Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis ofFinancial Condition and Results of Operations

In the following discussion, the terms, "we," "us," "our," "Emmaus" or the "Company" refer to Emmaus Life Sciences, Inc. and its direct and indirect subsidiaries.

Forward-Looking Statements

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission ("SEC") on April 14, 2025 (the "Annual Report").

This Quarterly Report contains forward-looking statements that involve substantial risks and uncertainties. All statements other than historical facts contained in this report, including statements regarding our future financial position, capital expenditures, cash flows, business strategy and plans and objectives of management for future operations are forward-looking statements. The words "anticipate," "believe," "expect," "plan," "intend," "seek," "estimate," "project," "could," "may" and similar expressions are intended to identify forward-looking statements. These statements include, among others, information regarding future operations, future capital expenditures, and future net cash flow. Such statements reflect our management's current views with respect to future events and financial performance and involve risks and uncertainties, including those set forth in the "Risk Factors" section of the Annual Report, many of which are beyond our control.

Should one or more of these risks or uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated. Consequently, all forward-looking statements made in this Form 10-Q are qualified by these cautionary statements. We undertake no duty to amend or update these statements beyond what is required by SEC reporting requirements.

Company Overview

We are a commercial-stage biopharmaceutical company engaged in the discovery, development, marketing and sale of innovative treatments and therapies, primarily for rare and orphan diseases. Our only product, Endari® (prescription-grade L-glutamine oral powder) is approved by the U.S. Food and Drug Administration, or FDA, to reduce the acute complications of sickle cell disease ("SCD"), in adult and pediatric patients five years of age and older. In April 2022, Endari® was approved by the Ministry of Health and Prevention in the United Arab Emirates, or U.A.E, in adults and pediatric patients five years of age and older. In November and December of 2022, we received marketing authorizations for Endari® in Qatar and Kuwait, respectively. In May 2023, we received approval for marketing of Endari to treat SCD from the Bahrain National Health Regulatory Authority. In July 2023, we received marketing approval for Endari® in Oman. Application for marketing authorization in the Kingdom of Saudi Arabia is pending. While the application is pending, the FDA approval of Endari® can be referenced to allow access to Endari® on a named-patient basis.

Endari® is sold in the U.S. primarily through our nonexclusive distributors. Endari® is reimbursable by the Centers for Medicare and Medicaid Services, and every state provides coverage for Endari® for outpatient prescriptions to all eligible Medicaid enrollees within their state Medicaid programs. Endari® is also reimbursable by many commercial payors. We have agreements in place with the nation's leading distributors as well as physician group purchasing organizations and pharmacy benefits managers, making Endari® available at selected retail and specialty pharmacies nationwide.

As of September 30, 2025, our accumulated deficit was $268.1 million, and we had cash and cash equivalents of $0.3 million. Until we can generate sufficient net revenues from Endari® sales or enter into one or more strategic transactions, our future cash requirements are expected to be financed through loans from related parties, third-party loans, public or private equity or debt financings or possible corporate collaboration and licensing arrangements. We are unable to predict if or when we may generate increased net revenues or accomplish strategic transactions.

Results of Operations:

Three months ended September 30, 2025 and 2024

Net Revenues. Net revenues decreased by $2.1 million, or 38%, to $3.4 million for the three months ended September 30, 2025, compared to $5.5 million for the three months ended September 30, 2024 due to a decrease in U.S. sales, which management attributes to competition from a generic version of L-Glutamine oral powder introduced into U.S. market in mid-2024 as discussed below and a decrease of sales in the MENA region, which management attributes to the timing of sales in the region.

On July 15, 2024, ANI Pharmaceuticals, Inc., or ANI, announced the launch of its L-Glutamine Oral Powder, a generic version of Endari®, following final approval of its Abbreviated New Drug Application from the U.S. Food and Drug Administration. The introduction of ANI's generic product or other generic versions of L-Glutamine oral powder has adversely affected Endari® sales and the reimbursement rates that Medicare, Medicaid and third-party payors are willing to pay for Endari®, which has had and could continue to have a material, adverse effect on our future sales and net revenues.

Cost of Goods Sold. Cost of goods sold decreased by $0.1million, or 37%, to $0.2 million for the three months ended September 30, 2025, compared to $0.4 million for the three months ended September 30, 2024. The decrease was primarily due to the decrease in sales discussed above.

Research and Development Expenses. Research and development expenses decreased by $0.1 million, or 66%, to $50,000 for the three months ended September 30, 2025, compared to $150,000 for the three months ended September 30, 2024. The decrease was primarily due to a decrease in payroll expenses from a reduction in headcount implemented in the third quarter of 2024.

Selling Expenses. Selling expenses decreased by $0.7 million, or 50%, to $0.7 million for the three months ended September 30, 2025, compared to $1.3 million for the three months ended September 30, 2024. The decrease was due to decreases of $0.4 million in consulting fee, $0.2 million in payroll expenses from a reduction in headcount in our U.S. sales force implemented in the third quarter of 2024, and $0.1 million in distribution fee.

General and Administrative Expenses.General and administrative expenses decreased by $1.1 million, or 38%, to $1.7 million for the three months ended September 30, 2025, compared to $2.8 million for the three months ended September 30, 2024. The decrease was due to decreases of $0.5 million in professional services, $0.4 million in payroll expenses attributable to the reduction in headcount and $0.2 million in rent expenses attributable to the modification of office lease completed in the second quarter of 2025.

Other Income(Expense). Total other expenses increased by $3.2 million, or 318%, to $2.2 million in other expense for the three months ended September 30, 2025, compared to $1.0 million in other income for the three months ended September 30, 2024. The increase was primarily due to a decrease of $2.3 million in change in fair value of conversion feature derivative and increases of $0.6 million in interest expense and $0.3 million in loss on debt extinguishment.

Net Income(Loss). Net loss was $2.1 million for three months ended September 30, 2025 and net income was $1.8 million for three months ended September 30, 2024. The increase in net loss was primarily due to a decrease in net revenue and an increase other expense, partially offset by a decrease in operating expenses,.

Nine months ended September 30, 2025 and 2024

Net Revenues. Net revenues decreased by $4.8 million, or 36%, to $8.6 million for the nine months ended September 30, 2025, compared to $13.4 million for the nine months ended September 30, 2024 due to competition from a generic version of L-Glutamine oral powder introduced into U.S. market in mid-2024 and a decrease of sales in the MENA region.

Cost of Goods Sold. Cost of goods sold decreased by $0.3 million, or 30%, to $0.6 million for the nine months ended September 30, 2025, compared to $0.9 million for the nine months ended September 30, 2024. The decrease was primarily due to the decrease in sales discussed above.

Research and Development Expenses. Research and development expenses decreased by $0.2 million, or 46%, to $0.3 million for the nine months ended September 30, 2025, compared to $0.5 million for the nine months ended September 30, 2024. The decrease was primarily due to a decrease in payroll expenses $0.2 million from a reduction in headcount.

Selling Expenses. Selling expenses decreased by $2.9 million, or 60%, to $2.0 million for the nine months ended September 30, 2025, compared to $4.9 million for the nine months ended September 30, 2024. The decrease was due to decreases of $1.2 million in payroll expense, $1.2 million in consulting fees, $0.2 million in travel expense, $0.2 million in distribution fee, and $0.1 million in marketing expense.

General and Administrative Expenses.General and administrative expenses decreased by $2.0 million, or 24%, to $6.4 million for the nine months ended September 30, 2025, compared to $8.4 million for the nine months ended September 30, 2024. The decrease was primarily due to decreases of $1.0 million in payroll expense including share-based compensation, $0.9 million in professional service fees, and $0.5 million in rent expense, partially offset by an increase of $0.5 million in legal settlement fee.

Other Expense. Total other expense increased by $1.5 million, or 46% to $4.9 million for the nine months ended September 30, 2025, compared to $3.3 million for the nine months ended September 30, 2024. The increase was due to increases of

$0.7 million in loss on debt extinguishment, and $0.7 million in interest expense, and a decrease of $1.0 million in gain on restructured debt, partially offset by an increase of $0.9 million in gain on lease modification.

Net Loss. Net loss was $5.5 million and $4.7 million for nine months ended September 30, 2025 and September 30, 2024, respectively.

Liquidity and Capital Resources

Based on our losses to date, current liabilities and anticipated future net revenues, operating expenses and debt repayment obligations, and cash and cash equivalents of $0.3 million as of September 30, 2025, we do not have sufficient operating capital for our business without raising additional capital. We realized a net loss of $5.5 million for the nine months ended September 30, 2025 and we may continue to incur net losses for the foreseeable future and until we can generate increased net revenues from Endari®sales. There is no assurance that we will be able to increase our Endari® sales or attain sustainable profitability, or that we will have sufficient capital resources to fund our operations until we are able to generate sufficient cash flow from operations or accomplish a strategic transaction.

Liquidity represents our ability to pay our liabilities when they become due, fund our business operations, meet our contractual obligations, including repayment of our existing indebtedness and the purchase of API under our supply arrangements with Telcon, and execute our business plan. Our primary sources of liquidity are our cash balances at the beginning of each period, sales of future receipts to third parties, proceeds from related-party loans and other financing activities. Our short-term and long-term cash requirements consist primarily of working capital requirements, general corporate needs, our contractual obligations to purchase API from Telcon and pay debt service under our outstanding notes payable.

As of September 30, 2025, we had outstanding $15.9 million principal amount of convertible promissory notes and $10.9 million principal amount of other notes payable reflected in our current liabilities. Our minimum lease payment obligations were $2.3 million, of which $0.3 million was payable within 12 months.

Our API supply agreement with Telcon provides for an annual API purchase target of $5 million and a target "profit" (i.e., gross margin) to Telcon of $2.5 million. To the extent these targets are not met, Telcon may be entitled to payment of the shortfall or to offset the shortfall against the Telcon convertible bond and proceeds thereof that are pledged as collateral to secure our obligations. With our consent, in April 2025, Telcon offset KRW3.1 billion, or approximately $2.1 million, against the principal amount of the Telcon convertible bond and we released KRW49 million, or approximately $34,000, in cash proceeds to Telcon in satisfaction the target shortfall for the year ended 2024.

Due to uncertainties regarding our ability to meet our current and future operating and capital expenses, there is substantial doubt about our ability to continue as a going concern for 12 months from the date that our condensed consolidated financial statements are issued, as referred to in the "Risk Factors" section of our Annual Report and Note 2 of the Notes to Condensed Consolidated Financial Statements included herein.

Cash flows for the nine months ended September 30, 2025 and September 30, 2024

Net cash used in operating activities

Net cash used in operating activities decreased by $0.4 million, or 16%, to $2.2 million for the nine months ended September 30, 2025 from $2.6 million for the nine months ended September 30, 2024. This decrease was primarily due to a decrease in loss from operations.

Net cash provided by investing activities

Net cash provided by investing activities decreased by $0.3 million, or 13%, to $2.2 million for the nine months ended September 30, 2025 compared to $2.5 million for the nine months ended September 30, 2024. The decrease was primarily due to a decrease of proceeds from sales of Telcon convertible bond.

Net cash used in financing activities

Net cash used in financing activities decreased by $0.1 million, or 8%, to $1.1 million for the nine months ended September 30, 2025 from $1.2 million for the nine months ended September 30, 2024. The decrease was due to a decrease of $1.4 million in proceeds from note payable issued, partially offset by an increase of $1.3 million in repayments of promissory notes and convertible notes.

Off-Balance-Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Estimates

Management's discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of certain assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments, including but not limited to those relating revenue recognition on product sales, the variables used to calculate the valuation of investment in convertible bond, conversion feature, stock options and warrants. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the present circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates.

Refer to "Critical Accounting Policies" in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Annual Report for our critical accounting policies. There have been no material changes in any of our critical accounting policies during the nine months ended September 30, 2025.