SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2009
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                               to

Commission File Number: 0-26372

ADAMIS PHARMACEUTICALS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	82-0429727
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

2658 Del Mar Heights Rd., #555, Del Mar, CA 92014

(Address of principal executive offices, including zip code)

(858) 401-3984

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  x    No   o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).

Yes  o    No   o

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 definitions of “larger accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):   

 Large accelerated filer  o     Accelerated filer  o         Non-accelerated filer  o   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 o    No   x

There were 45,469,155 shares of common stock outstanding at November 20, 2009.

ADAMIS PHARMACEUTICALS, INC.

CONTENTS OF QUARTERLY REPORT ON FORM 10-Q

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Cash Flows	5&6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosure of Market Risk	19
Item 4.	Controls and Procedures	19
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Submission of Matters to a Vote of Security Holders	20
Item 5.	Other Information	20
Item 6.	Exhibits	20
	Signatures	21

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ADAMIS PHARMACEUTICALS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
	September 30,
	2009			March 31, 2009
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	14,655		$	17,697
Accounts Receivable, Net		159,011			136,283
Inventory, Net		228,281			195,167
Prepaid Expenses and Other Current Assets		16,612			4,087
Related Party Receivables		76,732			—
Assets from Discontinued Operations		350,000			350,000
Total Current Assets		845,291			703,234
PROPERTY AND EQUIPMENT, Net		27,419			31,726
DEFERRED ACQUISITION COSTS		—			147,747
Total Assets	$	872,710		$	882,707
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts Payable	$	1,628,302		$	972,522
Accrued Expenses		1,522,859			723,896
Notes Payable to Related Parties		334,565			599,765
Total Current Liabilities		3,485,726			2,296,183
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Preferred Stock – Par Value $.0001; 20,000,000 Shares Authorized; Issued and Outstanding-None		—			—
Common Stock – Par Value $.0001; 100,000,000 Shares Authorized; 47,073,989 and 37,306,704 Issued, 45,972,303 and 36,990,704 Outstanding, Respectively		4,708			3,731
Additional Paid-in Capital		10,792,097			10,762,963
Accumulated Deficit		(13,408,719	)		(12,179,854	)
Treasury Stock at Cost - 1,101,686 and 316,000 Shares, Respectively		(1,102	)		(316	)
Total Stockholders’ Deficit		(2,613,016	)		(1,413,476	)
	$	872,710		$	882,707

The Accompanying Notes are an Integral Part of These Unaudited Condensed Consolidated Financial Statements

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ADAMIS PHARMACEUTICALS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended						Six Months Ended
	September 30, 2009			September 30, 2008			September 30, 2009			September 30, 2008
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
REVENUE	$	125,870		$	202,339		$	232,340		$	311,481
COST OF GOODS SOLD		19,496			137,759			67,574			181,448
Gross Margin		106,374			64,580			164,766			130,033
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		552,658			1,333,786			1,282,585			2,335,760
RESEARCH AND DEVELOPMENT		85,548			25,195			98,563			336,138
Loss from Operations		(531,832	)		(1,294,401	)		(1,216,382	)		(2,541,865	)
OTHER INCOME (EXPENSE)
Interest Expense		(8,250	)		(194,631	)		(12,483	)		(391,706	)
Gain on Sale of Asset		—			—			—			1,329
Total Other Income (Expense)		(8,250	)		(194,631	)		(12,483	)		(390,377	)
Loss from Continuing Operations		(540,082	)		(1,489,032	)		(1,228,865	)		(2,932,242	)
Income from Discontinued Operations		—			6,031,550			—			3,900,839
Net Income (Loss)	$	(540,082	)	$	4,542,518		$	(1,228,865	)	$	968,597
Basic and Diluted Income (Loss) Per Share:
Continuing Operations	$	(0.02	)	$	(0.06	)	$	(0.04	)	$	(0.12	)
Discontinued Operations		—			0.24			—			0.16
Basic and Diluted Income (Loss) Per Share	$	(0.02	)	$	0.18		$	(0.04	)	$	0.04
Basic and Diluted Weighted Average Shares Outstanding		29,249,925			24,697,594			28,529,015			24,438,410

The Accompanying Notes are an Integral Part of These Unaudited Condensed Consolidated Financial Statements

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ADAMIS PHARMACEUTICALS CORPORATION AND SUBSIDIARIES	3
CONDENSED ONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended
	September 30, 2009			September 30, 2008
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) from Continuing Operations	$	(1,228,865	)	$	(2,932,242	)
Adjustments to Reconcile Net (Loss) from Continuing Operations to Net
Cash (Used in) Operating Activities:
Depreciation Expense		9,195			9,349
Consulting Expense Paid in Common Stock		9,000			—
Gain on Sale of Asset		—			(1,329	)
Inventory Reserve Adjustment		1,733			(22,366	)
Loan Discount Accretion		—			328,000
Beneficial Conversion Feature Interest		—			(80,000	)
Sales Returns Reserve Adjustment		1,480			(10,681	)
Stock—Based Compensation Expense		24,702			—
Change in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable		(22,728	)		(84,496	)
Inventory		(34,847	)		(90,432	)
Prepaid Expenses and Other Current Assets		13,838			(199,970	)
Increase (Decrease) in:
Accounts Payable		428,656			(281,252	)
Accrued Expenses		577,286			157,927
Net Cash (Used in) Operating Activities from Continuing Operations		(220,550	)		(3,207,492	)
Net Cash (Used in) Operating Activities from Discontinued Operations		—			(662,603	)
Net Cash (Used in) Operating Activities		(220,550	)		(3,870,095	)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Acquired in Cellegy Pharmaceuticals, Inc. Acquisition		65,114			—
Loans to Related Parties		(76,732	)		—
Purchase of Property and Equipment		(4,888	)
Cash Received from Sale of International Laboratories, Inc.		—			2,154,000
International Laboratories, Inc. Obligation Repayments		—			4,322,082
Sale of Property and Equipment		—			5,001
Net Cash (Used in) Provided by Investing Activities from Continuing Operations		(16,506	)		6,481,083
Net Cash (Used in) Investing Activities from Discontinued Operations		—			(862,122	)
Net Cash Provided by (Used in) Investing Activities		(16,506	)		5,618,961
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of Notes Payable to Related Parties		—			(1,752,000	)
Proceeds from Issuance of Notes Payable to Related Parties		234,800			—
Proceeds from Issuance of Common Stock		—			878,740
Purchase of Treasury Stock		(786	)		(316	)
Payments of Loans		—			(2,000,000	)
Net Cash Provided by (Used in) Financing Activities from Continuing Operations		234,014			(2,873,576	)
Net Cash Provided by Financing Activities from Discontinued Operations		—			1,829,746
Net Cash (Used in) Provided by Financing Activities		234,014			(1,043,830	)
(Decrease) Increase in Cash		(3,042	)		705,036
Cash:
Beginning		17,697			541
Ending	$	14,655		$	705,577

The Accompanying Notes are an Integral Part of These Unaudited Condensed Consolidated Financial Statements

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4

ADAMIS PHARMACEUTICALS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended
	September 30, 2009		September 30, 2008
	(Unaudited)		(Unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid for Interest	$	—	$	208,470
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND
INVESTING ACTIVITIES
Forgiveness of Debt to International Laboratories, Inc.	$	—	$	570,618
Forgiveness of Debt and Accrued Interest to Cellegy Pharmaceuticals, Inc.	$	556,610	$	—
Reduction of Capital from Unexcercised Beneficial Conversion Feature	$	—	$	80,000
Release of Shares of Common Stock From Escrow	$	673	$	—

The Accompanying Notes are an Integral Part of These Unaudited Condensed Consolidated Financial Statements

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Note 1:  Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Articles 8 and 10 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments (consists of normal recurring adjustments) considered necessary for a fair statement of all periods presented. The results of Adamis Pharmaceuticals Corporation operations for any interim periods are not necessarily indicative of the results of operations for any other interim period or for a full fiscal year. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 and Form 8-K/A as of and for the year ended March 31, 2009 filed on July 1, 2009.

Liquidity and Capital Resources

Our cash and cash equivalents were $14,655 and $17,697 at September 30, 2009 and March 31, 2009, respectively.

We prepared the condensed consolidated financial statements assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities during the normal course of business. In preparing these condensed consolidated financial statements, consideration was given to the Company’s future business as described below, which may preclude the Company from realizing the value of certain assets.

The Company has negative working capital, liabilities that exceed its assets and significant cash flow deficiencies. Additionally, the Company will need significant funding for future operations and the expenditures that will be required to market existing products and conduct the clinical and regulatory work to develop the Company’s product candidates. Management’s plans include seeking additional funding to satisfy existing obligations, liabilities and future working capital needs, to build working capital reserves and to fund its research and development projects. There is no assurance that the Company will be successful in obtaining the necessary funding to meet its business objectives.

Note 2:  Asset Acquisition and Recapitalization

The stockholders of Cellegy Pharmaceuticals, Inc. (“Cellegy”) and the former Adamis Pharmaceuticals Corporation (“Old Adamis”) approved a merger transaction and related matters at an annual meeting of Cellegy’s stockholders and at a special meeting of Old Adamis’ stockholders each held on March 23, 2009. On April 1, 2009, Cellegy completed the merger transaction with Old Adamis. In connection with the closing of the merger transaction, the promissory note issued by Old Adamis converted into shares of Old Adamis stock, and these shares were immediately cancelled.

In connection with the consummation of the merger and pursuant to the terms of the definitive merger agreement relating to the transaction (the “Merger Agreement”), Cellegy changed its name from Cellegy Pharmaceuticals, Inc. to Adamis Pharmaceuticals Corporation (“Adamis” or the “Company”), and Old Adamis changed its corporate name to Adamis Corporation.

Pursuant to the terms of the Merger Agreement, immediately before the consummation of the merger Cellegy effected a reverse stock split of its common stock. Pursuant to this reverse stock split, each 9.929060333 shares of common stock of Cellegy that were issued and outstanding immediately before the effective time of the merger were converted into one share of common stock and any remaining fractional shares held by a stockholder (after the aggregating fractional shares) were rounded up to the nearest whole share (the “Reverse Split”).

As a result, the total number of shares of Cellegy that were outstanding immediately before the effective time of the merger were converted into approximately 3,000,000 shares of post-Reverse Split shares of common stock of the Company. Pursuant to the terms of the Merger Agreement, at the effective time of the merger, each

7

share of Adamis common stock that was issued and outstanding immediately before the effective time of the merger ceased to be outstanding and was converted into the right to receive one share of common stock of the Company. As a result, the Company issued approximately 44,038,989 post-Reverse Split shares of common stock, inclusive of 6,732,285 contingent shares held in escrow, were issuable to  the holders of the outstanding shares of common stock of Old Adamis before the effective time of the merger. Old Adamis is the surviving entity as a wholly-owned subsidiary of Cellegy.

Old Adamis security holders owned, immediately after the closing of the merger, approximately 93.5% of the combined company on a fully-diluted basis. Further, Old Adamis directors constitute a majority of the combined company’s board of directors and all members of executive management of the combined company are from old Adamis. Therefore, Old Adamis was deemed to be the acquiring company for accounting purposes and the merger transaction is accounted for as an asset acquisition recapitalization in accordance with accounting principles generally accepted in the United States. As a result, all of the assets and liabilities of Cellegy have been reflected in the financial statements at their respective fair market values and no goodwill or other intangibles were recorded as part of acquisition accounting and the cost of the merger is measured at the net liabilities acquired. Transaction costs amounting to $147,747 were considered as part of the assets acquired and included as a reduction of additional paid-in capital. The financial statements of the combined entity after the merger reflect the historical results of Old Adamis prior to the merger and do not include the historical financial results of Cellegy prior to the completion of the merger. Stockholders’ equity and earnings per share of the combined entity after the merger have been retroactively restated to include the number of shares received by Old Adamis security holders in the merger with the offset to additional paid-in capital.

In connection with the closing of the merger, the Company amended its certificate of incorporation to increase the authorized number of shares of common stock from 50,000,000 to 175,000,000 and the authorized number of shares of preferred stock from 5,000,000 to 10,000,000.

Note 3:  Common Stock

The Company released the remaining 6,732,285 re-purchasable holdback shares related to the HVG Acquisition from escrow during the quarter ended September 30, 2009. The Company’s rights of repurchase related to such shares have not expired, are subject to certain restrictions and are still treated as contingent consideration related to the HVG Acquisition. As a result, no purchase price adjustment was recorded during the current period, and the shares were recorded at par value. The shares are considered anti-dilutive during the period due to the outstanding repurchase options. On August 14, 2009, the Company exercised its repurchase option and repurchased 785,686 shares of common stock for treasury at a total cost of $786 in connection with the resignation of the former Vice President of Operations.

On September 21, 2009, the Company issued 35,000 shares of its common stock in lieu of payment for consulting services with a value of $9,000.

Note 4: Stock Option Plans, Shares Reserved and Warrants

Cellegy’s stockholders approved a new 2009 Equity Incentive Plan (the “2009 Plan”), which became effective upon the closing of the merger.  The 2009 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards, and other forms of equity compensation (collectively “stock awards”).  In addition, the 2009 Plan provides for the grant of performance cash awards.  The aggregate number of shares of common stock that may be issued initially pursuant to stock awards under the 2009 Plan is 7,000,000 shares.  The number of shares of common stock reserved for issuance will automatically increase on January 1 of each calendar year, from January 1, 2010 through and including January 1, 2019, by the lesser of (a) 5.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year or (b) a lesser number of shares of common stock determined by the Company’s board of directors before the start of a calendar year for which an increase applies.

The Company granted options to purchase a total of 150,000 shares of common stock to directors upon the closing of the merger. The stock options have an exercise price of $0.60 per share, which is equal to the fair market value of the Company’s common stock on the date of the grant. The stock options vest over a period of three years

8

from the date of the grant, and expire on the 10th anniversary of the grant date of the options. The Company estimated that the stock options have a fair market value of $0.30 per stock option using the Black-Scholes valuation model. Management’s assumptions included in the model assumed volatility of 35.4%, a risk-free interest rate of 2.7% based on the 10-year Treasury Rate at the date of the grant and no dividends. The Company estimated a forfeiture rate of 5.5%.

During the period, the directors resigned from their duties. Each director had 26,388 vested stock options for a total of 79,164. The remaining 73,806 stock options granted were cancelled during the period. The total fair market value of only the vested stock options was recorded during the period.

In August 2009, the Company hired an officer, who was granted a stock option by the Company to purchase up to 250,000 shares of common stock. The stock options have an exercise price of $0.22 per share, which is equal to the fair market value of the Company’s common stock on the date of the grant. The stock options vest over a period of three years from the date of the grant, and expire on the 10th anniversary of the grant date of the option. The Company estimated that the stock option has a fair market value of $0.11 per share using the Black-Scholes valuation model. Management’s assumptions included in the model were volatility of 35.4%, a risk-free interest rate of 3.4% based on the 10-year Treasury Rate at the date of the grant and no dividends. The Company estimated a forfeiture rate of 5.5%.

The Company recorded stock based compensation expense of $1,668 and $24,702 related to such stock options for the three and six months ended September 30, 2009, respectively.

In August 2009, the Company issued warrants to purchase up to 600,000 shares of common stock to consultants retained to assist the Company in fund-raising efforts. The warrants have an exercise price of $0.25 per share, which is equal to the fair market value of the Company’s common stock at the date of grant. The options have a five year term and expire on August 26, 2014.

The following summarizes outstanding stock options at September 30, 2009:

	Number of Stock Options		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number of Stock Options Vested
1995 Equity Incentive Plan		20,641	4.68 Years	$	31.83		20,641
2005 Equity Incentive Plan		4,834	6.00 Years	$	13.30		4,834
Directors’ Stock Option Plan		7,654	3.91 Years	$	43.49		7,654
Non-Plan Stock Options		100,714	4.10 Years	$	43.82		100,714
Biosyn Stock Options		431	4.31 Years	$	2.90		431
2009 Equity Incentive Plan		329,164	7.51 Years	$	0.38		79,164

The Company has reserved shares of common stock for issuance upon exercise at September 30, 2009 as follows:

Biosyn Stock Options	431
Director’s Plan	7,654
Warrants	1,752,139
Non-Plan Stock Options	100,714
1995 Equity Incentive Plan	20,641
2005 Equity Incentive Plan	4,838
2009 Equity Incentive Plan	7,000,000
Total Shares Reserved	8,886,414

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The following summarizes warrants outstanding at September 30, 2009:

	Warrant Shares		Exercise Price Per Share		Date Issued	Expiration Date
Biosyn Warrants		8,254	$	57.97 - $173.92	October 22, 2004	2013 - 2014
May 2005 PIPE
Series A		71,947	$	1.99	May 13, 2005	May 13, 2010
Series B		71,947	$	2.15	May 13, 2005	May 13, 2010
Old Adamis Warrants		1,000,000	$	0.50	November 15, 2007	November 15, 2012
Consultant Warants		600,000	$	0.25	August 26, 2009	August 26, 2014
Total Warrants		1,752,139

Note 5:  Inventory

Inventory consists of the following:

	September 30, 2009			March 31, 2009
Respiratory and Allergy Products	$	291,450		$	52,843
Less: Obsolescence Reserve		(63,169	)		(37,175	)
Respiratory and Allergy Products, Net		228,281			15,668
Pre-Launch epi Inventory		—			179,499
Inventory, Net	$	228,281		$	195,167

The Company launched the epinephrine syringe product in the second fiscal quarter of 2010.

Note 6:  Notes Payable

Ben Franklin Note

Biosyn (a wholly owned subsidiary of Old Cellegy) issued a note payable to Ben Franklin Technology Center of Southeastern Pennsylvania (“Ben Franklin Note”) in October 1992, in connection with funding the development of Savvy, a compound to prevent the transmission of AIDS.

The Ben Franklin Note was recorded at its estimated fair value of $205,000 and was assumed by Old Cellegy as an obligation in connection with its acquisition of Biosyn in 2004. The repayment terms of the non-interest bearing obligation include the remittance of an annual fixed percentage of 3.0% applied to future revenues of Biosyn, if any, until the principal balance of $777,902 (face amount) is satisfied. Under the terms of the obligation, revenues are defined to exclude the value of unrestricted research and development funding received by Biosyn from nonprofit sources. Absent a material breach of contract or other event of default, there is no obligation to repay the amounts in the absence of future Biosyn revenues. Cellegy accreted the discount of $572,902 against earnings using the interest rate method (approximately 46%) over the discount period of five years, which was estimated in connection with the Ben Franklin Note’s valuation at the time of the acquisition. At September 30, 2009, the outstanding balance of the note was $777,902.

Accounting principles generally accepted in the United States emphasize market-based measurement through the use of valuation techniques that maximize the use of observable or market-based inputs. The Ben Franklin Note’s peculiar repayment terms outlined above affects its comparability with main stream market issues and also affects its transferability.  The value of the Ben Franklin Note would also be impacted by the ability to estimate Biosyn’s expected future revenues which in turn hinge largely upon the outcome of its ongoing Savvy contraception trial, the results of which are currently under review and which are not known by the Company. Given the above factors and therefore the lack of market comparability, the Ben Franklin Note would be valued based on Level 3 inputs. As such, management has determined that the Ben Franklin Note will have no future cash flows, as we do not believe the product will create a revenue stream in the future. As a result, the Note had no fair market value at the time of the acquisition.

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Notes Payable to Related Parties

The Company had notes payable to related parties amounting to $334,565 at September 30, 2009, which bear interest at 10%. Accrued interest related to the notes was $14,877 at September 30, 2009.

On various dates during the three and six months ended September 30, 2009 and included in the amount above, the Company issued promissory notes to shareholders for a total of $47,500 and $234,800, respectively, that bear interest at 10% with all principal and interest due on various maturity dates during May – June 2010.

Note 7:  Subsequent Events

We evaluated all events or transactions that occurred after September 30, 2009 up through November 23, 2009, the date we filed this quarterly report.  

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ITEM  2.         Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion of Adamis’ financial condition and results of operations contains certain statements that are not strictly historical and are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a high degree of risk and uncertainty. Actual results may differ materially from those projected in the forward-looking statements due to other risks and uncertainties that exist in Adamis’ operations, development efforts and business environment, the other risks and uncertainties described in the section entitled “Risk Factors” in the most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 13, 2009, and the other risks and uncertainties described elsewhere in this report. All forward-looking statements included in this report are based on information available to Adamis as of the date hereof, and except as may be required under the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder, Adamis assumes no obligation to update any such forward-looking statements.

Recent Events

Merger of Cellegy and Adamis; Change of Corporate Name

On February 12, 2008, Cellegy Pharmaceuticals, Inc. (“Cellegy,” and Cellegy before the effective time of the merger described below sometimes referred to as “Old Cellegy”) entered into an Agreement and Plan of Reorganization (the agreement as amended, referred to as the “Merger Agreement”) with Adamis Pharmaceuticals Corporation (“Old Adamis”) and Cellegy Holdings, Inc., a wholly-owned subsidiary of Cellegy (“Merger Sub”), providing for the acquisition of Old Cellegy by Old Adamis shareholders.   The Merger Agreement provided that Merger Sub will merge with and into Old Adamis, with Old Adamis becoming a wholly-owned subsidiary of Cellegy and the surviving corporation in the merger (the “Merger”).  The stockholders of Old Cellegy and Old Adamis approved the transaction at a special meeting of Adamis stockholders held on March 23, 2009, and at an annual meeting of Old Cellegy’s stockholders held on March 23, 2009.

Effective as of the close of business on April 1, 2009, Old Adamis and Old Cellegy completed the Merger transaction contemplated by the Merger Agreement.   In connection with the consummation of the Merger and pursuant to the terms of the Merger Agreement, Old Cellegy changed its name from Cellegy Pharmaceuticals, Inc.  to Adamis Pharmaceuticals Corporation, and Old Adamis changed its corporate name to “Adamis Corporation.”

Reverse Stock Split of Old Cellegy Common Stock

Pursuant to the terms of the Merger Agreement, immediately before the consummation of the Merger Old Cellegy effected a reverse stock split of its common stock.   Pursuant to this reverse stock split, each 9.929060333 shares of common stock of Old Cellegy that were issued and outstanding immediately before the effective time of the Merger was converted into one share of common stock of the Company, and any remaining fractional shares held by a record holder of shares were rounded up to the nearest whole share.

As a result, the total number of shares of Old Cellegy that were outstanding immediately before the effective time of the Merger were converted into approximately 3,000,000 shares of post-reverse split shares of common stock of the Company.

Issuance of Shares to Old Adamis Stockholders  

Pursuant to the terms of the Merger Agreement, at the effective time of the Merger, each share of Old Adamis common stock that was issued and outstanding immediately before the effective time of the Merger ceased to be outstanding and was converted into the right to receive one share of common stock of the Company.   As a result, 44,038,989 post-reverse split shares of common stock were issuable to the holders of the outstanding shares of common stock of Old Adamis before the effective time of the merger. As a result, the former Old Adamis stockholders, together with the holders of converted Old Adamis warrants, became entitled to receive shares of Company common stock and warrants representing in the aggregate approximately 93.5% of the outstanding shares of Company common stock outstanding immediately after the effective time of the Merger.

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           In connection with the Merger, each outstanding stock option, warrant, convertible security and other right to purchase or acquire the capital stock of Old Adamis was assumed by the Company and became an option, warrant, convertible security or other right to purchase or acquire shares of common stock of the Company, with the number of shares and exercise prices proportionately adjusted based on the exchange ratio in the Merger.   Because the exchange ratio in the Merger was one-for-one, the exercise prices and numbers of shares covered by outstanding Old Adamis options, warrants and convertible securities that the Company assumed in the Merger remained the same after the Merger.   As a result, an outstanding Adamis warrant to purchase 1,000,000 shares of Old Adamis common stock was assumed by the Company in the Merger and became a warrant to purchase 1,000,000 shares of common stock of the Company.

Increase in Authorized Shares of Capital Stock

Also in connection with the closing of the Merger, the Company amended its certificate of incorporation to increase the authorized number of shares of common stock from 50,000,000 to 175,000,000 and the authorized number of shares of preferred stock from 5,000,000 to 10,000,000.

General

Old Adamis currently has two wholly-owned subsidiaries: Adamis Laboratories, Inc. (specialty pharmaceuticals), or Adamis Labs; and Adamis Viral Therapies, Inc. (biotechnology), or Adamis Viral.

Adamis Labs is a specialty pharmaceutical company. Adamis Labs currently has a line of prescription products that it markets for a variety of allergy, respiratory disease and pediatric conditions. Adamis acquired these products in April 2007 by acquiring all of the outstanding shares of Healthcare Ventures Group, a private company that had previously acquired the products and related intellectual property, assets and personnel from another corporation in February 2007, and subsequently renaming the company Adamis Labs. A pre-filled epinephrine syringe product for use in the emergency treatment of extreme acute allergic reactions, or anaphylactic shock, was launched in July 2009.  An additional product candidate in its product pipeline is a generic inhaled nasal steroid for the treatment of seasonal and perennial allergic rhinitis.

Adamis estimates that approximately $1 million will be required to support the commercial launch of the epinephrine syringe product.  Adamis believes that, assuming sufficient funding to support commercial sales efforts, the syringe product has the potential to compete successfully and generate net cash inflows shortly after commercial introduction, although there can be no assurances that this will be the case.  Adamis estimates that the time to develop the nasal steroid product candidate will be approximately 24 months after the company receives sufficient funding.  Currently, neither manufacturing nor clinical trials have begun for that product candidate.  Adamis estimates that approximately $6-9 million will be invested to support the development and commercial introduction of the inhaled nasal steroid product candidate and its two other respiratory products.  Factors that could affect the actual launch date for the nasal steroid product candidate include the outcome of discussions with the FDA concerning the number and kind of clinical trials that the FDA will require before the FDA will consider regulatory approval of the product, any unexpected difficulties in licensing or sublicensing intellectual property rights for other components of the product such as the inhaler, any unexpected difficulties in the ability of our suppliers to timely supply quantities for commercial launch of the product, any unexpected delays or difficulties in assembling and deploying an adequate sales force to market the product, and adequate funding to support sales and marketing efforts.  Significant delays in obtaining funding to support ongoing sales efforts for the syringe product, or in the introduction of the steroid product, could reduce revenues and income to Adamis, require additional funding from other sources, and potentially have an adverse effect on the ability to fund Adamis’ research and development efforts for avian influenza and other vaccine product candidates by Adamis Viral.

From inception, Adamis’ development efforts have been focused on development of its vaccine technology, with the first product candidate expected to be a vaccine for avian flu. Adamis formed Adamis Viral to focus on developing that vaccine technology. As the avian flu product candidate is at an earlier stage of development, Adamis cannot estimate with any precision the amount that will be required to support development, clinical trials and commercial introduction of a product, although the amounts are likely to be larger than the amounts required to support the nasal steroid product candidate.  Factors that could affect the costs of developing such a candidate include those described above for the steroid product candidate. Adamis Viral’s product candidates are in the

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preclinical stage, and it has not generated any revenues to date. From June 6, 2006 (date of inception) through September 30, 2009, Adamis has spent a total of approximately $413,000 to in-license and develop the Adamis Viral vaccine technology. Research and development efforts will require the conduct of both preclinical and clinical studies and significant additional funding, and even if development and marketing efforts are successful, substantial time may pass before significant revenues will be realized; accordingly, even if Adamis Labs generates revenues and net income, during this period Adamis will require additional funds for its Adamis Viral operations, the availability of which cannot be assured. Consequently, Adamis is subject to many of the risks associated with early stage companies, including the need for additional financings; the uncertainty of research and development efforts resulting in successful commercial products, as well as the marketing and customer acceptance of such products; competition from larger organizations; reliance on the proprietary technology of others; dependence on key personnel; uncertain patent protection; and dependence on corporate partners and collaborators.

To achieve successful operations of both its Adamis Viral and Adamis Labs subsidiaries, Adamis will require additional capital to continue research and development and marketing efforts and to make capital investments in its operations. No assurance can be given as to the timing or ultimate success of obtaining future funding, and there are no assurances that Adamis will be successful, with the limited experience and resources Adamis has available at the present time, in developing and commercializing the syringe product, an avian flu vaccine or any other vaccine product or technology.

The process of developing new therapeutic products is inherently complex, time-consuming, expensive and uncertain. Adamis must make long-term investments and commit significant resources before knowing whether its development programs will result in products that will receive regulatory approval and achieve market acceptance. Product candidates that may appear to be promising at all stages of development may not reach the market for a number of reasons. Product candidates may be found ineffective or may cause harmful side effects during clinical trials, may take longer to progress through clinical trials than had been anticipated, may not be able to achieve the pre-defined clinical endpoint due to statistical anomalies even though clinical benefit may have been achieved, may fail to receive necessary regulatory approvals, may prove impracticable to manufacture in commercial quantities at reasonable cost and with acceptable quality, or may fail to achieve market acceptance. For these reasons, as well as other reasons identified under the heading “Risk Factors” in our most recent annual report on Form 10-K, Adamis is unable to predict the period in which material net cash inflows from product candidates incorporating the vaccine technology will commence.

Critical Accounting Policies and Estimates

Adamis has identified below some of its more significant accounting policies. For further discussion of Adamis’ accounting policies, see Note 1 in the Notes to the Adamis Consolidated Financial Statements.

Principles of Consolidation. The accompanying consolidated financial statements include Adamis Pharmaceuticals and its wholly owned subsidiaries, Adamis Labs and Adamis Viral. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates. The preparation of consolidated financial statements, in conformity with accounting principles generally accepted in the United States, requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents. For purposes of the consolidated statements of cash flows, Adamis considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents.

Accounts Receivable, Allowance for Doubtful Accounts and Sales Returns. Trade accounts receivable are stated net of an allowance for doubtful accounts and sales returns. Adamis estimates an allowance based on its historical experience of the relationship between actual bad debts and net credit sales.

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Adamis has established an allowance for sales returns based on management’s best estimate of probable loss inherent in the accounts receivable balance. Management determines the allowance based on current credit conditions, historical experience, and other currently available information.

Registration Payment Arrangements. Generally Accepted Accounting Principles (“GAAP”) for registration payment arrangements specifies that the contingent obligation to make future payments under a registration payment arrangement should be separately recognized and measured.

Inventory. Inventory, consisting of allergy and respiratory products, is recorded at the lower of cost or market, using the weighted average method.

Property and Equipment. Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. The cost of leasehold improvements are amortized over the lesser of the lease term or the life of the improvement, if shorter.

Useful lives used to depreciate property and equipment are as follows:

	Life in Years
Office Furniture and Equipment	7
Computer Equipment and Software	3
Vehicles	3

Deferred Acquisition Costs. Adamis incurred certain professional fees associated with specific potential acquisition targets. These costs will be capitalized as part of the purchase price paid for the acquisition.

Revenue Recognition.   Our primary customers are pharmaceutical wholesalers. In accordance with our revenue recognition policy, revenue is recognized when title and risk of loss are transferred to the customer, the sale price to the customer is fixed and determinable, and collectability of the sale price is reasonably assured. Reported revenue is net of estimated customer returns and other wholesaler fees. Our policy regarding sales to customers is that we do not recognize revenue from, or the cost of, such sales, where we believe the customer has more than a demonstrably reasonable level of inventory. We make this assessment based on historical demand, historical customer ordering patterns for purchases, business considerations for customer purchases and estimated inventory levels. If our actual experience proves to be different than our assumptions, we would then adjust such allowances accordingly.

We estimate allowances for revenue dilution items using a combination of information received from third parties, including market data, inventory reports from our major U.S. wholesaler customers, when available, historical information and analysis that we perform. The key assumptions used to arrive at our best estimate of revenue dilution reserves are estimated customer inventory levels and purchase forecasts provided. Our estimates of inventory at wholesaler customers and in the distribution channels are subject to the inherent limitations of estimates that rely on third-party data, as certain third-party information may itself rely on estimates, and reflect other limitations. We believe that such provisions are reasonably ascertainable due to the limited number of assumptions involved and the consistency of historical experience.

Revenues under license and royalty agreements are recognized in the period the earnings process is completed based on the terms of the specific agreement. Advanced payments received under these agreements are recorded as deferred revenue at the time the payment is received and are subsequently recognized as revenue on a straight-line basis over the longer of the life of the agreement or the life of the underlying patent. Royalties payable to Adamis under license agreements are recognized as earned when the royalties are no longer refundable under the terms defined in the agreement. To date no royalties have been paid.

Long Lived Assets. Adamis periodically assesses whether there has been permanent impairment of its long-lived assets held and used in accordance with GAAP, which requires Adamis to review long-lived assets for

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impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount of the asset to future net undiscounted cash flows expected to be generated from the use and eventual disposition of the asset.

Research and Development Expenses. Research and development costs are expensed as incurred. Non-refundable advance payments for goods and services to be used in future research and development activities are to be recorded as an asset and expensing the payments when the research and development activities are performed.

Shipping and Handling Costs. Shipping and handling costs are included in selling, general and administrative expenses.

Advertising Costs. Advertising costs are expensed as incurred.

Net Loss per Share. Basic loss per share is computed by dividing the income attributable to holders of common stock for the period by the weighted average number of shares of common stock outstanding during the period. Since the effect of common stock equivalents was anti-dilutive, all such equivalents were excluded from the calculation of weighted average shares outstanding.

Income Taxes. GAAP requires an asset and liability approach for financial accounting and reporting for income taxes. Under the asset and liability approach, deferred taxes are provided for the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances are established where management determines that it is more likely than not that some portion or all of a deferred tax asset will not be realized.

The Company is subject to income taxes in the U.S. federal jurisdiction and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company is subject to U.S. federal, state and local tax examinations by tax authorities for all previous tax years. If the Company were to subsequently record an unrecognized tax benefit, associated penalties and tax related interest expense would be reported as a component of income tax expense.

Discontinued Operations.   The results of operations for the year ended March 31, 2009, and the six month period ended September 30, 2009 and the assets and liabilities at March 31, 2009 and September 30, 2009 related to International Laboratories, Inc. (“INL”), a formerly wholly owned subsidiary of Adamis, have been accounted for as discontinued. There were no operations or related assets and liabilities of INL in the accompanying consolidated financial statements of prior periods.

Results of Operations

Six Months Ended September 30, 2009 and 2008

Revenues and Cost of Sales. Adamis had revenues of approximately $232,000 and $311,000 for the six months ending September 30, 2009 and 2008.  The approximately $79,000 reduction in revenues for the first six months of fiscal 2010 compared to the comparable period of last year was primarily the result of reduced sales of Aerohist, Prelone and Aero Otic, partially offset by sales of the Pre-filled Epi Syringe product, which commenced in July 2009.  Cost of sales for the six months ending September 30, 2009 and 2008 were approximately $68,000 and $181,000.  The difference of approximately $113,000 was due to an adjustment of inventory reserves with the introduction of the Epi Syringe.

Research and Development Expense. Adamis incurred research and development expenses of approximately $336,000 for the six months ended September 30, 2008 and approximately $99,000 in the six month period ended September 30, 2009.  The reduction of research and development for the two comparative periods was caused by the completion of the prefilled EPI syringe product and a reduction in research and development activities in light of limited available funds.  

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Selling, General and Administrative Expenses. Selling, general and administrative expenses for the six months ending September 30, 2009 and 2008 were approximately $1,283,000 and $2,336,000, respectively.  Selling, general and administrative expenses consist primarily of legal fees, accounting and audit fees, professional fees and employee salaries.  The reduction in comparative six month period expense levels is primarily a result of reduced salary levels, which the Company believes is temporary, offset somewhat by increased professional fees and other related expenses.

Other Income (Expenses).  Interest and other income (expense) for the six month period ending September 30, 2009 and 2008 was approximately $(12,000) and $(390,000), respectively.  Interest and other income consists primarily of interest expense paid in connection with various notes payable. The increase in interest expense for the six month period ended September 30, 2008 in comparison to the same period for 2009 is due to interest from three debt instruments that were retired in 2009.

Three Months Ended September 30, 2009 and 2008

Revenues and Cost of Sales. Adamis had revenues of approximately $126,000 and $202,000, for the three months ending September 30, 2009 and 2008.  The difference of $76,000 resulted from reduced sales of Aerohist, Aero Kid and Prelone, partially offset by sales of the Pre-filled Epi Syringe.  Cost of sales for the three months ending September 30, 2009 and 2008 were approximately $19,000 and $138,000.  The difference of $119,000 was due to an adjustment of the inventory reserves with the introduction of the Epi Syringe.

Research and Development Expense. Adamis incurred research and development expenses of approximately $25,000 for the three months ended September 30, 2008 and approximately $86,000 in the three month period ended September 30, 2009.  The increase in research and development expenses in the second quarter of fiscal 2010 compared to the comparable period of the prior year was caused by the Company considering a joint venture in the development of the Epi syringe during the second quarter of fiscal 2009.  Once the Company determined not to pursue the joint venture, higher development expenditures resulted in the third quarter of fiscal 2010.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three months ending September 30, 2009 and 2008 were approximately $553,000 and $1,334,000, respectively.  Selling, general and administrative expenses consist primarily of legal fees, accounting and audit fees, professional fees and employee salaries.  The reduction in expense levels for the second quarter of fiscal 2010 from the comparable period of last year is primarily a result of reduced salary levels, which the Company believes is temporary, offset somewhat by increased professional fees and other related expenses.

Other Income (Expenses).  Interest and other income (expense) for the three month period ending September 30, 2009 and 2008 were approximately $(8,000) and $(195,000), respectively.  Interest and other income consist primarily of interest expense paid in connection with various notes payable.  The increase in interest expense for quarter ended September 30, 2008 in comparison of same period for 2009 is due to interest from three debt instruments that were retired in 2009.

Liquidity and Capital Resources

Adamis’ cash was approximately $15,000 and $706,000 as of September 30, 2009 and September 30, 2008, respectively. The decrease in cash was primarily the result of selling, general and administrative expenses and merger costs.

Net cash used in operating activities from continuing operations for the six months ended September 30, 2009 and 2008 were approximately $221,000 and $3,207,000, respectively. Adamis expects net cash used in operating activities to increase going forward as it engages in additional product research and development activities, pursues additional expansion of its sales base and other business activities, assuming that it is able to obtain sufficient funding.  The increase in accrued expenses of approximately $577,000 and the increase in accounts payable of $429,000 was created by an increase in legal, accounting, accrued compensation and consulting expenses due to becoming a publicly traded company and reduction of cash reserves.

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Net cash provided by (used in) investing activities from continuing operations was approximately $(17,000) and $6,481,000 for the six months ended September 30, 2009 and 2008.  Results for the quarter ended September 30, 2008, were affected by proceeds received from the sale of INL’s contract packaging operations which were sold in July 2008.

Net cash provided by financing activities from continuing operations was approximately $234,000  for the  six months ended September 30, 2009 and net cash used in financing activities was approximately $2,874,000 for the six months ended September 30, 2008.  The differences between the two periods were primarily due to the repayment of loans and related party notes from the  proceeds of the sale of INL.  Net cash provided by financing activities of discontinued operations was $0 and $1,829,000 for the six months ended September 30, 2009 and 2008, respectively.  The increase between the two six month periods was due to proceeds from the issuance of stock.

At September 30, 2009, Adamis had no significant cash balances and substantial liabilities and obligations.  Even if development and marketing efforts are successful, substantial time may pass before significant revenues will be realized from the Epi syringe product or other products, and during this period Adamis will require additional funds, the availability of which cannot be assured. Consequently, Adamis is subject to the risks associated with early stage companies, including the need for additional financings; the uncertainty of research and development efforts resulting in successful commercial products, as well as the marketing and customer acceptance of such products; unexpected issues with the FDA or other federal or state regulatory authorities; competition from larger organizations; reliance on the proprietary technology of others; dependence on key personnel; uncertain patent protection; and dependence on corporate partners and collaborators. To achieve successful operations, Adamis will require additional capital to continue research and development and marketing efforts. No assurance can be given as to the timing or ultimate success of obtaining future funding.

We prepared the condensed consolidated financial statements assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities during the normal course of business.  In preparing these condensed consolidated financial statements, consideration was given to the  Company’s future business as described below, which may preclude the Company from realizing the value of certain assets.  The Company has limited cash reserves, liabilities that exceed its assets and significant cash flow deficiencies.  Additionally, Adamis will need significant funding for the future operations and the expenditures that will be required to market existing products and conduct the clinical and regulatory work to develop the Company’s product candidates. Management’s plans include seeking additional funding to satisfy existing obligations, liabilities and future working capital needs, to build working capital reserves and to fund its research and development projects.  There is no assurance that Adamis will be successful obtaining the necessary funding to meet its business objectives.

Additional financing will be required to support sales and marketing efforts relating to the syringe product, product development and marketing efforts for the Adamis Labs products, continued product research and development on the Company’s vaccine technology, and fund any product or company acquisition opportunities, and cash flow from the Adamis Labs’ operations are not expected to provide sufficient cash to fund Adamis’ overall cash requirements for the foreseeable future.  Adamis’ future capital requirements will depend upon numerous factors, including the following:

● the progress and costs of development programs;

● the commercial success of new products that are introduced;

●  patient recruitment and enrollment in future clinical trials;

● the scope, timing and results of pre-clinical testing and clinical trials;

● the costs involved in seeking regulatory approvals for product candidates;

● the costs involved in filing and pursuing patent applications and enforcing patent claims;

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● the establishment of collaborations and strategic alliances;

● the cost of manufacturing and commercialization activities;

● the results of operations;

● the cost, timing and outcome of regulatory reviews;

● the rate of technological advances;

● ongoing determinations of the potential commercial success of products under development;

● the level of resources devoted to sales and marketing capabilities; and

● the activities of competitors.

To obtain additional capital when needed, Adamis will evaluate alternative financing sources, including, but not limited to, the issuance of equity or debt securities, corporate alliances, joint ventures and licensing agreements; however, there can be no assurance that funding will be available on favorable terms, if at all. There are no assurances that Adamis will be able to successfully develop its products under development or that its products, if successfully developed, will generate revenues sufficient to enable it to earn a profit. If Adamis is unable to obtain additional capital, management may be required to explore alternatives to reduce cash used by operating activities, including the termination of development efforts that may appear to be promising to Adamis, the sale of certain assets and the reduction in overall operating activities.

Off Balance Sheet Arrangements

At September 30, 2009, Adamis did not have any off balance sheet arrangements.

ITEM 3.  Quantitative and Qualitative Disclosure of Market Risk

Not required.

ITEM 4.  Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)).

Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission rules and forms.

During the period covered by this report, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.  A controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls are met, and no evaluation of controls can provide absolute assurance that all controls and instances of fraud, if any, within a company have been detected.

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PART II   -  OTHER INFORMATION

ITEM 1. Legal Proceedings

 None

ITEM 1A.  Risk Factors

As a smaller reporting company, Adamis is not required under the rules of the Securities and Exchange Commission, or SEC, to provide information under this Item.  Risks and uncertainties relating to the amount of cash and cash equivalents at September 30, 2009 are discussed above under the heading, “Liquidity and Capital Resources” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this Form 10-Q, and are incorporated herein by this reference.  Other material risks and uncertainties associated with Adamis’ business have been previously disclosed in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission, included under the heading “Risk Factors,” and those disclosures are incorporated herein by reference.

ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds

In August 2009, the Company issued warrants to purchase up to 600,000 shares of common stock to two organizations for financial consulting and advisory services.  The warrants have a term of five years and an exercise price of $.25 per share.

All of the above issuances were made without any public solicitation, to a limited number of employees, consultants and shareholders and were acquired for investment purposes only.  The securities were issued in reliance on the private placement exemption provided by Section 4(2) of the Securities Act of 1933.

During the quarter ended September 30, 2009, the Company repurchased 316,000 and 785, 686 shares from a former executive and a consultant, pursuant to rights of repurchase in favor of the Company.  The shares were repurchased at $.001 cents per share.  The repurchase was not part of any program.

ITEM 3.   Defaults Upon Senior Securities

None

ITEM 4. Submission of Matters to a Vote of Security Holders

None

ITEM 5.  Other Information

None

ITEM 6.  Exhibits

a)	Exhibits
	31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		CELLEGY PHARMACEUTICALS, INC.
Date:	November 23, 2009	/s/ Dennis J. Carlo
		Dennis J. Carlo
		Chief Executive Officer
Date:	November 23, 2009	/s/ Robert O. Hopkins
		Robert O. Hopkins
		Vice President, Finance and Chief Financial Officer

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