Emmaus Life Sciences, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

STOCKHOLDERS' DEFICIT (Tables)

STOCKHOLDERS' DEFICIT (Tables)

12 Months Ended

Sep. 30, 2014

Stockholders' Equity Note [Abstract]

Schedule of Debt Conversions [Table Text Block]

Below is a summary of all promissory notes conversions:

	Shares of
	Common		Conversion	Conversion		Principal
Conversion of Notes	Stock		Date	Price		Amount		Interest		Total
Fiscal Year 2012
October 2012 Notes:
Unsecured convertible notes		40,000	09/19/12	$	0.04718	$	1,800	$	100	$	1,900

Fiscal Year 2013
October 2010 Notes: Senior		303,313	01/31/13	$	1.00	$	250,000	$	53,300	$	303,300
subordinated convertible notes		13,943,539	08/12/13	$	0.25		2,773,900		712,000		3,485,900
Total October 2010 Notes:		14,246,852				$	3,023,900	$	765,300	$	3,789,200

January 2011 Notes:		1,166,503	01/31/13	$	1.00	$	1,000,000	$	166,500	$	1,166,500
Subordinated convertible notes		7,336,500	08/12/13	$	0.25		1,500,000		334,100		1,834,100
Total January 2011 Notes:		8,503,003				$	2,500,000	$	500,600	$	3,000,600

October 2011 Notes:
Subordinated convertible notes		9,205,680	08/12/13	$	0.25	$	2,000,000	$	301,400	$	2,301,400

February 2012 Notes:
Unsecured convertible note		407,700	08/12/13	$	0.25	$	90,000	$	11,900	$	101,900

October 2012 Notes:
Unsecured convertible notes		44,085,044	01/18/13 through 09/30/13	$	0.04718	$	1,998,200	$	81,800	$	2,080,000
Total of Notes Converted in Fiscal 2013		76,448,279				$	9,612,100	$	1,661,000	$	11,273,100
Total of Notes Converted		76,488,279				$	9,613,900	$	1,661,100	$	11,275,000

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The following assumptions were made in estimating the fair value:

	2014			2013
Annual dividend yield		-			-
Expected life (years)		5			5
Risk-free interest rate		1.42% - 1.76	%		0.62% - 0.79	%
Expected volatility		116% - 129	%		380% - 393	%
Fair value of options granted	$	0.21		$	0.05 - 0.25

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [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 year ended September 30, 2014 and 2013 is as follows:

	For the fiscal year ended
	September 30,
	2014		2013
Cost of Neurometric Services revenues	$	5,100	$	10,600
Research		65,500		92,700
Product Development		249,700		113,300
Sales and marketing		87,700		155,500
General and administrative		600,700		885,200
Total	$	1,008,700	$	1,257,300

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

A summary of stock option activity is as follows:

	Number of			Weighted Average
		Shares		Exercise Price
Outstanding at September 30, 2012			546,746	$	17.08
Granted			9,205,000		0.05
Exercised			-		-
Forfeited			(2,152)		14.10
Outstanding at September 30, 2013			9,749,594	$	1.00
Granted			2,725,000		0.25
Exercised			-		-
Forfeited			(57,095)		12.67
Outstanding at September 30, 2014			12,417,499	$	0.84

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

Following is a summary of the status of options outstanding at September 30, 2014:

				Weighted		Weighted		Vested and		Weighted		Aggregate Intrinsic
				Average		Average		Exercisable at		Average		Value at $0.22 price
Exercise		Number		Contractual		Exercise		September		Remaining		per share at
Price		of Shares		Life		Price		30, 2014		Life (Years)		September 30, 2014

$	0.04718		8,920,300		10 years	$	0.04718		6,538,494		8.2	$	1,541,606
$	0.25		2,527,605		10 years		0.25		1,951,216		9.0		-
$	0.26		425,000		10 years		0.26		35,417		9.8		-
$	3.00		42,670		10 years		3.00		37,929		7.5		-
$	3.60		28,648		10 years		3.60		28,648		1.9		-
$	3.96		32,928		10 years		3.96		32,928		1.9		-
$	9.00		4,525		10 years		9.00		4,525		2.1		-
$	12.00		28,535		10 years		12.00		28,535		5.7		-
$	14.10		10,000		10 years		14.10		8,958		6.5		-
$	15.30		1,373		10 years		15.30		1,373		4.0		-
$	16.50		262,441		10 years		16.50		262,441		5.4		-
$	17.70		953		10 years		17.70		953		1.9		-
$	24.00		4,667		10 years		24.00		4,667		3.2		-
$	26.70		32,297		10 years		26.70		32,297		3.0		-
$	28.80		11,767		10 years		28.80		11,767		3.5		-
$	32.70		83,790		10 years		32.70		83,790		2.8		-
	Total		12,417,499			$	0.843		9,063,938		4.79	$	1,541,606

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

The warrant activity for the period starting October 1, 2012, through September 30, 2014, is described as follows:

	Exercise
Warrants	Price		Issued, Surrendered or Expired in Connection With:
2,164,440	$		Warrants outstanding at October 1, 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.

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.

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 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.

52,000		0.275	These warrants were issued to Monarch Capital who acted as placement agents in raising $520,000 from five accredited investors who purchased common stock, par value $0.001 per share, in a private placement agreement dated May 23, 2013.

1,497,556	$	3.03	Warrants outstanding at September 30, 2013
120,000		0.275	Warrants issued to Monarch Capital who acted as placement agents in raising $300,000 from 11 accredited investors who purchased restricted common stock, par value $0.001 per share, in a private placement agreements dated October 2, 2013 and January 8, 2014.

32,200		0.25	Warrants issued to D&D Securities Inc. who acted as placement agents in raising $115,000 from three accredited investors who purchased restricted common stock, par value $0.001 per share, in a private placement agreement dated January 8, 2014.

(519,288)		0.04718	Warrants exercised as of January 29, 2013.
(89,021)		0.04718	Warrants exercised as of June 20, 2014.
(226,703)		$9.00 to $9.90	Warrants expired

814,744	$	3.07	Warrants outstanding at September 30, 2014

- 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.

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