Emmaus Life Sciences, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

STOCKHOLDERS’ DEFICIT (Tables)

STOCKHOLDERS’ DEFICIT (Tables)

9 Months Ended

Jun. 30, 2013

Schedule Of Stock Based Compensation Expenses [Table Text Block]

Stock-based compensation expense is recognized over the employees’ or service provider’s requisite service period, generally the vesting period of the award. Stock-based compensation expense included in the accompanying statements of operations for the three months and nine months ended June 30, 2013 and 2012 is as follows:

	For the three months ended June 30,
	2013		2012
Cost of Neurometric Services revenues	$	2,700	$	2,500
Research		21,900		24,000
Product Development		33,600		19,000
Sales and marketing		30,300		49,500
General and administrative		205,000		245,200
Total	$	293,500	$	340,200

	For the nine months ended June 30,
	2013		2012
Cost of Neurometric Services revenues	$	7,900	$	7,600
Research		70,800		75,200
Product Development		82,600		53,600
Sales and marketing		129,400		147,400
General and administrative		696,300		726,900
Total	$	987,000	$	1,010,700

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

A summary of stock option activity is as follows:

	Number of Shares		Weighted Average Exercise Price
Outstanding at September 30, 2012		546,746	$	17.08
Granted		5,395,000		0.04718
Exercised		-		-
Forfeited		(2,152)		14.10
Outstanding at December 31, 2012		5,939,594	$	1.61
Granted		3,810,000		0.06
Exercised		-		-
Forfeited		-		-
Outstanding at March 31, 2013		9,749,594	$	1.00
Granted		-		-
Exercised		-		-
Forfeited		-		-
Outstanding at June 30, 2013		9,749,594	$	1.00

Schedule of Share-based Compensation, Activity [Table Text Block]

Following is a summary of the status of options outstanding at June 30, 2013:

Exercise Price		Number of Shares		Weighted Average Contractual Life		Weighted Average Exercise Price
$	0.04718		8,955,000		10 years	$	0.04718
$	0.25		250,000		10 years	$	0.25
$	3.00		42,670		10 years	$	3.00
$	3.60		28,648		10 years	$	3.60
$	3.96		32,928		10 years	$	3.96
$	9.00		4,525		10 years	$	9.00
$	12.00		28,535		10 years	$	12.00
$	14.10		10,000		10 years	$	14.10
$	15.30		1,373		10 years	$	15.30
$	16.50		262,441		10 years	$	16.50
$	17.70		953		10 years	$	17.70
$	24.00		4,667		10 years	$	24.00
$	26.70		32,297		10 years	$	26.70
$	28.80		11,767		10 years	$	28.80
$	32.70		83,790		10 years	$	32.70
	Total		9,749,594			$	1.00

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

The warrant activity for the period starting October 1, 2011, through June 30, 2013 are described as follows:

Warrants		Exercise Price		Issued, Surrendered or Expired in Connection With:
	980,390			Warrants outstanding at October 1, 2011

	613,782	$	3.00	As a result of the issuance of October 2011 Notes at a conversion of $3.00 and associated warrants to purchase common stock at an exercise price of $3.00, the ratchet provision in the October and January 2011 Notes was triggered with the resultant adjustment in the number of shares convertible at the lowered conversion price of $3.00 down from $9.00 and the consequential adjustment in the number of warrants issued to the October and January Note Holders.

	31,112	$	1.00	As mentioned above the ratchet provision in the issued placement agent warrants was also triggered with the resultant adjustment in the number of warrants being issued to the placement agents. Effective on November 20, 2012 the holders of placement agent warrants agreed to remove the ratchet feature in exchange for lowering the conversion price to $1.00 per share down from $3.00 per share. This resulted in the elimination of warrant liabilities as of such date.

	(2,823)	$	0.30	Warrants were surrendered in a cash exercise for 2,823 shares.

	696,673	$	3.00	These warrants were issued to 11 investors who purchased notes for $2,000,000 pursuant to the 2011 Bridge Purchase Agreement described in note 4 were as follows: 1) Three October 2011 Notes in aggregate principal amount of $750,000, and warrants to purchase 250,002 shares were issued to John Pappajohn, a director of the Company. 2) Two October 2011 Notes in aggregate amount of $80,000 were issued to accredited investors, who had previously invested in the Company, together with warrants to purchase 26,667 shares. 3) An October 2011 Note in the principal amount of $250,000, and a warrant to purchase 83,334 shares were issued to the Zanett Opportunity Fund, an entity affiliated with Zachary McAdoo, who was subsequently appointed a director of the Company. 4) Three October 2011 Notes in aggregate amount of $180,000 were issued to accredited investors, who had previously invested in the Company, together with warrants to purchase 60,001 shares. 5) An October 2011 Note in the principal amount of $40,000, and a warrant to purchase 13,334 shares were issued to the Zanett Opportunity Fund, an entity affiliated with Zachary McAdoo, who is a director of the Company. 6) A unsecured Bridge Note in the principal amount of $90,000, and a warrant to purchase 30,000 shares were issued to the Zanett Opportunity Fund, an entity affiliated with Zachary McAdoo, who is a director of the Company. 7) Four October 2011 Notes in aggregate amount of $700,000 and a warrant to purchase 233,335 shares were issued to four new investors to the company.

	5,334	$	1.00	These warrants were issued to Monarch Capital who acted as placement agents in raising $80,000 from two investors who purchased October 2011 Notes pursuant to the 2011 Bridge Note January Purchase Agreement described in Note 4. Effective on November 20, 2012 the holders of placement agent warrants agreed to remove the ratchet feature in exchange for lowering the conversion price to $1.00 per share down from $3.00 per share. This resulted in the elimination of warrant liabilities as of such date.

	15,167	$	1.00	These warrants were issued to Innerkip Capital Management who acted as placement agents in raising $650,000 from three investors who purchased October 2011 Notes pursuant to the 2011 Bridge Note January Purchase Agreement described in Note 4. Effective on November 20, 2012 the holders of placement agent warrants agreed to remove the ratchet feature in exchange for lowering the conversion price to $1.00 per share down from $3.00 per share. This resulted in the elimination of warrant liabilities as of such date.

(175,195)		$0.30 to $54.0	Warrants expired

2,164,440			Warrants outstanding at September 30, 2012

(1,617,345)	$	3.00	Warrants forfeited pursuant to the Amended and Restated Consent, Note Amendment and Warrant Forfeiture Agreement dated October 24, 2012
127,173	$	0.04718	These warrants were issued to Monarch Capital who acted as placement agents in raising $60,000 from one investor who purchased October 2012 Notes pursuant to the 2012 Bridge Note October Purchase Agreement described in Note 4.
519,288	$	0.04718	These warrants due to be issued to Tony Pullen who acted as placement agents in raising $350,000 from three investors who purchased October 2012 Notes pursuant to the 2012 Bridge Note October Purchase Agreement described in Note 4.
152,000	$	0.275	These warrants were issued to Monarch Capital who acted as placement agents in raising $380,000 from twelve accredited investors who purchased common stock, par value $0.001 per share, in a private placement agreements dated February 20, 2013 and May 23, 2013.
100,000	$	0.25	These warrants were issued to D&D Securities Inc. in connection with the Company’s private offering to select accredited investors of shares of restricted common stock at a private of $0.25 per share, in a private placement agreement dated February 20, 2013.

1,445,556		3.13	Warrants outstanding at June 30, 2013

Senior Subordinated Convertible Notes Payable [Member]

Schedule of Debt Conversions [Table Text Block]

From January 18, 2013 through June 30, 2013 the following note holders have converted their notes into shares of common stock.

Conversion Date	Bridge Note Originated	Note #4 Reference	Name	Note Tranche	Note Amount		Conversion Price per Shar		Total Shares
01/18/13	11/30/12	(20)	Larry Hopfenspirger	October 2012	$	60,000		0.04718		1,287,303
01/25/13	11/28/12	(01)	John Pappajohn	October 2012		200,000		0.04718		4,300,551
01/31/13	08/21/12	(15)	Tierney Family Trust	October 2012		100,000		0.04718		2,205,914
01/31/13	09/06/12	(15)	Tierney Family Trust	October 2012		100,000		0.04718		2,197,435
01/31/13	10/01/10	(03)	SAIL Venture Partners, LP	October 2010		250,000		1.00000		303,313
01/31/13	02/28/11	(03)	SAIL Venture Partners, LP	January 2011		187,500		1.00000		220,454
01/31/13	04/15/11	(03)	SAIL Venture Partners, LP	January 2011		250,000		1.00000		291,063
01/31/13	04/25/11	(03)	SAIL Venture Partners, LP	January 2011		125,000		1.00000		145,219
01/31/13	02/28/11	(03)	SAIL 2010 Co-Investment Partners, LP	January 2011		62,500		1.00000		73,485
01/31/13	04/15/11	(03)	SAIL 2010 Co-Investment Partners, LP	January 2011		250,000		1.00000		291,063
01/31/13	04/25/11	(03)	SAIL 2010 Co-Investment Partners, LP	January 2011		125,000		1.00000		145,219
01/31/13	08/17/12	(03)	SAIL Holding LLC	October 2012		100,000		0.04718		2,208,034
01/31/13	10/26/12	(03)	SAIL Venture Partners II, LP	October 2012		50,000		0.04718		1,085,471
01/31/13	10/26/12	(03)	SAIL 2010 Co-Investment Partners, LP	October 2012		20,000		0.04718		434,189
01/31/13	10/26/12	(03)	SAIL 2011 Co-Investment Partners, LP	October 2012		20,000		0.04718		434,189
02/07/13	08/22/12	(10)	BluMont Northern Rivers Fund	October 2012		21,700		0.04718		480,000
03/21/13	11/28/12	(01)	John Pappajohn	October 2012		300,000		0.04718		6,538,258
03/26/13	08/22/12	(10)	BluMont Northern Rivers Fund	October 2012		16,400		0.04718		366,629
03/27/13	11/28/12	(08)	George Carpenter	October 2012		50,000		0.04718		1,091,299
03/28/13	11/06/12	(13)	AlphaNorth Offshore, Inc.	October 2012		39,100		0.04718		858,415
04/11/13	08/22/12	(07)	Meyer Proler MD	October 2012		50,000		0.04718		1,121,238
04/30/13	11/29/12	(18)	Mark & Jill Oman	October 2012		250,000		0.04718		5,500,212
04/30/13	11/29/12	(04)	Andy Sassine	October 2012		25,000		0.04718		550,021
05/16/13	11/06/12	(13)	Alpha North Offshore, Inc.	October 2012		60,900		0.04718		1,352,181
06/14/13	10/19/12	(16)	The Follman Trust	October 2012		200,000		0.04718		4,491,310
06/14/13	10/25/12	(17)	Extuple Limited Partnership	October 2012		50,000		0.04718		1,121,237
06/14/13	11/28/12	(10)	Argyris & Ann Vassiliou	October 2012		25,000		0.04718		556,114
06/14/13	11/29/12	(19)	Ronald Dozoretz MD	October 2012		100,000		0.04718		2,223,929
				Total	$	3,088,100				41,873,745

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

+ References + Details