estimated annual effective tax rate to the year-to-date pre-tax income (loss). For the three months and six months ended June 30, 2020, the Company recorded an income tax benefit of $0.5 million and $0.2 million, respectively. For the three months and six months ended June 30, 2019, the Company |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
LEASES | NOTE 10 — LEASES Operating leases — The Company leases its office space under operating leases with unrelated entities. The Company leased 21,293 square feet of office space for our headquarters in Torrance, California, at a base rental of $78,543 per month, which lease will expire on September 30, 2026. The Company also leased an additional 1,850 square feet office space in New York, New York, at a base rent of $8,479, which leases will expire on January 31, 2023. In addition, the Company leased 1,322 square feet of office space in Tokyo, Japan, at a base rent of approximately $3,000, which the lease will expire on September 30, 2020. The rent expense during the three months ended June 30, 2020 and 2019 amounted to approximately $298,000 and $219,000, respectively, and during the six months ended June 30, 2020 and 2019 amounted approximately $609,000 and $419,000, respectively. Future minimum lease payments under the lease agreements were as follows as of June 30, 2020 (in thousands): Amount 2020 (six months) $ 587 2021 1,106 2022 1,138 2023 1,050 2024 and thereafter 2,984 Total lease payments 6,865 Less: Interest 2,040 Present value of lease liabilities $ 4,825 The Company adopted Accounting Standard Update (“ASU”) 2016-02 – Lease (“Topic 842”) on January 1, 2019 using a modified retrospective approach and elected the transition method and the practical expedients permitted under the transition guidance, which allowed to carryforward the historical lease classification and our assessment on whether a contract is or contains a lease. The Company also elected to combine lease and non-lease components, such as common area maintenance charges, as single lease and elected to use the short-term lease exception permitted by the standard As a result of the adoption of Topic 842 on January 1, 2019, the Company recorded a $3.0 million in operating right-of-use asset and $3.3 million in lease liability and derecognized $287,000 of deferred rent as of the adoption date. These were calculated using the present value of the Company’s remaining lease payments using an estimated incremental borrowing rate. The Company also recorded a $29,000 cumulative effect increased on our accumulated deficit as of January 1, 2019. As of June 30, 2020, the Company had an operating lease right-of-use asset of $4.3 million and lease liability of $4.8 million in the balance sheet. The weighted average remaining term of the Company’s leases as of June 30, 2020 was 6.0 years and the weighted-average discount rate was 12.4%. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 11 — COMMITMENTS AND CONTINGENCIES API Supply Agreement — On June 12, 2017, the Company entered into an API Supply Agreement (the “API agreement”) with Telcon pursuant to which Telcon paid the Company approximately $31.8 million in consideration of the right to supply 25% of the Company’s requirements for bulk containers of PGLG for a fifteen-year (the “revised API agreement”) . The revised API agreement is effective for a term of five years and will renew automatically for 10 successive one-year renewal periods, except as either party may determine. In the revised API agreement, the Company has agreed to purchase a total of 940,000 kilograms of PGLG at $50 per kilogram, or a total of $47.0 million, over the term of the agreement. In September 2018, the Company entered into an agreement with Ajinomoto Health and Nutrition North America, Inc. (“Ajinomoto”), the producer of the PGLG, and Telcon to facilitate Telcon’s purchase of PGLG from Ajinomoto for resale to the Company under the revised API agreement. On June 16, 2019, the Company entered into an agreement with Telcon to adjust the price payable to Telcon under the revised API agreement from $50 per kilogram of PGLG purchased from Telcon is recorded in inventory at net realizable value and the excess purchase price is recorded against deferred trade discount. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12 — RELATED PARTY TRANSACTIONS The following table sets forth information relating to our loans from related persons outstanding as of June 30, 2020 and interest paid during the six months ended June 30, 2020 (in thousands): Class Lender Interest Rate Date of Loan Term of Loan Principal Amount Outstanding at June 30, 2020 Amount of Interest Paid Current, Promissory note payable to related parties: Lan T. Tran (2) 10% 4/29/2016 Due on Demand $ 20 $ — Lan T. Tran (2) 11% 2/10/2018 Due on Demand — 35 Lan T. Tran (2) 10% 2/9/2019 Due on Demand 14 — Subtotal 34 35 Revolving line of credit Yutaka Niihara (2) 5.25% 12/27/2019 Due on Demand 600 18 Subtotal 600 18 Total $ 634 $ 53 The following table sets forth information relating to our loans from related persons outstanding at any time during the year ended December 31, 2019: Class Lender Interest Rate Date of Loan Term of Loan Principal Amount Outstanding at December 31, 2019 Highest Principal Outstanding Amount of Principal Repaid or Converted into Stock Amount of Interest Paid Conversion Rate Current, Promissory note payable to related parties: Lan T. Tran (2) 10% 4/29/2016 Due on Demand $ 20 $ 20 $ — $ — — Hope International Hospice, Inc. (1) 10% 6/3/2016 Due on Demand — 250 250 78 — Lan T. Tran (2) 10% 2/9/2017 Due on Demand — 12 — 2 — Yutaka Niihara (2)(3) 10% 9/14/2017 Due on Demand — 904 27 2 — Lan T. Tran (2) 11% 2/10/2018 Due on Demand 159 159 — — — Lan T. Tran (2) 10% 2/9/2019 Due on Demand 14 14 — — — Subtotal 193 1,359 277 82 Current, Convertible notes payable to related parties: Yasushi Nagasaki (2) 10% 6/29/2012 Due on Demand — 200 200 56 $ 3.30 Yutaka & Soomi Niihara (2)(3) 10% 11/16/2015 2 years — 200 200 73 $ 4.50 Wei Peu Zen (3) 10% 11/6/2017 2 years — 5,000 5,000 597 $ 10.00 Profit Preview International Group, Ltd. (4) 10% 2/1/2018 2 years — 4,037 4,037 385 $ 10.00 Profit Preview International Group, Ltd. (4) 10% 3/21/2018 2 years — 5,363 5,363 442 $ 10.00 Subtotal — 14,800 14,800 1,553 Revolving line of credit Yutaka Niihara (2) 5% 12/27/2019 Due on Demand 600 600 — — Subtotal 600 600 — — Total $ 793 $ 16,759 $ 15,077 $ 1,635 ( 1) Dr. Niihara, a Director and the Chairman, and Chief Executive Officer of the Company, is also a director and the Chief Executive Officer of Hope International Hospice, Inc. (2) Officer. (3) Director. (4) Mr. Zen, a Director of the Company, is the sole owner of Profit Preview International Group, Ltd. See Note 7 for a discussion of the Company’s revolving line of credit agreement with Dr. Niihara. See Notes 6 and 11 for a discussion of the Company’s distribution and supply agreements with Telcon, which holds 4,147,491 shares of the Company common stock, or approximately 8.6% of the common stock outstanding as of June 30, 2020. As of June 30, 2020, the Company held |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 13 — SUBSEQUENT EVENTS On September 22, 2020, the Company and EMI entered into a securities amendment agreement (the “September 2020 Amendment”) with the holders of our outstanding 10% Senior Secured Convertible Debentures described above. The September 2020 Amendment amended in certain respects the securities purchase agreement among EMI and the Debenture holders originally entered into on September 8, 2018, as amended by the February 2020 Amendment, and provides that the Debentures are to be amended in certain respects as set forth in the form of Allonge Amendment No. 1 to the debentures included in the September 2020 Agreement (the “Allonge”). Pursuant to the Allonge, the aggregate monthly redemption payments under the Debentures were reduced to $500,000 from $1,000,000 in principal amount and the maturity date of the Debentures was extended from April 21, 2021 to August 31, 2021. The monthly redemption payments resumed in September 2020 and will continue on the first day of each month thereafter commencing October 1, 2020. The remaining principal balance of the Debentures will be due and payable upon maturity, subject to mandatory prepayment in connection with certain “Capital Events” as defined. In consideration of the Debenture holder’s financial accommodations to the Company, the Company issued to the holders, pro rata based upon the relative principal amounts of their Debentures, five-year In October 2018, the Company granted to T.R. Winston and its affiliates for services relating to the September 2020 Amendment common stock purchase warrants to purchase up to 75,000 shares of the Company common stock at an exercise price of $2.10 a share and otherwise on terms identical to the warrants issued to the debenture holders described above. In March 2021, the conversion price of the Debentures, and the exercise price of the these and the other warrants related to the Debentures was reduced to $1.54 in connection with our issuance of shares of common stock to Kainos Medicine, Inc. referred to below in this Note 13. On September 28, 2020, the Company entered into a convertible bond purchase agreement with Telcon pursuant to which it purchased The Telcon convertible bond matures on October 16, 2030 and bears interest at the rate of 2.1% a year, payable quarterly. Beginning on October 16, 2021, the holder of the convertible bond will be entitled on a quarterly basis to call for early redemption of all or any portion of the principal amount of the convertible bond. To the extent not previously redeemed, the principal amount of the bond will be due upon maturity. The convertible bond is convertible at the holder’s option at any time and from time to time into common shares of Telcon at an initial conversion price of approximately $8.00 per share. The conversion price is subject to antidilution adjustments in the event of the issuance of Telcon shares or share equivalents at a price below the market price of Telcon shares, a merger or similar reorganization of Telcon or a stock split, reverse stock split, stock dividend or similar event. In connection with the purchase of the convertible bond, the Company entered into a call option agreement dated September 28, 2020 with Telcon pursuant to which Telcon or its designee is entitled to repurchase, at par, up to 50% in principal amount of the convertible bond commencing October 16, 2021 and prior to maturity. If the Company transfers the convertible bond, it will be obliged under the call option agreement to see to it that the transferee is bound by such call option. On October 28, 2020, the Company entered into a loan agreement with EJ Holdings pursuant to which it agreed to loan to EJ Holdings a total of approximately $6.5 million, in monthly installments through March 2021, including approximately $4.0 million, loaned through December 31, 2020. The loans will be unsecured general obligations of EJ Holdings, will bear interest at a nominal annual rate payable on September 30 of each year beginning in 2021 and will be due and payable in a lump sum at maturity on September 30, 2028. The proceeds of the loans will be used by EJ Holdings to fund its activities and operations at its Ube facility as described under “Equity method investment” in Note 5 above. On February 9, 2021, the Company entered into a securities purchase agreement with an effective date of February 8, 2021 pursuant to which the Company agreed to sell and issue to the purchasers thereunder in a private placement pursuant to Rule 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D thereunder a total of up to $17 million in principal amount of convertible promissory notes of the Company for a purchase price equal to the principal amount thereof. As of April 5, 2021, the Company had sold approximately $14.5 million of the convertible promissory notes. Of the net proceeds from the sale of the convertible promissory notes, $6.2 million was used to prepay the outstanding Amended and Restated 10% Senior Secured Convertible Debentures as described above. Commencing one year from the original issue date, the convertible promissory notes will be convertible at the option of the holder into shares of the Company common stock at an initial conversion price of $1.48 per share, which equaled the “Average VWAP” (as defined) of our common stock on the effective date. The initial conversion price will be adjusted as of the end of each three-month period following the original issue date, commencing May 31, 2021, to equal the Average VWAP as of the end of such three-month period if such Average VWAP is less than the then-conversion price. The conversion price will be subject to further adjustment in the event of a stock split, reverse stock split or certain other events specified in the convertible promissory notes. The convertible promissory notes bear interest at the rate of 2% per annum payable semi-annually on the last business day of August and January of each year and will mature on the 3rd anniversary of the original issue date. The convertible promissory notes will become prepayable in whole or in part at the election of the holders on or after February 28, 2022 if our common shall not have been approved for listing on the NYSE American, the Nasdaq Capital Market or other “Trading Market” (as defined). The Company will be entitled to prepay up to 50% of the principal amount of the convertible promissory notes at any time after the first anniversary and on or before the second anniversary of the original issue date for a prepayment amount equal to the principal amount being prepaid, accrued and unpaid interest thereon and a prepayment premium equal to 50% of such principal amount. The convertible promissory notes are general, unsecured obligations of the Company. Effective February 22, 2021, the Company’s subsidiary, Emmaus Medical, Inc., or Emmaus Medical, entered into a purchase and sale agreement with Prestige Capital Finance, LLC, or Prestige Capital, pursuant to which Emmaus Medical may offer and sell to Prestige Capital from time to time eligible accounts receivable in exchange for Prestige Capital’s down payment, or advance, to Emmaus Medical of 70% (subject to increase to 75%) of the face amount of the accounts receivable, subject to a $7,500,000 cap on advances at any time. The balance of the face amount of the accounts receivable will be reserved by Prestige Capital and paid to Emmaus Medical, less discount fees of Prestige Capital ranging from 2.25% to 7.25% of the face amount, as and when Prestige Capital collects the entire face amount of the accounts receivable. Emmaus Medical’s obligations to Prestige Capital under the purchase and sale agreement are secured by a security interest in the accounts receivable and all or substantially all other assets of Emmaus Medical. In connection with the purchase and sale agreement, the Company agreed to guarantee Emmaus Medical’s obligations under the purchase and sale agreement. The Company’s obligations under the guarantee are unsecured. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Organization and Nature of Operations | Organization and Nature of Operations The Company is a commercial-stage biopharmaceutical company engaged in the discovery, development, marketing and sales of innovative treatments and therapies primarily for rare and orphan diseases. On July 17, 2019, we completed a merger transaction with EMI Holding, Inc., formerly known as Emmaus Life Sciences, Inc. (“EMI”), into a subsidiary of the Company (the “Merger”), with EMI surviving the Merger as a wholly owned subsidiary. Immediately after completion of the Merger, we changed our name to “Emmaus Life Sciences, Inc.” The Merger was treated as a reverse recapitalization under the acquisition method of accounting in accordance with accounting principles generally accepted in the U.S. For accounting purposed, EMI was considered to have acquired us. The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes. In connection with and prior to the Merger, we contributed and transferred to Telemynd, Inc. (“Telemynd”), a newly formed, wholly owned subsidiary of the Company, all or substantially all our historical business, assets and liabilities and our board of directors declared a stock dividend of one share of the Telemynd common stock held by the Company for each outstanding share of our common stock after giving effect to a 1-for-6 reverse stock split of our outstanding shares of common stock. As a result of the spin-off and the Merger, our ongoing business became EMI’s business, which is that of a commercial-stage biopharmaceutical company focused on the development, marketing and sale of innovative treatments and therapies, including those in the rare and orphan disease categories. |
Principles of consolidation | Principles of consolidation —The consolidated financial statements include the accounts of the Company, EMI and EMI’s wholly‑owned subsidiary, Emmaus Medical, Inc., and Emmaus Medical, Inc.’s wholly‑owned subsidiaries. All significant intercompany transactions have been eliminated. The preparation of the consolidated financial statements requires the use of management estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses for the reported period. Actual results could differ materially from those estimates. |
Restatement of Prior Period Amounts | Restatement of Prior Period Amounts — In connection with the preparation of our December 31, 2019 consolidated financial statements, we identified the following material errors in our condensed consolidated financial statements as of and for the three months and six months ended June 30, 2019. 1. The misclassification as equity of warrants issued by EMI in October of 2018, which warrants should have been accounted for as liabilities based upon fair value; and 2. The erroneous consolidation as a variable interest entity, or VIE, of EMI’s interest in EJ Holdings, Inc., which should have been accounted for based upon the equity method. 3. The misstatement of the fair value of cashless exercise warrants originally recorded in the Consolidated Statements of Operations and Comprehensive Loss, which fair value should have been recorded in additional paid-in capital in the Consolidated Balance Sheets. 4. In addition to the errors described above, the restated financial statements also include adjustments to correct certain immaterial errors identified during the audit of the Company’s financial statements for the year ended December 31, 2019. EMMAUS LIFE SCIENCES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited) As of June 30, 2019 Previously Reported Adjustment Restated ASSETS CURRENT ASSETS Cash and cash equivalents $ 15,169 $ (12,222 ) (a) $ 2,947 Accounts receivable, net 1,981 301 (c) 2,282 Inventories, net 5,906 — 5,906 Investment in marketable securities 32,890 — 32,890 Prepaid expenses and other current assets 703 (107 ) (a), (c) 596 Total current assets 56,649 (12,028 ) 44,621 Property and equipment, net 145 — 145 Equity method investment — 13,366 (a) 13,366 Right of use assets 4,285 — 4,285 Deposits and other assets 412 — 412 Total other assets 4,697 13,366 18,063 Total assets $ 61,491 $ 1,338 $ 62,829 LIABILITIES AND STOCKHOLDERS’ DEFICIT CURRENT LIABILITIES Accounts payable and accrued expenses $ 11,455 $ 62 (a), (c) $ 11,517 Operating lease liabilities, current portion 857 — 857 Other current liabilities 5,259 2 (c) 5,261 Warrant derivative liabilities — 9,023 (b), (c) 9,023 Notes payable, net of discount 11,163 91 (b) 11,254 Notes payable to related parties 470 — 470 Convertible notes payable, net of discount 13,867 — 13,867 Convertible notes payable to related parties, net of discount 14,180 — 14,180 Total current liabilities 57,251 9,178 66,429 Operating lease liabilities, less current portion 3,781 — 3,781 Other long-term liabilities 35,330 — 35,330 Warrant derivative liabilities 1,200 (1,200 ) (c) — Notes payable, net of discount, less current portion 703 (703 ) (b) — Convertible notes payable, net of discount, less current portion 450 — 450 Total liabilities 98,715 7,275 105,990 STOCKHOLDERS’ DEFICIT Preferred stock — par value $0.001 per share, 20,000,000 shares authorized, none issued or outstanding — — — Common stock — par value $0.001 per share, 250,000,000 shares authorized, 37,880,211 shares outstanding at June 30, 2019 36 2 (d) 38 Additional paid-in capital 153,084 10,164 (b), (e) 163,248 Accumulated other comprehensive income (loss) (56 ) — (56 ) Accumulated deficit (189,503 ) (16,888 ) (e) (206,391 ) Total stockholders’ deficit (36,439 ) (6,722 ) (43,161 ) Noncontrolling interest (785 ) 785 (a) — Total liabilities & stockholders’ deficit $ 61,491 $ 1,338 $ 62,829 (a) EJ Holdings adjustments: the correction of this misstatement resulted in increases of $13.4 million in equity method investment, $172,000 in accounts payable and accrued expenses, and $785,000 in non-controlling interest and decreases of $12.2 million in cash and cash equivalent and $187,000 in prepaid expenses and other current assets. (b) Warrant adjustments: the correction of this misstatement resulted in increases of $7.8 million in warrant derivative current liabilities, and $90,000 in short-term note payable and decreases of $703,000 in long-term notes payable and $9.7 million in additional paid-in capital. (c) Corrections of other misstatement: period adjustment and reclassification of variable consideration resulted in an increase of $301,000 in accounts receivable and a decrease of $110,000 in accounts payable and accrued expenses, a decrease of $10,000 in income tax receivable and an increase of $24,000 in income tax payable; a reclassification of GPB warrants resulted an increase of short-term warrant liability and a decrease of long-term warrant liability of $1.2 million; and correction of tax provision resulted an increase of $90,000 in income tax receivable and a decrease of $24,000 in income tax payable. (d) Retrospective adjustments made to common stock resulted from recapitalization transaction in July 2019. (e) Carryforward impact on 2018 restatement adjustments, including cashless warrant adjustments which resulted in an increase in additional paid-in capital and a decrease in retained earnings of $18.3 million. EMMAUS LIFE SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (In thousands, except share and per share amount) (Unaudited) Three months ended June 30, 2019 Six months ended June 30,2019 Previously Reported Adjustment Restated Previously Reported Adjustment Restated REVENUES, NET $ 5,869 $ (376 ) (c) $ 5,493 $ 11,176 $ (976 ) (c) $ 10,200 COST OF GOODS SOLD 195 69 (c) 264 395 128 (c) 523 GROSS PROFIT 5,674 (445 ) 5,229 10,781 (1,104 ) 9,677 OPERATING EXPENSES Research and development 540 — 540 1,053 — 1,053 Selling 1,903 (12 ) (c) 1,891 3,388 (18 ) (c) 3,370 General and administrative 3,851 (1,169 ) (a), (c) 2,682 7,532 (1,113 ) (a), (c) 6,419 Total operating expenses 6,294 (1,181 ) 5,113 11,973 (1,131 ) 10,842 INCOME (LOSS) FROM OPERATIONS (620 ) 736 116 (1,192 ) 27 (1,165 ) OTHER INCOME (EXPENSE) Change in fair value of warrant derivative liabilities 247 607 (b) 854 199 (283 ) (b) (84 ) Net losses on investment in marketable securities and long-term investment (10,537 ) — (10,537 ) (16,994 ) — (16,994 ) Losses on equity method investment — (458 ) (a) (458 ) — (449 ) (a) (449 ) Interest and other income (loss) 274 33 (a), (c) 307 163 67 (a), (c) 230 Interest expense (8,474 ) 647 (b), (c) (7,827 ) (15,439 ) (1,000 ) (b), (c) (16,439 ) Total other income (expenses) (18,490 ) 829 (17,661 ) (32,071 ) (1,665 ) (33,736 ) LOSS BEFORE INCOME TAXES (19,110 ) 1,565 (17,545 ) (33,263 ) (1,638 ) (34,901 ) INCOME TAXES (BENEFIT) 217 (166 ) (c) 51 217 (114 ) (c) 103 NET LOSS INCLUDING NONCONTROLLING INTERESTS (19,327 ) 1,731 (17,596 ) (33,480 ) (1,524 ) (35,004 ) Net (income) loss attributable to noncontrolling interests 688 (688 ) (a) — 674 (674 ) (a) — NET LOSS ATTRIBUTABLE TO THE COMPANY (18,639 ) 1,043 (17,596 ) (32,806 ) (2,198 ) (35,004 ) COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS) Foreign currency translation adjustments (9 ) 15 (a) 6 (2 ) 15 (a) 13 Other comprehensive income (loss) (9 ) 15 6 (2 ) 15 13 COMPREHENSIVE INCOME (LOSS) (19,336 ) 1,746 (17,590 ) (33,482 ) (1,509 ) (34,991 ) Amounts attributable to noncontrolling interest: Net (income) loss attributable to noncontrolling interest 688 (688 ) (a) — 674 (674 ) (a) — Foreign currency translation adjustments 15 (15 ) (a) — 14 (14 ) (a) — Comprehensive (income) loss attributable to noncontrolling interest 703 (703 ) — 688 (688 ) — COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY $ (18,633 ) $ 1,043 $ (17,590 ) $ (32,794 ) $ (2,197 ) $ (34,991 ) NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.52 ) $ 0.05 $ (0.47 ) $ (0.91 ) $ (0.01 ) $ (0.93 ) WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING 35,857,944 37,836,678 37,836,678 35,857,944 37,656,058 37,656,058 (a) EJ Holdings adjustments: the correction of this misstatement resulted in increases of $33,000 in interest income and $15,000 in foreign currency translation adjustments and decreases of $1.1million in general and administrative expenses, $458,000 in loss on equity method investment, and $688,000 in net loss attributable to noncontrolling interest for three months ended June 30, 2019. The correction of this misstatement resulted in increases of $67,000 in interest income and $14,000 in foreign currency translation adjustments and decreases of $1.1million in general and administrative expense, $449,000 in loss on equity method investment, and $674,000 in net loss attributable to noncontrolling interest for six months ended June 30, 2019. (b) Warrant adjustments: the correction of this misstatement resulted in increases of $647,000 in interest expense and $607,000 in change in fair value of warrant derivative liabilities for the three months ended June 2019. The correction of this misstatement resulted in an increase of $335,000 in interest expense and a decrease of $283,000 in change in fair value of warrant derivative liabilities for six months ended June 30, 2019. ( c ) Corrections of other misstatement: period adjustment of variable consideration resulted in a decrease of $ in revenue s , net; and reclassification of shipping cost and royalty expense to cost of sales resulted in an increase of $ in cost of sales and decreases of $ and $ in selling expense and general and administrative expense, respectively . Corrections of other misstatement for the six months ended June 30, 2019 : period adjustment of variable consideration resulted in a decrease of $ in revenues, net ; reclassification of shipping cost and royalty expense to cost of sales resulted in an increase of $ in cost of sales and decreases of $ and $ in selling expense and general and administrative expense, respectively; correction of stock modification accounting resulted in a decrease of $ 52,000 in general and administrative expense; correction of accounting treatment for convertible notes resulted in an increase of $ 1.3 million in interest expense ; and correction of income tax provision resulted in an decrease of $ 113,000 in income tax provision . EMMAUS LIFE SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 30, 2019 Previously Reported Adjustment Restated CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (33,480 ) $ (1,524 ) $ (35,004 ) Adjustments to reconcile net loss to net cash flows from operating activities Depreciation and amortization 35 — 35 Impairment loss on long-term investment 524 — 524 Amortization of discount of convertible notes and notes payable 12,770 1,001 13,771 Foreign exchange adjustments on convertible notes and notes payable 49 (257 ) (208 ) Net losses (gains) on equity investment in marketable securities 16,470 — 16,470 Loss on equity method investments 449 449 Share-based compensation 974 52 1,026 Change in fair value of warrant derivative liabilities (199 ) 283 84 Net changes in operating assets and liabilities Accounts receivable (630 ) 266 (364 ) Inventories (1,202 ) — (1,202 ) Prepaid expenses and other current assets 69 80 149 Other non-current assets (4,298 ) — (4,298 ) Accounts payable and accrued expenses 3,226 828 4,054 Income tax receivable and payable — (113 ) (113 ) Deferred revenue 500 — 500 Deferred rent (287 ) — (287 ) Other current liabilities 79 (142 ) (63 ) Other long-term liabilities 3,217 — 3,217 Net cash flows provided by (used in) operating activities (2,183 ) 923 (1,260 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (21 ) — (21 ) Sales of marketable securities 221 — 221 Purchase of marketable securities and investment at cost — — — Net cash flows provided by (used in) investing activities 200 — 200 CASH FLOWS FROM FINANCING ACTIVITIES Payments of convertible notes (3,368 ) — (3,368 ) Proceeds from exercise of warrants 186 — 186 Proceeds from issuance of common stock 3,261 — 3,261 Proceeds from conversion of notes payable to common stock 21 — 21 Net cash flows provided by (used in) financing activities 100 — 100 Effect of exchange rate changes on cash (28 ) 30 2 Net increase (decrease) in cash, cash equivalents and restricted cash (1,911 ) 953 (958 ) Cash and cash equivalents, beginning of period 17,080 (13,175 ) 3,905 Cash and cash equivalents, end of period $ 15,169 $ (12,222 ) $ 2,947 SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES Interest paid $ 934 $ (385 ) $ 549 Income taxes paid $ 217 $ (1 ) $ 216 NON-CASH INVESTING AND FINANCING ACTIVITIES Beneficial conversion feature relating to convertible notes $ 8,764 $ — $ 8,764 Common stocks issued on exercise of warrants $ 186 $ — $ 186 Conversion of notes payable and acrued interest to common stock $ 308 $ — $ 329 Initial recognition of right-of-use lease asset $ 2,922 $ — $ 2,922 Refer to the descriptions of the adjustments in the Condensed Consolidated Balance Sheets and Statements of Comprehensive Loss as of and for the three months ended June 30, 2019 and their impact on net loss above. In addition, a cash flow classification adjustment related to EJ Holdings resulted in a net decrease to cash flows used by operating activities of $953,000 for the six months ended June 30, 2019. |
Restricted Cash | Restricted cash — Restricted cash includes proceeds received from the sales of shares of Telcon RF Pharmaceutical, Inc., a Korean corporation (formerly, Telcon Inc. and herein “Telcon”) earmarked for the purchase of Telcon convertible bond per the December 23, 2019 agreement with Telcon. See Note 5 for the additional details. Reconciliation of cash, cash equivalent and restricted cash are as follows: Six Month Ended June 30 2020 2019 Cash and cash equivalents $ 1,032 $ 2,947 Restricted cash 7 — Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 1,039 $ 2,947 |
Net loss per share | Net loss per share — In accordance with ASC 260, “Earnings per Share, ” the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding. Dilutive loss per share is computed in a manner similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. As of June 30, 2020 and June 30, 2019, the Company had outstanding potentially dilutive securities exercisable for or convertible into 17,288,829 shares and 17,996,931 shares, respectively, of the Company’s common stock. No potentially dilutive securities were included in the calculation of diluted net loss per share since their effect would be anti-dilutive for all period presented. |
BASIS OF PRESENTATION (Tables)
BASIS OF PRESENTATION (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Schedule of Error Corrections and Prior Period Adjustments | EMMAUS LIFE SCIENCES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited) As of June 30, 2019 Previously Reported Adjustment Restated ASSETS CURRENT ASSETS Cash and cash equivalents $ 15,169 $ (12,222 ) (a) $ 2,947 Accounts receivable, net 1,981 301 (c) 2,282 Inventories, net 5,906 — 5,906 Investment in marketable securities 32,890 — 32,890 Prepaid expenses and other current assets 703 (107 ) (a), (c) 596 Total current assets 56,649 (12,028 ) 44,621 Property and equipment, net 145 — 145 Equity method investment — 13,366 (a) 13,366 Right of use assets 4,285 — 4,285 Deposits and other assets 412 — 412 Total other assets 4,697 13,366 18,063 Total assets $ 61,491 $ 1,338 $ 62,829 LIABILITIES AND STOCKHOLDERS’ DEFICIT CURRENT LIABILITIES Accounts payable and accrued expenses $ 11,455 $ 62 (a), (c) $ 11,517 Operating lease liabilities, current portion 857 — 857 Other current liabilities 5,259 2 (c) 5,261 Warrant derivative liabilities — 9,023 (b), (c) 9,023 Notes payable, net of discount 11,163 91 (b) 11,254 Notes payable to related parties 470 — 470 Convertible notes payable, net of discount 13,867 — 13,867 Convertible notes payable to related parties, net of discount 14,180 — 14,180 Total current liabilities 57,251 9,178 66,429 Operating lease liabilities, less current portion 3,781 — 3,781 Other long-term liabilities 35,330 — 35,330 Warrant derivative liabilities 1,200 (1,200 ) (c) — Notes payable, net of discount, less current portion 703 (703 ) (b) — Convertible notes payable, net of discount, less current portion 450 — 450 Total liabilities 98,715 7,275 105,990 STOCKHOLDERS’ DEFICIT Preferred stock — par value $0.001 per share, 20,000,000 shares authorized, none issued or outstanding — — — Common stock — par value $0.001 per share, 250,000,000 shares authorized, 37,880,211 shares outstanding at June 30, 2019 36 2 (d) 38 Additional paid-in capital 153,084 10,164 (b), (e) 163,248 Accumulated other comprehensive income (loss) (56 ) — (56 ) Accumulated deficit (189,503 ) (16,888 ) (e) (206,391 ) Total stockholders’ deficit (36,439 ) (6,722 ) (43,161 ) Noncontrolling interest (785 ) 785 (a) — Total liabilities & stockholders’ deficit $ 61,491 $ 1,338 $ 62,829 (a) EJ Holdings adjustments: the correction of this misstatement resulted in increases of $13.4 million in equity method investment, $172,000 in accounts payable and accrued expenses, and $785,000 in non-controlling interest and decreases of $12.2 million in cash and cash equivalent and $187,000 in prepaid expenses and other current assets. (b) Warrant adjustments: the correction of this misstatement resulted in increases of $7.8 million in warrant derivative current liabilities, and $90,000 in short-term note payable and decreases of $703,000 in long-term notes payable and $9.7 million in additional paid-in capital. (c) Corrections of other misstatement: period adjustment and reclassification of variable consideration resulted in an increase of $301,000 in accounts receivable and a decrease of $110,000 in accounts payable and accrued expenses, a decrease of $10,000 in income tax receivable and an increase of $24,000 in income tax payable; a reclassification of GPB warrants resulted an increase of short-term warrant liability and a decrease of long-term warrant liability of $1.2 million; and correction of tax provision resulted an increase of $90,000 in income tax receivable and a decrease of $24,000 in income tax payable. (d) Retrospective adjustments made to common stock resulted from recapitalization transaction in July 2019. (e) Carryforward impact on 2018 restatement adjustments, including cashless warrant adjustments which resulted in an increase in additional paid-in capital and a decrease in retained earnings of $18.3 million. EMMAUS LIFE SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (In thousands, except share and per share amount) (Unaudited) Three months ended June 30, 2019 Six months ended June 30,2019 Previously Reported Adjustment Restated Previously Reported Adjustment Restated REVENUES, NET $ 5,869 $ (376 ) (c) $ 5,493 $ 11,176 $ (976 ) (c) $ 10,200 COST OF GOODS SOLD 195 69 (c) 264 395 128 (c) 523 GROSS PROFIT 5,674 (445 ) 5,229 10,781 (1,104 ) 9,677 OPERATING EXPENSES Research and development 540 — 540 1,053 — 1,053 Selling 1,903 (12 ) (c) 1,891 3,388 (18 ) (c) 3,370 General and administrative 3,851 (1,169 ) (a), (c) 2,682 7,532 (1,113 ) (a), (c) 6,419 Total operating expenses 6,294 (1,181 ) 5,113 11,973 (1,131 ) 10,842 INCOME (LOSS) FROM OPERATIONS (620 ) 736 116 (1,192 ) 27 (1,165 ) OTHER INCOME (EXPENSE) Change in fair value of warrant derivative liabilities 247 607 (b) 854 199 (283 ) (b) (84 ) Net losses on investment in marketable securities and long-term investment (10,537 ) — (10,537 ) (16,994 ) — (16,994 ) Losses on equity method investment — (458 ) (a) (458 ) — (449 ) (a) (449 ) Interest and other income (loss) 274 33 (a), (c) 307 163 67 (a), (c) 230 Interest expense (8,474 ) 647 (b), (c) (7,827 ) (15,439 ) (1,000 ) (b), (c) (16,439 ) Total other income (expenses) (18,490 ) 829 (17,661 ) (32,071 ) (1,665 ) (33,736 ) LOSS BEFORE INCOME TAXES (19,110 ) 1,565 (17,545 ) (33,263 ) (1,638 ) (34,901 ) INCOME TAXES (BENEFIT) 217 (166 ) (c) 51 217 (114 ) (c) 103 NET LOSS INCLUDING NONCONTROLLING INTERESTS (19,327 ) 1,731 (17,596 ) (33,480 ) (1,524 ) (35,004 ) Net (income) loss attributable to noncontrolling interests 688 (688 ) (a) — 674 (674 ) (a) — NET LOSS ATTRIBUTABLE TO THE COMPANY (18,639 ) 1,043 (17,596 ) (32,806 ) (2,198 ) (35,004 ) COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS) Foreign currency translation adjustments (9 ) 15 (a) 6 (2 ) 15 (a) 13 Other comprehensive income (loss) (9 ) 15 6 (2 ) 15 13 COMPREHENSIVE INCOME (LOSS) (19,336 ) 1,746 (17,590 ) (33,482 ) (1,509 ) (34,991 ) Amounts attributable to noncontrolling interest: Net (income) loss attributable to noncontrolling interest 688 (688 ) (a) — 674 (674 ) (a) — Foreign currency translation adjustments 15 (15 ) (a) — 14 (14 ) (a) — Comprehensive (income) loss attributable to noncontrolling interest 703 (703 ) — 688 (688 ) — COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY $ (18,633 ) $ 1,043 $ (17,590 ) $ (32,794 ) $ (2,197 ) $ (34,991 ) NET LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.52 ) $ 0.05 $ (0.47 ) $ (0.91 ) $ (0.01 ) $ (0.93 ) WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING 35,857,944 37,836,678 37,836,678 35,857,944 37,656,058 37,656,058 (a) EJ Holdings adjustments: the correction of this misstatement resulted in increases of $33,000 in interest income and $15,000 in foreign currency translation adjustments and decreases of $1.1million in general and administrative expenses, $458,000 in loss on equity method investment, and $688,000 in net loss attributable to noncontrolling interest for three months ended June 30, 2019. The correction of this misstatement resulted in increases of $67,000 in interest income and $14,000 in foreign currency translation adjustments and decreases of $1.1million in general and administrative expense, $449,000 in loss on equity method investment, and $674,000 in net loss attributable to noncontrolling interest for six months ended June 30, 2019. (b) Warrant adjustments: the correction of this misstatement resulted in increases of $647,000 in interest expense and $607,000 in change in fair value of warrant derivative liabilities for the three months ended June 2019. The correction of this misstatement resulted in an increase of $335,000 in interest expense and a decrease of $283,000 in change in fair value of warrant derivative liabilities for six months ended June 30, 2019. ( c ) Corrections of other misstatement: period adjustment of variable consideration resulted in a decrease of $ in revenue s , net; and reclassification of shipping cost and royalty expense to cost of sales resulted in an increase of $ in cost of sales and decreases of $ and $ in selling expense and general and administrative expense, respectively . Corrections of other misstatement for the six months ended June 30, 2019 : period adjustment of variable consideration resulted in a decrease of $ in revenues, net ; reclassification of shipping cost and royalty expense to cost of sales resulted in an increase of $ in cost of sales and decreases of $ and $ in selling expense and general and administrative expense, respectively; correction of stock modification accounting resulted in a decrease of $ 52,000 in general and administrative expense; correction of accounting treatment for convertible notes resulted in an increase of $ 1.3 million in interest expense ; and correction of income tax provision resulted in an decrease of $ 113,000 in income tax provision . EMMAUS LIFE SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 30, 2019 Previously Reported Adjustment Restated CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (33,480 ) $ (1,524 ) $ (35,004 ) Adjustments to reconcile net loss to net cash flows from operating activities Depreciation and amortization 35 — 35 Impairment loss on long-term investment 524 — 524 Amortization of discount of convertible notes and notes payable 12,770 1,001 13,771 Foreign exchange adjustments on convertible notes and notes payable 49 (257 ) (208 ) Net losses (gains) on equity investment in marketable securities 16,470 — 16,470 Loss on equity method investments 449 449 Share-based compensation 974 52 1,026 Change in fair value of warrant derivative liabilities (199 ) 283 84 Net changes in operating assets and liabilities Accounts receivable (630 ) 266 (364 ) Inventories (1,202 ) — (1,202 ) Prepaid expenses and other current assets 69 80 149 Other non-current assets (4,298 ) — (4,298 ) Accounts payable and accrued expenses 3,226 828 4,054 Income tax receivable and payable — (113 ) (113 ) Deferred revenue 500 — 500 Deferred rent (287 ) — (287 ) Other current liabilities 79 (142 ) (63 ) Other long-term liabilities 3,217 — 3,217 Net cash flows provided by (used in) operating activities (2,183 ) 923 (1,260 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (21 ) — (21 ) Sales of marketable securities 221 — 221 Purchase of marketable securities and investment at cost — — — Net cash flows provided by (used in) investing activities 200 — 200 CASH FLOWS FROM FINANCING ACTIVITIES Payments of convertible notes (3,368 ) — (3,368 ) Proceeds from exercise of warrants 186 — 186 Proceeds from issuance of common stock 3,261 — 3,261 Proceeds from conversion of notes payable to common stock 21 — 21 Net cash flows provided by (used in) financing activities 100 — 100 Effect of exchange rate changes on cash (28 ) 30 2 Net increase (decrease) in cash, cash equivalents and restricted cash (1,911 ) 953 (958 ) Cash and cash equivalents, beginning of period 17,080 (13,175 ) 3,905 Cash and cash equivalents, end of period $ 15,169 $ (12,222 ) $ 2,947 SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES Interest paid $ 934 $ (385 ) $ 549 Income taxes paid $ 217 $ (1 ) $ 216 NON-CASH INVESTING AND FINANCING ACTIVITIES Beneficial conversion feature relating to convertible notes $ 8,764 $ — $ 8,764 Common stocks issued on exercise of warrants $ 186 $ — $ 186 Conversion of notes payable and acrued interest to common stock $ 308 $ — $ 329 Initial recognition of right-of-use lease asset $ 2,922 $ — $ 2,922 Refer to the descriptions of the adjustments in the Condensed Consolidated Balance Sheets and Statements of Comprehensive Loss as of and for the three months ended June 30, 2019 and their impact on net loss above. In addition, a cash flow classification adjustment related to EJ Holdings resulted in a net decrease to cash flows used by operating activities of $953,000 for the six months ended June 30, 2019. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Reconciliation of Cash, Cash Equivalent and Restricted Cash | Reconciliation of cash, cash equivalent and restricted cash are as follows: Six Month Ended June 30 2020 2019 Cash and cash equivalents $ 1,032 $ 2,947 Restricted cash 7 — Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 1,039 $ 2,947 |
REVENUES (Tables)
REVENUES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Summary of revenues disaggregated by category | Revenues disaggregated by category were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Restated 2020 2019 Restated Endari® $ 4,349 $ 5,390 $ 11,063 $ 9,992 Other 11 103 251 208 Revenues, net $ 4,360 $ 5,493 $ 11,314 $ 10,200 |
Revenue Allowance and Accrual Activities | The following table summarizes the revenue allowance and accrual activities for the six months ended June 30, 2020 and 2019 (in thousands): Trade Discounts, Allowances and Chargebacks Government Rebates and Other Incentives Returns Total Balance as of December 31, 2019 $ 228 $ 1,354 $ 315 $ 1,897 Provision related to sales in the current year 1,438 1,955 118 3,511 Adjustments related prior period sales 16 (43 ) (43 ) (70 ) Credit and payments made (1,208 ) (1,324 ) — (2,532 ) Balance as of June 30, 2020 $ 474 $ 1,942 $ 390 $ 2,806 Balance as of December 31, 2018 $ 84 $ 798 $ 99 $ 981 Provision related to sales in the current year 649 1,625 121 2,395 Credit and payments made (614 ) (1,135 ) — (1,749 ) Balance as of June 30, 2019, restated $ 119 $ 1,288 $ 220 $ 1,627 |
Summarizes revenues from each of our customers accounted for 10% or more of total revenues | The following table summarizes revenues attributable to each of our customers that accounted for 10% or more of our total revenues (as a percentage of total revenues): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Restated 2020 2019 Restated Customer A 55 % 58 % 54 % 61 % Customer B 20 % 25 % 24 % 22 % |
SELECTED FINANCIAL STATEMENT _3
SELECTED FINANCIAL STATEMENT CAPTIONS - ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of inventory | Inventories consisted of the following (in thousands): June 30, 2020 December 31, 2019 Raw materials and components $ 1,500 $ 1,187 Work-in-process 1,836 1,629 Finished goods 4,948 5,204 Inventory reserve (421 ) (49 ) Total $ 7,863 $ 7,971 |
Schedule of prepaid expenses and other current assets | Prepaid expenses and other current assets consisted of the following (in thousands): June 30, 2020 December 31, 2019 Prepaid insurance $ 271 $ 735 Other prepaid expenses and current assets 899 667 Total $ 1,170 $ 1,402 |
Schedule of property and equipment | Property and equipment consisted of the following (in thousands): June 30, 2020 December 31, 2019 Equipment $ 345 $ 335 Leasehold improvements 39 77 Furniture and fixtures 99 95 Total property and equipment $ 483 507 Less: accumulated depreciation (342 ) (356 ) Property and equipment, net $ 141 $ 151 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Investments [Abstract] | |
Schedule of carrying values of equity securities | As of June 30, 2020 and December 31, 2019, the carrying values of equity securities were included in the following line items in our consolidated balance sheets (in thousands): June 30, 2020 December 31, 2019 Fair Value with Changes Recognized in Income Fair Value with Changes Recognized in Income Marketable securities $ 27,007 $ 27,929 Total equity securities $ 27,007 $ 27,929 |
Schedule of Certain Financial Information of EJ Holdings | The following table sets forth certain financial information of EJ Holdings for the three months ended and the six months ended June 30, 2020 and 2019 (in thousands). Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) (Unaudited) (Unaudited) REVENUES, NET $ 61 $ 57 $ 145 $ 114 GROSS PROFIT 61 57 145 114 NET LOSS $ (1,432 ) $ (1,147 ) $ (2,449 ) $ (1,124 ) |
SELECTED FINANCIAL STATEMENT _4
SELECTED FINANCIAL STATEMENT CAPTIONS - LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Payables And Accruals [Abstract] | |
Schedule of accounts payable and accrued expenses | Accounts payable and accrued expenses consisted of the following at June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Accounts payable: Clinical and regulatory expenses $ 311 $ 232 Professional fees 960 1,183 Selling expenses 798 1,303 Manufacturing costs 3,824 4,541 Other vendors 128 18 Total accounts payable 6,021 7,277 Accrued interest payable, related parties 246 42 Accrued interest payable 407 991 Accrued expenses: Payroll expenses 998 891 Government rebates and other rebates 1,943 1,355 Due to EJ Holdings 406 238 Other accrued expenses 356 704 Total accrued expenses 3,703 3,188 Total accounts payable and accrued expenses $ 10,377 $ 11,498 |
Schedule of other long-term liabilities | Other long-term liabilities consisted of the following at June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Trade discount $ 26,422 $ 23,242 Unearned revenue 10,000 10,500 Other long-term liabilities 12 8 Total other long-term liabilities $ 36,434 $ 33,750 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Schedule of notes payable | Notes payable consisted of the following at June 30, 2020 and December 31, 2019 (in thousands): Year Issued Interest Rate Range Term of Notes Conversion Price Principal Outstanding June 30, 2020 Discount Amount June 30, 2020 Carrying Amount June 30, 2020 Shares Underlying June 30, 2020 Notes payable 2013 10% Due on demand — $ 928 $ — $ 928 — 2019 11% Due on demand - 6 months — 2,839 — 2,839 — 2020 1% - 11% Due on demand - 2 years — 992 — 992 — $ 4,759 $ — $ 4,759 — Current $ 4,271 $ — $ 4,271 — Non-current $ 488 $ — $ 488 — Notes payable - related parties 2016 10% Due on demand — $ 20 $ — $ 20 — 2019 10% Due on demand — 14 — 14 — $ 34 $ — $ 34 — Current $ 34 $ — $ 34 — Convertible debentures 2019 10% 18 months $2.00-$9.52 (a) $ 9,200 $ 1,606 $ 7,594 4,638,333 $ 9,200 $ 1,606 $ 7,594 4,638,333 Current $ 9,200 $ 1,606 $ 7,594 4,638,333 Convertible notes payable 2020 12% 3 years $ 10.00 (b) $ 3,150 $ — $ 3,150 — $ 3,150 $ — $ 3,150 — Non-current $ 3,150 $ — $ 3,150 — Total $ 17,143 $ 1,606 $ 15,537 4,638,333 Year Issued Interest Rate Range Term of Notes Conversion Price Principal Outstanding December 31, 2019 Discount Amount December 31, 2019 Carrying Amount December 31, 2019 Shares Underlying Notes December 31, 2019 Notes payable 2013 10% Due on demand — $ 920 $ — $ 920 — 2019 11% Due on demand - 6 months — 2,829 — 2,829 — $ 3,749 $ — $ 3,749 — Current 3,749 — 3,749 — Notes payable - related parties 2016 10% Due on demand — $ 20 $ — $ 20 — 2018 11% Due on demand — 159 — 159 — 2019 10% Due on demand — 14 — 14 — $ 193 $ — $ 193 — Current $ 193 $ — $ 193 — Convertible debentures 2019 10% 18 months $2.00-$9.52 (a) $ 10,200 $ 3,185 $ 7,015 1,080,415 $ 10,200 $ 3,185 $ 7,015 1,080,415 Current $ 10,200 $ 3,185 $ 7,015 1,080,415 Convertible notes payable 2018 10% 2 years $ 10.00 (b) $ 3,000 $ 5 $ 2,995 363,876 $ 3,000 $ 5 $ 2,995 363,876 Current $ 3,000 $ 5 $ 2,995 363,876 Total $ 17,142 $ 3,190 $ 13,952 1,444,291 (a) The notes are convertible to Emmaus Life Sciences, Inc. shares. (b) The notes are convertible to EMI Holding, Inc. shares. |
Schedule of future contractual principal payments of notes payable | As of June 30, 2020, future contractual principal payments due on notes payable were as follows: Year Ending 2020 (six months) $ 9,040 2021 4,732 2022 221 2023 3,150 Total $ 17,143 |
Conversion Feature Liabilities [Member] | Senior Secured Convertible Debentures [Member] | |
Schedule of fair value of conversion feature liabilities | The following table sets forth the fair value of the conversion feature liabilities as of June 30, 2020 and December 31, 2019 (in thousands): Six Months Ended Year ended Conversion feature liabilities - Amended and Restated 10% Senior Convertible Debentures June 30, 2020 December 31, 2019 Balance, beginning of period $ 1 $ — Fair value at issuance date — 132 Fair value at debt modification date 118 — Change in fair value included in the statement of comprehensive income (loss) (6 ) (131 ) Balance, end of period $ 113 $ 1 |
Schedule of fair value based upon assumptions | The fair values as of June 30, 2020, the February 21, 2020 modification date and December 31, 2019 were based upon following assumptions: June 30, 2020 February 21, 2020 (Modification date) December 31, 2019 Stock price $ 1.67 $ 1.89 $ 1.97 Conversion price $ 2.00 $ 3.00 $ 9.52 Selected yield 15.73 % 19.12 % 16.77 % Expected volatility (peer group) 100 % 65 % 50 % Expected life (in years) 0.81 1.16 0.81 Expected dividend yield — — — Risk‑free rate Term structure Term structure Term structure |
STOCKHOLDERS' DEFICIT (Tables)
STOCKHOLDERS' DEFICIT (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Summary of outstanding warrants | A summary of outstanding warrants as of June 30, 2020 and December 31, 2019 is presented below: June 30, 2020 December 31, 2019 Warrants outstanding, beginning of period 4,931,099 3,436,431 Assumed as part of Merger — 1,044,939 Granted 1,250,000 500,729 Exercised — (51,000 ) Cancelled, forfeited or expired (115,953 ) — Warrants outstanding, end of period 6,065,146 4,931,099 A summary of outstanding warrants by year issued and exercise price as of June 30, 2020 is presented below: Outstanding Exercisable Year issued and Exercise Price Number of Warrants Issued Weighted-Average Remaining Contractual Life (Years) Weighted-Average Exercise Price Total Weighted-Average Exercise Price Prior to January 1, 2019 $2.00-$10.76 3,439,007 2.12 $ 4.38 3,439,007 $ 4.38 Prior to Jan 1, 2019 Total 3,439,007 3,439,007 At December 31, 2019 $ 6.12 32,391 3.91 $ 6.12 32,391 $ 6.12 $ 12.00 76,575 3.23 $ 12.00 76,575 $ 12.00 $ 14.04 174,999 2.75 $ 14.04 174,999 $ 14.04 $ 31.50 737,975 2.07 $ 31.50 737,975 $ 31.50 $ 36.24 22,333 2.07 $ 36.24 22,333 $ 36.24 $ 60.00 666 0.50 $ 60.00 666 $ 60.00 $ 2.00 256,200 3.21 $ 2.00 256,200 $ 2.00 $ 7.68 75,000 4.05 $ 7.68 75,000 $ 7.68 2019 Total 1,376,139 1,376,139 At June 30, 2020 $ 2.05 1,250,000 4.96 $ 2.05 — $ — Total 6,065,146 4,815,146 |
Schedule of valuation assumptions | Management has valued stock options at their date of grant utilizing the Black‑Scholes‑Merton Option pricing model. The fair value of the underlying shares was determined by the market value of stock of similar companies and recent arm’s length transactions involving the sale of the Company’s common stock. Prior the Merger, the Company lacked company-specific historical and implied volatility information for its common stock. Therefore, the expected volatility was calculated using the historical volatility of a comparative public traded companies. The following table presents the assumptions used on recent dates on which options were granted by the Company. June 29, 2020 June 19, 2019 Stock Price $ 1.67 $ 10.30 Exercise Price $ 2.05 $ 10.30 Term 5.5-6 years 6 years Risk-Free Rate 0.28% - 0.38% 1.83% Dividend Yield — — Volatility 78.91%-80.49% 67.16 % |
Summary of stock option activity | A summary of outstanding stock options as of June 30, 2020 and December 31, 2019 is presented below. June 30, 2020 December 31, 2019 Number of Options Weighted‑ Average Exercise Price Number of Options Weighted‑ Average Exercise Price Options outstanding, beginning of period 7,245,350 $ 4.68 6,642,200 $ 4.40 Granted or deemed granted 90,000 $ 2.05 636,683 (a) $ 10.10 Exercised — $ — (167 ) $ 5.00 Cancelled, forfeited and expired (142,818 ) $ 5.08 (33,366 ) $ 11.29 Options outstanding, end of period 7,192,532 $ 4.63 7,245,350 $ 4.68 Options exercisable, end of period 6,978,869 $ 4.58 7,001,680 $ 4.47 Options available for future grant 2,302,475 2,167,150 (a) Upon the Merger, the exercise prices of outstanding EMI options and number of shares of the Company common stock underlying the options were adjusted based upon the exchange ratio in the Merger. |
Convertible Promissory Note [Member] | |
Schedule of change in fair value of warrants | The following table presents the change in fair value of the warrants as of June 30, 2020 (in thousands): Six Months Ended Warrants Derivative Liabilities - convertible promissory note June 30, 2020 Balance, beginning of period $ — Fair value at issuance date 1,425 Change in fair value included in the statement of comprehensive loss (12 ) Balance, end of period $ 1,413 |
Schedule of fair value based upon assumptions | The fair value of the warrant derivative liabilities was determined using the Black-Scholes Merton model and was based upon following assumptions: June 30, 2020 June 15, 2020 (modification date) Exercise price $ 2.05 $ 2.05 Stock price $ 1.67 $ 1.68 Risk‑free interest rate 0.29 % 0.33 % Expected volatility (peer group) 94.00 % 94.00 % Expected life (in years) 4.96 5.00 Expected dividend yield 0.00 % 0.00 % Warrant shares 1,250,000 1,250,000 |
GPB Debt Holdings II, LLC [Member] | |
Schedule of change in fair value of warrants | The following table presents the change in fair value of the GPB Warrant as of June 30, 2020 and December 31, 2019 (in thousands): Six Months Ended Year Ended June 30, 2020 December 31, 2019 Warrant Liability - GPB Warrants Warrants Balance, beginning of period $ 38 $ 1,399 Change in fair value included in the statement of comprehensive income (loss) 88 (1,361 ) Balance, end of period $ 126 $ 38 |
Schedule of fair value based upon assumptions | The value as of the dates set forth in the table above was based on upon following assumptions: June 30, 2020 December 31, 2019 Stock price $ 1.67 $ 1.97 Risk‑free interest rate 0.18 % 1.64 % Expected volatility (peer group) 106.00 % 60.00 % Expected life (in years) 3.00 3.50 Expected dividend yield 0.00 % 0.00 % Number outstanding 252,802 252,802 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of future minimum lease payments | Future minimum lease payments under the lease agreements were as follows as of June 30, 2020 (in thousands): Amount 2020 (six months) $ 587 2021 1,106 2022 1,138 2023 1,050 2024 and thereafter 2,984 Total lease payments 6,865 Less: Interest 2,040 Present value of lease liabilities $ 4,825 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of outstanding loans from related parties | The following table sets forth information relating to our loans from related persons outstanding as of June 30, 2020 and interest paid during the six months ended June 30, 2020 (in thousands): Class Lender Interest Rate Date of Loan Term of Loan Principal Amount Outstanding at June 30, 2020 Amount of Interest Paid Current, Promissory note payable to related parties: Lan T. Tran (2) 10% 4/29/2016 Due on Demand $ 20 $ — Lan T. Tran (2) 11% 2/10/2018 Due on Demand — 35 Lan T. Tran (2) 10% 2/9/2019 Due on Demand 14 — Subtotal 34 35 Revolving line of credit Yutaka Niihara (2) 5.25% 12/27/2019 Due on Demand 600 18 Subtotal 600 18 Total $ 634 $ 53 The following table sets forth information relating to our loans from related persons outstanding at any time during the year ended December 31, 2019: Class Lender Interest Rate Date of Loan Term of Loan Principal Amount Outstanding at December 31, 2019 Highest Principal Outstanding Amount of Principal Repaid or Converted into Stock Amount of Interest Paid Conversion Rate Current, Promissory note payable to related parties: Lan T. Tran (2) 10% 4/29/2016 Due on Demand $ 20 $ 20 $ — $ — — Hope International Hospice, Inc. (1) 10% 6/3/2016 Due on Demand — 250 250 78 — Lan T. Tran (2) 10% 2/9/2017 Due on Demand — 12 — 2 — Yutaka Niihara (2)(3) 10% 9/14/2017 Due on Demand — 904 27 2 — Lan T. Tran (2) 11% 2/10/2018 Due on Demand 159 159 — — — Lan T. Tran (2) 10% 2/9/2019 Due on Demand 14 14 — — — Subtotal 193 1,359 277 82 Current, Convertible notes payable to related parties: Yasushi Nagasaki (2) 10% 6/29/2012 Due on Demand — 200 200 56 $ 3.30 Yutaka & Soomi Niihara (2)(3) 10% 11/16/2015 2 years — 200 200 73 $ 4.50 Wei Peu Zen (3) 10% 11/6/2017 2 years — 5,000 5,000 597 $ 10.00 Profit Preview International Group, Ltd. (4) 10% 2/1/2018 2 years — 4,037 4,037 385 $ 10.00 Profit Preview International Group, Ltd. (4) 10% 3/21/2018 2 years — 5,363 5,363 442 $ 10.00 Subtotal — 14,800 14,800 1,553 Revolving line of credit Yutaka Niihara (2) 5% 12/27/2019 Due on Demand 600 600 — — Subtotal 600 600 — — Total $ 793 $ 16,759 $ 15,077 $ 1,635 ( 1) Dr. Niihara, a Director and the Chairman, and Chief Executive Officer of the Company, is also a director and the Chief Executive Officer of Hope International Hospice, Inc. (2) Officer. (3) Director. (4) Mr. Zen, a Director of the Company, is the sole owner of Profit Preview International Group, Ltd. |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Narrative) | Jul. 17, 2019shares | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) |
Variable Interest Entity [Line Items] | |||
Net decrease to cash flow used by operating activities | $ (1,719,000) | $ (1,260,000) | |
Restatement Adjustment [Member] | |||
Variable Interest Entity [Line Items] | |||
Net decrease to cash flow used by operating activities | 923,000 | ||
Restatement Adjustment [Member] | EJ Holding, Inc. [Member] | |||
Variable Interest Entity [Line Items] | |||
Net decrease to cash flow used by operating activities | $ (953,000) | ||
Emmaus Life Sciences, Inc. [Member] | |||
Variable Interest Entity [Line Items] | |||
Reverse stock split | 1-for-6 | ||
Reverse stock split, conversion ratio | 0.167 | ||
Telemynd [Member] | |||
Variable Interest Entity [Line Items] | |||
Common stock shares, Stock split ratio | shares | 1 |
BASIS OF PRESENTATION (Detail_2
BASIS OF PRESENTATION (Details 1) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ 1,032 | $ 1,769 | $ 2,947 | ||||
Accounts receivable, net | 1,457 | 2,150 | 2,282 | ||||
Inventories, net | 7,863 | 7,971 | 5,906 | ||||
Investment in marketable securities | 27,007 | 27,929 | 32,890 | ||||
Prepaid expenses and other current assets | 1,170 | 1,402 | 596 | ||||
Total current assets | 38,536 | 41,221 | 44,621 | ||||
Property and equipment, net | 141 | 151 | 145 | ||||
Equity method investment | 13,366 | ||||||
Right of use assets | 4,283 | 4,474 | 4,285 | ||||
Deposits and other assets | 285 | 285 | 412 | ||||
Total other assets | 18,063 | ||||||
Total assets | 56,250 | 59,456 | 62,829 | ||||
CURRENT LIABILITIES | |||||||
Accounts payable and accrued expenses | 10,377 | 11,498 | 11,517 | ||||
Operating lease liabilities, current portion | 1,103 | 991 | 857 | ||||
Other current liabilities | 957 | 5,748 | 5,261 | ||||
Warrant derivative liabilities | 1,539 | 38 | 9,023 | ||||
Notes payable, net of discount | 4,271 | 3,749 | 11,254 | ||||
Notes payable to related parties | 34 | 193 | 470 | ||||
Convertible notes payable, net of discount | 2,995 | 13,867 | |||||
Convertible notes payable to related parties, net of discount | 14,180 | ||||||
Total current liabilities | 26,475 | 32,827 | 66,429 | ||||
Operating lease liabilities, less current portion | 3,722 | 3,932 | 3,781 | ||||
Other long-term liabilities | 36,434 | 33,750 | 35,330 | ||||
Convertible notes payable, net of discount, less current portion | 3,150 | 450 | |||||
Total liabilities | 70,269 | 70,509 | 105,990 | ||||
STOCKHOLDERS’ DEFICIT | |||||||
Preferred stock — par value $0.001 per share, 15,000,000 shares authorized, none issued or outstanding | |||||||
Common stock — par value $0.001 per share, 250,000,000 shares authorized, 37,880,211 shares outstanding at June 30, 2019 | 49 | 48 | 38 | ||||
Additional paid-in capital | 216,376 | 215,207 | 163,248 | ||||
Accumulated other comprehensive loss | (51) | (79) | (56) | ||||
Accumulated deficit | (230,393) | (226,229) | (206,391) | ||||
Total stockholders’ deficit | (14,019) | $ (4,732) | (11,053) | (43,161) | $ (32,311) | $ (21,708) | |
Total liabilities & stockholders’ deficit | $ 56,250 | $ 59,456 | 62,829 | ||||
Previously Reported [Member] | |||||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | 15,169 | ||||||
Accounts receivable, net | 1,981 | ||||||
Inventories, net | 5,906 | ||||||
Investment in marketable securities | 32,890 | ||||||
Prepaid expenses and other current assets | 703 | ||||||
Total current assets | 56,649 | ||||||
Property and equipment, net | 145 | ||||||
Right of use assets | 4,285 | ||||||
Deposits and other assets | 412 | ||||||
Total other assets | 4,697 | ||||||
Total assets | 61,491 | ||||||
CURRENT LIABILITIES | |||||||
Accounts payable and accrued expenses | 11,455 | ||||||
Operating lease liabilities, current portion | 857 | ||||||
Other current liabilities | 5,259 | ||||||
Notes payable, net of discount | 11,163 | ||||||
Notes payable to related parties | 470 | ||||||
Convertible notes payable, net of discount | 13,867 | ||||||
Convertible notes payable to related parties, net of discount | 14,180 | ||||||
Total current liabilities | 57,251 | ||||||
Operating lease liabilities, less current portion | 3,781 | ||||||
Other long-term liabilities | 35,330 | ||||||
Warrant derivative liabilities | 1,200 | ||||||
Notes payable, net of discount, less current portion | 703 | ||||||
Convertible notes payable, net of discount, less current portion | 450 | ||||||
Total liabilities | 98,715 | ||||||
STOCKHOLDERS’ DEFICIT | |||||||
Preferred stock — par value $0.001 per share, 15,000,000 shares authorized, none issued or outstanding | |||||||
Common stock — par value $0.001 per share, 250,000,000 shares authorized, 37,880,211 shares outstanding at June 30, 2019 | 36 | ||||||
Additional paid-in capital | 153,084 | ||||||
Accumulated other comprehensive loss | (56) | ||||||
Accumulated deficit | (189,503) | ||||||
Total stockholders’ deficit | (36,439) | ||||||
Noncontrolling interest | (785) | ||||||
Total liabilities & stockholders’ deficit | 61,491 | ||||||
Adjustments [Member] | |||||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | [1] | (12,222) | |||||
Accounts receivable, net | [2] | 301 | |||||
Prepaid expenses and other current assets | [2],[3] | (107) | |||||
Total current assets | (12,028) | ||||||
Equity method investment | [1] | 13,366 | |||||
Total other assets | 13,366 | ||||||
Total assets | 1,338 | ||||||
CURRENT LIABILITIES | |||||||
Accounts payable and accrued expenses | [2],[3] | 62 | |||||
Other current liabilities | [2] | 2 | |||||
Warrant derivative liabilities | [2],[4] | 9,023 | |||||
Notes payable, net of discount | [4] | 91 | |||||
Total current liabilities | 9,178 | ||||||
Warrant derivative liabilities | [2] | (1,200) | |||||
Notes payable, net of discount, less current portion | [4] | (703) | |||||
Total liabilities | 7,275 | ||||||
STOCKHOLDERS’ DEFICIT | |||||||
Preferred stock — par value $0.001 per share, 15,000,000 shares authorized, none issued or outstanding | |||||||
Common stock — par value $0.001 per share, 250,000,000 shares authorized, 37,880,211 shares outstanding at June 30, 2019 | [5] | 2 | |||||
Additional paid-in capital | [4],[6] | 10,164 | |||||
Accumulated deficit | [6] | (16,888) | |||||
Total stockholders’ deficit | (6,722) | ||||||
Noncontrolling interest | [1] | 785 | |||||
Total liabilities & stockholders’ deficit | $ 1,338 | ||||||
[1] | EJ Holdings adjustments: the correction of this misstatement resulted in increases of $13.4 million in equity method investment, $172,000 in accounts payable and accrued expenses, and $785,000 in non-controlling interest and decreases of $12.2 million in cash and cash equivalent and $187,000 in prepaid expenses and other current assets | ||||||
[2] | Corrections of other misstatement: period adjustment and reclassification of variable consideration resulted in an increase of $301,000 in accounts receivable and a decrease of $110,000 in accounts payable and accrued expenses, a decrease of $10,000 in income tax receivable and an increase of $24,000 in income tax payable; a reclassification of GPB warrants resulted an increase of short-term warrant liability and a decrease of long-term warrant liability of $1.2 million; and correction of tax provision resulted an increase of $90,000 in income tax receivable and a decrease of $24,000 in income tax payable. | ||||||
[3] | EJ Holdings adjustments: the correction of this misstatement resulted in increases of $13.4 million in equity method investment, $172,000 in accounts payable and accrued expenses, and $785,000 in non-controlling interest and decreases of $12.2 million in cash and cash equivalent and $187,000 in prepaid expenses and other current assets. | ||||||
[4] | Warrant adjustments: the correction of this misstatement resulted in increases of $7.8 million in warrant derivative current liabilities, and $90,000 in short-term note payable and decreases of $703,000 in long-term notes payable and $9.7 million in additional paid-in capital. | ||||||
[5] | Retrospective adjustments made to common stock resulted from recapitalization transaction in July 2019. | ||||||
[6] | Carryforward impact on 2018 restatement adjustments, including cashless warrant adjustments which resulted in an increase in additional paid-in capital and a decrease in retained earnings of $18.3 million. |
BASIS OF PRESENTATION (Parenthe
BASIS OF PRESENTATION (Parenthetical) (Details 1) - USD ($) | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | ||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | ||||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |
Preferred stock, authorized | 15,000,000 | 20,000,000 | 15,000,000 | |
Preferred stock, issued | 0 | 0 | 0 | |
Preferred stock, outstanding | 0 | 0 | 0 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |
Common stock, authorized | 250,000,000 | 250,000,000 | 250,000,000 | |
Common stock, outstanding | 48,987,189 | 37,880,211 | 48,471,446 | |
Increase in equity method investment | $ 13,366,000 | |||
Increase (decrease) in accounts payable and accrued expenses | $ 10,377,000 | 11,517,000 | $ 11,498,000 | |
Increase (decrease) in cash and cash equivalent | (730,000) | (958,000) | ||
Decrease in prepaid expenses and other current assets | 1,170,000 | 596,000 | 1,402,000 | |
Increase in warrant derivative current liabilities | 1,539,000 | 9,023,000 | 38,000 | |
Increase in short-term notes payable | 4,271,000 | 11,254,000 | 3,749,000 | |
Increase (decrease) in additional paid-in capital | 216,376,000 | 163,248,000 | 215,207,000 | |
Increase in accounts receivable | 1,457,000 | 2,282,000 | 2,150,000 | |
Decrease in retained earnings | $ (230,393,000) | (206,391,000) | $ (226,229,000) | |
Adjustments [Member] | ||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | ||||
Increase in equity method investment | [1] | 13,366,000 | ||
Increase (decrease) in accounts payable and accrued expenses | [2],[3] | 62,000 | ||
Increase in noncontrolling interest | [1] | 785,000 | ||
Increase (decrease) in cash and cash equivalent | 953,000 | |||
Decrease in prepaid expenses and other current assets | [2],[3] | (107,000) | ||
Increase in warrant derivative current liabilities | [2],[4] | 9,023,000 | ||
Increase in short-term notes payable | [4] | 91,000 | ||
Decrease in long-term notes payable | [4] | (703,000) | ||
Increase (decrease) in additional paid-in capital | [4],[5] | 10,164,000 | ||
Increase in accounts receivable | [2] | 301,000 | ||
Increase in short-term warrant liability | 1,200,000 | |||
Decrease in long-term warrant liability | [2] | (1,200,000) | ||
Decrease in retained earnings | [5] | (16,888,000) | ||
Adjustments [Member] | Warrant Adjustments [Member] | ||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | ||||
Increase in warrant derivative current liabilities | 7,800,000 | |||
Increase in short-term notes payable | 90,000 | |||
Decrease in long-term notes payable | (703,000) | |||
Increase (decrease) in additional paid-in capital | (9,700,000) | |||
Adjustments [Member] | Warrant Adjustments [Member] | 2018 Warrant [Member] | ||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | ||||
Increase (decrease) in additional paid-in capital | 18,300,000 | |||
Decrease in retained earnings | (18,300,000) | |||
Adjustments [Member] | Variable Consideration [Member] | ||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | ||||
Increase (decrease) in accounts payable and accrued expenses | (110,000) | |||
Increase in accounts receivable | 301,000 | |||
Increase (decrease) in income tax receivable | (10,000) | |||
Increase (decrease) in income tax payable | 24,000 | |||
Adjustments [Member] | Tax Provision [Member] | ||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | ||||
Increase (decrease) in income tax receivable | 90,000 | |||
Increase (decrease) in income tax payable | (24,000) | |||
Adjustments [Member] | EJ Holding, Inc. [Member] | ||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | ||||
Increase in equity method investment | 13,400,000 | |||
Increase (decrease) in accounts payable and accrued expenses | 172,000 | |||
Increase in noncontrolling interest | 785,000 | |||
Increase (decrease) in cash and cash equivalent | (12,200,000) | |||
Decrease in prepaid expenses and other current assets | $ (187,000) | |||
[1] | EJ Holdings adjustments: the correction of this misstatement resulted in increases of $13.4 million in equity method investment, $172,000 in accounts payable and accrued expenses, and $785,000 in non-controlling interest and decreases of $12.2 million in cash and cash equivalent and $187,000 in prepaid expenses and other current assets | |||
[2] | Corrections of other misstatement: period adjustment and reclassification of variable consideration resulted in an increase of $301,000 in accounts receivable and a decrease of $110,000 in accounts payable and accrued expenses, a decrease of $10,000 in income tax receivable and an increase of $24,000 in income tax payable; a reclassification of GPB warrants resulted an increase of short-term warrant liability and a decrease of long-term warrant liability of $1.2 million; and correction of tax provision resulted an increase of $90,000 in income tax receivable and a decrease of $24,000 in income tax payable. | |||
[3] | EJ Holdings adjustments: the correction of this misstatement resulted in increases of $13.4 million in equity method investment, $172,000 in accounts payable and accrued expenses, and $785,000 in non-controlling interest and decreases of $12.2 million in cash and cash equivalent and $187,000 in prepaid expenses and other current assets. | |||
[4] | Warrant adjustments: the correction of this misstatement resulted in increases of $7.8 million in warrant derivative current liabilities, and $90,000 in short-term note payable and decreases of $703,000 in long-term notes payable and $9.7 million in additional paid-in capital. | |||
[5] | Carryforward impact on 2018 restatement adjustments, including cashless warrant adjustments which resulted in an increase in additional paid-in capital and a decrease in retained earnings of $18.3 million. |
BASIS OF PRESENTATION (Detail_3
BASIS OF PRESENTATION (Details 2) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | |||||||
REVENUES, NET | $ 4,360,000 | $ 5,493,000 | $ 11,314,000 | $ 10,200,000 | |||
COST OF GOODS SOLD | 446,000 | 264,000 | 924,000 | 523,000 | |||
GROSS PROFIT | 3,914,000 | 5,229,000 | 10,390,000 | 9,677,000 | |||
OPERATING EXPENSES | |||||||
Research and development | 589,000 | 540,000 | 1,206,000 | 1,053,000 | |||
Selling | 1,135,000 | 1,891,000 | 2,203,000 | 3,370,000 | |||
General and administrative | 3,725,000 | 2,682,000 | 7,382,000 | 6,419,000 | |||
Total operating expenses | 5,449,000 | 5,113,000 | 10,791,000 | 10,842,000 | |||
INCOME (LOSS) FROM OPERATIONS | (1,535,000) | 116,000 | (401,000) | (1,165,000) | |||
OTHER INCOME (EXPENSE) | |||||||
Change in fair value of warrant derivative liabilities | (101,000) | 854,000 | (76,000) | (84,000) | |||
Net losses on investment in marketable securities and long-term investment | (5,631,000) | (10,537,000) | 1,208,000 | (16,994,000) | |||
Losses on equity method investment | (573,000) | (458,000) | (980,000) | (449,000) | |||
Interest and other income (loss) | 567,000 | 307,000 | 600,000 | 230,000 | |||
Interest expense | (1,309,000) | (7,827,000) | (3,109,000) | (16,439,000) | |||
Total other expenses | (8,437,000) | (17,661,000) | (3,776,000) | (33,736,000) | |||
LOSS BEFORE INCOME TAXES | (9,972,000) | (17,545,000) | (4,177,000) | (34,901,000) | |||
INCOME TAXES (BENEFIT) | (499,000) | 51,000 | (213,000) | 103,000 | |||
NET LOSS | (9,473,000) | $ 5,509,000 | (17,596,000) | $ (17,408,000) | (3,964,000) | (35,004,000) | |
NET LOSS ATTRIBUTABLE TO THE COMPANY | (17,596,000) | (35,004,000) | |||||
COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS) | |||||||
Foreign currency translation adjustments | (33,000) | $ 61,000 | 6,000 | $ 7,000 | 28,000 | 13,000 | |
Other comprehensive income (loss) | (33,000) | 6,000 | 28,000 | 13,000 | |||
COMPREHENSIVE INCOME (LOSS) | (17,590,000) | (34,991,000) | |||||
Amounts attributable to noncontrolling interest: | |||||||
COMPREHENSIVE LOSS | $ (9,506,000) | $ (17,590,000) | $ (3,936,000) | $ (34,991,000) | |||
NET LOSS PER COMMON SHARE - BASIC AND DILUTED | $ (0.19) | $ (0.47) | $ (0.08) | $ (0.93) | |||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | 48,987,189 | 37,836,678 | 48,805,829 | 37,656,058 | |||
Previously Reported [Member] | |||||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | |||||||
REVENUES, NET | $ 5,869,000 | $ 11,176,000 | |||||
COST OF GOODS SOLD | 195,000 | 395,000 | |||||
GROSS PROFIT | 5,674,000 | 10,781,000 | |||||
OPERATING EXPENSES | |||||||
Research and development | 540,000 | 1,053,000 | |||||
Selling | 1,903,000 | 3,388,000 | |||||
General and administrative | 3,851,000 | 7,532,000 | |||||
Total operating expenses | 6,294,000 | 11,973,000 | |||||
INCOME (LOSS) FROM OPERATIONS | (620,000) | (1,192,000) | |||||
OTHER INCOME (EXPENSE) | |||||||
Change in fair value of warrant derivative liabilities | 247,000 | 199,000 | |||||
Net losses on investment in marketable securities and long-term investment | (10,537,000) | (16,994,000) | |||||
Interest and other income (loss) | 274,000 | 163,000 | |||||
Interest expense | (8,474,000) | (15,439,000) | |||||
Total other expenses | (18,490,000) | (32,071,000) | |||||
LOSS BEFORE INCOME TAXES | (19,110,000) | (33,263,000) | |||||
INCOME TAXES (BENEFIT) | 217,000 | 217,000 | |||||
NET LOSS | (19,327,000) | (33,480,000) | |||||
Net (income) loss attributable to noncontrolling interests | 688,000 | 674,000 | |||||
NET LOSS ATTRIBUTABLE TO THE COMPANY | (18,639,000) | (32,806,000) | |||||
COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS) | |||||||
Foreign currency translation adjustments | (9,000) | (2,000) | |||||
Other comprehensive income (loss) | (9,000) | (2,000) | |||||
COMPREHENSIVE INCOME (LOSS) | (19,336,000) | (33,482,000) | |||||
Amounts attributable to noncontrolling interest: | |||||||
Net (income) loss attributable to noncontrolling interests | 688,000 | 674,000 | |||||
Foreign currency translation adjustments | 15,000 | 14,000 | |||||
Comprehensive (income) loss attributable to noncontrolling interest | 703,000 | 688,000 | |||||
COMPREHENSIVE LOSS | $ (18,633,000) | $ (32,794,000) | |||||
NET LOSS PER COMMON SHARE - BASIC AND DILUTED | $ (0.52) | $ (0.91) | |||||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | 35,857,944 | 35,857,944 | |||||
Adjustments [Member] | |||||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | |||||||
REVENUES, NET | [1] | $ (376,000) | $ (976,000) | ||||
COST OF GOODS SOLD | [1] | 69,000 | 128,000 | ||||
GROSS PROFIT | (445,000) | (1,104,000) | |||||
OPERATING EXPENSES | |||||||
Selling | [1] | (12,000) | (18,000) | ||||
General and administrative | [1],[2] | (1,169,000) | (1,113,000) | ||||
Total operating expenses | (1,181,000) | (1,131,000) | |||||
INCOME (LOSS) FROM OPERATIONS | 736,000 | 27,000 | |||||
OTHER INCOME (EXPENSE) | |||||||
Change in fair value of warrant derivative liabilities | [3] | 607,000 | (283,000) | ||||
Losses on equity method investment | [2] | (458,000) | (449,000) | ||||
Interest and other income (loss) | [1],[2] | 33,000 | 67,000 | ||||
Interest expense | [1],[3] | 647,000 | (1,000,000) | ||||
Total other expenses | 829,000 | (1,665,000) | |||||
LOSS BEFORE INCOME TAXES | 1,565,000 | (1,638,000) | |||||
INCOME TAXES (BENEFIT) | [1] | (166,000) | (114,000) | ||||
NET LOSS | 1,731,000 | (1,524,000) | |||||
Net (income) loss attributable to noncontrolling interests | [2] | (688,000) | (674,000) | ||||
NET LOSS ATTRIBUTABLE TO THE COMPANY | 1,043,000 | (2,198,000) | |||||
COMPONENTS OF OTHER COMPREHENSIVE INCOME (LOSS) | |||||||
Foreign currency translation adjustments | [2] | 15,000 | 15,000 | ||||
Other comprehensive income (loss) | 15,000 | 15,000 | |||||
COMPREHENSIVE INCOME (LOSS) | 1,746,000 | (1,509,000) | |||||
Amounts attributable to noncontrolling interest: | |||||||
Net (income) loss attributable to noncontrolling interests | [2] | (688,000) | (674,000) | ||||
Foreign currency translation adjustments | [2] | (15,000) | (14,000) | ||||
Comprehensive (income) loss attributable to noncontrolling interest | (703,000) | (688,000) | |||||
COMPREHENSIVE LOSS | $ 1,043,000 | $ (2,197,000) | |||||
NET LOSS PER COMMON SHARE - BASIC AND DILUTED | $ 0.05 | $ (0.01) | |||||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | 37,836,678 | 37,656,058 | |||||
[1] | Corrections of other misstatement: period adjustment of variable consideration resulted in a decrease of $ in revenue s , net; and reclassification of shipping cost and royalty expense to cost of sales resulted in an increase of $ in cost of sales and decreases of $ and $ in selling expense and general and administrative expense, respectively . Corrections of other misstatement for the six months ended June 30, 2019 : period adjustment of variable consideration resulted in a decrease of $ in revenues, net ; reclassification of shipping cost and royalty expense to cost of sales resulted in an increase of $ in cost of sales and decreases of $ and $ in selling expense and general and administrative expense, respectively; correction of stock modification accounting resulted in a decrease of $ 52,000 in general and administrative expense; correction of accounting treatment for convertible notes resulted in an increase of $ 1.3 million in interest expense ; and correction of income tax provision resulted in an decrease of $ 113,000 in income tax provision . | ||||||
[2] | EJ Holdings adjustments: the correction of this misstatement resulted in increases of $33,000 in interest income and $15,000 in foreign currency translation adjustments and decreases of $1.1million in general and administrative expenses, $458,000 in loss on equity method investment, and $688,000 in net loss attributable to noncontrolling interest for three months ended June 30, 2019. The correction of this misstatement resulted in increases of $67,000 in interest income and $14,000 in foreign currency translation adjustments and decreases of $1.1million in general and administrative expense, $449,000 in loss on equity method investment, and $674,000 in net loss attributable to noncontrolling interest for six months ended June 30, 2019. | ||||||
[3] | Warrant adjustments: the correction of this misstatement resulted in increases of $647,000 in interest expense and $607,000 in change in fair value of warrant derivative liabilities for the three months ended June 2019. The correction of this misstatement resulted in an increase of $335,000 in interest expense and a decrease of $283,000 in change in fair value of warrant derivative liabilities for six months ended June 30, 2019. |
BASIS OF PRESENTATION (Parent_2
BASIS OF PRESENTATION (Parenthetical) (Details 2) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | |||||
Increase (decrease) in general and administrative expenses | $ 3,725,000 | $ 2,682,000 | $ 7,382,000 | $ 6,419,000 | |
Losses on equity method investment | (573,000) | (458,000) | (980,000) | (449,000) | |
Increase (decrease) in interest expense | 1,309,000 | 7,827,000 | 3,109,000 | 16,439,000 | |
Increase (decrease) in change in fair value of warrant derivative liabilities | (101,000) | 854,000 | (76,000) | (84,000) | |
Increase (decrease) in revenues, net | 4,360,000 | 5,493,000 | 11,314,000 | 10,200,000 | |
Decrease in selling expense | $ 1,135,000 | 1,891,000 | $ 2,203,000 | 3,370,000 | |
Adjustments [Member] | |||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | |||||
Increase (decrease) in general and administrative expenses | [1],[2] | (1,169,000) | (1,113,000) | ||
Losses on equity method investment | [2] | (458,000) | (449,000) | ||
Decreases in net income (loss) attributable to noncontrolling interest | [2] | 688,000 | 674,000 | ||
Increase in foreign currency translation adjustments | [2] | 15,000 | 14,000 | ||
Increase (decrease) in interest expense | [1],[3] | (647,000) | 1,000,000 | ||
Increase (decrease) in change in fair value of warrant derivative liabilities | [3] | 607,000 | (283,000) | ||
Increase (decrease) in revenues, net | [1] | (376,000) | (976,000) | ||
Decrease in selling expense | [1] | (12,000) | (18,000) | ||
Increase (decrease) income tax provision | (113,000) | ||||
Adjustments [Member] | Warrant Adjustments [Member] | |||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | |||||
Increase (decrease) in interest expense | 647,000 | 335,000 | |||
Increase (decrease) in change in fair value of warrant derivative liabilities | (607,000) | (283,000) | |||
Adjustments [Member] | Variable Consideration [Member] | |||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | |||||
Increase (decrease) in revenues, net | (376,000) | (976,000) | |||
Adjustments [Member] | Reclassification of Shipping Cost and Royalty Expense [Member] | |||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | |||||
Increase (decrease) in general and administrative expenses | (58,000) | (110,000) | |||
Increase in cost of sales | 69,000 | 128,000 | |||
Decrease in selling expense | (12,000) | (18,000) | |||
Adjustments [Member] | Stock Modification Accounting [Member] | |||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | |||||
Increase (decrease) in general and administrative expenses | (52,000) | ||||
Adjustments [Member] | Accounting Treatment for Convertible Notes [Member] | |||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | |||||
Increase (decrease) in interest expense | 1,300,000 | ||||
Adjustments [Member] | EJ Holding, Inc. [Member] | |||||
Error Corrections And Prior Period Adjustments Restatement [Line Items] | |||||
Increase (decrease) in general and administrative expenses | (1,100,000) | (1,100,000) | |||
Losses on equity method investment | (458,000) | (449,000) | |||
Increase in interest income | 33,000 | 67,000 | |||
Decreases in net income (loss) attributable to noncontrolling interest | (688,000) | (674,000) | |||
Increase in foreign currency translation adjustments | $ 15,000 | $ 14,000 | |||
[1] | Corrections of other misstatement: period adjustment of variable consideration resulted in a decrease of $ in revenue s , net; and reclassification of shipping cost and royalty expense to cost of sales resulted in an increase of $ in cost of sales and decreases of $ and $ in selling expense and general and administrative expense, respectively . Corrections of other misstatement for the six months ended June 30, 2019 : period adjustment of variable consideration resulted in a decrease of $ in revenues, net ; reclassification of shipping cost and royalty expense to cost of sales resulted in an increase of $ in cost of sales and decreases of $ and $ in selling expense and general and administrative expense, respectively; correction of stock modification accounting resulted in a decrease of $ 52,000 in general and administrative expense; correction of accounting treatment for convertible notes resulted in an increase of $ 1.3 million in interest expense ; and correction of income tax provision resulted in an decrease of $ 113,000 in income tax provision . | ||||
[2] | EJ Holdings adjustments: the correction of this misstatement resulted in increases of $33,000 in interest income and $15,000 in foreign currency translation adjustments and decreases of $1.1million in general and administrative expenses, $458,000 in loss on equity method investment, and $688,000 in net loss attributable to noncontrolling interest for three months ended June 30, 2019. The correction of this misstatement resulted in increases of $67,000 in interest income and $14,000 in foreign currency translation adjustments and decreases of $1.1million in general and administrative expense, $449,000 in loss on equity method investment, and $674,000 in net loss attributable to noncontrolling interest for six months ended June 30, 2019. | ||||
[3] | Warrant adjustments: the correction of this misstatement resulted in increases of $647,000 in interest expense and $607,000 in change in fair value of warrant derivative liabilities for the three months ended June 2019. The correction of this misstatement resulted in an increase of $335,000 in interest expense and a decrease of $283,000 in change in fair value of warrant derivative liabilities for six months ended June 30, 2019. |
BASIS OF PRESENTATION (Detail_4
BASIS OF PRESENTATION (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net loss | $ (9,473) | $ 5,509 | $ (17,596) | $ (17,408) | $ (3,964) | $ (35,004) | |
Adjustments to reconcile net loss to net cash flows used in operating activities | |||||||
Depreciation and amortization | 30 | 35 | |||||
Impairment loss on long-term investment | 524 | ||||||
Amortization of discount of notes payable and convertible notes payable | 2,102 | 13,771 | |||||
Foreign exchange adjustments on convertible notes and notes payable | (70) | (208) | |||||
Net losses (gains) on equity investment in marketable securities | (1,208) | 16,470 | |||||
Loss on equity method investments | 573 | 458 | 980 | 449 | |||
Share-based compensation | 428 | 1,026 | |||||
Change in fair value of warrant derivative liabilities | 101 | (854) | 76 | 84 | |||
Net changes in operating assets and liabilities | |||||||
Accounts receivable | 693 | (364) | |||||
Inventories | (267) | (1,202) | |||||
Prepaid expenses and other current assets | 528 | 149 | |||||
Other non-current assets | 183 | (4,298) | |||||
Accounts payable and accrued expenses | (412) | 4,054 | |||||
Income tax receivable and payable | (295) | (113) | |||||
Deferred revenue | 500 | ||||||
Deferred rent | (287) | ||||||
Other current liabilities | (4,903) | (63) | |||||
Other long-term liabilities | 2,586 | 3,217 | |||||
Net cash flows used in operating activities | (1,719) | (1,260) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Purchases of property and equipment | (13) | (21) | |||||
Sale of marketable securities | 2,130 | 221 | |||||
Net cash flows provided by investing activities | 1,556 | 200 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Payments of convertible notes | (1,500) | (3,368) | |||||
Proceeds from exercise of warrants | 142 | 186 | |||||
Proceeds from issuance of common stock | 3,261 | ||||||
Proceeds from conversion of notes payable to common stock | 21 | ||||||
Net cash flows provided by (used in) financing activities | (560) | 100 | |||||
Effect of exchange rate changes on cash | (7) | 2 | |||||
Net decrease in cash, cash equivalents and restricted cash | (730) | (958) | |||||
Cash, cash equivalents and restricted cash, beginning of period | $ 1,769 | 3,905 | 1,769 | 3,905 | |||
Cash, cash equivalents and restricted cash, end of period | $ 1,039 | 2,947 | 1,039 | 2,947 | |||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES | |||||||
Interest paid | 802 | 549 | |||||
Income taxes paid | $ 82 | 216 | |||||
NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||||
Beneficial conversion feature relating to convertible notes | 8,764 | ||||||
Common stocks issued on exercise of warrants | 186 | ||||||
Conversion of notes payable and acrued interest to common stock | 329 | ||||||
Initial recognition of right-of-use lease asset | 2,922 | ||||||
Previously Reported [Member] | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net loss | (19,327) | (33,480) | |||||
Adjustments to reconcile net loss to net cash flows used in operating activities | |||||||
Depreciation and amortization | 35 | ||||||
Impairment loss on long-term investment | 524 | ||||||
Amortization of discount of notes payable and convertible notes payable | 12,770 | ||||||
Foreign exchange adjustments on convertible notes and notes payable | 49 | ||||||
Net losses (gains) on equity investment in marketable securities | 16,470 | ||||||
Share-based compensation | 974 | ||||||
Change in fair value of warrant derivative liabilities | (247) | (199) | |||||
Net changes in operating assets and liabilities | |||||||
Accounts receivable | (630) | ||||||
Inventories | (1,202) | ||||||
Prepaid expenses and other current assets | 69 | ||||||
Other non-current assets | (4,298) | ||||||
Accounts payable and accrued expenses | 3,226 | ||||||
Deferred revenue | 500 | ||||||
Deferred rent | (287) | ||||||
Other current liabilities | 79 | ||||||
Other long-term liabilities | 3,217 | ||||||
Net cash flows used in operating activities | (2,183) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Purchases of property and equipment | (21) | ||||||
Sale of marketable securities | 221 | ||||||
Net cash flows provided by investing activities | 200 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Payments of convertible notes | (3,368) | ||||||
Proceeds from exercise of warrants | 186 | ||||||
Proceeds from issuance of common stock | 3,261 | ||||||
Proceeds from conversion of notes payable to common stock | 21 | ||||||
Net cash flows provided by (used in) financing activities | 100 | ||||||
Effect of exchange rate changes on cash | (28) | ||||||
Net decrease in cash, cash equivalents and restricted cash | (1,911) | ||||||
Cash, cash equivalents and restricted cash, beginning of period | 17,080 | 17,080 | |||||
Cash, cash equivalents and restricted cash, end of period | 15,169 | 15,169 | |||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES | |||||||
Interest paid | 934 | ||||||
Income taxes paid | 217 | ||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||||
Beneficial conversion feature relating to convertible notes | 8,764 | ||||||
Common stocks issued on exercise of warrants | 186 | ||||||
Conversion of notes payable and acrued interest to common stock | 308 | ||||||
Initial recognition of right-of-use lease asset | 2,922 | ||||||
Adjustments [Member] | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net loss | 1,731 | (1,524) | |||||
Adjustments to reconcile net loss to net cash flows used in operating activities | |||||||
Amortization of discount of notes payable and convertible notes payable | 1,001 | ||||||
Foreign exchange adjustments on convertible notes and notes payable | (257) | ||||||
Loss on equity method investments | [1] | 458 | 449 | ||||
Share-based compensation | 52 | ||||||
Change in fair value of warrant derivative liabilities | [2] | (607) | 283 | ||||
Net changes in operating assets and liabilities | |||||||
Accounts receivable | 266 | ||||||
Prepaid expenses and other current assets | 80 | ||||||
Accounts payable and accrued expenses | 828 | ||||||
Income tax receivable and payable | (113) | ||||||
Other current liabilities | (142) | ||||||
Net cash flows used in operating activities | 923 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Effect of exchange rate changes on cash | 30 | ||||||
Net decrease in cash, cash equivalents and restricted cash | 953 | ||||||
Cash, cash equivalents and restricted cash, beginning of period | $ (13,175) | (13,175) | |||||
Cash, cash equivalents and restricted cash, end of period | $ (12,222) | (12,222) | |||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES | |||||||
Interest paid | (385) | ||||||
Income taxes paid | $ (1) | ||||||
[1] | EJ Holdings adjustments: the correction of this misstatement resulted in increases of $33,000 in interest income and $15,000 in foreign currency translation adjustments and decreases of $1.1million in general and administrative expenses, $458,000 in loss on equity method investment, and $688,000 in net loss attributable to noncontrolling interest for three months ended June 30, 2019. The correction of this misstatement resulted in increases of $67,000 in interest income and $14,000 in foreign currency translation adjustments and decreases of $1.1million in general and administrative expense, $449,000 in loss on equity method investment, and $674,000 in net loss attributable to noncontrolling interest for six months ended June 30, 2019. | ||||||
[2] | Warrant adjustments: the correction of this misstatement resulted in increases of $647,000 in interest expense and $607,000 in change in fair value of warrant derivative liabilities for the three months ended June 2019. The correction of this misstatement resulted in an increase of $335,000 in interest expense and a decrease of $283,000 in change in fair value of warrant derivative liabilities for six months ended June 30, 2019. |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Cash And Cash Equivalents [Abstract] | ||||
Cash and cash equivalents | $ 1,032 | $ 1,769 | $ 2,947 | |
Restricted cash | 7 | |||
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows | $ 1,039 | $ 1,769 | $ 2,947 | $ 3,905 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - shares | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Accounting Policies [Abstract] | ||
Potentially dilutive securities outstanding | 17,288,829 | 17,996,931 |
REVENUES (Details)
REVENUES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation Of Revenue [Line Items] | ||||
Revenues, net | $ 4,360 | $ 5,493 | $ 11,314 | $ 10,200 |
Endari [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues, net | 4,349 | 5,390 | 11,063 | 9,992 |
Other [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues, net | $ 11 | $ 103 | $ 251 | $ 208 |
REVENUES (Details 1)
REVENUES (Details 1) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation Of Revenue [Line Items] | ||
Beginning balance | $ 1,897 | $ 981 |
Provision related to sales in the current year | 3,511 | 2,395 |
Adjustments related prior period sales | (70) | |
Credit and payments made | (2,532) | (1,749) |
Ending balance | 2,806 | 1,627 |
Trade Discounts, Allowances and Chargebacks [Member] | ||
Disaggregation Of Revenue [Line Items] | ||
Beginning balance | 228 | 84 |
Provision related to sales in the current year | 1,438 | 649 |
Adjustments related prior period sales | 16 | |
Credit and payments made | (1,208) | (614) |
Ending balance | 474 | 119 |
Government Rebates and Other Incentives [Member] | ||
Disaggregation Of Revenue [Line Items] | ||
Beginning balance | 1,354 | 798 |
Provision related to sales in the current year | 1,955 | 1,625 |
Adjustments related prior period sales | (43) | |
Credit and payments made | (1,324) | (1,135) |
Ending balance | 1,942 | 1,288 |
Returns [Member] | ||
Disaggregation Of Revenue [Line Items] | ||
Beginning balance | 315 | 99 |
Provision related to sales in the current year | 118 | 121 |
Adjustments related prior period sales | (43) | |
Ending balance | $ 390 | $ 220 |
REVENUES (Details 2)
REVENUES (Details 2) - Revenue Benchmark - Customer Concentration Risk | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Customer A [Member] | ||||
Entity Wide Revenue Major Customer [Line Items] | ||||
Concentration risk, percentage | 55.00% | 58.00% | 54.00% | 61.00% |
Customer B [Member] | ||||
Entity Wide Revenue Major Customer [Line Items] | ||||
Concentration risk, percentage | 20.00% | 25.00% | 24.00% | 22.00% |
REVENUES (Details Narrative)
REVENUES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | ||||||
Revenue from contract | $ 4,360,000 | $ 5,493,000 | $ 11,314,000 | $ 10,200,000 | ||
Telcon, Inc. ("Telcon") [Member] | ||||||
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | ||||||
Upfront payment | 10,000,000 | |||||
Telcon, Inc. ("Telcon") [Member] | Distribution Agreement [Member] | ||||||
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | ||||||
Revenue from contract | 10,000,000 | $ 10,000,000 | ||||
Taiba Middle East FZ LLC [Member] | ||||||
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | ||||||
Upfront payment | $ 500,000 | |||||
Taiba Middle East FZ LLC [Member] | Distribution Agreement [Member] | ||||||
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | ||||||
Revenue from contract | $ 500,000 | $ 500,000 |
SELECTED FINANCIAL STATEMENT _5
SELECTED FINANCIAL STATEMENT CAPTIONS - ASSETS (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 |
Inventory Disclosure [Abstract] | |||
Raw materials and components | $ 1,500 | $ 1,187 | |
Work-in-process | 1,836 | 1,629 | |
Finished goods | 4,948 | 5,204 | |
Inventory reserve | (421) | (49) | |
Total | $ 7,863 | $ 7,971 | $ 5,906 |
SELECTED FINANCIAL STATEMENT _6
SELECTED FINANCIAL STATEMENT CAPTIONS - ASSETS (Details 1) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 |
Prepaid Expense And Other Assets Current [Abstract] | |||
Prepaid insurance | $ 271 | $ 735 | |
Other prepaid expenses and current assets | 899 | 667 | |
Total | $ 1,170 | $ 1,402 | $ 596 |
SELECTED FINANCIAL STATEMENT _7
SELECTED FINANCIAL STATEMENT CAPTIONS - ASSETS (Details 2) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 |
Property and equipment | |||
Property and equipment, gross | $ 483 | $ 507 | |
Less: accumulated depreciation | (342) | (356) | |
Property and equipment, net | 141 | 151 | $ 145 |
Equipment [Member] | |||
Property and equipment | |||
Property and equipment, gross | 345 | 335 | |
Leasehold Improvements [Member] | |||
Property and equipment | |||
Property and equipment, gross | 39 | 77 | |
Furniture and Fixtures [Member] | |||
Property and equipment | |||
Property and equipment, gross | $ 99 | $ 95 |
SELECTED FINANCIAL STATEMENT _8
SELECTED FINANCIAL STATEMENT CAPTIONS - ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Property Plant And Equipment [Abstract] | ||||
Depreciation expense | $ 11,000 | $ 14,000 | $ 23,000 | $ 28,000 |
INVESTMENTS (Details Narrative)
INVESTMENTS (Details Narrative) - USD ($) | Feb. 21, 2020 | Oct. 31, 2018 | Jul. 31, 2017 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Schedule Of Investments [Line Items] | |||||||
Shares held as marketable securities | 6,222,837 | ||||||
Impairment loss on equity securities | $ 524,000 | ||||||
Net unrealized loss on marketable securities available-for-sale | $ 800,000 | $ 16,500,000 | |||||
Debt instrument, maturity date | Apr. 21, 2021 | ||||||
EJ Holding, Inc. [Member] | |||||||
Schedule Of Investments [Line Items] | |||||||
Investment amount | $ 32,000 | ||||||
Percentage of voting interest | 40.00% | ||||||
Unsecured debt | $ 13,600,000 | 13,900,000 | $ 13,800,000 | ||||
Debt instrument, maturity date | Sep. 30, 2028 | ||||||
Debt instrument annual interest | 1.00% | ||||||
Unsecured debt, additional borrowings | 561,000 | ||||||
Loans receivable | $ 14,500,000 | ||||||
Telcon, Inc. ("Telcon") [Member] | |||||||
Schedule Of Investments [Line Items] | |||||||
Shares held as marketable securities | 6,222,837 | 6,643,559 | |||||
Investment | $ 31,800,000 | ||||||
Investment, closing price | $ 4.34 | $ 4.20 | |||||
Telcon, Inc. ("Telcon") [Member] | API Supply Agreement [Member] | 10-year Convertible Bond [Member] | |||||||
Schedule Of Investments [Line Items] | |||||||
Convertible notes payable, carrying amount | $ 31,800,000 | ||||||
Shares issued | 420,772 | ||||||
Proceeds from sale of convertible notes | $ 2,100,000 | ||||||
Japan Industrial Partners [Member] | EJ Holding, Inc. [Member] | |||||||
Schedule Of Investments [Line Items] | |||||||
Equity interest | 60.00% |
INVESTMENTS (Details 1)
INVESTMENTS (Details 1) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Schedule Of Investments [Line Items] | ||
Fair Value with Changes Recognized in Income | $ 27,007 | $ 27,929 |
Marketable Equity Securities [Member] | ||
Schedule Of Investments [Line Items] | ||
Fair Value with Changes Recognized in Income | $ 27,007 | $ 27,929 |
INVESTMENTS (Details 2)
INVESTMENTS (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Schedule Of Investments [Line Items] | ||||||
REVENUES, NET | $ 4,360 | $ 5,493 | $ 11,314 | $ 10,200 | ||
GROSS PROFIT | 3,914 | 5,229 | 10,390 | 9,677 | ||
Net loss | (9,473) | $ 5,509 | (17,596) | $ (17,408) | (3,964) | (35,004) |
EJ Holding, Inc. [Member] | ||||||
Schedule Of Investments [Line Items] | ||||||
REVENUES, NET | 61 | 57 | 145 | 114 | ||
GROSS PROFIT | 61 | 57 | 145 | 114 | ||
Net loss | $ (1,432) | $ (1,147) | $ (2,449) | $ (1,124) |
SELECTED FINANCIAL STATEMENT _9
SELECTED FINANCIAL STATEMENT CAPTIONS - LIABILITIES (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 |
Accounts payable: | |||
Clinical and regulatory expenses | $ 311 | $ 232 | |
Professional fees | 960 | 1,183 | |
Selling expenses | 798 | 1,303 | |
Manufacturing costs | 3,824 | 4,541 | |
Other vendors | 128 | 18 | |
Total accounts payable | 6,021 | 7,277 | |
Accrued interest payable, related parties | 246 | 42 | |
Accrued interest payable | 407 | 991 | |
Accrued expenses: | |||
Payroll expenses | 998 | 891 | |
Government rebates and other rebates | 1,943 | 1,355 | |
Due to EJ Holdings | 406 | 238 | |
Other accrued expenses | 356 | 704 | |
Total accrued expenses | 3,703 | 3,188 | |
Total accounts payable and accrued expenses | $ 10,377 | $ 11,498 | $ 11,517 |
SELECTED FINANCIAL STATEMENT_10
SELECTED FINANCIAL STATEMENT CAPTIONS - LIABILITIES (Details 1) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 |
Other Long Term Liabilities [Line Items] | |||
Other long-term liabilities | $ 36,434 | $ 33,750 | $ 35,330 |
Other Long-Term Liabilities [Member] | |||
Other Long Term Liabilities [Line Items] | |||
Other long-term liabilities | 12 | 8 | |
Unearned Revenue [Member] | |||
Other Long Term Liabilities [Line Items] | |||
Other long-term liabilities | 10,000 | 10,500 | |
Trade Discount [Member] | |||
Other Long Term Liabilities [Line Items] | |||
Other long-term liabilities | $ 26,422 | $ 23,242 |
SELECTED FINANCIAL STATEMENT_11
SELECTED FINANCIAL STATEMENT CAPTIONS - LIABILITIES (Details Narrative) - USD ($) $ in Thousands | Jun. 12, 2017 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 |
Summary of Significant Accounting Policy [Line Items] | ||||
Convertible notes payable to related parties, net of discount | $ 14,180 | |||
API Supply Agreement [Member] | Telcon, Inc. ("Telcon") [Member] | ||||
Summary of Significant Accounting Policy [Line Items] | ||||
Proceeds from supply agreement | $ 31,800 | |||
API Supply Agreement [Member] | Telcon, Inc. ("Telcon") [Member] | Pharmaceutical Grade L-glutamine [Member] | ||||
Summary of Significant Accounting Policy [Line Items] | ||||
PGLG, purchase price | $ 2,000 | $ 2,300 | ||
Convertible notes payable to related parties, net of discount | $ 3,700 | $ 3,700 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020USD ($)Equity_Instrument$ / shares | Dec. 31, 2019USD ($)Equity_Instrument | |
Debt Instrument [Line Items] | ||
Conversion Price | $ / shares | $ 10 | |
Principal Outstanding | $ 17,143 | $ 17,142 |
Discount Amount | 1,606 | 3,190 |
Carrying Amount | $ 15,537 | $ 13,952 |
Shares Underlying Notes | Equity_Instrument | 4,638,333 | 1,444,291 |
2013 Notes payable [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 10.00% | 10.00% |
Term of Notes | Due on demand | Due on demand |
Principal Outstanding | $ 928 | $ 920 |
Carrying Amount | $ 928 | $ 920 |
2019 Notes payable [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 11.00% | 11.00% |
Principal Outstanding | $ 2,839 | $ 2,829 |
Carrying Amount | $ 2,839 | $ 2,829 |
2019 Notes payable [Member] | Minimum [Member] | ||
Debt Instrument [Line Items] | ||
Term of Notes | Due on demand | Due on demand |
2019 Notes payable [Member] | Maximum [Member] | ||
Debt Instrument [Line Items] | ||
Term of Notes | 6 months | 6 months |
2020 Notes payable [Member] | ||
Debt Instrument [Line Items] | ||
Principal Outstanding | $ 992 | |
Carrying Amount | $ 992 | |
2020 Notes payable [Member] | Minimum [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 1.00% | |
Term of Notes | Due on demand | |
2020 Notes payable [Member] | Maximum [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 11.00% | |
Term of Notes | 2 years | |
Notes Payable [Member] | ||
Debt Instrument [Line Items] | ||
Principal Outstanding | $ 4,759 | $ 3,749 |
Carrying Amount | 4,759 | 3,749 |
Principal Outstanding, Current | 4,271 | 3,749 |
Notes payable, current | 4,271 | $ 3,749 |
Principal Outstanding, Non Current | 488 | |
Notes payable, non-current | $ 488 | |
2016 Notes payable - related parties [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 10.00% | 10.00% |
Term of Notes | Due on demand | Due on demand |
Principal Outstanding | $ 20 | $ 20 |
Carrying Amount | $ 20 | $ 20 |
2019 Notes payable - related parties [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 10.00% | 10.00% |
Term of Notes | Due on demand | Due on demand |
Principal Outstanding | $ 14 | $ 14 |
Carrying Amount | 14 | 14 |
Notes payable - related parties [Member] | ||
Debt Instrument [Line Items] | ||
Principal Outstanding | 34 | 193 |
Carrying Amount | 34 | 193 |
Principal Outstanding, Current | 34 | 193 |
Notes payable, current | $ 34 | $ 193 |
2018 Notes payable - related parties [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 11.00% | |
Term of Notes | Due on demand | |
Principal Outstanding | $ 159 | |
Carrying Amount | $ 159 |
NOTES PAYABLE (Details 1)
NOTES PAYABLE (Details 1) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020USD ($)Equity_Instrument$ / shares | Dec. 31, 2019USD ($)Equity_Instrument$ / shares | ||
Debt Instrument [Line Items] | |||
Conversion Price | $ / shares | $ 10 | ||
Principal Outstanding | $ 17,143 | $ 17,142 | |
Discount Amount | 1,606 | 3,190 | |
Carrying Amount | $ 15,537 | $ 13,952 | |
Shares Underlying Notes | Equity_Instrument | 4,638,333 | 1,444,291 | |
2019 Convertible Debentures [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | 10.00% | 10.00% | |
Term of Notes | 18 months | 18 months | |
Principal Outstanding | $ 9,200 | $ 10,200 | |
Discount Amount | 1,606 | 3,185 | |
Carrying Amount | $ 7,594 | $ 7,015 | |
Shares Underlying Notes | Equity_Instrument | 4,638,333 | 1,080,415 | |
2019 Convertible Debentures [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Conversion Price | $ / shares | [1] | $ 2 | $ 2 |
2019 Convertible Debentures [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Conversion Price | $ / shares | [1] | $ 9.52 | $ 9.52 |
Convertible Debentures [Member] | |||
Debt Instrument [Line Items] | |||
Principal Outstanding | $ 9,200 | $ 10,200 | |
Discount Amount | 1,606 | 3,185 | |
Carrying Amount | $ 7,594 | $ 7,015 | |
Shares Underlying Notes | Equity_Instrument | 4,638,333 | 1,080,415 | |
Principal Outstanding, Current | $ 9,200 | $ 10,200 | |
Discount Amount, Current | 1,606 | 3,185 | |
Convertible Debentures, Current | $ 7,594 | $ 7,015 | |
Shares Underlying Notes, Current | Equity_Instrument | 4,638,333 | 1,080,415 | |
[1] | The notes are convertible to Emmaus Life Sciences, Inc. shares. |
NOTES PAYABLE (Details 2)
NOTES PAYABLE (Details 2) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020USD ($)Equity_Instrument$ / shares | Dec. 31, 2019USD ($)Equity_Instrument$ / shares | Jun. 30, 2019USD ($) | ||
Debt Instrument [Line Items] | ||||
Conversion Price | $ / shares | $ 10 | |||
Principal Outstanding | $ 17,143 | $ 17,142 | ||
Discount Amount | 1,606 | 3,190 | ||
Carrying Amount | $ 15,537 | $ 13,952 | ||
Shares Underlying Notes | Equity_Instrument | 4,638,333 | 1,444,291 | ||
Convertible notes payable, Current | $ 2,995 | $ 13,867 | ||
Convertible notes payable, Non Current | $ 3,150 | $ 450 | ||
2020 Convertible Notes Payable [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 12.00% | |||
Term of Notes | 3 years | |||
Conversion Price | $ / shares | [1] | $ 10 | ||
Principal Outstanding | $ 3,150 | |||
Carrying Amount | 3,150 | |||
Convertible Notes Payable [Member] | ||||
Debt Instrument [Line Items] | ||||
Principal Outstanding | 3,150 | 3,000 | ||
Discount Amount | 5 | |||
Carrying Amount | 3,150 | $ 2,995 | ||
Shares Underlying Notes | Equity_Instrument | 363,876 | |||
Principal Outstanding, Current | $ 3,000 | |||
Discount Amount, Current | 5 | |||
Convertible notes payable, Current | $ 2,995 | |||
Shares Underlying Notes, Current | Equity_Instrument | 363,876 | |||
Principal Outstanding, Non Current | 3,150 | |||
Convertible notes payable, Non Current | $ 3,150 | |||
2018 Convertible Notes Payable [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 10.00% | |||
Term of Notes | 2 years | |||
Conversion Price | $ / shares | [1] | $ 10 | ||
Principal Outstanding | $ 3,000 | |||
Discount Amount | 5 | |||
Carrying Amount | $ 2,995 | |||
Shares Underlying Notes | Equity_Instrument | 363,876 | |||
[1] | The notes are convertible to EMI Holding, Inc. shares. |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | May 08, 2020 | Feb. 21, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||||
Weighted-average stated interest rate | 10.00% | 10.00% | ||
Weighted average effective annual interest rate | 34.00% | 66.00% | ||
Conversion Price | $ 10 | |||
Debt instrument, maturity date | Apr. 21, 2021 | |||
Paycheck Protection Program [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 1.00% | |||
Principal amount | $ 797,840 | |||
Debt instrument, maturity date | Apr. 29, 2022 | |||
Date of Loan | Apr. 29, 2020 | |||
Debt prepayment description | The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. | |||
Debt instrument, forgiveness description | The amount of loan forgiveness would be reduced if the Company were to terminate employees or reduce salaries during such period. | |||
Revolving Line of Credit Facility [Member] | Prime Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument variable annual rate | 3.00% | |||
Revolving Line of Credit Facility [Member] | Dr. Yutaka Niihara [Member] | ||||
Debt Instrument [Line Items] | ||||
Line of credit maximum borrowing capacity | $ 1,000,000 | |||
Line of credit outstanding balances | $ 600,000 | $ 600,000 | ||
Line of credit effective annual interest rate | 10.40% | |||
Line of credit expiration date | Nov. 22, 2022 | |||
10% of Senior Secured Debentures [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 10.00% |
NOTES PAYABLE (Details 3)
NOTES PAYABLE (Details 3) $ in Thousands | Jun. 30, 2020USD ($) |
Long Term Debt By Maturity [Abstract] | |
2020 (six months) | $ 9,040 |
2021 | 4,732 |
2022 | 221 |
2023 | 3,150 |
Total | $ 17,143 |
NOTES PAYABLE (Details 4)
NOTES PAYABLE (Details 4) - Amended and Restated 10% Senior Secured Convertible Debentures [Member] - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation Calculation Roll Forward | ||
Balance, beginning of period | $ 1 | |
Fair value at issuance date | $ 132 | |
Fair value at debt modification date | 118 | |
Change in fair value included in the statement of comprehensive income (loss) | (6) | (131) |
Balance, end of period | $ 113 | $ 1 |
NOTES PAYABLE (Details 5)
NOTES PAYABLE (Details 5) | Feb. 21, 2020$ / shares | Jun. 30, 2020$ / shares | Dec. 31, 2019$ / shares | Jun. 29, 2020$ / shares | Jun. 19, 2019$ / shares |
Debt Instrument [Line Items] | |||||
Stock price | $ 1.67 | $ 10.30 | |||
Conversion Price | $ 10 | ||||
Binomial Lattice Model [Member] | |||||
Debt Instrument [Line Items] | |||||
Stock price | $ 1.89 | 1.67 | $ 1.97 | ||
Conversion Price | $ 3 | $ 2 | $ 9.52 | ||
Binomial Lattice Model [Member] | Measurement Input, Selected Yield [Member] | |||||
Debt Instrument [Line Items] | |||||
Embedded derivative liability measurement input | 19.12 | 15.73 | 16.77 | ||
Binomial Lattice Model [Member] | Measurement Input, Expected Volatility (Peer Group) [Member] | |||||
Debt Instrument [Line Items] | |||||
Embedded derivative liability measurement input | 65 | 100 | 50 | ||
Binomial Lattice Model [Member] | Measurement Input, Expected Life (in Years) [Member] | |||||
Debt Instrument [Line Items] | |||||
Expected life (in years) | 1 year 1 month 28 days | 9 months 21 days | 9 months 21 days | ||
Binomial Lattice Model [Member] | Measurement Input, Risk Free Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Risk‑free rate | Term structure | Term structure | Term structure |
STOCKHOLDERS' DEFICIT (Details
STOCKHOLDERS' DEFICIT (Details Narrative) - USD ($) | Jun. 15, 2020 | Feb. 28, 2020 | Feb. 21, 2020 | Dec. 29, 2017 | Oct. 31, 2018 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Jun. 29, 2020 | Jan. 31, 2020 | Jul. 17, 2019 | Jul. 16, 2019 | Jun. 19, 2019 |
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Debt instrument exercise price | $ 3 | $ 5.87 | |||||||||||||||
Conversion Price | $ 10 | $ 10 | |||||||||||||||
Maturity date | Apr. 21, 2021 | ||||||||||||||||
Conversion debentures price | $ 3 | $ 9.52 | |||||||||||||||
Stock price | $ 1.67 | $ 10.30 | |||||||||||||||
Convertible notes principal amount | $ 15,537,000 | $ 15,537,000 | $ 13,952,000 | ||||||||||||||
Share-based compensation | $ 428,000 | $ 1,026,000 | |||||||||||||||
Period remaining for recognition of unrecognized compensation cost | 1 year 4 months 24 days | ||||||||||||||||
Value of common stock issued | $ 142,000 | $ 731,000 | $ 2,530,000 | ||||||||||||||
Common Stock [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Common stock issued for cash (net of issuance cost) (in shares) | 515,743 | 76,755 | 322,920 | ||||||||||||||
Value of common stock issued | $ 1,000 | $ 1,000 | |||||||||||||||
2011 Stock Incentive Option Plan [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Total unrecognized compensation cost | 1,100,000 | $ 1,100,000 | |||||||||||||||
2011 Stock Incentive Option Plan [Member] | Adjustment of Merger Exchange Ratio [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Exercisable term | 10 years | ||||||||||||||||
2011 Stock Incentive Option Plan [Member] | Adjustment of Merger Exchange Ratio [Member] | Common Stock [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Stock options granted to purchase common stock | 90,000 | 50,000 | |||||||||||||||
2011 Stock Incentive Option Plan [Member] | Adjustment of Merger Exchange Ratio [Member] | Share Based Compensation Award, Tranche One [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Vesting period | 1 year | ||||||||||||||||
Vesting percentage | 33.33% | ||||||||||||||||
2011 Stock Incentive Option Plan [Member] | Adjustment of Merger Exchange Ratio [Member] | Share Based Compensation Award, Tranche Two [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Vesting period | 2 years | ||||||||||||||||
Vesting percentage | 66.67% | ||||||||||||||||
2011 Stock Incentive Option Plan [Member] | Stock Options [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Number of shares authorized under the plan | 9,000,000 | ||||||||||||||||
Expiration period | 10 years | ||||||||||||||||
Vesting period | 3 years | ||||||||||||||||
Share-based compensation | $ 200,000 | $ 400,000 | $ 400,000 | $ 1,000,000 | |||||||||||||
Amended and Restated Warrants [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Debt instrument exercise price | $ 5.87 | ||||||||||||||||
Amended and Restated Debentures [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Debt instrument exercise price | 2 | ||||||||||||||||
Conversion debentures price | $ 2 | ||||||||||||||||
Initial shares under purchase agreement | 100,000 | ||||||||||||||||
Stock price | $ 2 | ||||||||||||||||
Convertible Promissory Note [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Stock price | $ 1.68 | $ 1.67 | $ 1.67 | ||||||||||||||
Convertible Debt [Member] | Convertible Promissory Note [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Debt instrument exercise price | $ 2.05 | ||||||||||||||||
Number of common stock to be purchased | 1,250,000 | ||||||||||||||||
Maturity date | Jun. 15, 2023 | ||||||||||||||||
Convertible notes principal amount | $ 3,150,000 | ||||||||||||||||
Convertible Debt [Member] | Convertible Promissory Note [Member] | Maximum [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||
Convertible Debt [Member] | Convertible Promissory Note [Member] | Minimum [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Interest rate | 11.00% | ||||||||||||||||
Senior Secured Convertible Debentures [Member] | Amended and Restated Debentures [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Percentage of monthly payments interest rate | 10.00% | ||||||||||||||||
GPB Debt Holdings II, LLC [Member] | Amended and Restated Warrants [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Debt instrument exercise price | $ 10 | ||||||||||||||||
GPB Debt Holdings II, LLC [Member] | Maximum [Member] | Amended and Restated Warrants [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Debt face amount percentage | 1,460,000 | ||||||||||||||||
GPB Debt Holdings II, LLC [Member] | Senior Secured Convertible Promissory Note [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Debt face amount percentage | 240,764 | ||||||||||||||||
Debt instrument exercise price | $ 10.80 | ||||||||||||||||
Initial warrants exercisable period after issuance | 5 years | ||||||||||||||||
GPB Debt Holdings II, LLC [Member] | Purchase Agreement With 10% Senior Secured Debentures [Member] | Securities Purchase Agreement [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Percentage of monthly payments interest rate | 10.00% | ||||||||||||||||
Principal amount of debentures and warrants issued | $ 12,200,000 | ||||||||||||||||
Debenture and warrants issued to original loan | $ 13,200,000 | ||||||||||||||||
GPB Debt Holdings II, LLC [Member] | Purchase Agreement With 10% Senior Secured Debentures [Member] | Maximum [Member] | Securities Purchase Agreement [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Number of common stock to be purchased | 1,220,000 | ||||||||||||||||
GPB Debt Holdings II, LLC [Member] | Amended and Restated Debentures [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Conversion Price | $ 10 | ||||||||||||||||
GPB Debt Holdings II, LLC [Member] | Convertible Debt [Member] | Senior Secured Convertible Promissory Note [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Convertible notes amount | $ 13,000,000 | ||||||||||||||||
Convertible notes aggregate purchase price | $ 12,500,000 | ||||||||||||||||
Original issue discount percentage | 4.00% | ||||||||||||||||
Lincoln Park Capital Fund, LLC [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Initial shares under purchase agreement | 100,000 | ||||||||||||||||
Stock price | $ 2 | ||||||||||||||||
Maximum number of common shares elect to sell | 25,000,000 | ||||||||||||||||
Maximum purchase shares of common stock | 20,000 | ||||||||||||||||
Maximum purchase of common stock in single regular purchase | $ 1,000,000 | ||||||||||||||||
Common stock issued for cash (net of issuance cost) (in shares) | 415,743 | ||||||||||||||||
Value of common stock issued | $ 750,000 | ||||||||||||||||
Lincoln Park Capital Fund, LLC [Member] | Minimum [Member] | |||||||||||||||||
Class Of Warrant Or Right [Line Items] | |||||||||||||||||
Affiliates beneficial ownership percentage | 4.99% |
STOCKHOLDERS' DEFICIT (Details)
STOCKHOLDERS' DEFICIT (Details) - GPB Debt Holdings II, LLC [Member] - Liability Instrument - Warrants [Member] - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation Calculation Roll Forward | ||
Balance, beginning of period | $ 38 | $ 1,399 |
Change in fair value included in the statement of comprehensive income (loss) | 88 | (1,361) |
Balance, end of period | $ 126 | $ 38 |
STOCKHOLDERS' DEFICIT (Detail_2
STOCKHOLDERS' DEFICIT (Details 1) | Jun. 30, 2020$ / sharesshares | Jun. 29, 2020$ / shares | Dec. 31, 2019$ / sharesshares | Jun. 19, 2019$ / shares |
Class Of Warrant Or Right [Line Items] | ||||
Stock price | $ 1.67 | $ 10.30 | ||
GPB Debt Holdings II, LLC [Member] | ||||
Class Of Warrant Or Right [Line Items] | ||||
Stock price | $ 1.67 | $ 1.97 | ||
Number outstanding | shares | 252,802 | 252,802 | ||
GPB Debt Holdings II, LLC [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||||
Class Of Warrant Or Right [Line Items] | ||||
Warrants and rights outstanding, measurement input | 0.18 | 1.64 | ||
GPB Debt Holdings II, LLC [Member] | Measurement Input, Expected Volatility (Peer Group) [Member] | ||||
Class Of Warrant Or Right [Line Items] | ||||
Warrants and rights outstanding, measurement input | 106 | 60 | ||
GPB Debt Holdings II, LLC [Member] | Measurement Input, Expected Life (in Years) [Member] | ||||
Class Of Warrant Or Right [Line Items] | ||||
Expected life (in years) | 3 years | 3 years 6 months | ||
GPB Debt Holdings II, LLC [Member] | Measurement Input, Expected Dividend Yield [Member] | ||||
Class Of Warrant Or Right [Line Items] | ||||
Warrants and rights outstanding, measurement input | 0 | 0 |
STOCKHOLDERS' DEFICIT (Detail_3
STOCKHOLDERS' DEFICIT (Details 2) - Convertible Promissory Note [Member] - Liability Instrument - Warrants [Member] $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation Calculation Roll Forward | |
Fair value at issuance date | $ 1,425 |
Change in fair value included in the statement of comprehensive income (loss) | (12) |
Balance, end of period | $ 1,413 |
STOCKHOLDERS' DEFICIT (Detail_4
STOCKHOLDERS' DEFICIT (Details 3) | Jun. 30, 2020$ / sharesshares | Jun. 29, 2020$ / shares | Jun. 15, 2020$ / sharesshares | Jun. 19, 2019$ / shares |
Class Of Warrant Or Right [Line Items] | ||||
Stock price | $ / shares | $ 1.67 | $ 10.30 | ||
Warrant shares | shares | 6,065,146 | |||
Convertible Promissory Note [Member] | ||||
Class Of Warrant Or Right [Line Items] | ||||
Stock price | $ / shares | $ 1.67 | $ 1.68 | ||
Warrant shares | shares | 1,250,000 | 1,250,000 | ||
Convertible Promissory Note [Member] | Measurement Input, Exercise Price | ||||
Class Of Warrant Or Right [Line Items] | ||||
Warrants and rights outstanding, measurement input | 2.05 | 2.05 | ||
Convertible Promissory Note [Member] | Measurement Input, Risk Free Rate [Member] | ||||
Class Of Warrant Or Right [Line Items] | ||||
Warrants and rights outstanding, measurement input | 0.29 | 0.33 | ||
Convertible Promissory Note [Member] | Measurement Input, Expected Volatility (Peer Group) [Member] | ||||
Class Of Warrant Or Right [Line Items] | ||||
Warrants and rights outstanding, measurement input | 94 | 94 | ||
Convertible Promissory Note [Member] | Measurement Input, Expected Life (in Years) [Member] | ||||
Class Of Warrant Or Right [Line Items] | ||||
Expected life (in years) | 3 years | 3 years 6 months | ||
Convertible Promissory Note [Member] | Measurement Input, Expected Dividend Yield [Member] | ||||
Class Of Warrant Or Right [Line Items] | ||||
Warrants and rights outstanding, measurement input | 0 | 0 |
STOCKHOLDERS' DEFICIT (Detail_5
STOCKHOLDERS' DEFICIT (Details 4) - shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Class Of Warrant Or Right [Line Items] | ||
Warrants outstanding, ending | 6,065,146 | |
Warrant [Member] | ||
Class Of Warrant Or Right [Line Items] | ||
Warrants outstanding, beginning | 4,931,099 | 3,436,431 |
Assumed as part of Merger | 1,044,939 | |
Granted | 1,250,000 | 500,729 |
Exercised | (51,000) | |
Cancelled, forfeited or expired | (115,953) | |
Warrants outstanding, ending | 6,065,146 | 4,931,099 |
STOCKHOLDERS' DEFICIT (Detail_6
STOCKHOLDERS' DEFICIT (Details 5) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants Issued, Outstanding | 6,065,146 |
Total, Exercisable | 4,815,146 |
Warrants Issued Prior to January 1, 2019 - Exercise Price $2.00-$10.76 [Member] | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants Issued, Outstanding | 3,439,007 |
Weighted Average Remaining Contractual Life (Years), Outstanding | 2 years 1 month 13 days |
Weighted Average Exercise Price, Outstanding | $ / shares | $ 4.38 |
Total, Exercisable | 3,439,007 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 4.38 |
Warrants Issued Prior to January 1, 2019 [Member] | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants Issued, Outstanding | 3,439,007 |
Total, Exercisable | 3,439,007 |
Warrants Issued in 2019 - Exercise Price $ 6.12 [Member] | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants Issued, Outstanding | 32,391 |
Weighted Average Remaining Contractual Life (Years), Outstanding | 3 years 10 months 28 days |
Weighted Average Exercise Price, Outstanding | $ / shares | $ 6.12 |
Total, Exercisable | 32,391 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 6.12 |
Warrants Issued in 2019 - Exercise Price $12.00 [Member] | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants Issued, Outstanding | 76,575 |
Weighted Average Remaining Contractual Life (Years), Outstanding | 3 years 2 months 23 days |
Weighted Average Exercise Price, Outstanding | $ / shares | $ 12 |
Total, Exercisable | 76,575 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 12 |
Warrants Issued in 2019 - Exercise Price $14.04 [Member] | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants Issued, Outstanding | 174,999 |
Weighted Average Remaining Contractual Life (Years), Outstanding | 2 years 9 months |
Weighted Average Exercise Price, Outstanding | $ / shares | $ 14.04 |
Total, Exercisable | 174,999 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 14.04 |
Warrants Issued in 2019 - Exercise Price $ 31.50 [Member] | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants Issued, Outstanding | 737,975 |
Weighted Average Remaining Contractual Life (Years), Outstanding | 2 years 25 days |
Weighted Average Exercise Price, Outstanding | $ / shares | $ 31.50 |
Total, Exercisable | 737,975 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 31.50 |
Warrants Issued in 2019 - Exercise Price $ 36.24 [Member] | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants Issued, Outstanding | 22,333 |
Weighted Average Remaining Contractual Life (Years), Outstanding | 2 years 25 days |
Weighted Average Exercise Price, Outstanding | $ / shares | $ 36.24 |
Total, Exercisable | 22,333 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 36.24 |
Warrants Issued in 2019 - Exercise Price $ 60.00 [Member] | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants Issued, Outstanding | 666 |
Weighted Average Remaining Contractual Life (Years), Outstanding | 6 months |
Weighted Average Exercise Price, Outstanding | $ / shares | $ 60 |
Total, Exercisable | 666 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 60 |
Warrants Issued in 2019 - Exercise Price $ 2.00 [Member] | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants Issued, Outstanding | 256,200 |
Weighted Average Remaining Contractual Life (Years), Outstanding | 3 years 2 months 15 days |
Weighted Average Exercise Price, Outstanding | $ / shares | $ 2 |
Total, Exercisable | 256,200 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 2 |
Warrants Issued in 2019 - Exercise Price $ 7.68 [Member] | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants Issued, Outstanding | 75,000 |
Weighted Average Remaining Contractual Life (Years), Outstanding | 4 years 18 days |
Weighted Average Exercise Price, Outstanding | $ / shares | $ 7.68 |
Total, Exercisable | 75,000 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 7.68 |
Warrants Issued in 2019 [Member] | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants Issued, Outstanding | 1,376,139 |
Total, Exercisable | 1,376,139 |
Warrants Issued in 2020 - Exercise Price $ 2.05 [Member] | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants Issued, Outstanding | 1,250,000 |
Weighted Average Remaining Contractual Life (Years), Outstanding | 4 years 11 months 15 days |
Weighted Average Exercise Price, Outstanding | $ / shares | $ 2.05 |
STOCKHOLDERS' DEFICIT (Detail_7
STOCKHOLDERS' DEFICIT (Details 6) - $ / shares | Jun. 29, 2020 | Jun. 19, 2019 |
Class Of Warrant Or Right [Line Items] | ||
Stock price | $ 1.67 | $ 10.30 |
Exercise Price | $ 2.05 | $ 10.30 |
Term | 6 years | |
Risk-Free Rate | 1.83% | |
Risk-Free Rate, Minimum | 0.28% | |
Risk-Free Rate, Maximum | 0.38% | |
Volatility | 67.16% | |
Volatility, Minimum | 78.91% | |
Volatility, Maximum | 80.49% | |
Minimum [Member] | ||
Class Of Warrant Or Right [Line Items] | ||
Term | 5 years 6 months | |
Maximum [Member] | ||
Class Of Warrant Or Right [Line Items] | ||
Term | 6 years |
STOCKHOLDERS' DEFICIT (Detail_8
STOCKHOLDERS' DEFICIT (Details 7) - 2011 Stock Incentive Option Plan [Member] - $ / shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | ||
Class Of Warrant Or Right [Line Items] | |||
Number of Options outstanding, beginning | 7,245,350 | 6,642,200 | |
Number of Options, Granted or deemed granted | 90,000 | 636,683 | [1] |
Number of Options, Exercised | (167) | ||
Number of Options, Cancelled, forfeited and expired | (142,818) | (33,366) | |
Number of Options outstanding, end | 7,192,532 | 7,245,350 | |
Number of Options, Options exercisable | 6,978,869 | 7,001,680 | |
Number of Options, Options available for future grant | 2,302,475 | 2,167,150 | |
Weighted-Average Exercise Price, Options outstanding, beginning | $ 4.68 | $ 4.40 | |
Weighted-Average Exercise Price, Granted or deemed granted | 2.05 | 10.10 | |
Weighted-Average Exercise Price, Exercised | 5 | ||
Weighted-Average Exercise Price, Cancelled, forfeited and expired | 5.08 | 11.29 | |
Weighted-Average Exercise Price, Options outstanding, end | 4.63 | 4.68 | |
Weighted-Average Exercise Price, Options exercisable | $ 4.58 | $ 4.47 | |
[1] | Upon the Merger, the exercise prices of outstanding EMI options and number of shares of the Company common stock underlying the options were adjusted based upon the exchange ratio in the Merger. |
INCOME TAX (Details Narrative)
INCOME TAX (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||||
Income tax provision (benefit) | $ (499,000) | $ 51,000 | $ (213,000) | $ 103,000 | |
Provision for federal income tax | 0 | ||||
Unrecognized tax benefit | $ 0 | $ 0 | $ 0 |
LEASES (Details Narrative)
LEASES (Details Narrative) | Jan. 01, 2019USD ($) | Jun. 30, 2020USD ($)ft² | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)ft² | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) |
Leases [Line Items] | ||||||
Rent expense | $ 298,000 | $ 219,000 | $ 609,000 | $ 419,000 | ||
Right of use assets | 4,283,000 | 4,285,000 | 4,283,000 | 4,285,000 | $ 4,474,000 | |
Operating lease liabilities | 4,825,000 | 4,825,000 | ||||
Deferred rent | (287,000) | |||||
Cumulative-effect increased on our accumulated deficit | $ (230,393,000) | $ (206,391,000) | $ (230,393,000) | $ (206,391,000) | $ (226,229,000) | |
Weighted average remaining term of leases | 6 years | 6 years | ||||
Weighted average discount rate | 12.40% | 12.40% | ||||
ASC 842 [Member] | ||||||
Leases [Line Items] | ||||||
Change in accounting principle, accounting standards update, adoption date | Jan. 1, 2019 | Jan. 1, 2019 | ||||
Change in accounting principle, accounting standards update, adopted [true false] | true | true | ||||
Right of use assets | $ 3,000,000 | |||||
Operating lease liabilities | 3,300,000 | |||||
Deferred rent | (287,000) | |||||
ASC 842 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | ||||||
Leases [Line Items] | ||||||
Cumulative-effect increased on our accumulated deficit | $ 29,000 | |||||
Torrance, California [Member] | ||||||
Leases [Line Items] | ||||||
Operating lease, leased space | ft² | 21,293 | 21,293 | ||||
Operating lease, base rental per month | $ 78,543 | |||||
Operating lease, expiration date | Sep. 30, 2026 | |||||
New York [Member] | ||||||
Leases [Line Items] | ||||||
Operating lease, expiration date | Jan. 31, 2023 | |||||
Operating lease, additional space for rent | ft² | 1,850 | 1,850 | ||||
Operating lease, additional base rent per month | $ 8,479 | |||||
Tokyo, Japan [Member] | ||||||
Leases [Line Items] | ||||||
Operating lease, leased space | ft² | 1,322 | 1,322 | ||||
Operating lease, expiration date | Sep. 30, 2020 | |||||
Operating lease base rent | $ 3,000 |
LEASES (Details)
LEASES (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
2020 (six months) | $ 587 |
2021 | 1,106 |
2022 | 1,138 |
2023 | 1,050 |
2024 and thereafter | 2,984 |
Total lease payments | 6,865 |
Less: Interest | 2,040 |
Present value of lease liabilities | $ 4,825 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - Telcon RF Pharmaceuticals, Inc. ("Telcon") [Member] $ in Millions | Jul. 12, 2017USD ($)Numberkg$ / kg | Jun. 12, 2017USD ($) | Jun. 30, 2020$ / kg |
API Supply Agreement [Member] | |||
Proceeds from supply agreement | $ 31.8 | ||
API Supply Agreement [Member] | Pharmaceutical Grade L-glutamine [Member] | |||
Percentage of right to supply | 25.00% | ||
Agreement term | 15 years | ||
Revised API Agreement [Member] | |||
Agreement term | 5 years | ||
Number of renewals | Number | 10 | ||
Purchase quantity | kg | 940,000 | ||
Unit price of grade L-glutamine | $ / kg | 50 | 100 | |
Purchase amount | $ 47 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Dec. 31, 2019 | |||
Short-term Debt [Line Items] | ||||
Principal Amount Outstanding | $ 15,537 | $ 13,952 | ||
Conversion Rate (in dollars per share) | $ 10 | |||
Yutaka Niihara [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest Rate | 5.25% | 5.00% | ||
Date of Loan | Dec. 27, 2019 | Dec. 27, 2019 | ||
Term of Loan | Due on Demand | Due on Demand | ||
Principal Amount Outstanding | $ 600 | $ 600 | ||
Amount of Interest Paid | 18 | |||
Highest Principal Outstanding | 600 | |||
Revolving Line of Credit Facility [Member] | ||||
Short-term Debt [Line Items] | ||||
Principal Amount Outstanding | 600 | 600 | ||
Amount of Interest Paid | $ 18 | |||
Highest Principal Outstanding | $ 600 | |||
Lan T. Tran [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest Rate | [1] | 10.00% | 10.00% | |
Date of Loan | [1] | Apr. 29, 2016 | Apr. 29, 2016 | |
Term of Loan | [1] | Due on Demand | Due on Demand | |
Principal Amount Outstanding | [1] | $ 20 | $ 20 | |
Highest Principal Outstanding | [1] | $ 20 | ||
Lan T. Tran [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest Rate | [1] | 11.00% | 11.00% | |
Date of Loan | [1] | Feb. 10, 2018 | Feb. 10, 2018 | |
Term of Loan | [1] | Due on Demand | Due on Demand | |
Principal Amount Outstanding | [1] | $ 159 | ||
Amount of Interest Paid | [1] | $ 35 | ||
Highest Principal Outstanding | [1] | $ 159 | ||
Lan T. Tran [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest Rate | [1] | 10.00% | 10.00% | |
Date of Loan | [1] | Feb. 9, 2019 | Feb. 9, 2019 | |
Term of Loan | [1] | Due on Demand | Due on Demand | |
Principal Amount Outstanding | [1] | $ 14 | $ 14 | |
Highest Principal Outstanding | [1] | $ 14 | ||
Promissory note payable to related parties [Member] | ||||
Short-term Debt [Line Items] | ||||
Term of Loan | Subtotal | |||
Principal Amount Outstanding | 34 | [1] | $ 193 | |
Amount of Interest Paid | 35 | [1] | 82 | |
Highest Principal Outstanding | 1,359 | |||
Amount of Principal Repaid | $ 277 | |||
Promissory note payable and Revolving line of credit [Member] | ||||
Short-term Debt [Line Items] | ||||
Principal Amount Outstanding | 634 | |||
Amount of Interest Paid | $ 53 | |||
Hope International Hospice, Inc. [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest Rate | [2] | 10.00% | ||
Date of Loan | [2] | Jun. 3, 2016 | ||
Term of Loan | [2] | Due on Demand | ||
Amount of Interest Paid | [2] | $ 78 | ||
Highest Principal Outstanding | [2] | 250 | ||
Amount of Principal Repaid | [2] | $ 250 | ||
Lan T. Tran [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest Rate | [1] | 10.00% | ||
Date of Loan | [1] | Feb. 9, 2017 | ||
Term of Loan | [1] | Due on Demand | ||
Amount of Interest Paid | [1] | $ 2 | ||
Highest Principal Outstanding | [1] | $ 12 | ||
Yutaka Niihara [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest Rate | [1],[3] | 10.00% | ||
Date of Loan | [1],[3] | Sep. 14, 2017 | ||
Term of Loan | [1],[3] | Due on Demand | ||
Amount of Interest Paid | [1],[3] | $ 2 | ||
Highest Principal Outstanding | [1],[3] | 904 | ||
Amount of Principal Repaid | [1],[3] | $ 27 | ||
Yasushi Nagasaki [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest Rate | [1] | 10.00% | ||
Date of Loan | [1] | Jun. 29, 2012 | ||
Term of Loan | [1] | Due on Demand | ||
Amount of Interest Paid | [1] | $ 56 | ||
Highest Principal Outstanding | [1] | 200 | ||
Amount of Principal Repaid | [1] | $ 200 | ||
Conversion Rate (in dollars per share) | [1] | $ 3.30 | ||
Yutaka & Soomi Niihara [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest Rate | [1],[3] | 10.00% | ||
Date of Loan | [1],[3] | Nov. 16, 2015 | ||
Term of Loan | [1],[3] | 2 years | ||
Amount of Interest Paid | [1],[3] | $ 73 | ||
Highest Principal Outstanding | [1],[3] | 200 | ||
Amount of Principal Repaid | [1],[3] | $ 200 | ||
Conversion Rate (in dollars per share) | [1],[3] | $ 4.50 | ||
Wei Peu Zen [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest Rate | [3] | 10.00% | ||
Date of Loan | [3] | Nov. 6, 2017 | ||
Term of Loan | [3] | 2 years | ||
Amount of Interest Paid | [3] | $ 597 | ||
Highest Principal Outstanding | [3] | 5,000 | ||
Amount of Principal Repaid | [3] | $ 5,000 | ||
Conversion Rate (in dollars per share) | [3] | $ 10 | ||
Profit Preview International Group, Ltd. [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest Rate | [4] | 10.00% | ||
Date of Loan | [4] | Feb. 1, 2018 | ||
Term of Loan | [4] | 2 years | ||
Amount of Interest Paid | [4] | $ 385 | ||
Highest Principal Outstanding | [4] | 4,037 | ||
Amount of Principal Repaid | [4] | $ 4,037 | ||
Conversion Rate (in dollars per share) | [4] | $ 10 | ||
Profit Preview International Group, Ltd. [Member] | ||||
Short-term Debt [Line Items] | ||||
Interest Rate | [4] | 10.00% | ||
Date of Loan | [4] | Mar. 21, 2018 | ||
Term of Loan | [4] | 2 years | ||
Amount of Interest Paid | [4] | $ 442 | ||
Highest Principal Outstanding | [4] | 5,363 | ||
Amount of Principal Repaid | [4] | $ 5,363 | ||
Conversion Rate (in dollars per share) | [4] | $ 10 | ||
Convertible notes payable - related party non-current [Member] | ||||
Short-term Debt [Line Items] | ||||
Amount of Interest Paid | $ 1,553 | |||
Highest Principal Outstanding | 14,800 | |||
Amount of Principal Repaid | 14,800 | |||
Promissory note payable and convertible notes payable - related party [Member] | ||||
Short-term Debt [Line Items] | ||||
Principal Amount Outstanding | 793 | |||
Amount of Interest Paid | 1,635 | |||
Highest Principal Outstanding | 16,759 | |||
Amount of Principal Repaid | $ 15,077 | |||
[1] | Officer | |||
[2] | Dr. Niihara, a Director and the Chairman, and Chief Executive Officer of the Company, is also a director and the Chief Executive Officer of Hope International Hospice, Inc. | |||
[3] | Director | |||
[4] | Mr. Zen, a Director of the Company, is the sole owner of Profit Preview International Group, Ltd. |
RELATED PARTY TRANSACTIONS (D_2
RELATED PARTY TRANSACTIONS (Details Narrative) | Jun. 30, 2020shares |
Related Party Transactions [Abstract] | |
Marketable securities common stock outstanding | 4,147,491 |
Percentage of marketable securities common stock outstanding | 8.60% |
Shares held as marketable securities | 6,222,837 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Apr. 05, 2021 | Feb. 22, 2021 | Feb. 09, 2021 | Sep. 28, 2020 | Sep. 22, 2020 | Feb. 21, 2020 | Jul. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2018 | Mar. 31, 2021 | Oct. 31, 2020 | Oct. 28, 2020 | Jan. 31, 2020 |
Subsequent Event [Line Items] | ||||||||||||||
Debt instrument, maturity date | Apr. 21, 2021 | |||||||||||||
Exercise price | $ 3 | $ 5.87 | ||||||||||||
Conversion debentures price | $ 3 | $ 9.52 | ||||||||||||
Net proceeds from the sale of the convertible promissory notes | $ 21,000 | |||||||||||||
Conversion Price | $ 10 | |||||||||||||
Securities Amendment Agreement [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Monthly redemptions description | Pursuant to the Allonge, the aggregate monthly redemption payments under the Debentures were reduced to $500,000 from $1,000,000 in principal amount and the maturity date of the Debentures was extended from April 21, 2021 to August 31, 2021. The monthly redemption payments resumed in September 2020 and will continue on the first day of each month thereafter commencing October 1, 2020. The remaining principal balance of the Debentures will be due and payable upon maturity, subject to mandatory prepayment in connection with certain “Capital Events” as defined. | |||||||||||||
Convertible Bond Purchase Agreement [Member] | T.R. Winston & Company, LLC [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Exercise price | $ 2.10 | |||||||||||||
Convertible Bond Purchase Agreement [Member] | Maximum [Member] | T.R. Winston & Company, LLC [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Number of common stock to be purchased | 75,000 | |||||||||||||
10% of Senior Secured Debentures [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Debt instrument annual interest | 10.00% | |||||||||||||
Subsequent Event [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Debt instrument annual interest | 2.10% | |||||||||||||
Common stock purchase period | 5 years | |||||||||||||
Exercise price | $ 2 | |||||||||||||
Convertible bond maturity date | Oct. 16, 2030 | |||||||||||||
Convertible bond initial conversion price | $ 8 | |||||||||||||
Call option agreement date | Sep. 28, 2020 | |||||||||||||
Subsequent Event [Member] | EJ Holding, Inc. [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Unsecured long-term debt | $ 4,000,000 | $ 6,500,000 | ||||||||||||
Subsequent Event [Member] | Maximum [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Number of common stock to be purchased | 1,840,000 | |||||||||||||
Percentage of principal amount of convertible bond to be repurchased | 50.00% | |||||||||||||
Subsequent Event [Member] | Securities Amendment Agreement [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Monthly redemption payment on principal amount | $ 500,000,000 | $ 1,000,000,000 | ||||||||||||
Debt instrument, maturity date | Aug. 31, 2021 | Apr. 21, 2021 | ||||||||||||
Subsequent Event [Member] | Convertible Bond Purchase Agreement [Member] | T.R. Winston & Company, LLC [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Convertible notes payable, carrying amount | $ 26,100,000 | |||||||||||||
Subsequent Event [Member] | Convertible Bond Purchase Agreement [Member] | Kainos Medicine, Inc [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Conversion debentures price | $ 1.54 | |||||||||||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Senior Secured Convertible Debentures [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Debt instrument annual interest | 10.00% | |||||||||||||
Convertible promissory notes amount used to prepay outstanding | $ 6,200,000 | |||||||||||||
Subsequent Event [Member] | 10% of Senior Secured Debentures [Member] | Securities Amendment Agreement [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Debt instrument annual interest | 10.00% | |||||||||||||
Subsequent Event [Member] | Convertible Promissory Note [Member] | Securities Purchase Agreement [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Debt instrument annual interest | 2.00% | |||||||||||||
Date of Loan | Feb. 8, 2021 | |||||||||||||
Net proceeds from the sale of the convertible promissory notes | $ 14,500,000 | |||||||||||||
Conversion Price | $ 1.48 | |||||||||||||
Debt instrument, frequency of periodic payment | The convertible promissory notes bear interest at the rate of 2% per annum payable semi-annually on the last business day of August and January of each year and will mature on the 3rd anniversary of the original issue date. | |||||||||||||
Debt instrument percentage of accrued and unpaid interest on prepayment of principal amount | 50.00% | |||||||||||||
Subsequent Event [Member] | Convertible Promissory Note [Member] | Securities Purchase Agreement [Member] | Maximum [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Convertible notes aggregate purchase price | $ 17,000,000 | |||||||||||||
Debt instrument prepayment percentage on principle amount | 50.00% | |||||||||||||
Subsequent Event [Member] | Convertible Promissory Note [Member] | Purchase and Sale Agreement [Member] | Prestige Capital Finance, LLC [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Percentage of face amount of applicable at time of sale accounts receivable | 70.00% | |||||||||||||
Percentage of face amount of applicable subject to increase at time of sale accounts receivable | 75.00% | |||||||||||||
Accounts receivable face amount | $ 7,500,000 | |||||||||||||
Face amount of accounts receivable discount rate | 2.25% | |||||||||||||
Subsequent Event [Member] | Convertible Promissory Note [Member] | Purchase and Sale Agreement [Member] | Maximum [Member] | Prestige Capital Finance, LLC [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Face amount of accounts receivable discount rate | 7.25% |