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

Annual report pursuant to Section 13 and 15(d)

STOCKHOLDERS' EQUITY (Tables)

STOCKHOLDERS' EQUITY (Tables)

12 Months Ended

Sep. 30, 2013

Schedule of Debt Conversions [Table Text Block]

Below is a summary of all promissory notes conversions:

Conversion of Notes	Shares of Common Stock		Conversion Date		Conversion Price		Principal 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

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block]

The following assumptions were made in estimating the fair value:

	2013			2012
Annual dividend yield		-			-
Expected life (years)		5			5
Risk-free interest rate		0.62% - 0.79	%		1.13	%
Expected volatility		380% - 393	%		274	%
Fair value of options granted	$	0.05 - 0.25		$	3.00

Schedule Of Stock Based Compensation Expenses [Table Text Block]

Stock-based compensation expense included in the accompanying statements of operations for the fiscal years ended September 30, 2013 and 2012 is as follows:

	For the fiscal years ended September 30,
	2013		2012
Cost of Neurometric Services revenues	$	10,600	$	10,200
Research		92,700		99,200
Product Development		113,300		72,500
Sales and marketing		155,500		196,800
General and administrative		885,200		972,100
Total	$	1,257,300	$	1,350,800

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, 2011		524,201	$	19.88

Granted		42,670		3.00
Exercised		-		-
Forfeited		(20,125)		24.08
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

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

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

Exercise Price		Number of Shares		Weighted Average Contractual Life		Weighted Average Exercise Price		Vested at September 30, 2013		Weighted Average Remaining Life (Years)		Aggregate Intrinsic Value at $0.25 price per share at September 30, 2013

$	0.04718		8,955,000		10 years	$	0.04718		3,138,611		9.2	$	1,816,254
$	0.25		250,000		10 years		0.25		48,611		9.5		-
$	3.00		42,670		10 years		3.00		23,706		8.5		-
$	3.60		28,648		10 years		3.60		28,648		2.9		-
$	3.96		32,928		10 years		3.96		32,928		2.9		-
$	9.00		4,525		10 years		9.00		4,525		3.1		-
$	12.00		28,535		10 years		12.00		25,723		6.7		-
$	14.10		10,000		10 years		14.10		6,458		7.5		-
$	15.30		1,373		10 years		15.30		1,373		5.0		-
$	16.50		262,441		10 years		16.50		242,476		6.4		-
$	17.70		953		10 years		17.70		953		2.9		-
$	24.00		4,667		10 years		24.00		4,667		4.2		-
$	26.70		32,297		10 years		26.70		32,297		4.0		-
$	28.80		11,767		10 years		28.80		11,767		4.5		-
$	32.70		83,790		10 years		32.70		83,790		3.9		-

Total			9,749,594			$	1.00		3,686,533		9.0	$	1,816,254

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

The warrant activity for the period starting October 1, 2011, through September 30, 2013, is 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. These warrants were subsequently forfeited pursuant to the Amended and Restated Consent, Note Amendment and Warrant Forfeiture Agreement dated October 24, 2012.
	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 (October 2011 Notes). These warrants were subsequently forfeited pursuant to the Amended and Restated Consent, Note Amendment and Warrant Forfeiture Agreement dated October 24, 2012.

Warrants			Exercise Price		Issued, Surrendered or Expired in Connection With:
	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 pursuant to the 2011 Bridge Note Purchase Agreement (October 2011 Notes). 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 pursuant to the 2011 Bridge Note Purchase Agreement (October 2011 Notes). 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.
	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

- 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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