EMMAUS LIFE SCIENCES, INC. - FORM 10-Q/A - August 25, 2011

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EX-31.1 - 302 CERTIFICATION FOR CEO - EMMAUS LIFE SCIENCES, INC.ex-31_1.htm
EX-32.1 - 906 CERTIFICATION FOR CEO - EMMAUS LIFE SCIENCES, INC.ex-32_1.htm
EX-31.2 - 302 CERTIFICATION FOR CFO - EMMAUS LIFE SCIENCES, INC.ex-31_2.htm
EX-32.2 - 906 CERTIFICATION FOR CFO - EMMAUS LIFE SCIENCES, INC.ex-32_2.htm
 
 
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A
(Amendment No. 2)

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2011

¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File No. 000-53072
 

EMMAUS HOLDINGS, INC.
(Name of registrant in its charter)

Delaware
  
41-2254389
(State or other jurisdiction of incorporation or formation)
   
(I.R.S. employer identification number)

20725 S Western Avenue
Suite 136
Torrance, CA 90501
 (Address of principal executive offices)
 
Issuer’s telephone number:  (310) 492-9898
 
AFH ACQUISITION IV, INC.
______________9595 Wilshire Blvd., Suite 700, Beverly Hills, CA 90212 _________
(Former Name or Former Address, if Changed Since Last Report)

 
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   x  Yes ¨  No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o  Yes ¨  No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in rule 12b-2 of the Exchange Act.
 
Large accelerated filer   
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company   
x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
¨  Yes x  No
State the number of shares outstanding of each of the issuer’s classes of common equity, as of August 25, 2011:  24,381,667 shares of common stock.
 
 
 
 
 
AFH ACQUISITION IV, INC.
- INDEX -

   
Page
PART I – FINANCIAL INFORMATION:
  
     
     
 
     
 
     
 
     
 
     
 
     
4
     
5
 
 
 
 
 
EXPLANATORY NOTE
 
Emmaus Holdings, Inc, a Delaware corporation, is filing this Amendment No.2 to its Form 10-Q for the period ended April 30, 2011 which was originally filed with the Securities and Exchange Commission on May 13, 2011 and the first amendment filed on July 5, 2011, in order to correctly reference the financial statements for the period ended April 30, 2011 as those of AFH Acquisition IV, Inc. and not Emmaus Holdings, Inc.,since the financial statements in this quarterly report are for a period prior to the merger that closed on May 3, 2011.  This amendment also updates the equity statement with respect to outstanding common stock and additional paid in capital, as well as to update subsequent events, and updates share information with respect to the amounts outstanding upon the merger.
 
New certifications of our principal executive and financial officer are included as exhibits to this amendment.
 
 
 
 

PART I – FINANCIAL INFORMATION

AFH ACQUISITION IV, INC.
 (A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
BEVERLY HILLS, CA

FINANCIAL REPORTS
AT
APRIL 30, 2011
 
 
AFH ACQUISTION IV, INC.
 (A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Beverly Hills, CA

TABLE OF CONTENTS
 
Balance Sheets at April 30, 2011 (Unaudited) and October 31, 2010
F-1
   
Statement of Changes in Stockholder’s Deficit for the Period from Date of Inception (September 24, 2007) through April 30, 2011 (Unaudited)
F-2
   
Statements of Operations for the Three and Six Months Ended April 30, 2011 and 2010 and for the Period from Date of Inception (September 24, 2007) through April 30, 2011 (Unaudited)
F-3
   
Statements of Cash Flows for the Three and Six Months Ended April 30, 2011 and 2010 and for the Period from Date of Inception (September 24, 2007) through April 30, 2011 (Unaudited)
F-4
   
Notes to Financial Statements
F-5 – F-8
 
 
 
 
   
AFH ACQUISITION IV, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Beverly Hills, CA		            
             
             
           
             
   
(Unaudited)
        
   
April 30,
    
October 31,
  
   
2011
    
2010
  
             
ASSETS
            
Cash and Cash Equivalents
    
260
      
—
  
Due from Parent
    
1,137,874
      
—
  
                 
Total Assets
  
$
1,138,134
    
$
—
  
                 
LIABILITIES AND STOCKHOLDER'S DEFICIT
                
                 
Liabilities
                
Accrued Expenses
  
$
863
    
$
3,703
  
Due to Parent
    
—
      
11,895
  
                 
Total Liabilities
    
863
      
15,598
  
                 
Stockholder's Deficit
                
Preferred Stock:  $.001 Par; 20,000,000 Shares Authorized,
                
                            -0- Issued and Outstanding
    
—
      
—
  
Common Stock:  $.001 Par; 100,000,000 Shares Authorized;
                
                            5,577,750 and 5,000,000 Issued and Outstanding at
            
0
  
                            April 30, 2011 and October 31, 2010, respectively
    
5,578
      
5,000
  
Additional Paid-In-Capital
    
1,174,922
      
20,000
  
Deficit Accumulated During Development Stage
    
(43,229
)
    
(40,598
)
                 
Total Stockholder's Deficit
    
1,137,271
      
(15,598
)
                 
Total Liabilities and Stockholder's Deficit
  
$
1,138,134
    
$
—
  

 
 
 
 
   
AFH ACQUISITION IV, INC.
 (A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Beverly Hills, CA
 
                                     
STATEMENTS OF CHANGES IN STOCKHOLDER'S DEFICIT FOR THE PERIOD FROM
                    
DATE OF INCEPTION (SEPTEMBER 24, 2007) THROUGH APRIL 30, 2011 - UNAUDITED
              
                                     
                           
Deficit
        
                           
Accumulated
        
   
Common Stock
    
Additional
    
Stock
    
During
    
Total
  
   
Number
          
Paid-In
    
Subscription
    
Development
    
Stockholder's
  
   
of Shares
    
Value
    
Capital
    
Receivable
    
Stage
    
Deficit
  
                                     
Balance - September 24, 2007
    
—
    
$
—
    
$
—
    
$
—
    
$
—
    
$
—
  
                                                 
Common Stock Issued for Cash
    
5,000,000
      
5,000
      
20,000
      
(4,900
)
    
—
      
20,100
  
                                                 
Net Loss for the Period
    
—
      
—
      
—
      
—
      
(21,853
)
    
(21,853
)
                                                 
Balance - October 31, 2007
    
5,000,000
      
5,000
      
20,000
      
(4,900
)
    
(21,853
)
    
(1,753
)
                                                 
Cash Received for Stock Subscriptions
    
—
      
—
      
—
      
4,900
      
—
      
4,900
  
                                                 
Net Loss for the Period
    
—
      
—
      
—
      
—
      
(7,600
)
    
(7,600
)
                                                 
Balance - October 31, 2008
    
5,000,000
      
5,000
      
20,000
      
—
      
(29,453
)
    
(4,453
)
                                                 
Net Loss for the Period
    
—
      
—
      
—
      
—
      
(7,317
)
    
(7,317
)
                                                 
Balance - October 31, 2009
    
5,000,000
      
5,000
      
20,000
      
—
      
(36,770
)
    
(11,770
)
                                                 
Net Loss for the Period
    
—
      
—
      
—
      
—
      
(3,828
)
    
(3,828
)
                                                 
Balance - October 31, 2010
    
5,000,000
      
5,000
      
20,000
      
—
      
(40,598
)
    
(15,598
)
                                                 
Common Stock Issued for Cash
    
577,750
      
578
      
1,154,922
      
—
      
—
      
1,155,500
  
                                                 
Net Loss for the Period
    
—
      
—
      
—
      
—
      
(2,631
)
    
(2,631
)
                                                 
Balance - April 30, 2011
    
5,577,750
    
$
5,578
    
$
1,174,922
    
$
—
    
$
(43,229
)
  
$
1,137,271
  

 
 
 
 
   
AFH ACQUSITION IV, INC.
                  
(A DEVELOPMENT STAGE COMPANY)
                  
(A DELAWARE CORPORATION)
                  
Beverly  Hills, CA
                        
 
                               
                               
STATEMENTS OF OPERATIONS – UNAUDITED
                              
                               
                           
Period From
  
                           
Date of Inception
  
   
For the Three Months Ended
    
For the Six Months Ended
    
(September 24, 2007)
  
   
April 30,
    
April 30,
    
Through
  
   
2011
    
2010
    
2011
    
2010
    
April 30, 2011
  
                               
                               
Revenues
  
$
—
    
$
—
    
$
—
    
$
—
    
$
—
  
                                         
Expenses
                                        
Consulting
  
$
—
    
$
—
    
$
—
    
$
—
    
$
1,736
  
Interest
    
—
      
—
      
—
      
—
      
15
  
Legal and Professional
    
863
      
1,244
      
2,138
      
2,031
      
39,121
  
Office Expenses
    
93
      
—
      
93
      
—
      
795
  
Organizational Costs
    
—
      
—
      
—
      
—
      
962
  
                             
—
          
Total Expenses
  
$
956
    
$
1,244
    
$
2,231
    
$
2,031
    
$
42,629
  
                                         
Net Loss for the Period Before Taxes
  
$
(956
)
  
$
(1,244
)
  
$
(2,231
)
  
$
(2,031
)
  
$
(42,629
)
                                         
Franchise Tax
    
400
      
125
      
400
      
125
      
600
  
                                         
Net Loss for the Period After Taxes
  
$
(1,356
)
  
$
(1,369
)
  
$
(2,631
)
  
$
(2,156
)
  
$
(43,229
)
                                         
Loss per Share - Basic and Diluted
  
$
(0.00
)
  
$
(0.00
)
  
$
(0.00
)
  
$
(0.00
)
  
$
(0.01
)
                                         
Weighted Average Common Shares Outstanding
    
5,077,899
      
5,000,000
      
5,038,304
      
5,000,000
      
5,005,276
  

 
 
 
   
AFH ACQUSITION IV, INC.
 (A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Beverly Hills, CA
 
STATEMENTS OF CASH FLOWS - UNAUDITED
                  
                   
               
Period From
  
               
Date of Inception
  
   
For the Six Months Ended
    
(September 24, 2007)
  
   
April 30,
    
Through
  
   
2011
    
2010
    
April 30, 2011
  
                   
Cash Flows from Operating Activities
                  
Net Loss for the Period
  
$
(2,631
)
  
$
(2,156
)
  
$
(43,229
)
                         
Changes in Assets and Liabilities:
                        
Prepaid Expenses
    
—
      
—
      
—
  
Accrued Expenses
    
(2,840
)
    
(3,749
)
    
863
  
                         
Net Cash Flows from Operating Activities
    
(5,471
)
    
(5,905
)
    
(42,366
)
                         
Net Cash Flows from Investing Activities
    
—
      
—
      
—
  
                         
Cash Flows from Financing Activities
                        
Cash Advance by (Repayment to) Parent
    
5,731
      
5,905
      
17,626
  
Cash Proceeds from Stock Subscriptions
    
—
      
—
      
4,900
  
Cash Proceeds from Sale of Stock
    
—
      
—
      
20,100
  
                         
Net Cash Flows from Financing Activities
    
5,731
      
5,905
      
42,626
  
                         
Net Change in Cash and Cash Equivalents
    
260
      
—
      
260
  
                         
Cash and Cash Equivalents - Beginning of Period
    
—
      
—
      
—
  
                         
Cash and Cash Equivalents - End of Period
  
$
260
    
$
—
    
$
260
  
                         
Cash Paid During the Period for:
                        
Interest
  
$
—
    
$
—
    
$
—
  
Income Taxes
  
$
—
    
$
—
    
$
—
  
                         
Supplemental Disclosure of Cash Flow Information
                
Proceeds Held by Parent
  
$
1,155,500
    
$
—
    
$
1,155,500
  
 
 
 
 

 
AFH ACQUISITION IV, INC.
 (A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Beverly Hills, CA



Note A -
The Company
 
Prior to May 3, 2011, AFH Acquisition IV, Inc. (the “Company”)  was a development stage company that was incorporated under the laws of the State of Delaware on September 24, 2007.  The Company was majority owned by AFH Holding & Advisory, LLC (the “Parent”).  The financial statements presented represent only those transactions of the Company. On April 21, 2011, the Company entered into a merger agreement and plan of merger with Emmaus Medical, Inc. (“Emmaus”), which closed on May 3, 2011 (See Note G).

 
 
The condensed financial statements of the Company included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).  Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the annual audited financial statements and the notes thereto included in the Company’s annual report on Form 10-K, and other reports filed with the SEC.

 
The accompanying unaudited interim financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented.  The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole.  Certain information that is not required for interim financial reporting purposes has been omitted.

Note B -
Summary of Significant Accounting Policies
 
Method of Accounting

 
The Company maintains its books and prepares its financial statements on the accrual basis of accounting.

- continued -

 
 
 
 
AFH ACQUISITION IV, INC.
 (A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Beverly Hills, CA
 
NOTES TO FINANCIAL STATEMENTS


Note B -
Summary of Significant Accounting Policies - continued
 
Development Stage

 
The Company has operated as a development stage enterprise since its inception by devoting substantially all of its efforts to financial planning, raising capital, research and development, and developing markets for its services.  The Company prepares its financial statements in accordance with the requirements of FASB ASC 915.

 
Cash and Cash Equivalents
 
Cash and cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less.  The Company maintains cash and cash equivalents at financial institutions, which periodically may exceed federally insured amounts.

 
Loss Per Common Share
 
Loss per common share is computed in accordance with FASB ASC 260-10, by dividing income (loss) available to common stockholders by weighted average number of common shares outstanding for each period.

 
Use of Estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results can differ from those estimates.

 
Organizational Costs
 
Organizational costs represent management, consulting, legal, accounting, and filing fees incurred to date in the formation of the company.  Organizational costs are expensed as incurred in accordance with FASB ASC 720-15.

 
Income Taxes
 
The Company accounts for income taxes in accordance with FASB ASC 740-10, using the asset and liability approach, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of such assets and liabilities.  This method utilizes enacted statutory tax rates in effect for the year in which the temporary differences are expected to reverse and gives immediate effect to changes in income tax rates upon enactment.  Deferred tax assets are recognized, net of any valuation allowance, for temporary differences and net operating loss and tax credit carry forwards.  Deferred income tax expense represents the change in net deferred assets and liability balances.
 
 
 
 
 
AFH ACQUISITION IV, INC.
 (A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Beverly Hills, CA
 

NOTES TO FINANCIAL STATEMENTS


Note B -
Summary of Significant Accounting Policies - continued
 
Financial Instruments

 
The Company’s financial instruments consist of cash and due from parent. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.  The fair value of these financial instruments approximates their carrying value, unless otherwise noted.

 
Recent Pronouncements
 
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position, or cash flow.

Note C -
Equity Securities
 
Holders of shares of common stock shall be entitled to cast one vote for each common share held at all stockholder’s meetings for all purposes, including the election of directors.  The common stock does not have cumulative voting rights.

 
The preferred stock of the Company shall be issued by the Board of Directors of the Company in one or more classes or one or more series within any class and such classes or series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, limitations or restrictions as the Board of Directors of the Company may determine, from time to time.

 
No holder of shares of stock of any class shall be entitled as a matter of right to subscribe for or purchase or receive any part of any new or additional issue of shares of stock of any class, or of securities convertible into shares of stock or any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of dividend.

Note D -
Going Concern
 
The Company’s financial statements have been presented on the basis that it is a justified going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has reported recurring losses from operations.  As a result, there is an accumulated deficit of $43,229 at April 30, 2011.

 
The Company’s continued existence is dependent upon its ability to raise capital or acquire a marketable company. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 
 
 
 
AFH ACQUISITION IV, INC.
 (A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Beverly Hills, CA


NOTES TO FINANCIAL STATEMENTS


Note E -
Due from Parent
 
Represents cash advance to/from AFH Holding & Advisory, LLC for services and expenses paid for on the Company’s behalf and proceeds of the sale of stock. AFH Holding & Advisory, LLC is the majority shareholder of the Company.  The proceeds of the sale of stock are held by AFH Holding & Advisory in anticipation of the costs of merging.   AFH Holding & Advisory, LLC anticipates the costs will approximate the funds raised however will retain any unspent funds post merger.   There are no repayment terms.
 
 
Note F -
Stock Transactions
 
On April 19, 2011, the Company sold an aggregate of 577,750 shares of common stock at a per share purchase price of $2.00 per share for gross proceeds of approximately $1.2 million (the “Private Placement”).  The shares of our common stock sold in the Private Placement were not registered under the Securities Act of 1933, as amended (the “Securities Act”).  All proceeds from this stock sale were retained by AFH Holding & Advisory, LLC, the Parent, prior to the merger (see Note G).
 
Note G -
Subsequent Events
 
Pursuant to an Agreement and Plan of Merger, dated April 21, 2011 (the “Merger Agreement”), by and among AFH Acquisition IV, Inc. (“AFH IV”), AFH Merger Sub, Inc. (“AFH Merger Sub”), AFH Holding & Advisory, LLC (“AFH Advisory”), and Emmaus Medical, Inc. (“Emmaus”), Emmaus merged with and into AFH Merger Sub with Emmaus continuing as the surviving entity (the “Merger”).  Upon the closing of the Merger on May 3, 2011, AFH IV changed its name from “AFH Acquisition IV, Inc.” to “Emmaus Holdings, Inc.”
 
Emmaus agreed to reimburse AFH Advisory, our Parent, an aggregate of $900,000 consisting of $500,000 for the identification of AFH IV and providing consulting services related to coordination the Merger and managing the interrelationship of legal and accounting activities and $400,000 for expenses incurred in connection with providing services; and that AFH Advisory is entitled, in its sole discretion, to either be reimbursed such costs in cash from the proceeds of any public offering conducted by the Company or to convert such amount into five-year warrants to purchase additional shares of common stock at a valuation equal to 75% of the fair market value of the common stock if the Company closes a public offering.  We further note that just prior to the closing of the Merger, AFH Advisory canceled an aggregate of 1,827,750 shares of our common stock.
 
Upon consummation of the Merger, (i) each outstanding share of Emmaus common stock was exchanged for 29.48548924976 shares of AFH IV common stock, (ii) each outstanding Emmaus option and warrant, which was exercisable for one share of Emmaus common stock, was exchanged for an option or warrant, as applicable, exercisable for 29.48548924976 shares of AFH IV common stock; and (iii) each outstanding convertible note of Emmaus, which was converted for one share of Emmaus common stock, was exchanged for a convertible note exercisable for 29.48548924976 shares of AFH IV common stock. As a result of the Merger, securityholders of Emmaus received 24,378,305 (excluding 47,178 shares held by stockholders who exercised dissenters’ rights) shares of AFH IV common stock, options to purchase 23,590 shares of common stock, warrants to purchase an aggregate of 302,918 shares of AFH IV common stock, and convertible notes to purchase an aggregate of 271,305 shares of AFH IV common stock.
 
For accounting purposes, the Merger transaction will be accounted for as a reverse merger. The transaction has been treated as a recapitalization of Emmaus Medical and its subsidiaries, with AFH Acquisition IV, Inc. (the legal acquirer of Emmaus Medical and its subsidiaries) considered the accounting acquiree and Emmaus Medical whose management took control of AFH Acquisition IV, Inc. (the legal acquiree of Emmaus Medical) considered the accounting acquirer. Pro forma disclosure giving effect to the Merger has been included in the Company’s Current Report on Form 8-K/A filed with the SEC.
 
The Company entered into employment agreements with Yutaka Niihara, M.D., MPH, its Chief Executive Officer, Willis C. Lee, its Chief Operating Officer, and Lan T. Tran, its Chief Administrative Officer on April 5, 2011 and with Yasushi Nagasaki, its Chief Financial Officer, on April 8, 2011 (collectively, the “Employment Agreements”).  Each of the Employment Agreements has an initial 2-year term, unless terminated earlier.  The Employment Agreements for Dr. Niihara, Mr. Lee and Ms. Tran automatically renew for additional one year periods unless the Company or the officer provides notice of non-renewal at least sixty (60) days prior to the expiration of the then current term. 
 
 
 
 
   
Item 2.    
Management’s Discussion and Analysis or Plan of Operation.

Plan of Operation
 
Prior to May 3, 2011, AFH Acquisition IV, Inc. (the “Company”), was a development stage company that was incorporated under the laws of the State of Delaware on September 24, 2007.  The Company was majority owned by AFH Holding & Advisory, LLC (the “Parent”).  The financial statements presented represent only those transactions of the Company. (See Note G).
  
Pursuant to an Agreement and Plan of Merger, dated April 21, 2011 (the “Merger Agreement”), by and among the Company, AFH Merger Sub, Inc. (“AFH Merger Sub”), AFH Holding & Advisory, LLC (“AFH Advisory”), and Emmaus Medical, Inc. (“Emmaus”), Emmaus merged with and into AFH Merger Sub with Emmaus continuing as the surviving entity (the “Merger”).  Upon the closing of the Merger on May 3, 2011, the Company changed its name from “AFH Acquisition IV, Inc.” to “Emmaus Holdings, Inc.”

Upon consummation of the Merger, (i) each outstanding share of Emmaus common stock was exchanged for 29.48548924976 shares of AFH IV common stock, (ii) each outstanding Emmaus option and warrant, which was exercisable for one share of Emmaus common stock, was exchanged for an option or warrant, as applicable, exercisable for 29.48548924976 shares of AFH IV common stock; and (iii) each outstanding convertible note of Emmaus, which was converted for one share of Emmaus common stock, was exchanged for a convertible note exercisable for 29.48548924976 shares of AFH IV common stock. As a result of the Merger, securityholders of Emmaus received 24,378,305 (excluding 47,178 shares held by stockholders who exercised dissenters’ rights) shares of AFH IV common stock, options to purchase 23,590 shares of common stock , warrants to purchase an aggregate of 302,918 shares of AFH IV common stock, and convertible notes to purchase an aggregate of 271,305 shares of AFH IV common stock.

Emmaus is engaged in the discovery, development, and commercialization of innovative and cost-effective treatments and therapies, areas that may have traditionally been underserved by large pharmaceutical companies. Emmaus believes that there are attractive niche markets and financial opportunities for companies one that specializes in treatments for rare diseases.  Over time, Emmaus plans to expand the business to include developing and marketing products to treat more common diseases.  The primary focus of the business is the late-stage development of the amino acid L-glutamine as a prescription drug for the treatment of sickle cell disease (“SCD”).  To a lesser extent, Emmaus is also engaged in the marketing and sale of NutreStore® [L-glutamine powder for oral solution] and promotion of Zorbtive® [somatropin (rDNA origin) for injection], as a treatment for short bowel syndrome (“SBS”) and the sale of L-glutamine as a nutritional supplement under the brand name AminoPure®.  Since inception, Emmaus has generated minimal revenues from the sale and/or promotion of NutreStore®, Zorbtive® and AminoPure®.

Results of Operations

The Company has not conducted any active operations since inception, except for its efforts to locate suitable acquisition candidates. No revenue has been generated by the Company from September 24, 2007 (inception) to April 30, 2011.   See the Company's Current Report on Form 8-K/A filed with the SEC for results of operations of Emmaus.
 
Expenses incurred since inception are primarily due to legal, accounting, and other professional service fees.

Liquidity and Capital Resources
 
At April 30, 2011, the Company had limited capital resources and has relied upon the issuance of common stock and additional capital contributions from shareholders to fund administrative expenses pending the acquisition of an operating company.

 
 
 
 
Off-Balance Sheet Arrangements
 
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
   
Item 3.    
Quantitative and qualitative Disclosures About Market Risk

Not applicable.
   
Item 4.    
Controls and Procedures.
 
Evaluation of Disclosure Controls and Procedures
 
Our Principal Executive Officer and Principal Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of April 30, 2011. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to the Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding disclosure.
 
Changes in Internal Controls.

There have been no significant changes to the Company’s internal controls over financial reporting that occurred during our last fiscal quarter ended April 30, 2011, that materially affected, or were reasonably likely to materially affect, our internal controls over financial reporting. 

 
As of May 3, 2011, we completed a merger as disclosed in Note G of the financial statements.  Upon completion of the Merger, the Company adopted the operating control system of Emmaus Medical, Inc.

 
 
 
 

PART II – OTHER INFORMATION
   
Item 1.    
Legal Proceedings.
 
None
  
Item 2.    
Unregistered Sales of Equity Securities and Use of Proceeds.
 
None
  
Item 3.    
Defaults Upon Senior Securities.
 
None
  
Item 4.    
Reserved.
 
None
  
Item 5.    
Other Information.
 
None
  
Item 6.    
 
(a)  Exhibits required by Item 601 of Regulation S-K.
 
 
 
Exhibit   Description
 
 
 
 
 
 
 
 
 
SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

Dated:  August 25, 2011
 

     
EMMAUS HOLDINGS, INC.
  
     
(Registrant)
  
         
   
By:
/s/ Yutaka Niihara
  
   
Name:
Yutaka Niihara M.D., MPH.
  
   
Title:
President and Chief Executive Officer  and Duly Authorized Officer
  
 
 
 
 

EMMAUS LIFE SCIENCES, INC. Reports

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