Exhibit 99.2

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

The following unaudited pro forma condensed combined financial statements present the pro forma financial position and results of operations of (1) MYnd Analytics, Inc. (now known as Emmaus Life Sciences, Inc. and herein “MYnd”) based on the historical consolidated financial statements of MYnd after giving effect to the Spin-Off and (2) of the combined company based on the historical consolidated financial statements of MYnd and Emmaus Life Sciences, Inc. (now known as EMI Holding, Inc. and herein “Emmaus”) after giving effect to the Spin-Off and the Merger. The following information gives effect at the 1-for-6 reverse stock split effected by MYnd on July 17, 2019 prior to the Merger.

 

The Merger was accounted for as a reverse recapitalization transaction with Emmaus being deemed the acquiring company for accounting purposes. MYnd’s determination that Emmaus will be the accounting acquirer is based on an analysis of the criteria outlined in ASC 805 and the facts and circumstances of the Merger, including: (1) equity holders of Emmaus will own 94.1% of the common stock of the combined company on a fully-diluted basis; (2) all but one of the directors of the combined company was designated by Emmaus under the terms of the Merger Agreement; (3) Emmaus’ management will be the management of the combined company; (4) approximately 90% of the convertible debt of Emmaus was converted concurrent with the Merger; and (5) the Spin-Off took place immediately before the Merger.

 

Because Emmaus will be the accounting acquirer in the Merger, but not the legal acquirer, the Merger is deemed a reverse recapitalization transaction under the guidance of ASC 805. As a result, upon consummation of the Merger, the historical financial statements of Emmaus will become the historical financial statements of the combined company.

 

The following unaudited pro forma combined condensed statements of operations for the year ended September 30, 2018 combine the historical statement of operations of MYnd for the fiscal year ended September 30, 2018 with the historical combined statement of operations of Emmaus for the twelve months ended December 31, 2018, in each case after giving effect to the Merger as if it had been consummated as of the beginning of the respective 12 month periods, October 1, 2017 and January 1, 2018. The following unaudited pro forma combined condensed statements of operations for the nine months ended June 30, 2019 combine the historical statement of operations of MYnd for the nine months year ended June 30, 2019 with the historical combined statement of operations of Emmaus for the nine months ended June 30, 2019, in each case after giving effect to the Merger as if it had been consummated as of October 1, 2018. Other than as disclosed in the notes thereto, the unaudited pro forma combined financial statements do not reflect any additional liabilities, off-balance sheet commitments or other obligations that may become payable after the date of such financial statements.

 

The unaudited pro forma combined financial statements were prepared based on assumptions and adjustments that are described in the accompanying notes. The application of the acquisition method of accounting is dependent upon certain valuations and other studies that have yet to be completed. Accordingly, the pro forma adjustments reflected in the unaudited pro forma combined financial statements are preliminary and subject to revision as additional information becomes available and additional analyses are performed. Differences between the preliminary adjustments reflected in the unaudited pro forma combined financial statements and the final application of the acquisition method of accounting, which is expected to be completed as soon as practicable after the closing of the Merger, may arise and those differences could have a material impact on the actual accounting for the merger. In addition, differences between the preliminary and final adjustments will likely occur as a result of the amount of cash used in Emmaus’ operations, changes in fair value of Emmaus common stock and changes in Emmaus’ other assets or liabilities between September 30, 2018 and the closing of the Merger.

 

The unaudited pro forma combined financial statements do not give effect to the potential impact of current financial conditions, regulatory matters or expenses that may be associated with the integration of the two companies. The unaudited pro forma combined financial statements have been prepared for illustrative purposes only and is not necessarily indicative of the financial position or results of operations in future periods or the results that actually would have been realized had MYnd and Emmaus been a combined company during the specified period.

 

The unaudited pro forma combined financial statements, including the notes thereto, should be read in conjunction with the separate historical financial statements of MYnd and Emmaus included or incorporate by reference in this Current Report and the sections entitled “MYnd Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Emmaus Management’s Discussion and Analysis of Financial Condition and Results of

 

F-1


Operations”, in the joint proxy statement/prospectus dated June 12, 2019 filed by MYnd with the SEC on June 14, 2019 under Rule 424 of the Securities Act of 1933.

 

F-2


UNAUDITED PRO FORMA COMBINED BALANCE SHEET OF EMMAUS LIFE SCIENCES, INC.
AS OF JUNE 30, 2019

 

 

 

Emmaus Life

 

 

MYnd

 

 

Pro Forma

 

 

 

 

Emmaus

 

 

 

Sciences, Inc.

 

 

Analytics, Inc.

 

 

Adjustments

 

 

Notes

 

Combined

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

15,168,700

 

 

$

 

2,443,400

 

 

 

 

(2,443,400

)

 

(e)

 

$

 

15,168,700

 

Accounts receivable, net

 

 

 

1,981,200

 

 

 

 

183,400

 

 

 

 

(183,400

)

 

(e)

 

 

 

1,981,200

 

Inventories, net

 

 

 

5,906,300

 

 

 

 

 

 

 

 

 

 

 

 

5,906,300

 

Investment in marketable securities

 

 

 

32,890,400

 

 

 

 

 

 

 

 

 

 

 

 

32,890,400

 

Prepaid expenses and other current assets

 

 

 

703,000

 

 

 

 

151,700

 

 

 

 

(151,700

)

 

(e)

 

 

 

703,000

 

Total current assets

 

 

 

56,649,600

 

 

 

 

2,778,500

 

 

 

 

(2,778,500

)

 

 

 

 

 

56,649,600

 

Property and equipment, net

 

 

 

144,800

 

 

 

 

82,800

 

 

 

 

(82,800

)

 

(e)

 

 

 

144,800

 

Intangible assets, net

 

 

 

47,000

 

 

 

 

74,300

 

 

 

 

(74,300

)

 

(e)

 

 

 

47,000

 

Goodwill

 

 

 

 

 

 

1,386,800

 

 

 

 

(1,386,800

)

 

(e)

 

 

 

 

Other noncurrent assets

 

 

 

4,649,900

 

 

 

 

26,000

 

 

 

 

(26,000

)

 

(e)

 

 

 

365,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,284,500

)

 

(f)

 

 

 

 

 

Total assets

 

$

 

61,491,300

 

 

$

 

4,348,400

 

 

$

 

(8,632,900

)

 

 

 

$

 

57,206,800

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

 

11,453,600

 

 

$

 

1,748,400

 

 

 

 

(1,748,400

)

 

(e)

 

$

 

9,009,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

750,000

 

 

(h)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,194,200

)

 

(c)

 

 

 

 

 

Trade discount

 

 

 

5,000,000

 

 

 

 

 

 

 

 

 

 

 

 

5,000,000

 

Deferred revenue

 

 

 

 

 

 

175,800

 

 

 

 

(175,800

)

 

(e)

 

 

 

 

Notes payable, net

 

 

 

11,163,300

 

 

 

 

 

 

 

(7,277,400

)

 

(c)

 

 

 

3,885,900

 

Notes payable to related parties, net

 

 

 

470,200

 

 

 

 

 

 

 

(276,600

)

 

(c)

 

 

 

193,600

 

Convertible notes payable, net

 

 

 

13,866,300

 

 

 

 

 

 

 

(9,833,300

)

 

(c)

 

 

 

4,033,000

 

Convertible notes payable to related parties, net

 

 

 

14,180,200

 

 

 

 

 

 

 

(14,180,200

)

 

(c)

 

 

 

 

Other current liabilities

 

 

 

1,116,400

 

 

 

 

1,500

 

 

 

 

(1,500

)

 

(e)

 

 

 

259,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(857,000

)

 

(f)

 

 

 

 

 

Total current liabilities

 

 

 

57,250,000

 

 

 

 

1,925,700

 

 

 

 

(36,794,400

)

 

 

 

 

 

22,381,300

 

LONG-TERM LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade discount

 

 

 

24,830,000

 

 

 

 

 

 

 

 

 

 

 

 

24,830,000

 

Deferred revenue

 

 

 

10,500,000

 

 

 

 

 

 

 

 

 

 

 

 

10,500,000

 

Warrant derivative liabilities

 

 

 

1,200,000

 

 

 

 

 

 

 

(1,200,000

)

 

(g)

 

 

 

 

Notes payable, net

 

 

 

703,000

 

 

 

 

615,800

 

 

 

 

(1,318,800

)

 

(e)

 

 

 

 

Convertible notes payable, net

 

 

 

450,300

 

 

 

 

 

 

 

5,525,100

 

 

(c)

 

 

 

5,975,400

 

Other long-term liabilities

 

 

 

3,781,800

 

 

 

 

123,000

 

 

 

 

(123,000

)

 

(e)

 

 

 

400

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,781,400

)

 

(f)

 

 

 

 

 

Total Liabilities

 

 

 

98,715,100

 

 

 

 

2,664,500

 

 

 

 

(37,692,500

)

 

 

 

 

 

63,687,100

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock—par value $0.001 per share, 15,000,000

   shares authorized, 1,100,000 issued and outstanding at

   June 30, 2019 and none issued and outstanding on a

   pro forma basis

 

 

 

 

 

 

1,100

 

 

 

 

(1,100

)

 

(a)

 

 

 

 

Common stock—par value $0.001 per share, 250,000,000

   shares authorized, 12,701,266 shares issued and outstanding

   at June 30, 2019 and 47,465,209 shares outstanding

   on a pro forma basis

 

 

 

35,600

 

 

 

 

12,700

 

 

 

 

1,100

 

 

(a)

 

 

 

42,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,800

)

 

(e)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,500

 

 

(c)

 

 

 

 

 

Additional paid-in capital

 

 

 

153,085,300

 

 

 

 

95,789,800

 

 

 

 

(95,789,800

)

 

(e)

 

 

 

189,420,300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

36,335,000

 

 

(c)

 

 

 

 

 

Accumulated other comprehensive income (loss)

 

 

 

(56,200

)

 

 

 

 

 

 

 

 

 

 

 

(56,200

)

Accumulated deficit

 

 

 

(189,503,200

)

 

 

 

(92,003,100

)

 

 

 

92,003,100

 

 

(e)

 

 

 

(195,101,200

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(750,000

)

 

(h)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

353,900

 

 

(f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,201,900

)

 

(c)(g)

 

 

 

 

 

Non-controlling interest

 

 

 

(785,300

)

 

 

 

(2,116,600

)

 

 

 

2,116,600

 

 

(e)

 

 

 

(785,300

)

Total stockholders’ equity (deficit)

 

 

 

(37,223,800

)

 

 

 

1,683,900

 

 

 

 

29,059,600

 

 

 

 

 

 

(6,480,300

)

Total liabilities & stockholders’ equity

 

$

 

61,491,300

 

 

$

 

4,348,400

 

 

$

 

(8,632,900

)

 

 

 

$

 

57,206,800

 

 

F-3


UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME (LOSS) OF EMMAUS LIFE SCIENCES, INC.

FOR THE TWELVE MONTHS SEPTEMBER 30, 2018 FOR MYND AND TWELVE MONTHS DECEMBER 31, 2018 FOR EMMAUS

 

 

 

 

Historical

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Emmaus Life

Sciences, Inc.

 

 

MYnd Analytics,

Inc.

 

 

Pro Forma

Adjustments

 

 

Notes

 

Emmaus

Combined

 

NET SALES

 

 

 

15,076,800

 

 

$

 

1,315,500

 

 

 

 

(1,315,500

)

 

(e)

 

$

 

15,076,800

 

COST OF SALES

 

 

 

763,500

 

 

 

 

827,400

 

 

 

 

(827,400

)

 

(e)

 

 

 

763,500

 

GROSS PROFIT

 

 

 

14,313,300

 

 

 

 

488,100

 

 

 

 

(488,100

)

 

 

 

 

 

14,313,300

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

 

1,722,900

 

 

 

 

1,377,500

 

 

 

 

(1,377,500

)

 

(e)

 

 

 

1,722,900

 

Selling and marketing

 

 

 

4,813,500

 

 

 

 

1,617,900

 

 

 

 

(1,617,900

)

 

(e)

 

 

 

4,813,500

 

General and administrative

 

 

 

17,876,600

 

 

 

 

7,737,600

 

 

 

 

(7,737,600

)

 

(e)

 

 

 

17,876,600

 

Total operating expenses

 

 

 

24,413,000

 

 

 

 

10,733,000

 

 

 

 

(10,733,000

)

 

 

 

 

 

24,413,000

 

OPERATING INCOME (LOSS)

 

 

 

(10,099,700

)

 

 

 

(10,244,900

)

 

 

 

10,244,900

 

 

 

 

 

 

(10,099,700

)

Other income (expense)

 

 

 

738,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

738,000

 

Loss on Debt extinguishment

 

 

 

(3,244,800

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,244,800

)

Change in fair value of warrant derivative liabilities

 

 

 

20,674,000

 

 

 

 

 

 

 

 

(20,674,000

)

 

(g)

 

 

 

 

Change in fair value of embedded conversion option

 

 

 

466,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

466,000

 

Loss on investment in marketable securities

 

 

 

(43,977,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(43,977,000

)

Interest income (expense)

 

 

 

(22,593,600

)

 

 

 

(86,300

)

 

 

 

86,300

 

 

(e)

 

 

 

(4,445,436

)

 

 

 

 

 

 

 

 

 

 

 

 

18,148,164

 

 

(c)

 

 

 

 

 

Total other income (expense)

 

 

 

(47,937,400

)

 

 

 

(86,300

)

 

 

 

(2,439,536

)

 

 

 

 

 

(50,463,236

)

INCOME (LOSS) BEFORE INCOME TAXES

 

 

 

(58,037,100

)

 

 

 

(10,331,200

)

 

 

 

7,805,364

 

 

 

 

 

 

(60,562,936

)

INCOME TAXES

 

 

 

6,200

 

 

 

 

1,900

 

 

 

 

(1,900

)

 

(e)

 

 

 

6,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

 

(58,043,300

)

 

$

 

(10,333,100

)

 

$

 

7,807,264

 

 

 

 

$

 

(60,569,136

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS ATTRIBUTED TO NONCONTROLLING INTEREST

 

 

 

(145,700

)

 

 

 

(734,400

)

 

 

 

734,400

 

 

(e)

 

 

 

(145,700

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS ATTRIBUTED TO EMMAUS LIFE SCIENCES

 

 

 

(57,897,600

)

 

 

 

(9,598,700

)

 

 

 

7,072,864

 

 

 

 

 

 

(60,423,436

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC LOSS PER SHARE

 

$

 

(1.65

)

 

$

 

(1.86

)

 

 

 

 

 

(g)

 

$

 

(1.38

)

WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC

 

 

 

35,097,990

 

 

 

 

5,199,566

 

 

 

 

(35,097,990

)

 

(d)

 

 

 

43,729,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,724,149

 

 

(c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,724,149

)

 

(b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38,530,274

 

 

(d)

 

 

 

 

 

DILUTED LOSS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(g)

 

$

 

(1.33

)

WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45,340,574

 

 

The accompanying notes are an integral part of these unaudited pro forma financial statements.

 

 

F-4


UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME (LOSS) OF EMMAUS LIFE SCIENCES, INC.

FOR THE NINE MONTHS ENDED JUNE 30, 2019

 

 

 

Emmaus Life

 

 

MYnd

 

 

Pro Forma

 

 

 

 

Emmaus

 

 

 

Sciences, Inc.

 

 

Analytics, Inc.

 

 

Adjustments

 

 

Notes

 

Combined

 

NET SALES

 

$

 

18,018,500

 

 

$

 

1,374,200

 

 

 

 

(1,374,200

)

 

(e)

 

$

 

18,018,500

 

COST OF SALES

 

 

 

661,500

 

 

 

 

929,000

 

 

 

 

(929,000

)

 

(e)

 

 

 

661,500

 

GROSS PROFIT

 

 

 

17,357,000

 

 

 

 

445,200

 

 

 

 

(445,200

)

 

 

 

 

 

17,357,000

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

 

1,502,600

 

 

 

 

951,200

 

 

 

 

(951,200

)

 

(e)

 

 

 

1,502,600

 

Selling and marketing

 

 

 

4,538,200

 

 

 

 

592,500

 

 

 

 

(592,500

)

 

(e)

 

 

 

4,538,200

 

General and administrative

 

 

 

13,279,000

 

 

 

 

6,969,600

 

 

 

 

(6,969,600

)

 

(e)

 

 

 

13,279,000

 

Total operating expenses

 

 

 

19,319,800

 

 

 

 

8,513,300

 

 

 

 

(8,513,300

)

 

 

 

 

 

19,319,800

 

OPERATING INCOME (LOSS)

 

 

 

(1,962,800

)

 

 

 

(8,068,100

)

 

 

 

8,068,100

 

 

 

 

 

 

(1,962,800

)

Other income (expense)

 

 

 

351,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

351,900

 

Impairment loss on long-term investment

 

 

 

(524,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(524,000

)

Change in fair value of warrant derivative liabilities

 

 

 

522,000

 

 

 

 

 

 

 

 

(522,000

)

 

(g)

 

 

 

 

Loss on investment in marketable securities

 

 

 

(28,820,200

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(28,820,200

)

Interest income (expense)

 

 

 

(21,995,500

)

 

 

 

(69,500

)

 

 

 

69,500

 

 

(e)

 

 

 

(7,299,200

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,696,300

 

 

(c)

 

 

 

 

 

Total other income (expense)

 

 

 

(50,465,800

)

 

 

 

(69,500

)

 

 

 

14,243,800

 

 

 

 

 

 

(36,291,500

)

INCOME (LOSS) BEFORE INCOME TAXES

 

 

 

(52,428,600

)

 

 

 

(8,137,600

)

 

 

 

22,311,900

 

 

 

 

 

 

(38,254,300

)

INCOME TAXES

 

 

 

220,700

 

 

 

 

2,400

 

 

 

 

(2,400

)

 

(e)

 

 

 

220,700

 

NET INCOME (LOSS)

 

$

 

(52,649,300

)

 

$

 

(8,140,000

)

 

$

 

22,314,300

 

 

 

 

$

 

(38,475,000

)

NET LOSS ATTRIBUTED TO NONCONTROLLING

   INTEREST

 

 

 

(819,400

)

 

 

 

(1,382,200

)

 

 

 

1,382,200

 

 

 

 

 

 

(819,400

)

NET LOSS ATTRIBUTED TO EMMAUS LIFE SCIENCES

 

 

 

(51,829,900

)

 

 

 

(6,757,800

)

 

 

 

20,932,100

 

 

 

 

 

 

(37,655,600

)

BASIC LOSS PER SHARE

 

$

 

(1.45

)

 

$

 

(0.76

)

 

 

 

 

 

 

(g)

 

$

 

(0.84

)

WEIGHTED AVERAGE SHARES OUTSTANDING -

   BASIC

 

 

 

35,805,832

 

 

 

 

8,880,214

 

 

 

 

(35,805,832

)

 

(d)

 

 

 

45,017,632

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,652,802

 

 

(c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,652,802

)

 

(b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

36,137,418

 

 

(d)