SEC Info℠

Home

Search

My Interests

Help

Sign In

Please Sign In

Emmaus Life Sciences, Inc. – ‘S-4’ on 2/13/19

On:  Wednesday, 2/13/19, at 5:07pm ET   ·   Accession #:  1615774-19-2408   ·   File #:  333-229660

Previous ‘S-4’:  None   ·   Next:  ‘S-4/A’ on 6/10/19   ·   Latest:  ‘S-4/A’ on 6/11/19   ·   1 Reference:  By:  SEC – ‘UPLOAD’ on 2/25/19

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

 Text Wildcards:  ? (any letter/digit),  * (many).  Search Logic:  for Documents:  & (and),  | (or);  for Text:  | (anywhere),  "(&)" (near).  Details... 

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 2/13/19  Emmaus Life Sciences, Inc.        S-4                   77:12M                                    S2 Filings LLC/FA

Document/Exhibit                   Description                      Pages   Size 

 1: S-4         Registration of Securities Issued in a              HTML   4.11M 
                Business-Combination Transaction                                 
 2: EX-23.1     Consent of Experts or Counsel                       HTML     21K 
 3: EX-23.2     Consent of Experts or Counsel                       HTML     20K 
 4: EX-23.4     Consent of Experts or Counsel                       HTML     21K 
 9: EX-99.11    Miscellaneous Exhibit                               HTML     21K 
 5: EX-99.6     Miscellaneous Exhibit                               HTML     21K 
 6: EX-99.7     Miscellaneous Exhibit                               HTML     21K 
 7: EX-99.8     Miscellaneous Exhibit                               HTML     21K 
 8: EX-99.9     Miscellaneous Exhibit                               HTML     21K 
16: R1          Document and Entity Information                     HTML     43K 
17: R2          Consolidated Balance Sheets                         HTML    126K 
18: R3          Consolidated Balance Sheets (Parenthetical)         HTML     49K 
19: R4          Consolidated Statements of Operations               HTML     79K 
20: R5          Consolidated Statements of Changes in Equity        HTML    104K 
21: R6          Consolidated Statements of Cash Flows               HTML    119K 
22: R7          Consolidated Statements of Cash Flows               HTML     24K 
                (Parenthetical)                                                  
23: R8          Nature of Operations                                HTML     32K 
24: R9          Summary of Significant Accounting Policies          HTML     80K 
25: R10         Accounts Receivable, Net                            HTML     27K 
26: R11         Long - Term Borrowings and Other Note Payables      HTML     27K 
27: R12         Acquisition                                         HTML     47K 
28: R13         Stockholders' Equity                                HTML    189K 
29: R14         Convertible Preferred Stock                         HTML     40K 
30: R15         Income Taxes                                        HTML     67K 
31: R16         Related Party Transactions                          HTML     30K 
32: R17         Loss Per Share                                      HTML     38K 
33: R18         Commitments and Contingent Liabilities              HTML     33K 
34: R19         Significant Customers                               HTML     23K 
35: R20         Subsequent Events                                   HTML     32K 
36: R21         Summary of Significant Accounting Policies          HTML    162K 
                (Policies)                                                       
37: R22         Summary of Significant Accounting Policies          HTML     26K 
                (Tables)                                                         
38: R23         Accounts Receivable, Net (Tables)                   HTML     28K 
39: R24         Acquisition (Tables)                                HTML     47K 
40: R25         Stockholders' Equity (Tables)                       HTML    157K 
41: R26         Income Taxes (Tables)                               HTML     67K 
42: R27         Loss Per Share (Tables)                             HTML     37K 
43: R28         Commitments and Contingent Liabilities (Tables)     HTML     28K 
44: R29         Nature of Operations (Details Narrative)            HTML     32K 
45: R30         Summary of Significant Accounting Policies          HTML     33K 
                (Details )                                                       
46: R31         Summary of Significant Accounting Policies          HTML     31K 
                (Details Narrative)                                              
47: R32         Summary of Significant Accounting Policies          HTML     71K 
                (Details Narrative 1)                                            
48: R33         Accounts Receivable, Net (Details)                  HTML     29K 
49: R34         Long - Term Borrowings and Other Note Payables      HTML     49K 
                (Details Narrative)                                              
50: R35         Acquisition (Details)                               HTML     67K 
51: R36         Acquisition (Details 1)                             HTML     30K 
52: R37         Acquisition (Details Narrative)                     HTML     57K 
53: R38         Stockholders' Equity (Details)                      HTML     34K 
54: R39         Stockholders' Equity (Details 1)                    HTML     28K 
55: R40         Stockholders' Equity (Details 2)                    HTML     56K 
56: R41         Stockholders' Equity (Details 3)                    HTML    124K 
57: R42         Stockholders' Equity (Details 4)                    HTML     50K 
58: R43         Stockholders' Equity (Details 5)                    HTML     34K 
59: R44         Stockholders' Equity (Details 6)                    HTML     43K 
60: R45         Stockholders' Equity (Details 7)                    HTML     63K 
61: R46         Stockholders' Equity (Details Narrative)            HTML    215K 
62: R47         Stockholders' Equity (Details Narrative 1)          HTML    101K 
63: R48         Convertible Preferred Stock (Details Narrative)     HTML     59K 
64: R49         Income Taxes (Details)                              HTML     45K 
65: R50         Income Taxes (Details 1)                            HTML     41K 
66: R51         Income Taxes (Details 2)                            HTML     44K 
67: R52         Income Taxes (Details 3)                            HTML     42K 
68: R53         Income Taxes (Details Narrative)                    HTML     37K 
69: R54         Related Party Transactions (Details Narrative)      HTML     61K 
70: R55         Loss Per Share (Details)                            HTML     48K 
71: R56         Commitments and Contingent Liabilities (Details)    HTML     25K 
72: R57         Commitments and Contingent Liabilities (Details     HTML     43K 
                Narrative)                                                       
73: R58         Significant Customers (Details Narrative)           HTML     31K 
74: R59         Subsequent Events (Details Narrative)               HTML     60K 
76: XML         IDEA XML File -- Filing Summary                      XML    131K 
75: EXCEL       IDEA Workbook of Financial Reports                  XLSX    100K 
10: EX-101.INS  XBRL Instance -- mynd-20180930                       XML   1.81M 
12: EX-101.CAL  XBRL Calculations -- mynd-20180930_cal               XML    199K 
13: EX-101.DEF  XBRL Definitions -- mynd-20180930_def                XML    782K 
14: EX-101.LAB  XBRL Labels -- mynd-20180930_lab                     XML   1.28M 
15: EX-101.PRE  XBRL Presentations -- mynd-20180930_pre              XML   1.00M 
11: EX-101.SCH  XBRL Schema -- mynd-20180930                         XSD    198K 
77: ZIP         XBRL Zipped Folder -- 0001615774-19-002408-xbrl      Zip    173K 

CALCULATION OF REGISTRATION FEE

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this joint proxy statement/prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This joint proxy statement/prospectus is not an offer to sell and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED FEBRUARY 13, 2019

PROPOSED MERGER

YOUR VOTE IS VERY IMPORTANT

To the Stockholders of MYnd Analytics, Inc. and Emmaus Life Sciences, Inc.:

On January 4, 2019, MYnd Analytics, Inc., or MYnd, and Emmaus Life Sciences, Inc., or Emmaus, entered into an Agreement and Plan of Merger and Reorganization, or the Merger Agreement, pursuant to which a wholly owned subsidiary of MYnd named Athena Merger Subsidiary, Inc. will merge with and into Emmaus, with Emmaus surviving as a subsidiary of MYnd, which is referred to as the Merger. The Merger will result in a commercial-stage biopharmaceutical company engaged in the discovery, development, marketing and sale of innovative treatments and therapies, including those in the rare and orphan disease categories.

The Merger Agreement provides that, subject to the completion of the Merger, all or substantially all of the business, assets and liabilities of MYnd are expected to be transferred to an existing wholly-owned subsidiary of MYnd, which is referred to as MYnd California, and holders of record of MYnd common stock at the close of business on [●], 2019 are expected to receive a pro rata distribution of one share of MYnd California’s common stock for each [●] share of MYnd common stock held at the close of business on [●], 2019, which is referred to as the Spin-Off. In furtherance of the Spin-Off, MYnd and MYnd California entered into a Separation and Distribution Agreement, or Separation Agreement, on January 4, 2019.

At the effective time of the Merger, each outstanding share of Emmaus common stock, including shares issued upon conversion of Emmaus convertible promissory notes or other indebtedness, will be converted into the right to receive a number of shares of MYnd common stock referred to in this joint proxy statement/prospectus as the Exchange Ratio. It is currently anticipated that, at the closing of the Merger, the Exchange Ratio will be approximately [●] shares of MYnd common stock for each share of Emmaus common stock. MYnd will assume each outstanding and unexercised option and warrant (if permitted by the terms of the warrant) to purchase Emmaus common stock and any indebtedness (if permitted by the terms of the indebtedness) convertible into Emmaus common stock, which will be converted into an option or warrant, as applicable, to purchase MYnd common stock or indebtedness convertible into MYnd common stock. MYnd stockholders will continue to own and hold their existing shares of MYnd common stock and MYnd preferred stock will convert into common stock. The Exchange Ratio is subject to adjustment to account for the effect of a possible reverse stock split of MYnd common stock in accordance with a ratio to be determined by mutual agreement of MYnd and Emmaus, and approved by the MYnd board of directors, within a range of one share of MYnd common stock for every two to ten shares of MYnd common stock (or any number in between), which we refer to in this joint proxy statement/prospectus as the Reverse Stock Split, to be implemented prior to the consummation of the Merger as discussed in this joint proxy statement/prospectus. The actual Exchange Ratio will be determined pursuant to a formula in the Merger Agreement and described in this joint proxy statement/prospectus, and these estimates are subject to adjustment for any changes in the capitalization of MYnd or Emmaus prior to the Merger.

Immediately after the Merger, (i) MYnd securityholders (including holders of MYnd common and preferred stock and holders of options and warrants to purchase shares of MYnd common stock) are expected to own 5.9% of the combined company, and (ii) Emmaus securityholders (including holders of Emmaus common stock, options, warrants, convertible promissory notes and other indebtedness convertible into shares of Emmaus common stock) are expected to own 94.1% of the combined company, in each case on a fully-diluted basis.

Shares of MYnd common stock are currently listed on The NASDAQ Capital Market under the symbol “MYND.” Prior to consummation of the Merger, MYnd intends to apply for initial listing of the combined company common stock on The NASDAQ Capital Market. After completion of the Merger, MYnd will be renamed “Emmaus Life Sciences, Inc.” and expects to trade on The NASDAQ Capital Market under the symbol “EMMA.” On January [●], 2019, the last trading day before the date of this joint proxy statement/prospectus, the closing sale price of MYnd common stock was $[●] per share.

MYnd and Emmaus will each hold special meetings of their respective stockholders in connection with the Merger and related matters.

The MYnd special meeting will be held on [●], 2019, at 10:00 A.M. Eastern Time (unless postponed or adjourned to a later date) via live webcast. The special meeting will be a completely virtual meeting of stockholders. You will only be able to attend the special meeting of stockholders online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/MYnd2019SM. You will also be able to vote your shares electronically at the online special meeting. At the MYnd special meeting, MYnd will ask its stockholders to:

The Emmaus special meeting will be held on [●], 2019, at 10:00 A.M. Pacific Time (unless postponed or adjourned to a later date) at the DoubleTree by Hilton located at 21333 Hawthorne Boulevard, Torrance, California 90503. At the Emmaus special meeting, Emmaus will ask its stockholders to:

As described in the accompanying joint proxy statement/prospectus, the executive officers and directors of Emmaus, who in the aggregate own or control approximately 30% of the outstanding shares of Emmaus common stock, and the executive officers and directors of MYnd, who in the aggregate own or control approximately 37% of the outstanding shares of MYnd common stock on an as-converted to common stock basis, are parties to voting agreements with MYnd and Emmaus, respectively, whereby such parties have agreed to vote in favor of certain proposals described in this joint proxy statement/prospectus, subject to the terms of the voting agreements.

After careful consideration, each of the MYnd board of directors and the Emmaus board of directors have approved the Merger Agreement and the respective proposals for consideration at the MYnd special meeting and the Emmaus special meeting described in this joint proxy statement/prospectus, and the MYnd board of directors has determined that it is advisable to consummate the Merger and the Spin-Off and the Emmaus board of directors has determined that it is advisable to consummate the Merger. The MYnd board of directors and the Emmaus board of directors, as the case may be, recommends that their respective stockholders vote “FOR” the proposals.

More information about MYnd, Emmaus, the Merger and the Spin-Off is contained in the accompanying joint proxy statement/prospectus. MYnd and Emmaus urge you to read the accompanying joint proxy statement/prospectus carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER “RISK FACTORS” BEGINNING ON PAGE [●].

MYnd and Emmaus are excited about the opportunities the Merger and Spin-Off brings to both MYnd’s and Emmaus’ stockholders, and thank you for your consideration and continued support.

Neither the SEC nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The accompanying joint proxy statement/prospectus is dated [●], 2019, and is first being mailed to MYnd stockholders and Emmaus stockholders on or about [●], 2019.

26522 La Alameda, Suite 290
Mission Viejo, CA 92691

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON [●], 2019

Dear Stockholders of MYnd:

On behalf of the board of directors of MYnd Analytics, Inc., a Delaware corporation, or MYnd, MYnd is pleased to deliver this joint proxy statement/prospectus for the proposed merger between MYnd and Emmaus Life Sciences, Inc., a Delaware corporation, or Emmaus, pursuant to which Athena Merger Subsidiary, Inc., a wholly owned subsidiary of MYnd, or Merger Sub, will merge with and into Emmaus, with Emmaus surviving as a subsidiary of MYnd. The Merger Agreement also provides that if the transactions contemplated by the Merger Agreement are completed, all of the business, assets and liabilities of MYnd are expected to be transferred to an existing wholly-owned subsidiary of MYnd, which is referred to as MYnd California, and holders of record of MYnd common stock at the close of business on [●], 2019 are expected to receive a pro rata distribution of one share of MYnd California’s common stock for each share of MYnd common stock held at the close of business on [●], 2019, which is referred to as the Spin-Off.

The MYnd special meeting will be held on [●], 2019, at 10:00 A.M. Eastern Time (unless postponed or adjourned to a later date) via live webcast for the following purposes:

The board of directors of MYnd has fixed [●], 2019 as the record date for the determination of stockholders entitled to notice of, and to vote at, the MYnd special meeting and any adjournment or postponement thereof. Only holders of record of shares of MYnd common stock at the close of business on the record date are entitled to notice of, and to vote at, the MYnd special meeting.

Your vote is important. The affirmative vote of the holders of a majority of the shares of MYnd common stock (which includes the MYnd preferred stock on an as-converted basis to MYnd common stock) having voting power present in person or represented by proxy at the MYnd special meeting, presuming a quorum is present, is required for approval of MYnd Stockholder Proposal Nos. 1, 5, 6 and 7. The affirmative vote of the holders of a majority of shares of MYnd common stock having voting power outstanding on the record date for the MYnd special meeting is required for approval of MYnd Stockholder Proposal Nos. 2, 3 and 4. Each of Proposal Nos. 1, 2, 3 and 4 is conditioned upon each other. Therefore, the Merger cannot be consummated without the approval of Proposal Nos. 1, 2, 3 and 4.

Even if you plan to attend the MYnd special meeting in person, MYnd requests that you sign and return the enclosed proxy to ensure that your shares will be represented at the MYnd special meeting if you are unable to attend.

THE MYND BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS ADVISABLE TO, AND IN THE BEST INTERESTS OF, MYND AND ITS STOCKHOLDERS AND HAS APPROVED EACH SUCH PROPOSAL. THE MYND BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT MYND STOCKHOLDERS VOTE “FOR” EACH SUCH PROPOSAL.

21250 Hawthorne Blvd., Suite 800
Torrance, California 90503

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [●], 2019

Dear Emmaus Stockholders:

On behalf of the board of directors of Emmaus Life Sciences, Inc., a Delaware corporation, or Emmaus, Emmaus is pleased to deliver this joint proxy statement/prospectus regarding the proposed merger, or the Merger, between Emmaus and MYnd pursuant to which Athena Merger Subsidiary, Inc., or Merger Sub, a wholly owned subsidiary of MYnd, Analytics, Inc., a Delaware corporation, or MYnd, will merge with and into Emmaus, with Emmaus surviving as a subsidiary of MYnd.

The Emmaus special meeting will be held on [●], 2019, at 10:00 A.M. Pacific Time (unless postponed or adjourned to a later date) at the DoubleTree by Hilton located at 21333 Hawthorne Boulevard, Torrance, California 90503, for the following purposes:

The board of directors of Emmaus has fixed [●], 2019 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Emmaus special meeting and any adjournment or postponement thereof. Only holders of record of shares of Emmaus common stock at the close of business on the record date are entitled to notice of, and to vote at, the Emmaus special meeting.

Your vote is important. The affirmative vote of the holders of a majority of the shares of Emmaus common stock outstanding on the record date for the Emmaus special meeting is required for approval of Emmaus Stockholder Proposal No. 1. The affirmative vote of the holders of a majority of the shares of Emmaus common stock voted at the Emmaus special meeting, whether or not a quorum is present, is required for approval of Emmaus Stockholder Proposal No. 2.

Even if you plan to attend the Emmaus special meeting in person, Emmaus requests that you sign and return the enclosed proxy to ensure that your shares will be represented at the Emmaus special meeting if you are unable to attend.

THE EMMAUS BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS ADVISABLE TO, AND IN THE BEST INTERESTS OF, EMMAUS AND ITS STOCKHOLDERS AND HAS APPROVED EACH SUCH PROPOSAL. THE EMMAUS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT EMMAUS STOCKHOLDERS VOTE “FOR” EACH SUCH PROPOSAL.

REFERENCES TO ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about MYnd and Emmaus that is not included in or delivered with this document. You may obtain this information without charge through the SEC website (www.sec.gov) or by requesting it in writing or by telephone from MYnd or Emmaus at the following addresses and telephone numbers:

If you would like to request documents, please do so no later than five business days before the MYnd Special Meeting and the Emmaus Special Meeting, each to be held on [●], 2019.

For additional details about where you can find information about MYnd or Emmaus, please see the section titled “Where You Can Find More Information” in this joint proxy statement/prospectus.

TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS

The following section provides brief answers to certain questions that you may have regarding the Merger Agreement, the proposed Merger and the Spin-Off. Please note that this section does not address all issues that may be important to you as a MYnd stockholder or an Emmaus stockholder. Accordingly, you should carefully read this entire joint proxy statement/prospectus, including each of the Annexes and the documents that are incorporated by reference into this joint proxy statement/prospectus.

Except where specifically noted, the following information and all other information contained in this joint proxy statement/prospectus does not give effect to the possible Reverse Stock Split described in MYnd Stockholder Proposal No. 4.

A:            You are receiving this joint proxy statement/prospectus because you were a stockholder of record of MYnd or Emmaus as of the close of business on the record date for the special meeting of MYnd stockholders, or the MYnd Special Meeting, or the special meeting of Emmaus stockholders, or the Emmaus Special Meeting, respectively.

This document serves as:

A:            MYnd Analytics, Inc., or MYnd, and Emmaus Life Sciences, Inc., or Emmaus, have entered into an Agreement and Plan of Merger and Reorganization, dated January 4, 2019, or the Merger Agreement. The Merger Agreement contains the terms and conditions of the proposed reverse recapitalization of MYnd and Emmaus. Under the Merger Agreement, MYnd Merger Subsidiary, Inc., a wholly-owned subsidiary of MYnd, or Merger Sub, will merge with and into Emmaus, with Emmaus surviving as a subsidiary of MYnd. After the completion of the Merger, MYnd will change its corporate name to “Emmaus Life Sciences, Inc.” This transaction is referred to as the Merger.

At the effective time of the Merger, each outstanding share of Emmaus common stock, including shares issued upon conversion of Emmaus convertible promissory notes or other indebtedness, will be converted into the right to receive a number of shares of MYnd common stock referred to in this joint proxy statement/prospectus as the Exchange Ratio. It is currently anticipated that, at the closing of the Merger, the Exchange Ratio will be approximately [●] shares of MYnd common stock for each share of Emmaus common stock. MYnd will assume each outstanding and unexercised option and warrant (if permitted by the terms of the warrant) to purchase Emmaus common stock and any indebtedness (if permitted by the terms of indebtedness) convertible into Emmaus common stock, which will be converted into an option or warrant, as applicable, to purchase MYnd common stock or indebtedness convertible into MYnd common stock. MYnd stockholders will continue to own and hold their existing shares of MYnd common stock. The actual Exchange Ratio will be determined pursuant to a formula in the Merger Agreement and described in this joint proxy statement/prospectus, and these estimates are subject to adjustment for any changes in the capitalization of MYnd or Emmaus prior to the Merger.

Immediately after the Merger, (i) MYnd securityholders (including holders of MYnd common stock and preferred stock and holders of options and warrants to purchase shares of MYnd common stock) are expected to own 5.9% of the combined company and (ii) Emmaus securityholders (including holders of Emmaus common stock, options, warrants and convertible promissory notes and other indebtedness convertible into shares of Emmaus common stock) are expected to own 94.1% of the combined company, in each case on a fully-diluted basis.

A:            MYnd and Emmaus believe that the Merger will result in a commercial-stage biopharmaceutical company engaged in the discovery, development, marketing and sale of innovative treatments and therapies, including those in the rare and orphan disease categories. For a discussion of MYnd’s and Emmaus’ reasons for the Merger, please see the sections entitled “The Merger—MYnd Reasons for the Merger” beginning on page [●] of this joint proxy statement/prospectus and “The Merger—Emmaus Reasons for the Merger” beginning on page [●] of this joint proxy statement/prospectus.

A:            Immediately prior to the effective time of the Merger, each share of outstanding MYnd preferred stock will be converted into one share of MYnd common stock in accordance with the MYnd certificate of incorporation. MYnd stockholders, warrant holders and holders of MYnd equity awards will not receive anything as a result of the Merger, but will continue to hold the same amount of MYnd common stock, warrants to purchase MYnd common stock and MYnd equity awards held immediately prior to the Merger, as appropriately adjusted for the Reverse Stock Split, if it is effected.

At the effective time of the Merger, each share of Emmaus common stock issued and outstanding immediately prior to the effective time of the Merger will be converted into and represent the right to receive a number of shares of MYnd common stock equal to the Exchange Ratio.

It is currently anticipated that, at the closing of the Merger, the Exchange Ratio will be approximately [●] shares of MYnd common stock for each share of Emmaus common stock. MYnd will assume each outstanding and unexercised option and warrant (if permitted by the terms of the warrant) to purchase Emmaus common stock, which will be converted into options or warrants, as applicable, to purchase MYnd common stock. The actual Exchange Ratio is determined pursuant to a formula in the Merger Agreement and described in the attached joint proxy statement/prospectus, and these estimates are subject to adjustment for any changes in the capitalization of MYnd or Emmaus prior to the Merger. See the section entitled “The Merger Agreement—Exchange Ratio” beginning on page [●] of this joint proxy statement/prospectus. Shares of Emmaus common stock held by stockholders who exercise and perfect appraisal or dissenters’ rights will be treated as described in the section entitled “The Merger—Appraisal Rights and Dissenters’ Rights” beginning on page [●] of this joint proxy statement/prospectus.

For a more complete description of what Emmaus stockholders and other security holders will receive in the Merger, please see the section entitled “The Merger Agreement—Merger Consideration” beginning on page [●] of this joint proxy statement/prospectus.

A.            As a condition to the consummation of the Merger, MYnd is required to: (i) transfer all or substantially all of its business and assets and those liabilities of MYnd which are not to be retained by MYnd, referred to as the Separation, to an existing wholly-owned subsidiary of MYnd, which is referred to as MYnd California; and subsequently, (ii) spin off MYnd California, referred to as the Spin-Off, as a separate, independent corporation, with such spin-off being achieved by means of a stock distribution. In furtherance of the Separation, MYnd and MYnd California entered into a Separation and Distribution Agreement, or Separation Agreement, on January 4, 2019. Approval by the stockholders of MYnd is required to effect and adopt the Spin-Off.

MYnd believes that Spin-Off will provide MYnd’s existing stockholders with the opportunity to continue to participate in MYnd’s existing business as stockholders of MYnd California.

A:            Holders of record of MYnd’s common stock immediately prior to a date prior to the closing of the Merger, or the Spin-Off Record Date, will receive a pro rata distribution of one share of MYnd California’s common stock for each share of MYnd common stock held immediately prior to the Spin-Off Record Date; provided that current holders of MYnd preferred stock will receive one share of MYnd California’s preferred stock for each share of MYnd preferred stock held immediately prior to the Spin-Off Record Date.

A:            The Spin-Off is expected to occur immediately prior to, and is contingent upon, the consummation of the Merger.

A:            MYnd California will continue the business of MYnd. MYnd files annual, quarterly and current reports, proxy statements and other documents with the SEC under the Exchange Act. These SEC filings are available to the public from commercial document retrieval services and at www.sec.gov. The description of MYnd’s business and financial condition, as well as all risk factors, in MYnd’s periodic reports filed with the SEC, including but not limited to its Annual Report on 10-K for the year ended September 30, 2018, are applicable to those shares of stock of MYnd California to be distributed further to the Spin-Off. If any of those risks and uncertainties develops into actual events, these events could have a material adverse effect on MYnd California’s businesses, financial conditions or results of operations. In addition, past financial performance may not a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.

A:            The Merger will require MYnd stockholder approval of Proposal Nos. 1 through 5, below. MYnd is also requesting that MYnd stockholders approve Proposal No. 6, below, which, collectively with Proposal Nos. 1 through 6, is referred to as the MYnd Stockholder Proposals. The MYnd Stockholder Proposals are:

The presence, in person or represented by proxy, at the MYnd special meeting of the holders of a majority of the shares of MYnd common stock outstanding and entitled to vote at the MYnd special meeting is necessary to constitute a quorum at the meeting. Abstentions and broker non-votes will be counted towards a quorum. The affirmative vote of the holders of a majority of the shares of MYnd common stock and MYnd preferred stock on an as-converted basis to MYnd common stock having voting power present in person or represented by proxy at the MYnd special meeting is required for approval of MYnd Stockholder Proposal Nos. 1, 5 and 6. The affirmative vote of the holders of a majority of shares of MYnd common stock having voting power outstanding on the record date for the MYnd special meeting is required for approval of MYnd Stockholder Proposal Nos. 2, 3 and 4. Each of MYnd Stockholder Proposal Nos. 1, 2, 3, 4 is conditioned upon each other. Therefore, the Merger cannot be consummated without the approval of MYnd Stockholder Proposal Nos. 1, 2, 3 and 4.

Votes will be counted by the inspector of election appointed for MYnd special meeting, who will separately count “FOR” and “AGAINST” votes, abstentions and broker non-votes. Abstentions will be counted towards the vote total for each MYnd Stockholder Proposal and will have the same effect as “AGAINST” votes for MYnd Stockholder Proposal Nos. 2, 3 and 4, but will have no effect on the outcome of voting on MYnd Stockholder Proposal Nos. 1, 5 and 6. Similarly, broker non-votes will have the same effect as “AGAINST” votes for MYnd Stockholder Proposal Nos. 2, 3 and 4, but will have no effect on the outcome of voting on MYnd Stockholder Proposal Nos. 1, 5 and 6.

A:            The Merger will require Emmaus stockholder approval of Proposal No. 1, below. Emmaus is also requesting that Emmaus stockholders approve Proposal No. 2, below, which, together with Proposal No. 1, is referred to as the Emmaus Stockholder Proposals. The Emmaus Stockholder Proposals are:

The presence, in person or represented by proxy, at the Emmaus special meeting of the holders of a majority of the shares of Emmaus common stock outstanding and entitled to vote at the Emmaus special meeting is necessary to constitute a quorum at the meeting. Abstentions will be counted towards a quorum. The approval of Emmaus Stockholder Proposal No. 1 requires the affirmative vote of the holders of a majority of the shares of Emmaus common stock outstanding as of the record date for the Emmaus special meeting. The approval of Emmaus Stockholder Proposal No. 2 requires the affirmative vote of holders of a majority of the shares of Emmaus common stock voted on such Proposal, whether or not a quorum is present.

Votes will be counted by the inspector of election appointed for Emmaus special meeting, who will separately count “FOR” and “AGAINST” votes and abstentions. Abstentions will be counted towards the vote total and will have the same effect as “AGAINST” votes for Emmaus Stockholder Proposal No. 1. Abstentions will not be counted and will have no effect on the voting on Emmaus Stockholder Proposal No. 2.

A:            Immediately following the Merger, MYnd’s board of directors is expected to be composed of up to six directors to be designated by Emmaus, who are expected to be the incumbent Emmaus directors, and one director designated by MYnd.

A:            Immediately following the Merger, the combined company’s executive management team is expected to be composed of the members of the Emmaus executive management team prior to the Merger, including Yutaka Niihara, M.D., M.P.H., the Chairman and Chief Executive Officer of Emmaus, and the other incumbent executive officers described under “Management Following the Merger” beginning on page [●] of this joint proxy statement/prospectus.

A:            After careful consideration, MYnd’s board of directors unanimously recommends that MYnd stockholders vote “FOR” all of the MYnd Stockholder Proposals.

A:            After careful consideration, Emmaus’ board of directors unanimously recommends that Emmaus stockholders vote “FOR” each of the Emmaus Stockholder Proposals.

A:            You should carefully review the section of this joint proxy statement/prospectus titled “Risk Factors,” which sets forth certain risks and uncertainties related to the Merger, risks and uncertainties to which the combined company’s business will be subject, and risks and uncertainties to which each of MYnd and Emmaus, as an independent company, is subject.

A:            The Merger is anticipated to occur in the second quarter of 2019 after the MYnd special meeting and the Emmaus special meeting, each to be held on [●], 2019, but the exact timing cannot be predicted. For more information, please see the section titled “The Merger Agreement—Conditions to the Completion of the Merger” in this joint proxy statement/prospectus.

A:            MYnd and Emmaus urge you to read this joint proxy statement/prospectus carefully, including its annexes, and to consider how the Merger affects you.

If you are a MYnd stockholder of record, you may provide your proxy instructions in one of three ways. First, you can attend the MYnd special meeting in person and MYnd will provide you with a ballot when you arrive at the meeting. Second, you can mail your signed proxy card in the enclosed return envelope. Third, you can provide your proxy instructions via fax by following the instructions on your proxy card. If you hold your shares in “street name” (as described below), you may provide your proxy instructions via telephone or the internet by following the instructions on your vote instruction form. Please provide your proxy instructions only once, unless you are revoking a previously delivered proxy instruction, and as soon as possible so that your shares can be voted at the special meeting of MYnd stockholders.

If you are an Emmaus stockholder of record, you also may provide your proxy instructions in one of three ways. First, you can attend the Emmaus special meeting in person and Emmaus will provide you with a ballot when you arrive at the meeting. Second, you can provide your proxy instructions via the Internet by following the instructions on your proxy card. Third, you can mail your signed proxy card in the enclosed postage-paid return envelope. Please provide your proxy instructions only once, unless you are revoking a previously delivered proxy instruction, and as soon as possible so that your shares can be voted at the Emmaus special meeting.

A:            If you are an MYnd stockholder, the failure to return your proxy card or otherwise provide proxy instructions will reduce the aggregate number of votes required to approve MYnd Stockholder Proposal Nos. 1, 5, 6 and 7 and will have the same effect as voting against MYnd Stockholder Proposal Nos. 2, 3 and 4. Also, your shares will not be counted for purposes of determining whether a quorum is present at the MYnd special meeting.

If you are an Emmaus stockholder, the failure to return your proxy card or attend the Emmaus special meeting and vote your shares of Emmaus common stock will have the same effect as voting against Emmaus Stockholder Proposal No 1. and will reduce the aggregate number of votes required to approve Emmaus Stockholder Proposal No. 2. Also, your shares will not be counted for purposes of determining whether a quorum is present at the Emmaus special meeting.

A:            If your shares of MYnd common stock are registered directly in your name with MYnd’s transfer agent, you are considered to be the stockholder of record with respect to those shares, and the proxy materials and proxy card are being sent directly to you by MYnd. If you are an MYnd stockholder of record, you may attend the special meeting of MYnd stockholders and vote your shares in person. Even if you plan to attend the MYnd special meeting in person, MYnd requests that you sign and return the enclosed proxy card to ensure that your shares will be represented at the MYnd special meeting if you are unable to attend.

If your shares of MYnd common stock are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in “street name,” and the proxy materials are being forwarded to you by your broker or other nominee together with a voting instruction form. As the beneficial owner, you are also invited to attend the special meeting of MYnd stockholders. Because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the MYnd special meeting unless you obtain a legal proxy from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the meeting.

A:            The MYnd special meeting will be held on [●], 2019, at 10:00 A.M. Eastern Time (unless postponed or adjourned to a later date) via live webcast. The special meeting will be a completely virtual meeting of stockholders. You will only be able to attend the special meeting of stockholders online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/MYnd2019SM. You will also be able to vote your shares electronically at the online special meeting.

A:            Yes. Even if you plan to attend the Emmaus special meeting in person, Emmaus requests that you sign and return the enclosed proxy card to ensure that your shares will be represented at the Emmaus special meeting if you are unable to attend.

A:            The Emmaus special meeting will be held on [●], 2019, at 10:00 A.M. Pacific Time (unless postponed or adjourned to a later date) at the DoubleTree by Hilton located at 21333 Hawthorne Boulevard, Torrance, California 90503.

A:            Unless your broker has discretionary authority to vote on certain matters, your broker will not be able to vote your shares of MYnd common stock on matters requiring discretionary authority without instructions from you.

If you do not give instructions to your broker, your broker can vote your MYnd shares with respect to “discretionary” items but not with respect to “non-discretionary” items. Discretionary items are proposals considered routine under the rules of The NASDAQ Capital Market on which your broker may vote shares held in “street name” in the absence of your voting instructions. On non-discretionary items for which you do not give your broker instructions, the MYnd shares will be treated as broker non-votes. It is anticipated that MYnd Stockholder Proposal Nos. [●] will be non-discretionary items. To make sure that your vote is counted, you should instruct your broker to vote your shares, following the procedures provided by your broker.

A:            Yes. MYnd and Emmaus stockholders of record may change their vote at any time before their proxy is voted at the MYnd special meeting or the Emmaus special meeting in one of three ways. First, a stockholder of record can send a written notice to the Secretary of MYnd or Emmaus, as applicable, stating that the stockholder would like to revoke its proxy. Second, a stockholder of record can submit a new proxy card or new proxy instructions. Third, a stockholder of record can attend the MYnd special meeting or the Emmaus special meeting and vote in person. Attendance alone, however, will not revoke a proxy. If a MYnd stockholder who owns MYnd shares in “street name” has instructed a broker to vote its shares of MYnd common stock, the stockholder must follow directions received from its broker to change those instructions.

A:            MYnd and Emmaus will share equally the cost of printing and filing of this joint proxy statement/prospectus. MYnd also will make arrangements with brokerage firms and other custodians, nominees and fiduciaries who are record holders of MYnd common stock for the forwarding of solicitation materials to the beneficial owners of MYnd common stock. MYnd will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials. MYnd has retained Alliance Advisors LLC to assist it in soliciting proxies using the means referred to above. MYnd will pay the fees of Alliance Advisors LLC, which are expected to be approximately $5,000, plus reimbursement of out-of-pocket expenses.

A:            The distribution to MYnd stockholders of stock in MYnd California will be a taxable event to each MYnd stockholder. Please read with particular care the detailed description of material U.S. Federal income tax to MYnd’s stockholders of the distribution of stock in MYnd California described in “Proposal No. 5—Approval of the Spin-Off—Material United States Federal Income Tax Considerations” beginning on page [●] of this joint proxy statement/prospectus.

A:             The Reverse Stock Split described in MYnd Stockholder Proposal No. 5, if effected, should constitute a “recapitalization” for U.S. federal income tax purposes. As a result, a U.S. Holder (as described in more detail in the section titled “Matters Being Submitted to a Vote of MYnd Stockholders—MYnd Stockholder Proposal No. 5: Approval of the Amendment to the Certificate of Formation of MYnd Authorizing the Reverse Stock Split—Material U.S. Federal Income Tax Consequences of the Reverse Stock Split”) of MYnd common stock generally should not recognize gain or loss upon such Reverse Stock Split, except with respect to cash received in lieu of a fractional share of MYnd common stock, as discussed below in the section titled “Matters Being Submitted to a Vote of MYnd Stockholders—MYnd Stockholder Proposal No. 5: Approval of the Amendment to the Certificate of Formation of MYnd Authorizing the Reverse Stock Split—Material U.S. Federal Income Tax Consequences of the Reverse Stock Split—Cash in Lieu of Fractional Shares.” A U.S. Holder’s aggregate tax basis in the shares of MYnd common stock received pursuant to such Reverse Stock Split should equal the aggregate tax basis of the shares of the MYnd common stock surrendered (excluding any portion of such basis that is allocated to any fractional share of MYnd common stock), and such U.S. Holder’s holding period in the shares of MYnd common stock received should include the holding period in the shares of MYnd common stock surrendered. Treasury Regulations provide detailed rules for allocating the tax basis and holding period of the shares of MYnd common stock surrendered to the shares of MYnd common stock received in a recapitalization pursuant to such Reverse Stock Split. U.S. Holders of shares of MYnd common stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares. For more information, please see the section titled “Matters Being Submitted to a Vote of MYnd Stockholders—MYnd Stockholder Proposal No. 5: Approval of the Amendment to the Certificate of Formation of MYnd Authorizing the Reverse Stock Split—Material U.S. Federal Income Tax Consequences of the Reverse Stock Split.”

A:            Each of MYnd and Emmaus intends the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, or the Code. In general, and subject to the qualifications and limitations set forth in the section titled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger,” if the Merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, the material tax consequences to U.S. Holders of Emmaus common stock will be as follows:

Tax matters are very complicated, and the tax consequences of the Merger to a particular Emmaus stockholder will depend on such stockholder’s circumstances. Accordingly, you are strongly urged to consult your tax advisor for a full understanding of the tax consequences of the Merger to you, including the applicability and effect of federal, state, local and non-U.S. income and other tax laws. For more information, please see the section titled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger.”

A:            If you are an MYnd stockholder and would like additional copies of this joint proxy statement/prospectus without charge or if you have questions about the Merger, including the procedures for voting your shares, you should contact Alliance Advisors LLC:

200 Broadacres Drive, 3rd Floor
Bloomfield, NJ 07003
Call Toll-Free: (844) 858-7387

If you are an Emmaus stockholder and would like additional copies of this joint proxy statement/prospectus without charge or if you have questions about the Merger, including the procedures for voting your shares, you should contact:

Emmaus Life Sciences, Inc.

21250 Hawthorne Boulevard, Suite 800

Torrance, California 90503

(310) 214-0065

PROSPECTUS SUMMARY

This summary highlights selected information from this joint proxy statement/prospectus and may not contain all of the information that is important to you. To better understand the Merger, the Spin-Off and the proposals to be considered at the MYnd special meeting and the Emmaus special meeting, you should read this entire joint proxy statement/prospectus carefully, including the Merger Agreement, the Separation Agreement and the other Annexes to this joint proxy statement/prospectus. For more information, please see the section entitled “Where You Can Find More Information” beginning on page [●] of this joint proxy statement/prospectus.

The Companies

MYnd, Inc.

26522 La Alameda, Suite 290

Mission Viejo, CA 92691

(949) 420-4400

MYnd Analytics, Inc., with its wholly owned subsidiary Arcadian Telepsychiatry Services, LLC, is a technology-enabled telepsychiatry and teletherapy company that provides enhanced access to behavioral health services, improves patient outcomes and helps lower the costs associated with behavioral health issues. The MYnd Psychiatric EEG Evaluation Registry (PEER) is a predictive analytics decision support tool that helps physicians reduce trial and error treatment for behavioral health conditions. PEER provides the physician a personalized care plan with recommended treatment options based on a patient’s unique brain markers, reducing treatment time and treatment costs. Arcadian Telepsychiatry Services, LLC provides a suite of complementary telemedicine services that can be combined with PEER, including telepsychiatry, teletherapy, digital patient screening, curbside consultation, on-demand services, and scheduled encounters for all age groups. MYnd’s customers include major health plans, health systems, and community-based organizations.

Emmaus Life Sciences, Inc.

21250 Hawthorne Boulevard, Suite 800

Torrance, California 90503

(310) 214-0065

Emmaus is a commercial-stage biopharmaceutical company engaged in the discovery, development, marketing and sale of innovative treatments and therapies, primarily for rare and orphan diseases. On July 7, 2017, the U.S. Food and Drug Administration, or FDA, approved Emmaus’ lead product, Endari™ (L-glutamine oral powder), to reduce the severe complications of sickle cell disease, or SCD, in adult and pediatric patients five years of age and older, and in January 2018 we began marketing and selling Endari™ in the U.S. Endari™ has received Orphan Drug designation from the FDA and Orphan Medical designation from the European Commission, or EC, which designations afford marketing exclusivity for Endari™ for a seven-year period in the U.S. and ten-year period in the E.U., respectively, following marketing approval.

Athena Merger Subsidiary, Inc.

26522 La Alameda, Suite 290

Mission Viejo, CA 92691

(949) 420-4400

Athena Merger Subsidiary, Inc., or Merger Sub, is a wholly owned subsidiary of MYnd and was formed solely for the purposes of carrying out the Merger and has no obligations or liabilities and has not engaged in any business activities, except in connection with its incorporation and the Merger.

The Merger (see page [●])

If the Merger is completed, Merger Sub will merge with and into Emmaus, with Emmaus surviving as a subsidiary of MYnd.

At the effective time of the Merger, each outstanding share of Emmaus common stock, including shares issued upon conversion of Emmaus convertible promissory notes or other indebtedness, will be converted into the right to receive a number of shares of MYnd common stock referred to in this joint proxy statement/prospectus as the Exchange Ratio. It is currently anticipated that, at the closing of the Merger, the Exchange Ratio will be approximately [●] shares of MYnd common stock for each share of Emmaus common stock. MYnd will assume each outstanding and unexercised Emmaus option and warrant (if permitted by the terms of the warrant) and any indebtedness (if permitted by the terms of the indebtedness convertible into Emmaus common stock, which will be converted into a MYnd option or warrant, as applicable), or indebtedness convertible into MYnd common stock. MYnd stockholders will continue to own and hold their existing shares of MYnd common stock and MYnd options and warrants and will remain outstanding in accordance with their terms. Immediately prior to the effective time of the Merger, each share of outstanding MYnd preferred stock will be converted into one share of MYnd common stock in accordance with the MYnd certificate of incorporation.

Immediately after the Merger, (i) MYnd securityholders (including holders of MYnd common stock and holders of options and warrants to purchase shares of MYnd common stock) are expected to own 5.9% of the combined company and (ii) Emmaus securityholders (including holders of Emmaus common stock, holders of options and warrants to purchase shares of Emmaus common stock and holders of convertible promissory notes and other indebtedness that is convertible into Emmaus common stock) are expected to own 94.1% of the combined company, in each case on a fully-diluted basis.

The Exchange Ratio is determined pursuant to a formula described in more detail in the Merger Agreement. For a more complete description of the Exchange Ratio, please see the section entitled “The Merger Agreement—Exchange Ratio” beginning on page [●] of this joint proxy statement/prospectus.

The closing of the Merger will occur no later than three business days after the last of the conditions to the Merger has been satisfied or waived, or at another time as MYnd and Emmaus agree. MYnd and Emmaus anticipate that the consummation of the Merger will occur promptly after the MYnd special meeting and the Emmaus special meeting, assuming MYnd stockholder approval and Emmaus stockholder approval are received. However, because the Merger is subject to a number of conditions, neither MYnd nor Emmaus can predict exactly when the closing will occur or if it will occur at all. In connection with the Merger, assuming that MYnd receives the required stockholder approval of MYnd Stockholder Proposal No. 3, MYnd will be renamed “Emmaus Life Sciences, Inc.”

The reasons for the Merger and the Spin-Off are described under the sections entitled “The Merger—MYnd Reasons for the Merger” “The Merger—Emmaus Reasons for the Merger” and beginning on pages [●] and [●], respectively, of this joint proxy statement/prospectus.

The Reverse Stock Split

The Exchange Ratio is subject to adjustment to account for the effect of a possible reverse stock split of MYnd common stock, or Reverse Stock Split, in accordance with a ratio to be determined by mutual agreement of MYnd and Emmaus, and approved by the MYnd board of directors, within a range of one share of MYnd common stock for every two to ten shares of MYnd common stock to be implemented prior to the consummation of the Merger as discussed in this joint proxy statement/prospectus.

The MYnd board of directors has adopted resolutions (i) declaring that filing an amendment to MYnd’s Certificate of Incorporation to effect the Reverse Stock Split was advisable, and (ii) directing that a proposal to approve the Reverse Stock Split be submitted to the holders of MYnd’s common and preferred stock for their approval.

The MYnd board of directors is submitting the Reverse Stock Split proposal to MYnd’s stockholders for approval with the intent of increasing the market price of MYnd’s common stock to enhance MYnd’s ability to meet the continued listing requirements of the Nasdaq Capital Market and to ensure that Emmaus will be able to meet the initial listing requirements of the Nasdaq Capital Market after consummation of the Merger. Please see the section entitled “The Reverse Stock Split” for more information.

The Spin-Off

The Merger Agreement also provides that, subject to completion of the Merger, all or substantially all of the business, assets and liabilities of MYnd is expected to be transferred to an existing wholly-owned subsidiary of MYnd, which is referred to as MYnd California, and holders of record of MYnd common stock and preferred stock at the close of business on [●], 2019 are expected to receive a pro rata distribution of one share of MYnd California’s common stock or preferred stock, as applicable, for each share of MYnd common stock and preferred stock held at the close of business on [●], 2019, which is referred to as the Spin-Off. In furtherance of the Spin-Off, MYnd and MYnd California entered the Separation Agreement. Upon completion of the Spin-Off, MYnd California will be 100%-owned by the MYnd stockholders of record as of [●], 2019.

Opinion of MYnd’s Financial Advisor (see page [●])

ThinkEquity, a division of Fordham Financial Management, Inc., or ThinkEquity, the financial advisor of MYnd, delivered to the MYnd board of directors, a written opinion dated January 3, 2019, addressed to the MYnd board of directors, to the effect that, as of such date and based on and subject to the various assumptions, factors, qualifications and limitations set forth in the opinion, the Exchange Ratio and the Spin-Off is fair, from a financial point of view, to MYnd. The full text of this written opinion, which sets forth, among other things, the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by ThinkEquity in preparing its opinion, is attached as Annex C to this joint proxy statement/prospectus and is incorporated by reference in its entirety into this joint proxy statement/prospectus. Holders of MYnd common stock are encouraged to read the opinion carefully in its entirety. The ThinkEquity opinion was prepared for the information of the MYnd board of directors for its use in connection with its consideration of the Merger and the Spin--Off. Neither ThinkEquity’s written opinion nor the summary of its opinion and the related analyses set forth in this joint proxy statement/prospectus are intended to be, and they do not constitute, a recommendation to any stockholder as to how such stockholder should act or vote with respect to any matter relating to the Merger, the Spin-Off or any other matter.

Overview of the Merger Agreement and Agreements Related to the Merger Agreement

Immediately prior to the effective time of the Merger, each share of MYnd preferred stock issued and outstanding immediately prior to the effective time of the Merger will be converted into one share of MYnd common stock.

Merger Consideration (see page [●])

At the effective time of the Merger, upon the terms and subject to the conditions set forth in the Merger Agreement:

Immediately after the Merger, (a) MYnd securityholders (including holders of MYnd common stock and holders of options and warrants to purchase shares of MYnd common stock) are expected to own 5.9% of the combined company on a fully-diluted basis and (b) Emmaus securityholders (including holders of Emmaus common stock, holders of options and warrants to purchase shares of Emmaus common stock and holders of convertible promissory notes and other indebtedness that is convertible into Emmaus common stock) are expected to own 94.1% of the combined company.

There will be no adjustment to the total number of shares of MYnd common stock that Emmaus stockholders will be entitled to receive for changes in the market price of MYnd common stock. Accordingly, the market value of the shares of MYnd common stock issued pursuant to the Merger will depend on the market value of the shares of MYnd common stock at the time the Merger closes and could vary significantly from the market value on the date of this joint proxy statement/prospectus.

In connection with the Merger Agreement, MYnd has agreed to either transfer certain agreements to MYnd California in connection with the Spin-Off or to terminate these agreements prior to the effective time of the Merger.

Treatment of Emmaus Options (see page [●])

As of the date of this joint proxy statement/prospectus, 6,642,200 shares of Emmaus common stock were issuable upon the exercise of outstanding options at a weighted-average exercise price of $4.40 per share. At the effective time of the Merger, each option to purchase common stock of Emmaus, or an Emmaus Option, will be assumed by MYnd and will become an option to purchase shares of common stock of MYnd. The number of shares of MYnd common stock subject to each Emmaus Option assumed by MYnd will be determined by multiplying (i) the number of shares of Emmaus common stock that were subject to the underlying Emmaus Option by (ii) the Exchange Ratio, with the resulting number rounded down to the nearest whole number of shares of MYnd common stock. The per share exercise price for the MYnd common stock subject to each Emmaus Option assumed by MYnd will be determined by dividing (a) the per share exercise price of the underlying Emmaus Option by (b) the Exchange Ratio, with the resulting number rounded up to the nearest whole cent.

Any restrictions on the exercise of assumed Emmaus Options will continue in full force and effect following the conversion and the term, exercisability, vesting schedules, status as an “incentive stock option” under Section 422 of the Code, if applicable, and other provisions of the assumed Emmaus Options will generally remain unchanged, provided, that any Emmaus Options assumed by MYnd may be subject to adjustment to reflect changes in MYnd’s capitalization after the effective time of the Merger and the MYnd board of directors or any committee thereof will succeed to the authority of the Emmaus board of directors with respect to each assumed Emmaus Option.

Treatment of Emmaus Warrants (see page [●])

As of the date of this joint proxy statement/prospectus, 1,340,000 shares of Emmaus common stock were issuable upon the exercise of Emmaus Warrants at an exercise price of $11.30 per share. At the effective time of the Merger, such Emmaus Warrants will be assumed by MYnd and become exercisable for shares of common stock of MYnd from and after the effective time of the Merger. In addition, as of the date of this joint proxy statement/prospectus, 2,096,431 shares of Emmaus common stock were issuable upon the exercise of other Emmaus Warrants at a weighted-average exercise price of $6.19 per share. Such Emmaus Warrants do not provide for assumption by MYnd. Emmaus intends to enter into negotiations with the holders of such Emmaus Warrants to amend the terms thereof to provide that they will be assumed by MYnd at the effective time of the Merger and become exercisable for shares of common stock of MYnd from and after the effective time of the Merger. The Chairman and Chief Executive Officer of Emmaus, who holds such an Emmaus Warrant to purchase 1,300,000 shares of Emmaus common stock, has expressed his willingness to amend his Emmaus Warrant. However, we cannot guarantee that Emmaus will be able to negotiate these changes with all holders of such Emmaus Warrants.

Accordingly, each Emmaus Warrant will, at the effective time, either (i) be assumed by MYnd and become a warrant to purchase shares of MYnd common stock or (ii) will remain outstanding and exercisable for shares of Emmaus common stock if the terms thereof are not amended to provide for the assumption of such Emmaus Warrant by MYnd.

With respect to the Emmaus Warrants assumed by MYnd, (i) the number of shares of MYnd common stock subject to each Emmaus Warrant assumed by MYnd will be determined by multiplying (a) the number of shares of Emmaus common stock that were subject to the underlying Emmaus Warrant by (b) the Exchange Ratio, with the resulting number rounded down to the nearest whole number of shares of MYnd common stock, and (ii) the per share exercise price for the MYnd common stock subject to each Emmaus Warrant assumed by MYnd will be determined by dividing (a) the per share exercise price of the underlying Emmaus Warrant by (b) the Exchange Ratio, with the resulting number rounded up to the nearest whole cent.

Any Emmaus Warrants which are not converted into MYnd Warrants as described above, will remain outstanding and exercisable in accordance with their terms for shares of common stock of Emmaus, which will become a subsidiary of MYnd by a result of the Merger.

Treatment of Emmaus Convertible Notes (see page [●])

As of the date of this joint proxy statement/prospectus, Emmaus had outstanding $[●] principal amount of Emmaus Convertible Notes convertible into [●] shares of Emmaus common stock at conversion prices ranging from $3.05 to $10.00 per share. None of the outstanding Emmaus Convertible Notes contain terms which provide for their conversion into Emmaus common stock or assumption in connection with the Merger.

Emmaus intends to enter into negotiations with the holders of Emmaus Convertible Notes to amend the terms thereof to provide that they will be converted automatically into shares of Emmaus common stock at their respective conversion prices immediately prior to the effective time of the Merger, which shares would be outstanding immediately prior to the Merger and would be converted into shares of MYnd common stock in the same manner as other outstanding shares of Emmaus common stock based the Exchange Ratio. Directors and executive officers of Emmaus and their affiliates, who hold in the aggregate $14,800,000, or 38.9%, principal amount of Emmaus Convertible Notes, have expressed their willingness to amend their Emmaus Convertible Notes. However, we cannot guarantee that Emmaus will be able to negotiate these changes with all holders of Emmaus Convertible Notes. See its section entitled “Index To Unaudited Pro Forma Condensed Financial Statements” in this joint proxy statement/prospectus for pro forma financial information of the combined company which reflects Emmaus’ expectations regarding the amount of the Emmaus Convertible Notes to be converted in connection with the Merger.

Treatment of Emmaus Debentures (see page [●])

As of the date of this joint proxy statement/prospectus, Emmaus had outstanding $12.2 million principal amount of debentures, or Emmaus Debentures. None of the outstanding Emmaus Debentures contain terms which provide for their conversion into shares of Emmaus common stock or assumption in connection with the Merger. Accordingly, the Emmaus Debentures will remain outstanding and will require repayment in accordance with their terms, unless amended. Emmaus intends to enter into negotiations with the holders of Emmaus Debentures to amend the terms thereof to provide that they will be convertible at the option of each holder into shares of Emmaus common stock and will be assumed by MYnd and become convertible into shares of MYnd common stock at the effective time of the Merger. However, we cannot guarantee that Emmaus will be able to negotiate these changes with all or any holders of Emmaus Debentures.

Conditions to the Completion of the Merger (see page [●])

To consummate the Merger, (i) the MYnd stockholders must approve the issuance of shares of MYnd common stock in the Merger, (ii) the Emmaus stockholders must adopt and approve the Merger Agreement and the Merger, (iii) the shares of MYnd common stock issuable in the Merger must be approved for listing upon notice of issuance on the NASDAQ Capital Market, or the NASDAQ Approval Condition and (iv) the shares represented by stockholders of Emmaus who have validly exercised appraisal rights or dissenters’ rights shall not exceed 20% of the outstanding voting shares of Emmaus, or the Appraisal Rights Condition.

In addition, the Merger Agreement anticipates approval of a certificate of amendment to the certificate of incorporation of MYnd (a) authorizing the MYnd board of directors to effect the Reverse Stock Split and (b) effecting a change of the MYnd name to “Emmaus Life Sciences, Inc.” In addition to obtaining such stockholder approvals and appropriate regulatory approvals, each of the other closing conditions set forth in the Merger Agreement must be satisfied or waived.

No Solicitation (see page [●])

Each of MYnd and Emmaus agreed that, subject to limited exceptions, MYnd and Emmaus will not, and will not authorize or permit any of their respective subsidiaries or any of their respective controlled affiliates, officers, directors, employees, partners, attorneys, accountants, advisors, agents or representatives of such parties or of any such party’s subsidiaries or other controlled affiliates to, directly or indirectly:

However, before obtaining the applicable MYnd or Emmaus stockholder approvals required to adopt the Merger Agreement, each party may furnish nonpublic information regarding such party and its respective subsidiaries to, may enter into discussions with, or facilitate or cooperate with the submission of an acquisition proposal made by any person in response to any such acquisition proposal, that after consultation with a financial advisor and outside legal counsel, such party’s board of directors determines in good faith is, or would reasonably be expected to result in a “superior offer,” as defined in the Merger Agreement, if:

Termination of the Merger Agreement (see page [●])

Either MYnd or Emmaus can terminate the Merger Agreement under certain circumstances, which would prevent the Merger from being consummated.

Termination Fees (see page [●])

If the Merger Agreement is terminated under certain circumstances, MYnd or Emmaus will be required to pay the other $750,000 in termination fees. If the Merger Agreement is terminated for failure to satisfy the NASDAQ Approval Condition, Emmaus will be required to pay MYnd $1,600,000 in termination fees. In addition, MYnd or Emmaus may be required to reimburse the other party for expenses incurred in connection with the Merger, up to a maximum of $600,000.

Voting Agreements (see page [●])

Certain Emmaus stockholders who in the aggregate own or control approximately 30% of the outstanding shares of Emmaus common stock, and the executive officers and directors of MYnd, who in the aggregate own or control approximately 37% of the outstanding shares of MYnd common stock on an as-converted to common stock basis, are parties to voting agreements with MYnd and Emmaus, respectively, whereby such parties agreed to vote in favor of certain proposals described in this joint proxy statement/prospectus, subject to the terms of the voting agreements.

Lock-Up Agreements (see page [●])

Certain officers and directors of Emmaus entered into lock-up agreements, or the Lock-Up Agreements, with Emmaus and MYnd pursuant to which the Emmaus officers and directors agreed, except in certain limited circumstances, to refrain from the following items, or the Lock-Up Restrictions, (i) offering, pledging, selling, contracting to sell, selling any option or contract purchase, purchasing any option or contract to sell, granting any option, right or warrant to purchase, making any short sale or otherwise transferring or disposing of or lending any shares of MYnd common stock or securities convertible into, exercisable or exchangeable for or that represent the right to receive MYnd common stock whether then owned or thereafter acquired, or the Lock-Up Securities, (ii) entering into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Lock-Up Securities, (iii) making any demanded for or exercise any right with respect to the registration of any MYnd common stock or any security convertible into or exercisable or exchangeable for MYnd common stock or (iv) publicly disclosing the intention to do any of the foregoing.

The restrictions in the Lock-Up Agreements automatically terminate 120 days following the effective time of the Merger for the Emmaus officers and directors and 90 days following the effective time of the Merger for the MYnd officers and directors.

Management Following the Merger (see page [●])

Effective as of the closing of the Merger, the combined company’s executive officers are expected to be the current Emmaus management team.

Interests of Certain Directors, Officers and Affiliates of MYnd and Emmaus (see pages [●] and [●])

When considering the recommendation of the MYnd board of directors, you should be aware that MYnd’s executive officers and directors have interests in the Merger that are different from, or in addition to, your interests as a stockholder. The MYnd board of directors was aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement and the Merger, and in recommending that MYnd stockholders approve the MYnd Stockholder Proposals. In addition, certain of MYnd’s directors and executive officers have options, which shall vest immediately prior to the consummation of the Merger. None of MYnd’s directors and executive officers are expected to continue with the combined company following the Merger except for one member of the MYnd board of directors who is expected to continue as a director of MYnd upon the closing of the Merger. All of MYnd’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement and coverage pursuant to insurance policies maintained by MYnd.

As of December 31, 2018, the directors and executive officers of MYnd, together with their affiliates, owned approximately 37% of the outstanding shares of MYnd common stock on an as-converted to common stock basis.

In considering the recommendation of the Emmaus board of directors with respect to approving the Merger and related transactions by written consent, Emmaus stockholders should be aware that certain members of the board of directors and executive officers of Emmaus have interests in the Merger that may be different from, or in addition to, interests they have as Emmaus stockholders. For example, certain of Emmaus’ directors and executive officers hold Emmaus Options subject to vesting and Emmaus Warrants, which will be converted into and become MYnd Options and MYnd Warrants. All of Emmaus’ directors and executive officers are expected to continue as directors and executive officers of the combined company upon the closing of the Merger. Certain of Emmaus’ directors and executive officers also hold Emmaus Convertible Notes which are expected to be converted into shares of Emmaus common stock immediately prior to the Merger, which shares will then be converted into shares of MYnd common stock based upon the Exchange Rate in the same manner as other outstanding shares of Emmaus common stock.

As of December 31, 2018, the directors and executive officers of Emmaus, together with their affiliates, owned approximately 30% of the outstanding shares of Emmaus common stock. All of Emmaus’ directors and executive officers have also entered into Voting Agreements and Lock-Up Agreements in connection with the Merger.

Considerations with Respect to U.S. Federal Income Tax Consequences of the Merger (see page [●])

Each of MYnd and Emmaus intends the Merger to qualify as a reorganization within the meaning of Section 368(a) of the United States Internal Revenue Code, as amended, or the Code. Assuming the Merger qualifies as a reorganization, in general, and subject to the qualifications and limitations set forth in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger,” the material U.S. federal income tax consequences to U.S. Holders (as defined herein) of Emmaus common stock should be as follows:

Tax matters are very complicated, and the tax consequences of the Merger to a particular Emmaus stockholder will depend on such stockholder’s circumstances. Accordingly, you should consult your tax advisor for a full understanding of the tax consequences of the Merger to you, including the applicability and effect of federal, state, local and non-U.S. income and other tax laws. For more information, please see the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page [●] of this joint proxy statement/prospectus.

Risk Factors (see page [●])

Both MYnd and Emmaus are subject to various risks associated with their businesses and their industries. In addition, the Merger, including the possibility that the Merger may not be completed, poses a number of risks to each company and its respective stockholders, including the following:

These risks and other risks are discussed in greater detail under the section entitled “Risk Factors” in this joint proxy statement/prospectus. MYnd and Emmaus both encourage you to read and consider all of these risks carefully.

Regulatory Approvals (see page [●])

MYnd and Emmaus must comply with applicable federal and state securities laws and the rules and regulations of The NASDAQ Capital Market in connection with the issuance of shares of MYnd common stock and the filing of this joint proxy statement/prospectus with the SEC.

National Securities Exchange Listing (see page [●])

Prior to consummation of the Merger, MYnd intends to file an initial listing application for the combined company with The NASDAQ Capital Market. If such application is accepted, MYnd anticipates that MYnd common stock will be listed on The NASDAQ Capital Market following the Merger under the trading symbol “EMMA.”

Anticipated Accounting Treatment (see page [●])

Although MYnd is the legal acquirer and will issue shares of its common stock in the Merger, Emmaus is considered the acquirer for accounting purposes.

Appraisal Rights and Dissenters’ Rights (see page [●])

Holders of MYnd common stock are not entitled to appraisal rights in connection with the Merger.

Emmaus stockholders are entitled under Delaware law to appraisal rights in connection with the Merger. For more information about such rights, see the provisions of Section 262 of the Delaware General Corporation Law attached hereto as Annex F and the section entitled “The Merger—Appraisal Rights and Dissenters’ Rights” in this joint proxy statement/prospectus. The Merger Agreement, however, provides as a condition to the closing of the Merger, or the Appraisal Rights Condition, that Emmaus stockholders not exercise appraisal rights with respect to more than 20% of the outstanding shares of Emmaus common stock. See the section entitled “The Merger Agreement—Conditions to the Merger” in this joint proxy statement/prospectus. See also the discussion of certain risks associated with the possible exercise of appraisal rights by Emmaus stockholders in the section entitled “Risk Factors—Risks Related to the Merger” on page [●] of this joint proxy statement/prospectus.

Comparison of Stockholder Rights (see page [●])

Both MYnd and Emmaus are incorporated under the laws of the State of Delaware and, accordingly, the rights of the stockholders of each are currently, and will continue to be, governed by the DGCL. If the Merger is completed, Emmaus stockholders will become stockholders of MYnd, and their rights will be governed by the DGCL, the bylaws of MYnd and, assuming MYnd Stockholder Proposals Nos. 4 and 5 are approved by MYnd stockholders at the MYnd special meeting, the certificate of incorporation of MYnd, as amended by the certificates of amendment attached to this joint proxy statement/prospectus as Annex D and Annex E, respectively. The rights of MYnd stockholders contained in the certificate of incorporation and bylaws of MYnd differ from the rights of Emmaus stockholders under the certificate of incorporation and bylaws of Emmaus, as more fully described under the section entitled “Comparison of Rights of Holders of MYnd Stock and Emmaus Stock” in this joint proxy statement/prospectus.

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

The information below reflects the historical net loss and book value per share of MYnd common stock and the historical net loss and book value per share of Emmaus common stock in comparison with the unaudited net loss and book value per share of the combined company after giving effect to the Merger on a pro forma basis.

Because Emmaus has a fiscal year end of December 31 and MYnd has a fiscal year end of September 30, the following unaudited pro forma net loss and book value per share data as of September 30, 2018 was calculated using the historical condensed combined statement of operations data of MYnd for its fiscal year ended September 30, 2018 and the historical condensed combined statement of operations data of Emmaus for its twelve months ended September 30, 2018, after giving pro forma effect to the Merger as if it had been completed on October 1, 2017.

The unaudited pro forma per share data is presented for illustrative purposes only and is not necessarily indicative of actual or future financial position or results of operations that would have been realized if the Merger had been completed as of the dates indicated or will be realized upon the completion of the Merger. Neither MYnd nor Emmaus declared or paid dividends during the period indicated.

MARKET PRICE AND DIVIDEND INFORMATION

Market Information

The MYnd common stock is has been listed on The NASDAQ Capital Market under the symbol “MYND” since July 14, 2017. Prior thereto, MYnd common stock was quoted under the symbol “MYAN” (and previously “CNSO”) on the OTCQB marketplace. The following table presents the range of high and low per share sales prices for the MYnd common stock as reported on The Nasdaq Stock Market for each of the periods set forth below. These per share sales prices do not give effect to the Reverse Stock Split.

The Emmaus common stock is not traded on any established market.

The closing price of the MYnd common stock on [●], 2019, as reported on The Nasdaq Capital Market, was $[●] per share. Because the market price of the MYnd common stock is subject to fluctuation, the market value of the shares of the MYnd common stock that Emmaus stockholders will be entitled to receive in the Merger may increase or decrease.

Assuming the successful application for initial listing with The Nasdaq Capital Market, following the consummation of the Merger, the MYnd common stock will trade on The Nasdaq Capital Market under MYnd’s new name, “Emmaus Life Sciences, Inc.,” and new trading symbol “EMMA.”

As of [●], 2019, the record date for the MYnd Special Meeting, there were approximately [●] holders of record of the MYnd common stock. As of [●], 2019, the record date for the Emmaus Special Meeting, there were approximately [●] holders of record of the Emmaus common stock.

Dividend Policy

MYnd has never declared or paid any cash dividends on its common stock and does not anticipate declaring or paying any cash dividends on its common stock in the foreseeable future. MYnd expects to retain all available funds and any future earnings to support operations and fund the development and growth of its business. Notwithstanding the foregoing, any determination to pay cash dividends subsequent to the Merger will be at the discretion of the combined company’s then-current board of directors and will depend upon a number of factors, including the combined company’s results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other actors the then-current board of directors deems relevant.

Emmaus has never paid or declared any cash dividends on the Emmaus common stock. If the Merger does not occur, Emmaus does not anticipate paying any cash dividends on the Emmaus common stock in the foreseeable future, and Emmaus intends to retain all available funds and any future earnings to fund its business and operations. Any future determination to pay dividends will be at the discretion of the Emmaus board of directors and will depend upon a number of factors, including its results of operations, financial condition, future prospects, contractual restrictions, and restrictions imposed by applicable laws and other factors the Emmaus board of directors deems relevant.

RISK FACTORS

The Exchange Ratio is not adjustable based on the market price of MYnd common stock or on any relative valuations of MYnd or on Emmaus, and Emmaus stockholders may not realize benefits from the Merger commensurate with the dilution in their percentage ownership of Emmaus’ business and assets they will experience in connection with the Merger.

The Merger Agreement has set the Exchange Ratio formula for Emmaus common stock, and the Exchange Ratio is adjustable upward or downward based on changes in the outstanding Emmaus common stock (on a fully-diluted basis) and changes in the outstanding MYnd common stock (on a fully-diluted basis), including in connection with the proposed Reverse Stock Split prior to completion of the Merger as described in the section titled “The Merger—Merger Consideration and Adjustment” in this joint proxy statement/prospectus. The Exchange Ratio is not adjustable based on the market price of MYnd common stock or on any relative valuations of MYnd or on Emmaus, and the Merger Agreement does not include a market price-based termination right, and Emmaus stockholders may not realize benefits from the Merger commensurate with the dilution in their percentage ownership of Emmaus’ business and assets they will experience in connection with the Merger.

Risks Related to the Merger

Failure to complete the Merger may result in MYnd and Emmaus paying a termination fee or expenses to the other party and could harm the common stock price of MYnd and future business and operations of each company.

If the Merger is not completed, MYnd and Emmaus are subject to the following risks:

In addition, if the Merger Agreement is terminated and the MYnd board of directors or Emmaus board of directors determines to seek another business combination, there can be no assurance that either MYnd or Emmaus will be able to find a partner willing to provide equivalent or more attractive strategic alternative than the Merger.

If the conditions to the Merger are not met, the Merger may not occur.

Even if the Merger is approved by the respective stockholders of MYnd and Emmaus, other specified conditions must be satisfied or waived to complete the Merger. These conditions are set forth in the Merger Agreement and described in the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page [●] of this joint proxy statement/prospectus. MYnd and Emmaus cannot assure you that all of the conditions will be satisfied. If the conditions are not satisfied or waived, the Merger may not occur or may be delayed, and MYnd and Emmaus each may lose some or all of the intended benefits of the Merger, the Spin-Off and the other transactions contemplated by the Merger Agreement.

The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes and other causes.

In general, either MYnd or Emmaus can refuse to complete the Merger if there is a material adverse change affecting the other party between the date of the Merger Agreement and the closing. However, certain types of changes do not permit either party to refuse to complete the Merger, even if such change could be said to have a material adverse effect on MYnd or Emmaus, including:

If adverse changes occur and MYnd and Emmaus still complete the Merger, the combined company stock price may suffer. This in turn may reduce the value of the Merger to the stockholders of MYnd, Emmaus or both.

Some MYnd and Emmaus executive officers and directors have interests in the Merger that are different from yours and that may influence them to support or approve the Merger without regard to your interests.

Certain officers and directors of MYnd and Emmaus participate in arrangements that provide them with interests in the Merger that are different from yours, including, among others, the continued service as an officer or director of the combined company, continued indemnification and the potential ability to sell an increased number of shares of common stock of the combined company in accordance with Rule 144 under the Securities Act of 1933, as amended, or the Securities Act. For example, certain of MYnd’s directors and executive officers have options, certain of which shall vest immediately prior to the date the Merger is consummated. One member of the MYnd board of directors is expected to continue as a director of MYnd upon the closing of the Merger, and all of MYnd’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement and coverage pursuant to insurance policies maintained by MYnd.

Certain of Emmaus’ directors and executive officers hold Emmaus Options subject to vesting and Emmaus Warrants, which will be converted into and become MYnd Options and MYnd Warrants. Emmaus’ directors and executive officers are expected to become directors and executive officers of MYnd upon the closing of the Merger. Certain of Emmaus’ directors and executive officers also hold Emmaus Convertible Notes with conversion prices that may be below or above the current fair value of Emmaus common stock and which are expected to be converted into shares of Emmaus common stock immediately prior to the Merger, which shares will be converted into shares of MYnd common stock based upon the Exchange Rate in the same manner as other outstanding shares of Emmaus common stock.

There is no assurance as to the market price of the combined company common stock following the Merger.

The common stock of Emmaus is not traded in any established market, and all or substantially all of the business assets and liabilities of MYnd will be transferred to MYnd California in the Spin-Off, and there can be no assurance as to the market price of the combined company common stock following the Merger. The market price of the combined company will be affected by a number of factors, including:

During the pendency of the Merger, MYnd and Emmaus may not be able to enter into a business combination with another party on favorable terms because of restrictions in the Merger Agreement, which could adversely affect their respective businesses.

Covenants in the Merger Agreement impede the ability of MYnd and Emmaus to make acquisitions, subject to certain exceptions relating to fiduciaries duties, as set forth below, or complete other transactions that are not in the ordinary course of business pending completion of the Merger. As a result, if the Merger is not completed, the parties may be at a disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, initiating, encouraging or entering into certain extraordinary transactions, such as a merger, sale of assets or other business combination, with any third party, subject to certain exceptions described below. These restrictions apply even if such transactions could be favorable to such party’s stockholders.

Emmaus stockholders are entitled to appraisal rights in connection with the Merger, and to the extent they exercise their appraisal rights, it could have a material adverse effect on the financial condition of the combined company.

The Merger Agreement provides as a condition to the closing of the Merger, or the Appraisal Rights Condition, that Emmaus stockholders not exercise appraisal rights with respect to more than 20% of the outstanding shares of Emmaus common stock. If the Appraisal Rights Condition is satisfied and the Merger is completed, to the extent Emmaus stockholders exercise their appraisal rights the combined company could be required to pay such Emmaus stockholders in cash the fair value of their Emmaus shares, as well as interest and legal fees, which could have a material, adverse effect on the financial condition of the combined company.

If the Merger does not qualify as a tax-free reorganization, the receipt of MYnd common stock pursuant to the Merger could be fully taxable to all Emmaus stockholders.

Each of MYnd and Emmaus intends the Merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. However, completion of the Merger is not conditioned upon receipt of an opinion from counsel dated as of the closing date that the Merger qualifies as a reorganization. The tax opinion received by MYnd as of the effective date of this joint proxy statement/prospectus is based on representation letters delivered as of such date by MYnd and Emmaus pertaining to factual matters and on certain factual assumptions, including with respect to the number of Emmaus shares held by, and the amount of consideration payable to, Emmaus stockholders, if any, that exercise appraisal rights. If any of these assumptions or representations proves incorrect, for example, if there is a change in applicable law or if consideration paid to Emmaus stockholders exercising appraisal rights is significant, the Merger could be fully taxable to all Emmaus stockholders. Further, no ruling from the IRS has been or will be requested with respect to the tax consequences of the Merger. Opinions of counsel do not bind the courts or the IRS, nor will they preclude the IRS from adopting the position contrary to those expressed in the opinions. See the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page [●] of this joint proxy statement/prospectus.

Certain provisions of the Merger Agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.

The terms of the Merger Agreement prohibit each of MYnd and Emmaus from soliciting alternative takeover proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances when such party’s board of directors determines in good faith that an unsolicited alternative takeover proposal is or is reasonably likely to lead to a superior takeover proposal and is reasonably capable of being consummated and that failure to cooperate with the proponent of the proposal is reasonably likely to result in a breach of the directors’ fiduciary duties. If the Merger Agreement is terminated under certain circumstances by either MYnd or Emmaus, the terminating party will be required to pay the other party termination fees of $750,000 or $1,600,000. In addition, MYnd or Emmaus will be required in some circumstances to reimburse the other party for expenses incurred in connection with the Merger, up to a maximum of $600,000. The termination fees may discourage third parties from submitting alternative takeover proposals to MYnd or Emmaus or their stockholders and may cause the respective boards of directors to be less inclined to recommend an alternative proposal.

Risks Related to the Proposed Reverse Stock Split

The proposed Reverse Stock Split may not increase the combined company’s stock price over the long-term.

The principal purpose of the proposed Reverse Stock Split, if effected, would be to increase the per-share market price of MYnd common stock. While it is expected that the reduction in the number of outstanding shares of MYnd common stock resulting from the Reverse Stock Split would proportionally increase the market price of MYnd common stock, it cannot be assured that the Reverse Stock Split will increase the market price of MYnd common stock by a multiple of the Reverse Stock Split ratio, or result in any permanent or sustained increase in the market price of MYnd common stock, which is dependent upon many factors, including the combined company’s business and financial performance, general market conditions and prospects for future success. Thus, while the stock price of the combined company might meet the continued listing requirements for The Nasdaq Capital Market initially, there is no assurance that it would continue to do so.

The proposed Reverse Stock Split may decrease the liquidity of the combined company common stock.

Although the MYnd board of directors believes that the anticipated increase in the market price of the combined company’s common stock could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the proposed Reverse Stock Split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for MYnd common stock.

The proposed Reverse Stock Split may lead to a decrease in the combined company’s overall market capitalization.

Should the market price of the combined company’s common stock decline after the proposed Reverse Stock Split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the proposed Reverse Stock Split. A reverse stock split may be viewed negatively by the market and, consequently, can lead to a decrease in the combined company’s overall market capitalization. If the per share market price does not increase in proportion to the proposed Reverse Stock Split ratio, then the value of the combined company, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of MYnd common stock will remain the same after the proposed Reverse Stock Split is effected, or that the proposed Reverse Stock Split will not have an adverse effect on the stock price of MYnd Common due to the reduced number of shares outstanding after the proposed Reverse Stock Split.

Risks Related to MYnd

MYnd needs immediate additional funding to support MYnd’s operations and capital expenditures, which may not be available to MYnd. This lack of availability could result in the cessation of MYnd’s business. MYnd’s recurring net losses and negative cash flows from operations raise substantial doubt about MYnd’s ability to continue as a going concern.

MYnd has not generated significant revenues or become profitable, may never do so and may not generate sufficient working capital to cover costs of operations. MYnd’s recurring net losses and negative cash flows from operations raise substantial doubt about MYnd’s ability to continue as a going concern. Historically, MYnd has been unable to pay other obligations as they become due and have been in arrears on paying certain of MYnd’s larger creditors. MYnd has a history of insolvency that requires MYnd to immediately secure additional funds to continue MYnd’s operations. Until MYnd can generate a sufficient amount of revenues to finance MYnd’s operations and capital expenditures, MYnd is required to finance MYnd’s cash needs primarily through public or private equity offerings, debt financings, borrowings or strategic collaborations. As of December 31, 2018, MYnd had approximately $1,499,800 in cash and cash equivalents on hand. MYnd will therefore need additional funds to continue MYnd’s operations and will need substantial additional funds before MYnd can increase demand for MYnd’s telebehavioral health services and PEER solution offering.

As of September 30, 2018, MYnd has issued purchase notices to Aspire Capital under the second common stock purchase agreement with Aspire Capital dated as of May 15, 2018, or the Second Purchase Agreement, to purchase an aggregate of 884,671 shares of common stock, resulting in gross cash proceeds of approximately $1.9 million. On November 26, 2018, MYnd received shareholder approval to remove the exchange cap under the Second Purchase Agreement in compliance with the applicable listing rules of the Nasdaq Stock Market. Pursuant to Nasdaq Listing Rule 5635(d), shareholder approval is required prior to the issuance of securities in connection with a transaction other than a public offering involving the sale, issuance or potential issuance by MYnd of common stock (or securities convertible into or exercisable common stock) equal to 20% or more of the common stock outstanding before the issuance for less than the greater of book or market value of the stock. Following receipt of shareholder approval, MYnd may issue an additional $8.1 million, up to an aggregate of $10 million, of common stock to Aspire Capital under the Second Purchase Agreement. The issuance of shares of common stock that were issued from time to time to Aspire Capital under the First and Second Purchase Agreement were exempt from registration under the Securities Act, pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act.

When MYnd elects to raise additional funds or additional funds are required, MYnd may raise such funds from time to time through public or private equity offerings, debt financings, corporate collaboration and licensing arrangements or other financing alternatives, as well as through sales of common stock to Aspire Capital under the First Purchase Agreement or Second Purchase Agreement. Additional equity or debt financing or corporate collaboration and licensing arrangements may not be available on acceptable terms, if at all. If MYnd is unable to raise additional capital in sufficient amounts or on terms acceptable to MYnd, MYnd will be prevented from pursuing acquisition, licensing, development and commercialization efforts and MYnd’s ability to generate revenues and achieve or sustain profitability will be substantially harmed.

MYnd is currently exploring additional sources of capital; however, MYnd does not know whether additional funding will be available on acceptable terms, or at all, especially given the economic conditions that currently prevail. Furthermore, any additional equity funding will likely result in significant dilution to existing stockholders, and, if MYnd incur additional debt financing in the future, a substantial portion of MYnd’s operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, thus limiting funds available for MYnd’s business activities. If adequate funds are not available, it would have a material adverse effect on MYnd’s business, financial condition and/or results of operations and could cause MYnd to be required to cease operations. MYnd’s financial statements include an opinion of MYnd’s auditors that MYnd’s recurring net losses and negative cash flows from operations raise substantial doubt about MYnd’s ability to continue as a going concern.

MYnd’s independent registered public accounting firm has expressed substantial doubt about MYnd’s ability to continue as a going concern.

MYnd has experienced significant net losses and sustained negative cash flows from operations. In the twelve months ended September 30, 2018, MYnd incurred a net loss of $10.3 million and used cash for operating activities of $9.0 million. MYnd had an accumulated deficit of $85.2 million as of September 30, 2018. MYnd expects to experience further significant net losses in 2019 and the foreseeable future. These factors raise substantial doubt about MYnd’s ability to continue as a going concern for at least the next twelve months from the date of the issuance of the financial statements. As of and for the year ended September 30, 2018, MYnd’s independent registered public accounting firm has included an explanatory paragraph in their audit report raising substantial doubt about MYnd’s ability to continue as a going concern. MYnd’s consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty. If MYnd is unable to obtain adequate funding from this proposed offering or in the future, or if MYnd is unable to grow MYnd’s revenue substantially to achieve and sustain profitability, amongst other factors, MYnd may not be able to continue as a going concern, and MYnd’s shareholders may lose some or all of their investment in MYnd.

MYnd has a history of operating losses and MYnd has never been profitable.

Since MYnd’s inception, MYnd has incurred significant operating losses. As of September 30, 2018, MYnd’s accumulated deficit was approximately $85.2 million. On November 13, 2017, MYnd acquired Arcadian, a telepsychiatry and telebehavioral health company. Arcadian also has a history of significant operating losses, which represent a further obstacle to MYnd’s goal of achieving profitability.

MYnd’s future capital requirements will depend on many factors, such as the risk factors described in this section, including MYnd’s ability to maintain MYnd’s existing cost structure and to execute MYnd’s business and strategic plans, including the successful integration of the PEER solution offering with the Arcadian network. Even if MYnd achieve profitability, MYnd may be unable to maintain or increase profitability on a quarterly or annual basis.

Risks Related to MYnd’s Business-Telebehavioral Health

MYnd’s telebehavioral health business could be adversely affected by new state actions relating to healthcare services and telemedicine providers, which could restrict MYnd’s ability to provide the full range of MYnd’s services in certain states.

MYnd’s ability to conduct business in each state is dependent upon the state’s treatment of telehealth under each state’s laws, rules and policies governing the practice of medicine and other health care professions, which are subject to changing political, regulatory and other influences. Some state professional boards have established new rules or interpreted existing rules in a manner that limits or restricts MYnd’s ability to conduct MYnd’s business as currently conducted in other states, and it is possible that the laws and rules governing the practice of telehealth in one or more states may change in a similar manner in the future. Many states have imposed different, and, in some cases, additional, standards regarding the provision of services via telehealth. These standards often relate to particular modalities of telecommunication that are permitted or prohibited, meaning that a system MYnd has established in some states may not satisfy regulatory requirements in others. State laws are also in flux regarding the licensure required to provide services via telehealth. By way of example, certain state Medicaid programs may cover behavioral health treatment provided by psychiatric nurse practitioners, but not clinical social workers. Others provide that certain services can be provided via telehealth by a clinical social worker, but not a licensed mental health counselor. Finally, both federal and state laws impose strict standards on using telehealth to prescribe certain classes of controlled substances that can be commonly used to treat behavioral health disorders. Recently passed federal legislation will also allow for controlled substances to be prescribed in emergency situations to treat substance use disorder, and if that change results in further abuse of controlled substances instead of curbing their abuse as intended, there could be negative ramifications for the entire telebehavioral health industry. The unpredictability of this regulatory landscape means that sudden changes in policy regarding standards of care and reimbursement are possible. If this were to happen, and MYnd were unable to adapt MYnd’s business model accordingly, MYnd’s operations in such states could be disrupted, which could have a material adverse effect on MYnd’s business, financial condition and results of operations. Federal law prohibits prescribing controlled substances without a prior in-person examination unless one of a number of narrow exceptions is met, and certain states impose further restrictions which prohibit prescribing certain classes of controlled substances via telemedicine altogether.

MYnd’s telebehavioral health business is dependent on MYnd’s relationships with affiliated professional entities, which MYnd does not own, to provide physician services, and MYnd’s business would be adversely affected if those relationships were disrupted.

There is a risk that state authorities in some jurisdictions may find that MYnd’s contractual relationships with MYnd’s affiliated physicians, psychologists and other behavioral health professionals, or Providers, violate laws prohibiting the corporate practice of medicine and certain other health professions. These laws generally prohibit the practice of medicine and certain other health professions by lay persons or entities and are intended to prevent unlicensed persons or entities from interfering with or inappropriately influencing the clinician’s professional judgment. The professions subject to corporate practice restrictions and the extent to which each state considers particular actions or contractual relationships to constitute improper influence of professional judgment vary across the states and are subject to change and evolving interpretations by state boards of medicine and other health professions and state attorneys general. As such, MYnd must monitor MYnd’s compliance with laws in every jurisdiction in which MYnd operate on an ongoing basis and MYnd cannot guarantee that subsequent interpretation of the corporate practice laws will not further circumscribe MYnd’s business operations. State corporate practice restrictions also often impose penalties on health professionals for aiding a corporate practice violation, which could discourage clinicians from participating in MYnd’s network of providers. Any difficulty securing clinicians to participate in MYnd’s network could impair MYnd’s ability to provide telebehavioral health services and could have a material adverse effect on MYnd’s business.

Corporate practice restrictions exist in some form, whether by statute, regulation, professional board or attorney general guidance, or case law, in at least 42 states, though the broad variation between state application and enforcement of the doctrine makes establishing an exact count difficult. Because of the prevalence of corporate practice restrictions on medicine and psychology in particular, including in the states where MYnd predominantly conduct MYnd’s business, MYnd contract for provider services through services agreements rather than employ Providers. MYnd expects that these relationships will continue, but MYnd cannot guarantee that they will. A material change in MYnd’s relationship with the Providers, whether resulting from a dispute among the entities, a change in government regulation, or the loss of these affiliations, could impair MYnd’s ability to provide telebehavioral health services and could have a material adverse effect on MYnd’s business, financial condition and results of operations.

Evolving government regulations may require increased costs or adversely affect MYnd’s results of operations.

In a regulatory climate that is uncertain, MYnd’s operations may be subject to direct and indirect adoption, expansion or reinterpretation of various laws and regulations. Compliance with these future laws and regulations may require MYnd to change MYnd’s practices at an undeterminable and possibly significant initial monetary and annual expense. These additional monetary expenditures may increase future overhead, which could have a material adverse effect on MYnd’s results of operations.

MYnd has identified what MYnd believe are the areas of government regulation that, if changed, would be costly to MYnd. These include: rules governing the practice of telehealth; including the remote prescribing of controlled substance; licensure standards for behavioral health professionals; laws limiting the corporate practice of medicine and other professions; clinic licensure laws requiring health facilities to obtain a clinic license; fraud and abuse; reimbursement and false claims statutes and regulations governing the submission of health care claims; cybersecurity and privacy laws; laws and rules relating to the distinction between independent contractors and employees; and tax and other laws encouraging employer-sponsored health insurance. There could be laws and regulations applicable to MYnd’s business that MYnd has not identified or that, if changed, may be costly to MYnd, and MYnd cannot predict all the ways in which implementation of such laws and regulations may affect MYnd.

In the states in which MYnd operate, MYnd believe MYnd is in compliance with all applicable regulations, but, because of the uncertain regulatory environment, certain states may determine that MYnd is in violation of their laws and regulations. If MYnd must remedy such violations, MYnd may be required to modify MYnd’s services and solutions in such states in a manner that undermines MYnd’s solution’s attractiveness to patients or providers. MYnd may become subject to fines or other penalties or, if MYnd determine that the requirements to operate in compliance in such states are overly burdensome, MYnd may elect to terminate MYnd’s operations in such states. In each case, MYnd’s revenue may decline and MYnd’s business, financial condition and results of operations could be materially adversely affected.

Additionally, the introduction of new services may require MYnd to comply with additional, yet undetermined, laws and regulations. Compliance may require restructuring MYnd’s relationships with Providers, increasing MYnd’s security measures and expending additional resources to monitor developments in applicable rules and ensure compliance. The failure to adequately comply with these future laws and regulations may delay or possibly prevent some of MYnd’s solutions or services from being offered, which could have a material adverse effect on MYnd’s business, financial condition and results of operations.

The telebehavioral health market is immature and volatile, and if it does not develop, if it develops more slowly than MYnd expect, if it encounters negative publicity or if MYnd’s solution does not drive patient engagement, the growth of MYnd’s business will be harmed.

The telebehavioral health market is relatively new and unproven, and it is uncertain whether it will achieve and sustain high levels of demand, consumer acceptance and market adoption. MYnd’s success will depend to a substantial extent on the willingness of MYnd’s patients to use, and to increase the frequency and extent of their utilization of, MYnd’s solutions, as well as on MYnd’s ability to demonstrate the value of telebehavioral health to employers, health plans, government agencies and other purchasers of healthcare. Negative publicity concerning MYnd’s solutions or the telebehavioral health market as a whole could limit market acceptance of MYnd’s solutions. Enforcement activity throughout the telehealth industry is on the rise, after the Medicare program published findings in April 2018 that more than 30% of claims filed failed to satisfy Medicare reimbursement standards, and the Department of Justice recently issued an indictment alleging that several individuals and companies participated in a billion-dollar telemedicine fraud conspiracy. As telehealth utilization and investment continue to rise, it would not be surprising for enforcement actions to increase in kind. Such activity could certainly produce negative publicity regarding public and patient confidence in telehealth, which could negatively impact MYnd’s business. If MYnd’s patients and providers do not perceive the benefits of MYnd’s solutions, or if MYnd’s solutions do not drive patient engagement, then MYnd’s market may not develop at all, or it may develop more slowly than MYnd expect. Similarly, individual and healthcare industry concerns or negative publicity regarding patient confidentiality and privacy in the context of telehealth could limit market acceptance of MYnd’s healthcare services. If any of these events occurs, it could have a material adverse effect on MYnd’s business, financial condition or results of operations.

A significant portion of Arcadian’s revenue comes from a limited number of clients, the loss of which would have a material adverse effect on MYnd’s business, financial condition and results of operations.

Historically, Arcadian has relied on a limited number of clients for a substantial portion of its total revenue. MYnd relies on Arcadian’s reputation and recommendations from key clients to promote MYnd’s solution to potential new clients. In addition, mergers and acquisitions involving MYnd’s clients could lead to cancellation or non-renewal of MYnd’s contracts with those clients or by the acquiring or combining companies, thereby reducing the number of MYnd’s existing and potential clients and patients.

MYnd’s business and growth strategy depend on MYnd’s ability to maintain and expand a network of qualified providers. If MYnd is unable to do so, MYnd’s future growth would be limited and MYnd’s business, financial condition and results of operations would be harmed.

MYnd’s success is dependent upon MYnd’s continued ability to maintain a network of qualified providers. If MYnd is unable to recruit and retain board-certified Providers as needed to render telebehavioral health services in a given state, whether that requires psychiatrists, psychologists or master’s level therapists, it would have a material adverse effect on MYnd’s business and ability to grow and would adversely affect MYnd’s results of operations. In any particular market, Providers could demand higher payments or take other actions that could result in higher medical costs, extra income, e.g., only permitting clinicians with higher levels of licensure who demand higher payment rates to provide telebehavioral health services, less attractive service for MYnd’s clients or difficulty meeting regulatory or accreditation requirements. MYnd’s ability to develop and maintain satisfactory relationships with Providers also may be negatively impacted by other factors not associated with MYnd, such as changes in Medicare and/or Medicaid reimbursement levels and other pressures on healthcare providers and consolidation activity among hospitals, physician groups and the Providers. The failure to maintain or to secure new cost-effective provider contracts may result in a loss of or inability to grow MYnd’s membership base, higher costs, healthcare provider network disruptions, less attractive service for MYnd’s clients and/or difficulty in meeting regulatory or accreditation requirements, any of which could have a material adverse effect on MYnd’s business, financial condition and results of operations.

MYnd’s telebehavioral health business may give rise to medical liability claims against MYnd, which could cause MYnd to incur significant expenses and may require MYnd to pay significant damages if not covered by insurance.

MYnd’s telebehavioral health business entails the risk of malpractice and professional liability claims against both MYnd’s Providers and MYnd. Although MYnd and MYnd’s Providers carry insurance covering malpractice and professional liability claims in amounts that MYnd believe are appropriate in light of the risks attendant to MYnd’s business, successful malpractice or professional liability claims could result in substantial damage awards that exceed the limits of MYnd’s and MYnd’s Providers’ insurance coverage. The Providers each carry professional liability insurance covering $1 million per claim and $3 million in the aggregate for themselves, and MYnd separately carry a general insurance policy covering $1 million per claim and $3 million in the aggregate. In addition, professional liability insurance is expensive and insurance premiums may increase significantly in the future, particularly as MYnd expand MYnd’s services. As a result, adequate professional liability insurance may not be available to MYnd’s providers or to MYnd in the future at acceptable costs or at all.

Any claims made against MYnd that are not fully covered by insurance could be costly to defend against, result in substantial damage awards against MYnd and divert the attention of MYnd’s management and MYnd’s Providers from MYnd’s operations, which could have a material adverse effect on MYnd’s business, financial condition and results of operations. In addition, any claims may adversely affect MYnd’s business or reputation.

If MYnd’s new applications and services are not adopted by MYnd’s partners or patients, or if MYnd fails to innovate and develop new applications and services that are adopted by MYnd’s patients, MYnd’s revenue and results of operations will be adversely affected.

MYnd’s longer-term results of operations and continued growth will depend on MYnd’s ability successfully to develop and market new applications and services that patients want and are willing to purchase. In addition MYnd will invest significant resources in research and development to enhance MYnd’s solution and introduce new high-quality applications and services. If patients are not willing to make additional payments for such new applications, or if new patients do not value such new applications, it could have a material adverse effect on MYnd’s business, financial condition and results of operations. If MYnd is unable to predict user preferences or if MYnd’s industry changes, or if MYnd is unable to modify MYnd’s solution and services on a timely basis, patients may not patronize MYnd or the Providers. MYnd’s results of operations would also suffer if MYnd’s innovations were not responsive to the needs patients, appropriately timed with market opportunity or effectively brought to market.

If MYnd’s arrangements with Providers or MYnd’s partners are found to violate state laws prohibiting the corporate practice of medicine and other professions or fee-splitting, MYnd’s business, financial condition and MYnd’s ability to operate in those states could be adversely impacted.

The laws of many states, including states in which MYnd’s partners may be located prohibit MYnd from exercising control over the medical judgments or decisions of psychiatrists and certain other providers and from engaging in certain financial arrangements, such as splitting professional fees with behavioral health professionals. These laws and their interpretations vary from state to state and are enforced by state courts and regulatory authorities, each with broad discretion. MYnd enter into agreements with certain of MYnd’s providers pursuant to which they render professional medical services. In addition, MYnd may enter into contracts with MYnd’s providers to deliver professional services in exchange for fees. These contracts include management services agreements with MYnd’s affiliated physician organizations pursuant to which the physician organizations reserve exclusive control and responsibility for all aspects of the practice of medicine and the delivery of medical services. Although MYnd seek to comply with applicable state prohibitions on the corporate practice of medicine and fee splitting, state officials who administer these laws or other third parties may successfully challenge MYnd’s existing organization and contractual arrangements. If such a claim were successful, MYnd could be subject to civil and criminal penalties and could be required to restructure or terminate the applicable contractual arrangements. A determination that these arrangements violate state statutes, or MYnd’s inability to successfully restructure MYnd’s relationships with MYnd’s providers to comply with these statutes, could eliminate clients located in certain states from the market for MYnd’s services, as well as complicate MYnd’s efforts to secure qualified clinicians to participate in MYnd’s network. Either outcome could have a materially adverse effect on MYnd’s business, financial condition and results of operations.

If MYnd’s providers are characterized as employees, MYnd would be subject to employment and withholding liabilities.

MYnd structure MYnd’s relationships with the Providers in a manner that MYnd believe results in an independent contractor relationship, not an employee relationship. An independent contractor is generally distinguished from an employee by his or her degree of autonomy and independence in providing services. A high degree of autonomy and independence is generally indicative of a contractor relationship, while a high degree of control is generally indicative of an employment relationship. Although MYnd believe that the Providers are properly characterized as independent contractors, tax or other regulatory authorities may in the future challenge MYnd’s characterization of these relationships. If such regulatory authorities or state, federal or foreign courts were to determine that MYnd’s providers are employees, and not independent contractors, MYnd would be required to withhold income taxes, to withhold and pay Social Security, Medicare and similar taxes and to pay unemployment and other related payroll taxes. MYnd would also be liable for unpaid past taxes and subject to penalties. As a result, any determination that the Providers are MYnd’s employees could have a material adverse effect on MYnd’s business, financial condition and results of operations.

Certain state tax authorities may assert that MYnd has a state nexus and seek to impose state and local income taxes which could adversely affect MYnd’s results of operations.

MYnd is currently licensed to operate MYnd’s telebehavioral health business in four states and file state income tax returns in four states. There is a risk that certain state tax authorities where MYnd does not currently file a state income tax return could assert that MYnd is liable for state and local income taxes based upon income or gross receipts allocable to such states. States are becoming increasingly aggressive in asserting a nexus for state income tax purposes. MYnd could be subject to state and local taxation, including penalties and interest attributable to prior periods, if a state tax authority successfully asserts that MYnd’s activities give rise to a nexus. Such tax assessments, penalties and interest may adversely affect MYnd’s results of operations.

MYnd’s sales and implementation cycle can be long and unpredictable and requires considerable time and expense, which may cause MYnd’s results of operations to fluctuate.

The sales cycle for MYnd’s solutions from initial contact with a potential lead to contract execution and implementation, varies widely by client. Some of MYnd’s clients undertake a significant and prolonged evaluation process, including to determine whether MYnd’s services meet their unique healthcare needs, which frequently involves evaluation of not only MYnd’s solutions but also an evaluation of those of MYnd’s competitors, which has in the past resulted in extended sales cycles. MYnd’s sales efforts involve educating MYnd’s clients about the use, technical capabilities and potential benefits of MYnd’s solution. Moreover, MYnd’s large enterprise clients often begin to deploy MYnd’s solutions on a limited basis, but nevertheless demand extensive configuration, integration services and pricing concessions, which increase MYnd’s upfront investment in the sales effort with no guarantee that these clients will deploy MYnd’s solutions widely enough across their organization to justify MYnd’s substantial upfront investment. It is possible that in the future MYnd may experience even longer sales cycles, more complex client needs, higher upfront sales costs and less predictability in completing some of MYnd’s sales as MYnd continues to expand MYnd’s direct sales force, expand into new territories and market additional applications and services. If MYnd’s sales cycle lengthens or MYnd’s substantial upfront sales and implementation investments do not result in sufficient sales to justify MYnd’s investments, it could have a material adverse effect on MYnd’s business, financial condition and results of operations.

The telehealth market is competitive, and if MYnd is not able to compete effectively, MYnd’s business, financial condition and results of operations will be harmed.

While the telehealth market is in an early stage of development, it is competitive and MYnd expects it to attract increased competition, which could make it difficult for MYnd to succeed. MYnd currently face competition in the telehealth industry for MYnd’s solutions from a range of companies, including specialized software and solution providers that offer similar solutions, often at substantially lower prices, and that are continuing to develop additional solutions and becoming more sophisticated and effective. Competition from specialized software and solution providers, health plans and other parties will result in continued pricing pressures, which is likely to lead to price declines in certain solution segments, which could negatively impact MYnd’s sales, profitability and market share.

Some of MYnd’s competitors may have greater name recognition, longer operating histories and significantly greater resources than MYnd do. Further, MYnd’s current or potential competitors may be acquired by third parties with greater available resources. As a result, MYnd’s competitors may be able to respond more quickly and effectively than MYnd can to new or changing opportunities, technologies, standards or customer requirements and may have the ability to initiate or withstand substantial price competition. In addition, current and potential competitors have established, and may in the future establish, cooperative relationships with vendors of complementary solutions, technologies or services to increase the availability of their solutions in the marketplace. Accordingly, new competitors or alliances may emerge that have greater market share, a larger customer base, more widely adopted proprietary technologies, greater marketing expertise, greater financial resources and larger sales forces than MYnd have, which could put MYnd at a competitive disadvantage. MYnd’s competitors could also be better positioned to serve certain segments of the telehealth market, which could create additional price pressure. In light of these factors, even if MYnd’s solutions are more effective than those of MYnd’s competitors, current or potential clients may accept competitive solutions in lieu of purchasing MYnd’s solutions. If MYnd is unable to successfully compete in the telehealth market, MYnd’s business, financial condition and results of operations could be materially adversely affected.

MYnd is subject to evolving and expensive corporate governance regulations and requirements. Management has determined that there is a material weakness in MYnd’s internal controls and procedures under the standards of the Public Company Accounting Oversight Board or PCAOB. MYnd’s failure to adequately adhere to these requirements or the failure or circumvention of MYnd’s internal controls and procedures could seriously harm MYnd’s business.

Because MYnd is a publicly traded company MYnd is subject to certain federal, state and other rules and regulations, including applicable requirements of the Sarbanes-Oxley Act of 2002. Compliance with these evolving regulations is costly and requires a significant diversion of management time and attention, particularly with regard to MYnd’s disclosure controls and procedures and MYnd’s internal control over financial reporting. Faulty judgments, simple errors or mistakes, or the failure of MYnd’s personnel to adhere to established controls and procedures may make it difficult for MYnd to ensure that the objectives of the control system are met. A failure of MYnd’s controls and procedures to detect other than inconsequential errors or fraud could seriously harm MYnd’s business and results of operations.

As of September 30, 2018, management assessed the effectiveness of MYnd’s internal control over financial reporting based on the criteria for effective internal control over financial reporting, and determined that there continues to be a material weakness in MYnd’s internal controls and procedures. The matter involving internal controls and procedures that MYnd’s management considered to be a material weakness under the standards of the Public Company Accounting Oversight Board was a lack of a sufficient complement of personnel with a level of accounting expertise and an adequate supervisory review structure that is commensurate with MYnd’s financial reporting requirements. Management has been continuing, since September 30, 2017, to attempt to remedy the material weakness, but has been unable to identify sufficient personnel or to implement adequate improvements. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Failure to provide effective internal controls may cause investors to lose confidence in MYnd’s financial reporting and may negatively affect the price of MYnd’s common stock. Moreover, effective internal controls are necessary to produce accurate, reliable financial reports and to prevent fraud. If deficiencies in MYnd’s internal controls over financial reporting continue, these deficiencies may negatively impact MYnd’s business and operations.

Taxing authorities may successfully assert that MYnd should have collected or in the future should collect sales and use or similar taxes which could adversely affect MYnd’s results of operations.

MYnd does not collect sales and use and similar taxes in any states based on MYnd’s belief that MYnd’s services are not subject to such taxes in any state. Sales and use and similar tax laws and rates vary greatly from state to state. Certain states in which MYnd does not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties and interest with respect to past services, and MYnd may be required to collect such taxes for services in the future. Such tax assessments, penalties and interest or future requirements may adversely affect MYnd’s results of operations.

Economic uncertainties or downturns in the general economy or the industries in which MYnd’s clients operate could disproportionately affect the demand for MYnd’s telebehavioral health solution and negatively impact MYnd’s results of operations.

General worldwide economic conditions have experienced significant downturns during the last ten years, and market volatility and uncertainty remain widespread, making it potentially very difficult for MYnd’s clients and MYnd to accurately forecast and plan future business activities. During challenging economic times, MYnd’s clients may have difficulty gaining timely access to sufficient credit or obtaining credit on reasonable terms, which could impair their ability to make timely payments to MYnd and adversely affect MYnd’s revenue. If that were to occur, MYnd’s financial results could be harmed. Further, challenging economic conditions may impair the ability of MYnd’s clients to pay for the applications and services they already have purchased from MYnd and, as a result, MYnd’s write-offs of accounts receivable could increase. MYnd cannot predict the timing, strength or duration of any economic slowdown or recovery. If the condition of the general economy or markets in which MYnd operate worsens, MYnd’s business could be harmed.

Risks Related to MYnd’s Business-Predictive Medicine (PEER)

If MYnd’s PEER Reports do not gain widespread market acceptance, MYnd may not be able to achieve the level of sales required for growth, and MYnd’s business, financial condition and results of operations would be harmed.

MYnd has developed a methodology that aids psychiatrists and other physicians in selecting appropriate and effective medications for patients with certain behavioral or addictive disorders based on physiological traits of the patient’s brain and information contained in a proprietary database that has been developed over approximately the last twenty-five years. MYnd began selling reports, referred to as rEEG Reports, based on MYnd’s methodology in 2000; these reports have since been rebranded as PEER Reports. To date, MYnd has not received widespread market acceptance of the usefulness of MYnd’s PEER Reports in helping psychiatrists and other physicians inform their treatment strategies for patients suffering from behavioral and/or addictive disorders and MYnd currently rely on a limited number of employees to market and promote MYnd’s PEER Reports. To grow MYnd’s business, MYnd will need to develop and introduce new sales and marketing programs and clinical education programs to promote the use of MYnd’s PEER Reports by psychiatrists and other physicians and hire additional employees for this purpose which MYnd is in the process of doing. If MYnd does not implement these new sales and marketing and education programs in a timely and successful manner, MYnd may not be able to achieve the level of market awareness and sales required to expand MYnd’s business, which could also negatively impact MYnd’s stock price, financial condition and results of operations.

MYnd’s PEER Reports may not be as effective as MYnd believe them to be, which could limit or prevent MYnd from growing MYnd’s revenues. If the results of MYnd’s clinical trials are not significant, MYnd may not be able to continue to fund MYnd’s development efforts.

MYnd’s belief in the efficacy of MYnd’s PEER Online technology is based on a finite number of successful studies. Such results may not be statistically significant in future studies and may not be indicative of the long-term future efficacy of the information MYnd provide. Controlled scientific studies, including those that have already been announced and that are planned for the future, may yield results that are unfavorable or demonstrate that MYnd’s services, including MYnd’s PEER Reports, are not clinically useful. While MYnd has not experienced such problems to date, if the initially indicated results cannot be successfully replicated or maintained over time, utilization of services based on MYnd’s PEER Online technology, including the delivery of MYnd’s PEER Reports, may not increase as MYnd anticipate, which would harm MYnd’s operating results and stock price. In addition, if MYnd fails to upgrade MYnd’s PEER Online database to account for new medications that are now available on the market, psychiatrists and other physicians may be less inclined to utilize MYnd’s services if they believe that MYnd’s reports only provide information about older treatment options, which would further harm MYnd’s operating results and stock price. In August of 2016, MYnd commenced enrolling patients into a new clinical trial. The trials are designed as a double-blind trial for military patients with a primary diagnosis of depression and other psychological comorbidity. MYnd does not know whether the ultimate results of the trial will be successful. There are many factors beyond MYnd’s control that could affect the success of the trials, including difficulty in registering more subjects, failures of investigators to follow the proper protocol, and external factors affecting patient health, among others. If MYnd fails to receive significant positive results for these trials, doctors may not be willing to use MYnd’s services and MYnd’s ability to generate revenue and to continue the PEER Online program, if at all, could be limited.

The FDA believes that rEEG and, potentially, MYnd’s PEER Online service, constitute a medical device, which is subject to regulation by the FDA. The FDA has informed MYnd that MYnd’s marketing of MYnd’s rEEG services without prior approval or re-classification by the FDA constitutes a violation of the Federal Food, Drug and Cosmetic Act. MYnd believe that MYnd’s PEER Online service is a class 1 medical device, subject to minimal FDA oversight. As MYnd continues to market MYnd’s PEER Online service, there is risk that the FDA will determine that the service is a device that requires premarket clearance, commence an enforcement action against MYnd.

Since April of 2008, MYnd has been engaged in discussions with the FDA regarding its position that MYnd’s rEEG service and its successor, now called PEER Online, constitute a medical device which is subject to regulation by the FDA. On April 10, 2008, MYnd received correspondence from the FDA in which the FDA indicated it believed, based in part on the combination of certain marketing statements it read on MYnd’s website, together with the delivery of MYnd’s rEEG Reports, that MYnd were selling a software product to aid in diagnosis, which constituted a “medical device” requiring pre-market approval or 510(k) clearance by the FDA pursuant to the Federal Food, Drug and Cosmetic Act, or the Act, which MYnd contested.

Based upon written guidance from the FDA’s Center for Devices and Radiological Health, or the Center, MYnd chose to submit an application to obtain 510(k) clearance for MYnd’s rEEG service, without waiving MYnd’s right to continue to take the position that MYnd’s services do not constitute a medical device. MYnd sought review of MYnd’s rEEG service based upon its equivalence to predicate devices that already have FDA clearance which appeared to represent a sound mechanism to reduce regulatory risks.

The Company successfully registered its PEER Outcome database as a Class I Exempt Device within the category of Medical Device Data System, Section 860.6310. The Company continued its engagement with Center staff over the potential for a regulatory pathway for PEER Online as a Class II medical device, based on the Center’s recommendation that military use of PEER Online move forward under an Investigational Device Exemption, or the IDE, to provide additional data to support a successful 510(k) filing.

The Company is proceeding with two clinical trials based substantially on the Walter Reed PEER Trial protocol in an effort to replicate and expand the result achieved during the Walter Reed PEER Trial. One clinical trial with the Canadian Armed Forces commenced enrollment of patients in August of 2016. A second clinical trial with a large provider group has been through the training phase of the trial and is expected to commence enrolling patients in the next few months. At this time MYnd cannot predict the results or the success of any of these trials. MYnd can offer no assurances that the FDA will not insist on pre-market approval in the future, or that the data, which will be included in MYnd’s future submissions to the FDA, do not raise any important new issues that could materially affect the safety or effectiveness of MYnd’s PEER service. The inability to enroll sufficient subjects or the receipt of inconclusive results from MYnd’s new clinical trials would have a material adverse effect on MYnd’s ability to expand MYnd’s operations. MYnd currently intend to continue marketing as a non-device cloud-based neuromeric service branded as PEER Reports, under MYnd’s Class I registration, while MYnd pursue the additional clinical trials and consider submission of a Class II device premarket application in the future. If MYnd continues to market MYnd’s PEER Reports and the FDA determines that MYnd should be subject to further FDA regulation as a Class II medical device, it could seek enforcement action against MYnd based upon its position that MYnd’s PEER Reports constitute a medical device as a result of which MYnd could be forced to cease MYnd’s marketing activities and pay fines and penalties, which would have a material adverse impact on MYnd.

In addition to the foregoing, federal and state laws and regulations relating to the sale of MYnd’s neurometic services are subject to future changes, as are administrative interpretations of regulatory agencies. If federal and state laws and regulations change, MYnd may need to incur additional costs to seek government approvals for the sale of MYnd’s neurometic services.

If government and third-party payors fail to provide coverage and adequate payment rates for treatments that are guided by MYnd’s PEER Reports, MYnd’s revenue and prospects for profitability will be harmed.

MYnd’s future revenue growth will depend in part upon the availability of reimbursement from third-party payors for psychiatrists and other physicians who use MYnd’s PEER Reports to guide the treatment of their patients. Such third-party payors include government health programs such as Medicare and Medicaid, managed care providers, private health insurers and other organizations. These third-party payors are increasingly attempting to contain healthcare costs by demanding price discounts or rebates and limiting both coverage on which procedures they will pay for and the amounts that they will pay for new procedures. As a result, they may not cover or provide adequate payment for treatments that are guided by MYnd’s PEER Reports, which will discourage psychiatrists and other physicians from utilizing the information services MYnd provide. MYnd may need to conduct studies in addition to those MYnd has already announced to demonstrate the cost-effectiveness of treatments that are guided by MYnd’s solutions and services to such payors’ satisfaction. Such studies might require MYnd to commit a significant amount of management time and financial and other resources. Adequate third-party reimbursement might not be available to enable MYnd to realize an appropriate return on investment in research and product development and the lack of such reimbursement could have a material adverse effect on MYnd’s operations and could adversely affect MYnd’s revenues and earnings.

Although state Medicaid programs and commercial insurers are increasingly paying for healthcare services provided via telehealth, including telebehavioral health, reimbursement by the Medicare program remains limited. Medicare reimbursement is an important consideration for any provider of healthcare services in the United States, as Medicare accounted for twenty percent (20%) of all health expenditures in the United States in 2016, and the Centers for Medicare & Medicaid Services expect that figure to rise annually through at least 2025. It is uncertain if and when Medicare might adopt telehealth reimbursement standards that allow for reimbursement of telebehavioral health services generally. If Medicare does not loosen its telehealth reimbursement standards, MYnd’s telehealth services may not be reimbursable by Medicare and there could be a material adverse effect on MYnd’s ability to provide services to a significant portion of the American population, which could have a material adverse effect on MYnd’s business, financial condition and results of operations.

Billing complexities associated with obtaining payment or reimbursement for MYnd’s tests may negatively affect MYnd’s revenue, cash flow and profitability.

The Company derives revenue from the PEER Report process, which includes the EEG, the QEEG, and the PEER Report, for which MYnd bill on a fee-for-service basis, including reimbursements by third-party payors, such as Medicare, Medicaid and other governmental payor programs, hospitals, private insurance plans and managed care organizations and direct payments from individual patients. Billing for PEER Report testing services is generally highly complex. MYnd conduct MYnd’s own internal billing and work closely with third-party providers to ensure accuracy of billing, timely collections, and resolution of appeals and billing discrepancies.

Depending on MYnd’s billing arrangement with each third-party payor and applicable law, MYnd is often obligated to bill in the specific manner prescribed by the various payors, each of which may have different requirements. Among the potential factors complicating MYnd’s billing of third-party payors are:

MYnd also face risks in MYnd’s collection efforts, including potential write-offs of doubtful accounts and long collection cycles for accounts receivable.

Additionally, from time to time, payors change processes that may affect timely payment. These changes may result in uneven cash flow or impact the timing of revenue recognized with these payors. With respect to payments received from governmental programs, factors such as a prolonged government shutdown could cause significant regulatory delays or could result in attempts to reduce payments made to MYnd by government healthcare programs. These billing complexities, and the related uncertainty in obtaining payment for PEER Report testing services, could negatively affect MYnd’s revenue, cash flow and profitability. In addition, increases in write-offs of doubtful accounts, delays in receiving payments or potential retroactive adjustments and penalties resulting from audits by payors could adversely affect MYnd’s business, results of operations and financial condition.

Changes in laws, regulations, payor policies or contracting arrangements with payors may adversely affect coverage or reimbursement for PEER Report services, which may decrease MYnd’s revenue and adversely affect MYnd’s results of operations and financial condition.

Governmental payors, as well as private insurers, and other private payors have implemented and will continue to implement measures to control the cost, utilization and delivery of healthcare services, including laboratory services. Congress has from time to time considered and implemented changes to laws and regulations governing healthcare service providers, including specialized diagnostic service providers. These changes have adversely affected and may in the future adversely affect coverage for laboratory services, including the PEER Report and PGx testing services MYnd provide. MYnd also believe that healthcare professionals may not use the PEER Report if third-party payors do not provide adequate coverage and reimbursement for them.

Reimbursement to healthcare providers, such as specialized analytic service providers, are subject to continuing change in policies by governmental payors, such as Medicare and Medicaid, private insurers, including managed care organizations, and other private payors, such as hospitals and private medical groups.

As a Medicare-participating independent diagnostic testing facility based in California, MYnd bill Noridian Healthcare Solutions, or Noridian, the Medicare Administrative Contractor, or MAC, for California, and are subject to Noridian’s local coverage and reimbursement policies. Reductions in coverage could decrease MYnd’s average Medicare reimbursement rate per sample.

The provision of health care services through any kind of clinic, facility, storefront or other location open to the public is often subject to state clinic licensure laws akin to those that health facilities like hospitals, surgery centers and urgent care clinics must obtain and maintain. The Company does not operate or promote any physical place to obtain healthcare and therefore does not believe it is subject to any clinic licensure requirements, but the application of some of these laws to MYnd and telehealth is unclear and subject to differing interpretation given MYnd’s status for Medicare purposes as an independent diagnostic testing facility.

In addition, reimbursement from governmental payors is subject to statutory and regulatory changes, retroactive rate adjustments and administrative rulings, and other policy changes, all of which could materially decrease the range of services for which MYnd is reimbursed or the reimbursement rates paid for PEER Report services.

Finally, some private insurers and other third-party payors link their rates to Medicare’s reimbursement rates, and a reduction in Medicare reimbursement rates for PEER Report services could result in a corresponding reduction in the reimbursements MYnd receive from such third-party payors. Any reductions in reimbursement levels for the PEER Report would decrease MYnd’s revenue and adversely affect MYnd’s results of operations and financial condition.

Operating as a non-contracting provider with certain payors may adversely affect MYnd’s results of operations and financial condition, and contracting with those payors may be disadvantageous to MYnd.

MYnd is currently considered to be an out-of-network or “non-contracting provider” by a number of third-party payors because MYnd has not entered into a specific contract to provide PEER Report services to their insured patients at specified rates of reimbursement. MYnd is generally subject to reimbursement as a non-contracting provider. As a non-contracting provider, many payors pay MYnd a smaller percentage of MYnd’s charges that they recognize to be reasonable, and expect MYnd to collect greater coinsurance or copayments from patients. Rather than collecting these higher coinsurance and copayment amounts from these patients, when permitted by law to do so, MYnd may, if permissible under applicable law, instead choose to charge them only the lower coinsurance and copayments amounts that would have applied to them if MYnd had been contracted with their payor, which results in decreased revenues. In instances where MYnd may be prohibited by law from treating these patients as if MYnd were in-network, thus requiring these patients to pay higher coinsurance or copayments to MYnd, MYnd’s customers may decide to reduce or avoid prescribing PEER Report services for such patients, which could adversely affect MYnd’s results of operations and financial condition.

Should any of the third-party payors with whom MYnd is not contracted insist that MYnd enter into a contract for the PEER Report services MYnd provide, the resulting contract may contain pricing and other terms that are materially less favorable to MYnd than the terms under which MYnd currently operate. If revenue from a particular payor grows, there is heightened risk that such a third-party payor will insist that MYnd enter into contractual arrangements that contain such terms. If MYnd refuse to enter into a contract with such a third-party payor, they may refuse to cover and reimburse for PEER Report services, which may lead to a decrease in report volume and a corresponding decrease in MYnd’s revenues. If MYnd contract with such a third-party payor, although MYnd’s report volume may increase as a result of the contract, MYnd’s revenue per report under the contractual agreement and gross margin may decrease. The overall net result of contracting with third-party payors may adversely affect MYnd’s business, results of operations and financial condition.

Regulations relating to the sale of MYnd’s PEER Reports are constantly changing and in the future, MYnd’s business may be subject to additional regulations that will increase MYnd’s compliance costs.

Federal, state and foreign laws and regulations relating to the sale of MYnd’s PEER Reports are subject to future changes, as are administrative interpretations of regulatory agencies. If MYnd fails to comply with applicable federal, state or foreign laws or regulations, MYnd could be subject to enforcement actions, including injunctions that would prevent MYnd from conducting MYnd’s business, withdrawal of clearances or approvals and civil and criminal penalties. If federal, state, and foreign laws and regulations change, MYnd may need to incur additional costs to seek government approvals, in addition to the clearance from the FDA if MYnd so chose, to sell or market MYnd’s PEER Online service. There is no guarantee that MYnd will be able to obtain such approvals in a timely manner or at all, and as a result, MYnd’s business would be significantly harmed.

MYnd’s business practices may be found to constitute illegal fee-splitting or violate corporate practice restrictions, which may lead to penalties and adversely affect MYnd’s business.

Many states, including California, in which MYnd’s principal executive offices are located, and where MYnd and MYnd’s Providers operate, have laws that prohibit a general corporation as opposed to a professional corporation, from practicing medicine and certain other healthcare professions such as psychology, exercising control over medical judgments or decisions of behavioral health professionals, or engaging in certain arrangements, such as employment or fee-splitting, with professionals. MYnd has addressed strong corporate practice state prohibitions through management services agreements with Providers under which the Providers are paid directly by payors for professional services and the Providers pay MYnd under the management services agreements for MYnd’s non-clinical services. Although MYnd calibrate these management fees to comply with fee-splitting statutes, in many states those fee-splitting statutes are ambiguous and therefore could be used to challenge MYnd’s arrangements with the Providers. If asserted, such claims could subject MYnd to civil and criminal penalties and substantial legal costs, could result in MYnd’s contracts being found legally invalid and unenforceable, in whole or in part, or could result in MYnd being required to restructure MYnd’s contractual arrangements, all with potentially adverse consequences to MYnd’s business and MYnd’s stockholders.

If MYnd does not maintain and expand MYnd’s relationships in the psychiatric and physician community, MYnd’s growth will be limited and MYnd’s business could be harmed. If psychiatrists and other physicians do not recommend and endorse MYnd’s solutions and services, MYnd may be unable to increase MYnd’s sales, and in such instances, MYnd’s profitability would be harmed.

MYnd’s relationships with psychiatrists and other physicians are critical to the growth of MYnd’s neurometic Services business. MYnd believe that these relationships are based on the quality and ease of use of MYnd’s PEER Reports, MYnd’s commitment to the behavioral health market, MYnd’s marketing efforts and MYnd’s presence at tradeshows. Any actual or perceived diminution in MYnd’s reputation or the quality of MYnd’s PEER Reports, or MYnd’s failure or inability to maintain MYnd’s commitment to the behavioral health market and MYnd’s other marketing and solution promotion efforts could damage MYnd’s current relationships, or prevent MYnd from forming new relationships, with psychiatrists and other physicians and cause MYnd’s growth to be limited and MYnd’s business to be harmed.

To sell MYnd’s PEER Reports, psychiatric professionals must recommend and endorse them. MYnd may not obtain the necessary recommendations or endorsements from this community. Acceptance of MYnd’s PEER Reports depends on educating psychiatrists and other physicians as to the benefits, clinical efficacy, ease of use, revenue opportunity and cost-effectiveness of MYnd’s PEER Reports and on training the medical community to properly understand and utilize MYnd’s PEER Reports. If MYnd is not successful in obtaining the recommendations or endorsements of psychiatrists and other physicians for MYnd’s PEER Reports, MYnd may be unable to increase MYnd’s sales and profitability.

Negative publicity or unfavorable media coverage of MYnd’s PEER technology could damage MYnd’s reputation and harm MYnd’s operations.

If the marketplace perceives MYnd’s PEER Reports as not offering the benefits which MYnd believe they offer, MYnd may receive significant negative publicity. This publicity may result in litigation and increased regulation and governmental review. If MYnd were to receive such negative publicity or unfavorable media attention, whether warranted or unwarranted, MYnd’s ability to market MYnd’s PEER Reports would be adversely affected, MYnd may be required to change MYnd’s solutions and services and become subject to increased regulatory burdens and MYnd may be required to pay large judgments or fines and incur significant legal expenses. Any combination of these factors could further increase MYnd’s cost of doing business and adversely affect MYnd’s financial position, results of operations and cash flows.

If MYnd does not successfully generate additional solutions and services from MYnd’s patented methodology and proprietary database, or if such solutions and services are developed but not successfully commercialized, then MYnd could lose revenue opportunities.

The current focus of MYnd’s predictive medicine business is the sale of PEER Reports to psychiatrists and other physicians based on MYnd’s PEER Online methodology and proprietary database. If MYnd does not successfully generate additional solutions and services from MYnd’s patented methodology and proprietary database, or if such solutions and services are developed but not successfully commercialized, then MYnd could lose revenue opportunities.

MYnd’s industry is highly competitive and MYnd’s PEER solutions may not be able to compete successfully, which could result in price reductions and decreased demand for MYnd’s solutions.

The healthcare industry, in general, and behavioral health treatment services, in particular, are highly competitive. If MYnd is unable to convince physicians, psychiatrists and patients of the efficacy of MYnd’s solutions and services, individuals seeking treatment for behavioral health disorders may seek alternative treatment methods, including non-medication-based therapies, which could negatively impact MYnd’s sales of PEER Reports and MYnd’s profitability.

If MYnd conducts clinical trials, MYnd cannot predict whether MYnd will encounter problems that will cause MYnd or regulatory authorities to delay or suspend MYnd’s clinical trials or delay the analysis of data from MYnd’s completed or ongoing clinical trials. In addition, MYnd cannot provide assurance that MYnd will be successful in reaching the endpoints in these trials, or that the FDA or other regulatory agencies will accept the results.

Any of the following factors, among others, could delay the completion of clinical trials, or result in a failure of these trials to support MYnd’s business, which would have an adverse effect on MYnd’s business:

If MYnd determine that the costs associated with attaining regulatory approval of a solution exceed the potential financial benefits or if the projected development time line is inconsistent with MYnd’s determination of when MYnd need to get the product to market, MYnd may choose to stop a clinical trial and/or development of a solution.

MYnd may not be able to adequately protect MYnd’s intellectual property, which is the core of MYnd’s predictive medicine (PEER) business.

MYnd consider the protection of MYnd’s intellectual property to be important to MYnd’s business prospects. MYnd currently have twenty issued patents in the United States, Australia, Canada, Europe, Israel, Japan and Mexico and MYnd has also filed multiple additional patent applications in the United States and in multiple foreign jurisdictions.

In the future, if MYnd fails to file patent applications in a timely manner, fail to pay applicable maintenance fees on issued patents, or if MYnd elects not to file a patent application because of the costs associated with patent prosecution, MYnd may lose patent protection that MYnd may have otherwise obtained. The loss of any proprietary rights which are obtainable under patent laws may result in the loss of a competitive advantage over present or potential competitors, with a resulting decrease in revenues and profitability for MYnd.

With respect to the applications MYnd has filed, there is no guarantee that the applications will result in issued patents, and further, any patents that issue may be too narrow in scope to adequately protect MYnd’s intellectual property and provide MYnd with a competitive advantage. Competitors and others may design around aspects of MYnd’s technology, or alternatively, may independently develop similar or more advanced technologies that fall outside the scope of MYnd’s claimed subject matter, but that can be used in the treatment of behavioral health disorders.

In addition, even if MYnd is issued additional patents covering MYnd’s solutions, MYnd cannot predict with any degree of certainty, whether or not MYnd will be able to enforce MYnd’s proprietary rights and whether MYnd’s patents will provide MYnd with adequate protection against competitors. MYnd may be forced to engage in costly and time-consuming litigation or reexamination proceedings to protect MYnd’s intellectual property rights and MYnd’s opponents in such proceedings may have and be willing to expend, substantially greater resources than MYnd is able to expend. In addition, the results of such proceedings may result in MYnd’s patents being invalidated or reduced in scope. These developments could cause a decrease in MYnd’s operating income and reduce MYnd’s available cash flow, which could harm MYnd’s business and cause MYnd’s stock price to decline.

MYnd also utilize processes and technology that constitute trade secrets, such as MYnd’s PEER Online database, and MYnd must implement appropriate levels of security for those trade secrets to secure the protection of applicable laws, which MYnd may not do effectively. In addition, the laws of many foreign countries do not protect proprietary rights as fully as the laws of the United States.

While MYnd has not had any significant issues to date, the loss of any of MYnd’s trade secrets or proprietary rights, which may be protected under the foregoing intellectual property safeguards may result in the loss of MYnd’s competitive advantage over present and potential competitors.

Certain of MYnd’s patents will expire in the near future, and MYnd may have difficulties protecting MYnd’s proprietary rights and technology and MYnd may not be able to ensure their protection.

MYnd currently have 20 issued patents, of which seven are in the U.S., one of which covers the process involved in MYnd’s PEER Online service. MYnd’s patents will expire between July 2019 and June 2029 and cover QEEG (quantitative electrophysiology); at which point MYnd can no longer enforce MYnd’s rights under these patents against third parties to prevent them from developing processes and commercializing solutions similar or identical to ours. Because MYnd’s efforts to achieve broader market acceptance of MYnd’s PEER Online service may take a substantial period of time, MYnd’s patents may expire or provide only a short period of protection, if any, following such broader market acceptance. This could expose MYnd to substantially more competition and have a material adverse impact on MYnd’s business and MYnd’s ability to commercialize or license MYnd’s technology and solutions. MYnd’s asset is MYnd’s PEER Online Database and MYnd will continue to encrypt and protect it.

MYnd depend heavily upon secure access to, and secure transfer of, data via the internet in exchanging data with customers. Any security breaches could result in unauthorized access to sensitive patient data, MYnd’s intellectual property and other confidential business information. MYnd use third-party data centers and any damage to, or failure of, MYnd’s central analytical database could adversely affect MYnd’s ability to provide MYnd’s services. For any of the foregoing or related reasons, customers may curtail or stop using MYnd’s services and MYnd may incur significant legal and financial exposure and liabilities.

MYnd depend heavily on secure access to, and secure transfer of data via the internet in the generation of MYnd’s PEER Reports and other data exchange with MYnd’s customers. MYnd relies on services provided by third parties to store, transmit and process data in MYnd’s central neurometic database. Security breaches could expose MYnd to a risk of losing data and result in litigation and possible liability. Security measures taken by MYnd or by such third party service providers may be breached as a result of third party action, including intentional misconduct by computer hackers, employee error, malfeasance, fraud or otherwise, during transfer or processing of data or at any time and result in someone obtaining unauthorized access to sensitive patient information, MYnd’s intellectual property, other confidential business information, or MYnd’s information technology systems. Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently and generally are not recognized until launched against a target, MYnd or MYnd’s third-party service providers may be unable to anticipate these techniques or to implement adequate preventative measures. Any security breach could result in a loss of confidence in the security of MYnd’s service, damage to MYnd’s reputation, disruption to MYnd’s business, and could lead to legal liability and severely curtail future revenue.

In addition, any damage to, or failure of, MYnd’s central neurometic database and the server on which it resides could result in interruptions in MYnd’s ability to provide PEER Reports. Interruptions in MYnd’s service may reduce MYnd’s revenue, cause PEER Network providers to terminate their relationship with MYnd and adversely affect MYnd’s ability to attract new physicians to the PEER Network. MYnd’s business will also be harmed if MYnd’s customers and potential customers believe MYnd’s service is unreliable.

Because MYnd’s service is complex and cloud-based MYnd relies on third-party data centers to store the data in MYnd’s central neurometic database, MYnd’s data and processes may be corrupted at some future time resulting in erroneous, defective or ineffective reports, which could result in unanticipated downtime in MYnd’s service for PEER Network providers, resulting in harm to MYnd’s reputation and MYnd’s business. MYnd does not control the operation of these facilities. While MYnd take precautions (data redundancy, back-up and disaster recovery plans) to prevent service interruptions, MYnd’s data centers are vulnerable to damage or interruption from human error, intentional bad acts, pandemics, earthquakes, hurricanes, floods, fires, war, terrorist attacks, power losses, hardware failures, systems failures, communications failures and similar events. The occurrence of a natural disaster or an act of terrorism, vandalism or other misconduct, resulting in a decision to close the facilities without adequate notice or other unanticipated problems could result in lengthy interruptions in the availability of MYnd’s central neurometic database. Since many physicians rely on MYnd’s service to assist in treating their patients, any errors, defects, disruptions in service or other performance problems with MYnd’s service could hurt MYnd’s reputation and hurt the reputation of the physicians in MYnd’s PEER Network. If that occurs, physicians could elect to terminate their relationship with MYnd, or delay or withhold payment to MYnd. MYnd could lose future revenues or customers may make warranty or other claims against MYnd, which could result in an increase in MYnd’s provision for doubtful accounts, an increase in collection cycles for accounts receivable or the expense and risk of litigation and a reduction in revenue.

Security breaches, damages or failures of the sort described above would adversely affect MYnd’s ability to market MYnd’s PEER Reports. In addition, MYnd may be required to change MYnd’s products and services and become subject to increased regulatory burdens and MYnd may be required to pay large judgments or fines and incur significant legal expenses.

In the future MYnd could be subject to personal injury claims due to adverse events from treatment facilitated through the use of MYnd’s PEER reports, which could result in substantial liabilities that may exceed MYnd’s insurance coverage.

All significant medical treatments and procedures, including treatment that is facilitated through the use of MYnd’s PEER Reports, can involve the risk of serious adverse events up to and including death. MYnd’s PEER Reports generally require psychiatrists and other physicians to titrate patients off of psychotropic medications before receiving an EEG. The titration process and the removal of medications from patients risk potentially serious health consequences. Although MYnd has no clinical involvement, it is possible that MYnd could be named as defendants in any malpractice claim involving a patient harmed during the titration process or during a period in which the patient ceases the use of medications. Although MYnd has not been the subject of any personal injury claims for patients treated by providers using MYnd’s PEER Reports, MYnd’s business entails an inherent risk of claims for personal injuries, which are subject to the attendant risk of substantial damage awards. MYnd cannot control whether individual physicians and psychiatrists will properly select patients, apply the appropriate standard of care, or conform to MYnd’s procedures in determining how to treat their patients. A significant source of potential liability is negligence or alleged negligence by physicians treating patients with the aid of the PEER Reports that MYnd provide. There can be no assurance that a future claim or claims will not be successful or, including the cost of legal defense, will not exceed the limits of available insurance coverage.

MYnd currently have general liability and medical professional liability insurance coverage for up to $3 million per year for personal injury claims. MYnd may not be able to maintain adequate liability insurance, in accordance with standard industry practice, with appropriate coverage based on the nature and risks of MYnd’s business, at acceptable costs and on favorable terms. Insurance carriers are often reluctant to provide liability insurance for new healthcare services companies and products due to the limited claims history for such companies and products. In addition, based on current insurance markets, MYnd expects that liability insurance will be more difficult to obtain and that premiums will increase over time and as the volume of patients treated by physicians that are guided by MYnd’s PEER Reports increases. In the event of litigation, regardless of its merit or eventual outcome, or an award against MYnd during a time when MYnd has no available insurance or insufficient insurance, MYnd may sustain significant losses of MYnd’s operating capital which may substantially reduce stockholder equity in the company.

Risks Related to MYnd’s Business-General

MYnd conduct business in a heavily regulated industry and if MYnd fails to comply with these laws and government regulations, MYnd could incur penalties or be required to make significant changes to MYnd’s operations or experience adverse publicity, which could have a material adverse effect on MYnd’s business, financial condition, and results of operations.

The healthcare industry is heavily regulated and closely scrutinized by federal, state and local governments. Comprehensive statutes and regulations govern the manner in which Providers provide and bill for services and collect reimbursement from governmental programs and private payors, MYnd’s contractual relationships, MYnd’s marketing activities and other aspects of MYnd’s operations. Of particular importance are the following laws and rules:

Finally, in the operations of MYnd’s Company and MYnd’s Providers, MYnd must comply with additional restrictions, including the following:

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of MYnd’s business activities could be subject to challenge under one or more of such laws. Achieving and sustaining compliance with these laws may prove costly. Failure to comply with these laws and other laws can result in civil and criminal penalties such as fines, damages, overpayment recoupment loss of enrollment status and exclusion from the Medicare and Medicaid programs. The risk of MYnd’s being found in violation of these laws and regulations is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are sometimes open to a variety of interpretations. MYnd’s failure to accurately anticipate the application of these laws and regulations to MYnd’s business or any other failure to comply with regulatory requirements could create liability for MYnd and negatively affect MYnd’s business. Any action against MYnd for violation of these laws or regulations, even if MYnd successfully defend against it, could cause MYnd to incur significant legal expenses, divert MYnd’s management’s attention from the operation of MYnd’s business and result in adverse publicity.

To enforce compliance with the federal laws, the U.S. Department of Justice and the OIG, continue to increase their scrutiny of healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Dealing with investigations can be time- and resource-consuming and can divert management’s attention from the business. Any such investigation or settlement could increase MYnd’s costs or otherwise have an adverse effect on MYnd’s business. In addition, because of the potential for large monetary exposure under the federal False Claims Act, which provides for treble damages and mandatory minimum penalties of $5,500 to $11,000 per false claim or statement, healthcare providers often resolve allegations without admissions of liability for significant and material amounts to avoid the uncertainty of treble damages that may be awarded in litigation proceedings. Such settlements often contain additional compliance and reporting requirements as part of a consent decree, settlement agreement or corporate integrity agreement. Given the significant size of actual and potential settlements, it is expected that the government will continue to devote substantial resources to investigating healthcare providers’ compliance with the healthcare reimbursement rules and fraud and abuse laws.

The laws, regulations and standards governing the provision of healthcare services may change significantly in the future. MYnd cannot assure you that any new or changed healthcare laws, regulations or standards will not materially adversely affect MYnd’s business. MYnd cannot assure you that a review of MYnd’s business by judicial, law enforcement, regulatory or accreditation authorities will not result in a determination that could adversely affect MYnd’s operations.

In addition, the FDA regulates development, testing, labeling, manufacturing, marketing, promotion, distribution, record-keeping and reporting requirements for prescription drugs. Compliance with laws and regulations enforced by the FDA and other regulatory agencies may be required in relation to future products or services developed or used by MYnd, in addition to the regulatory process and dialogue in which MYnd is now engaged with the FDA (for more information, please see the risk factor entitled “The FDA believes that rEEG and, potentially, MYnd’s PEER Online service, constitute a medical device, which is subject to regulation by the FDA. As MYnd continues to market MYnd’s PEER Online service, there is risk that the FDA will commence an enforcement action against MYnd. The FDA has informed MYnd that MYnd’s marketing of MYnd’s rEEG services without prior approval or re-classification by the FDA constitutes a violation of the Federal Food, Drug and Cosmetic Act”). Failure to comply with applicable laws and regulations may result in various adverse consequences, including withdrawal of MYnd’s products and services from the market, or the imposition of civil or criminal sanctions.

The impact of healthcare reform legislation and other changes in the healthcare industry and in healthcare spending on MYnd is currently unknown, but may adversely affect MYnd’s business, financial condition and results of operations.

MYnd’s revenue is dependent on the healthcare industry and could be affected by changes in healthcare spending and policy. The healthcare industry is subject to changing political, regulatory and other influences. The Patient Protection and Affordable Care Act or PPACA made major changes in how healthcare is delivered and reimbursed, and increased access to health insurance benefits to the uninsured and underinsured population of the United States.

The PPACA, among other things, increased the number of individuals with Medicaid and private insurance coverage, implemented reimbursement policies that tie payment to quality, facilitated the creation of accountable care organizations that may use capitation and other alternative payment methodologies, strengthened enforcement of fraud and abuse laws and encouraged the use of information technology. The future of the PPACA is uncertain and the PPACA remains in a state of near-constant change. Several of these changes require implementing regulations which have not yet been drafted or have been released only as proposed rules.

Such changes in the regulatory environment may also result in changes to MYnd’s payor mix that may affect MYnd’s operations and revenue.

In addition, certain provisions of the PPACA authorize voluntary demonstration projects, which include the development of bundling payments for acute, inpatient hospital services, physician services and post-acute services for episodes of hospital care. Further, the PPACA may adversely affect payors by increasing medical costs generally, which could have an effect on the industry and potentially impact MYnd’s business and revenue as payors seek to offset these increases by reducing costs in other areas. The full impact of these changes on MYnd cannot be determined at this time.

MYnd expects that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments and other third-party payors will pay for healthcare products and services, which could adversely affect MYnd’s business, financial condition and results of operations.

There may be adverse consequences if the independent contractor status of Arcadian’s providers is successfully characterized as employee status.

MYnd has independent contractor relationships with MYnd’s providers rather than employee relationships. An independent contractor is generally distinguished from an employee by his or her degree of autonomy and independence in providing services. MYnd’s providers must be afforded independence over their actions and judgment while providing medical services. If a federal or state authority or court enacts legislation or adopts regulations or adopts an interpretation that changes the manner in which employees and independent contractors are classified or makes any adverse determination with respect to some or all of MYnd’s independent contractors, MYnd could incur significant costs in complying with such laws, regulations or interpretations, including, in respect of tax withholding, social security payments and recordkeeping, or MYnd could be held liable for the actions of such independent contractors. As a result, MYnd could be required to modify MYnd’s business model. All of the above, individually or in the aggregate could have a material adverse effect on MYnd’s business, financial condition and results of operations. In addition, there is the risk that MYnd may be subject to significant monetary liabilities arising from fines or judgments as a result of any such actual or alleged noncompliance with federal, state or local tax or employment laws.

The emergence of new technologies may require MYnd to expend significant resources in order to remain competitive.

The U.S. healthcare industry is massive, has a number of large market participants with conflicting agendas, is subject to significant government regulation and is currently undergoing significant change. Changes in MYnd’s industry, for example, away from high-deductible health plans, or the emergence of new technologies as more competitors enter MYnd’s market, could result in MYnd’s solution being less desirable or relevant.

If healthcare benefits trends shift or entirely new technologies are developed that replace existing solutions, MYnd’s existing or future solutions could be rendered obsolete and MYnd’s business could be adversely affected. In addition, MYnd may experience difficulties with software development, industry standards, design or marketing that could delay or prevent MYnd’s development, introduction or implementation of new applications and enhancements.

Any future litigation against MYnd could be costly and time-consuming to defend.

MYnd may become subject, from time to time, to legal proceedings and claims that arise in the ordinary course of business such as claims in connection with commercial disputes or employment claims made by MYnd’s current or former associates. Litigation may result in substantial costs and may divert management’s attention and resources, which may substantially harm MYnd’s business, financial condition and results of operations. Insurance may not cover such claims, may not provide sufficient payments to cover all of the costs to resolve one or more such claims and may not continue to be available on terms acceptable to MYnd. A claim brought against MYnd that is uninsured or underinsured could result in unanticipated costs, thereby reducing MYnd’s revenue and leading analysts or potential investors to reduce their expectations of MYnd’s performance, which could reduce the market price of MYnd’s stock.

MYnd may be subject to regulatory and investigative proceedings, which may find that MYnd’s policies and procedures do not fully comply with complex and changing healthcare regulations.

While MYnd has established policies and procedures that MYnd believe will be sufficient to ensure that MYnd operate in substantial compliance with applicable laws, regulations and requirements, the criteria are often vague and subject to change and interpretation. MYnd may become the subject of regulatory or other investigations or proceedings, and MYnd’s interpretations of applicable laws and regulations may be challenged. The defense of any such challenge could result in substantial cost and a diversion of management’s time and attention. Thus, any such challenge could have a material adverse effect on MYnd’s business, regardless of whether it ultimately is successful. If MYnd fails to comply with any applicable laws, or a determination is made that MYnd has failed to comply with these laws, MYnd’s financial condition and results of operations could be adversely affected.

Failure to comply with the Federal Trade Commission Act or similar state laws could result in sanctions or limit the claims MYnd can make.

MYnd’s promotional activities and materials, including advertising to consumers and physicians, and materials provided to third parties for their use in promoting MYnd’s products and services, are regulated by the Federal Trade Commission (FTC) under the FTC Act, which prohibits unfair and deceptive acts and practices, including claims which are false, misleading or inadequately substantiated. The FTC typically requires competent and reliable scientific tests or studies to substantiate express or implied claims that a product or service is effective. If the FTC were to interpret MYnd’s promotional materials as making express or implied claims that MYnd’s products and services are effective for the treatment of mental illness, it may find that MYnd does not have adequate substantiation for such claims. Failure to comply with the FTC Act or similar laws enforced by state attorneys general and other state and local officials could result in administrative or judicial orders limiting or eliminating the claims MYnd can make about MYnd’s products and services, and other sanctions including fines.

MYnd’s use and disclosure of personally identifiable information, including health information, is subject to federal and state privacy and security regulations, and MYnd’s failure to comply with those regulations or to adequately secure the information MYnd hold could result in significant liability or reputational harm and, in turn, a material adverse effect on MYnd’s client base, membership base and revenue.

Numerous state and federal laws and regulations govern the collection, dissemination, use, privacy, confidentiality, security, availability and integrity of personally identifiable information, including protected health information. These laws and regulations include HIPAA. HIPAA establishes a set of basic national privacy and security standards for the protection of protected health information, or PHI, by health plans, healthcare clearinghouses and certain healthcare providers, referred to as covered entities, and the business associates with whom such covered entities contract for services, which includes MYnd.

HIPAA requires healthcare providers like MYnd to develop and maintain policies and procedures with respect to PHI that is used or disclosed, including the adoption of administrative, physical and technical safeguards to protect such information. HIPAA also implemented the use of standard transaction code sets and standard identifiers that covered entities must use when submitting or receiving certain electronic healthcare transactions, including activities associated with the billing and collection of healthcare claims.

HIPAA imposes mandatory penalties for certain violations. Penalties for violations of HIPAA and its implementing regulations start at $100 per violation and are not to exceed $50,000 per violation, subject to a cap of $1.5 million for violations of the same standard in a single calendar year. However, a single breach incident can result in violations of multiple standards. HIPAA also authorizes state attorneys general to file suit on behalf of their residents. Courts will be able to award damages, costs and attorneys’ fees related to violations of HIPAA in such cases. While HIPAA does not create a private right of action allowing individuals to sue MYnd in civil court for violations of HIPAA, its standards have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.

In addition, HIPAA mandates that the Secretary of Health and Human Services, or HHS conduct periodic compliance audits of HIPAA covered entities or business associates for compliance with the HIPAA Privacy and Security Standards. It also tasks HHS with establishing a methodology whereby harmed individuals who were the victims of breaches of unsecured PHI may receive a percentage of the Civil Monetary Penalty fine paid by the violator.

HIPAA further requires that patients be notified of any unauthorized acquisition, access, use or disclosure of their unsecured PHI that compromises the privacy or security of such information, with certain exceptions related to unintentional or inadvertent use or disclosure by employees or authorized individuals. HIPAA specifies that such notifications must be made “without unreasonable delay and in no case later than 60 calendar days after discovery of the breach.” If a breach affects 500 patients or more, it must be reported to HHS without unreasonable delay, and HHS will post the name of the breaching entity on its public web site. Breaches affecting 500 patients or more in the same state or jurisdiction must also be reported to the local media. If a breach involves fewer than 500 people, the covered entity must record it in a log and notify HHS at least annually.

Numerous other federal and state laws protect the confidentiality, privacy, availability, integrity and security of personally identifiable information, or PII, including PHI. These laws in many cases are more restrictive than, and may not be preempted by, the HIPAA rules and may be subject to varying interpretations by courts and government agencies, creating complex compliance issues for MYnd and MYnd’s clients and potentially exposing MYnd to additional expense, adverse publicity and liability.

New health information standards, whether implemented pursuant to HIPAA, congressional action or otherwise, could have a significant effect on the manner in which MYnd must handle healthcare related data, and the cost of complying with standards could be significant. If MYnd does not comply with existing or new laws and regulations related to PHI, MYnd could be subject to criminal or civil sanctions.

Because of the extreme sensitivity of the PII MYnd store and transmit, the security features of MYnd’s technology platform are very important. If MYnd’s security measures, some of which are managed by third parties, are breached or fail, unauthorized persons may be able to obtain access to sensitive client and patient data, including HIPAA PHI. As a result, MYnd’s reputation could be severely damaged, adversely affecting client and patient confidence. Patients may curtail their use of or stop using MYnd’s services or MYnd’s client base could decrease, which would cause MYnd’s business to suffer. In addition, MYnd could face litigation, damages for contract breach, penalties and regulatory actions for violation of HIPAA and other applicable laws or regulations and significant costs for remediation, notification to individuals and for measures to prevent future occurrences. Any potential security breach could also result in increased costs associated with liability for stolen assets or information, repairing system damage that may have been caused by such breaches, incentives offered to clients or other business partners in an effort to maintain MYnd’s business relationships after a breach and implementing measures to prevent future occurrences, including organizational changes, deploying additional personnel and protection technologies, training employees and engaging third-party experts and consultants. While MYnd maintain insurance covering certain security and privacy damages and claim expenses in the amount of $100,000 per claim, MYnd may not carry insurance or maintain coverage sufficient to compensate for all liability and in any event, insurance coverage would not address the reputational damage that could result from a security incident.

MYnd outsource important aspects of the storage and transmission of client and patient information, and thus rely on third parties to manage functions that have material cyber-security risks. MYnd attempt to address these risks in part by requiring outsourcing subcontractors who handle client and patient information to sign business associate agreements contractually requiring those subcontractors to adequately safeguard personal health data to the same extent that applies to MYnd. However, MYnd cannot assure you that these contractual measures and other safeguards will adequately protect MYnd from the risks associated with the storage and transmission of client and patients’ proprietary and protected health information.

MYnd also publishes statements to patients that describe how MYnd handle and protect personal information. If federal or state regulatory authorities or private litigants consider any portion of these statements to be untrue, MYnd may be subject to claims of deceptive practices, which could lead to significant liabilities and consequences, including, without limitation, costs of responding to investigations, defending against litigation, settling claims and complying with regulatory or court orders.

MYnd also sends short message service, or SMS text messages to potential end users who are eligible to use MYnd’s service through certain customers and partners. While MYnd obtain consent from or on behalf of these individuals to send text messages, federal or state regulatory authorities or private litigants may claim that the notices and disclosures MYnd provide, form of consents MYnd obtain or MYnd’s SMS texting practices, are not adequate. These SMS texting campaigns are potential sources of risk for class action lawsuits and liability for MYnd’s company. Numerous class-action suits under federal and state laws have been filed in the past year against companies who conduct SMS texting programs, with many resulting in multi-million dollar settlements to the plaintiffs. Any future such litigation against MYnd could be costly and time-consuming to defend.

MYnd may be subject to healthcare anti-fraud initiatives, which may lead to penalties and adversely affect MYnd’s business.

State and federal governments are devoting increased attention and resources to anti-fraud initiatives against healthcare providers, taking an expansive definition of fraud that includes receiving fees in connection with a healthcare business that is found to violate any of the complex regulations described above. Although to MYnd’s knowledge MYnd has not been the subject of any anti-fraud investigations, if such a claim were made defending MYnd’s business practices could be time consuming and expensive, and an adverse finding could result in substantial penalties or require MYnd to restructure MYnd’s operations, which MYnd may not be able to do successfully.

MYnd’s operating results may fluctuate significantly and MYnd’s stock price could decline or fluctuate if MYnd’s results do not meet the expectation of analysts or investors.

Management expects that MYnd will experience substantial variations in MYnd’s operating results from quarter to quarter. MYnd believe that the factors which influence this variability of quarterly results include, without limitation:

As a result of fluctuations in MYnd’s revenue and operating expenses that may occur, management believes that period-to-period comparisons of MYnd’s results of operations are not a good indication of MYnd’s future performance. It is possible that in some future quarter or quarters, MYnd’s operating results will be below the expectations of securities analysts or investors. In that case, MYnd’s common stock price could fluctuate significantly or decline.

MYnd’s ability to use MYnd’s net operating losses to offset future taxable income may be subject to certain limitations.

As of September 30, 2018, MYnd had federal net operating losses, including any tax credit carryforwards, or NOLs, of approximately $60.2 million and state NOL carryforwards of approximately $33.8 million. Both the federal and state NOL carryforwards will begin to expire in 2022 and 2023 respectively. MYnd has not undertaken a comprehensive analysis to determine whether or not a change of control has occurred prior to the Merger. However, as a result of the Merger, MYnd will undergo a Section 382 “ownership change.” In general, under Section 382 of the U.S. Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of MYnd’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. In addition, if a loss corporation does not continue its historic business, the annual limitation is subject to certain exceptions. Because MYnd is not expected to continue its historic business, MYnd does not expect to be able to utilize its net operating loss carryforwards following the Merger.

MYnd has recorded a full valuation allowance against the deferred tax assets attributable to MYnd’s NOLs.

MYnd may fail to successfully manage and maintain the growth of MYnd’s business, which could adversely affect MYnd’s results of operations.

As MYnd continues expanding MYnd’s commercial operations, this expansion could place significant strain on MYnd’s management, operational and financial resources. To manage future growth, MYnd will need to continue to hire, train, and manage additional employees, particularly a specially-trained sales force to market MYnd’s PEER Reports.

Confidentiality agreements with employees, licensees and others may not adequately prevent disclosure of trade secrets and other proprietary information.

In order to protect MYnd’s proprietary technology and processes, MYnd relies in part on confidentiality provisions in MYnd’s agreements with employees, licensees, treating physicians, psychiatrists and behavioral health professionals. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Moreover, policing compliance with MYnd’s confidentiality agreements and nondisclosure agreements and detecting unauthorized use of MYnd’s technology is difficult and MYnd may, therefore, be unable to determine whether piracy of MYnd’s technology has actually occurred. In addition, others may independently discover MYnd’s trade secrets and proprietary information. Costly and time-consuming litigation could be necessary to enforce and determine the scope of MYnd’s proprietary rights and failure to obtain or maintain trade secret protection could adversely affect MYnd’s competitive business position.

The liability of MYnd’s directors and officers is limited.

The applicable provisions of the Delaware General Corporation Law and MYnd’s Certificate of Incorporation and By-laws limit the liability of MYnd’s directors to MYnd and MYnd’s stockholders for monetary damages for breaches of their fiduciary duties, with certain exceptions, and for other specified acts or omissions of such persons. In addition, the applicable provisions of the Delaware General Corporation Law and of MYnd’s Certificate of Incorporation and Bylaws, as well as indemnification agreements MYnd has entered into with MYnd’s directors, and officers, provide for indemnification of such persons under certain circumstances. In the event MYnd is required to indemnify any of MYnd’s directors or any other person, MYnd’s financial strength may be harmed, which may in turn lower MYnd’s stock price.

If MYnd does not retain MYnd’s senior management and other key employees, MYnd may not be able to successfully implement MYnd’s business strategy.

MYnd’s future success depends on the ability, experience and performance of MYnd’s senior management and MYnd’s key professional personnel. MYnd’s success therefore depends to a significant extent on retaining the services of Patrick Herguth, MYnd’s Chief Executive Officer, MYnd’s senior product development and clinical managers and others. Because of their ability and experience, if MYnd lose one or more of the members of MYnd’s senior management or other key employees, MYnd’s ability to successfully implement MYnd’s business strategy could be seriously harmed. While MYnd believe MYnd’s relationships with MYnd’s executives are good and do not anticipate any of them leaving in the near future, the loss of the services of any of MYnd’s senior management could have a material adverse effect on MYnd’s ability to manage MYnd’s business. MYnd does not carry key-man life insurance on any of MYnd’s key employees.

If MYnd does not attract and retain skilled personnel, MYnd may not be able to expand MYnd’s business.

MYnd’s solutions and services are based on a complex database of information. Accordingly, MYnd require skilled medical, scientific and administrative personnel to sell and support MYnd’s solutions and services. MYnd’s future success will depend largely on MYnd’s ability to continue to hire, train, retain and motivate additional skilled personnel, particularly sales representatives who are responsible for customer education and training and customer support. If MYnd is not able to attract and retain skilled personnel, MYnd will not be able to continue MYnd’s development and commercialization activities.

MYnd’s senior management’s limited recent experience managing a publicly traded company may divert management’s attention from operations and harm MYnd’s business.

MYnd’s management team has relatively limited experience managing a publicly traded company and complying with federal securities laws, including compliance with recently adopted disclosure requirements on a timely basis. MYnd’s management will be required to design and implement appropriate programs and policies in responding to increased legal, regulatory compliance and reporting requirements, and any failure to do so could lead to the imposition of fines and penalties and harm MYnd’s business.

The estimates of market opportunity and forecasts of market growth included in this Form 10-K may prove to be inaccurate, and even if the market in which MYnd compete achieves the forecasted growth, MYnd’s business could fail to grow at similar rates, if at all.

Market opportunity estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The estimates and forecasts in this Form 10-K relating to the size and expected growth of the telehealth and predictive medicine markets may prove to be inaccurate. Even if the markets in which MYnd compete meet MYnd’s size estimates and forecasted growth, MYnd’s business could fail to grow at similar rates, if at all.

Risks Related to an Investment in MYnd’s Common Stock

Although MYnd’s shares of common stock are now listed on the NASDAQ Capital Market, MYnd currently have a limited trading volume, which results in higher price volatility for, and reduced liquidity of, MYnd’s common stock.

Although MYnd’s common stock is listed on the NASDAQ Capital Market under the symbol “MYND,” trading volume in MYnd’s common stock has been limited and an active trading market for MYnd’s shares of common stock may never develop or be maintained. MYnd’s average trading volume of the last ninety days has been 231,701 shares. The absence of an active trading market increases price volatility and reduces the liquidity of MYnd’s common stock. As long as this condition continues, the sale of a significant number of shares of common stock at any particular time could be difficult to achieve at the market prices prevailing immediately before such shares are offered.

If MYnd cannot continue to satisfy NASDAQ’s continuing listing criteria, NASDAQ may subsequently delist MYnd’s common stock.

NASDAQ requires MYnd to meet certain financial, public float, bid price and liquidity standards on an ongoing basis in order to continue the listing of MYnd’s common stock. Generally, MYnd must maintain a minimum amount of stockholders’ equity (generally $2.5 million) and a minimum number of holders of MYnd’s securities (generally 300 round lot holders). If MYnd fails to meet any of the continuing listing requirements, MYnd’s common stock may be subject to delisting. If MYnd’s common stock is delisted and MYnd is not able to list MYnd’s common stock on another national securities exchange, MYnd expects MYnd’s securities would be quoted on an over-the-counter market. If this were to occur, MYnd’s stockholders could face significant material adverse consequences, including limited availability of market quotations for MYnd’s common stock and reduced liquidity for the trading of MYnd’s securities. In addition, MYnd could experience a decreased ability to issue additional securities and obtain additional financing in the future. There can be no assurance that an active trading market for MYnd’s common stock will develop or be sustained. MYnd may choose to raise additional capital in order to increase MYnd’s stockholders’ equity in order to meet the NASDAQ continued listing standards. Any additional equity financings may be financially dilutive to, and will be dilutive from an ownership perspective to MYnd’s stockholders, and such dilution may be significant based upon the size of such financing. Additionally, MYnd cannot assure that such funding will be available on a timely basis, in needed quantities, or on terms favorable to MYnd, if at all.

On February 23, 2018, MYnd received a letter from The Nasdaq Stock Market indicating that MYnd was not compliant with the minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1) for continued listing on The Nasdaq Capital Market because MYnd’s stockholders’ equity, as reported in MYnd’s Quarterly Report on Form 10-Q for the period ended December 31, 2017, was below the required minimum of $2.5 million. Further, as of February 22, 2018, MYnd did not meet the alternative compliance standards relating to the market value of listed securities or net income from continuing operations. This notice of noncompliance has had no immediate impact on the continued listing or trading of MYnd’s common stock on The Nasdaq Capital Market. MYnd did increase the stockholders’ equity in response to the above.

On May 9, 2018, MYnd received a letter from Nasdaq granting MYnd an extension through August 22, 2018 to regain compliance with Listing Rule 5550(b). As of June 30, 2018, MYnd had stockholders’ equity in excess of $2.5 million and believes that it continues to be in compliance through the current date. MYnd achieved compliance through a variety of factors, including through improved revenue, certain cost cutting measures and, primarily, through the sale of securities under the First Purchase Agreement and Second Purchase Agreement. MYnd regained compliance at June 30, 2018 and remains compliant through its fiscal year ended September 30, 2018.

As of the date of this joint proxy statement/prospectus MYnd is not in compliance with the minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1) for continued listing on The Nasdaq Capital Market because MYnd’s stockholders’ equity, to be reported in MYnd’s Quarterly Report on Form 10-Q for the period ended December 31, 2018, is expected to be below the required minimum of $2.5 million.

If and when a larger trading market for MYnd’s common stock develops, the market price of MYnd’s common stock is likely to be highly volatile and subject to wide fluctuations, and you may be unable to resell your shares at or above the price at which you acquired them.

The market price of MYnd’s common stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond MYnd’s control, including, but not limited to:

In the past, stockholders have often instituted securities class action litigation after periods of volatility in the market price of a company’s securities. If a stockholder were to file any such class action suit against MYnd, MYnd would incur substantial legal fees and MYnd’s management’s attention and resources would be diverted from operating MYnd’s business to respond to the litigation, which could harm MYnd’s business.

Recent and future sales of securities by MYnd in equity or debt financings could result in substantial dilution to MYnd’s existing stockholders and have a material adverse effect on MYnd’s earnings.

Recent and future sales of common stock or derivative securities by MYnd in private placements or public offerings could result in substantial dilution to MYnd’s existing stockholders. In addition, MYnd’s business strategy may include expansion through internal growth, by acquiring complementary businesses, by acquiring or licensing additional solutions and services, or by establishing strategic relationships with targeted customers and suppliers. In order to do so, or to finance the cost of MYnd’s other activities, MYnd may issue additional equity securities that could dilute MYnd’s stockholders’ stock ownership. MYnd may also assume additional debt and incur impairment losses related to goodwill and other tangible assets if MYnd acquire another company and this could negatively impact MYnd’s earnings and results of operations.

The sale of MYnd’s common stock to Aspire Capital may cause substantial dilution to MYnd’s existing stockholders and the sale of the shares of common stock acquired by Aspire Capital could cause the price of MYnd’s common stock to decline.

Pursuant to the terms of the First Purchase Agreement and Second Purchase Agreement, MYnd has registered for sale the Commitment Shares that MYnd has issued and additional shares that MYnd has already, or may in the future, sell to Aspire Capital under the First Purchase Agreement and Second Purchase Agreement. It is anticipated that the shares thereby registered will be sold over a period of up to approximately thirty months from the date of the related prospectus. The number of shares ultimately offered for sale by Aspire Capital under such prospectus will be dependent upon the number of shares MYnd elects to sell to Aspire Capital under the First Purchase Agreement and Second Purchase Agreement. Depending on a variety of factors, including market liquidity of MYnd’s common stock, the sale of shares under the Purchase Agreement may cause the trading price of MYnd’s common stock to decline.

As of September 30, 2018, MYnd has issued purchase notices to Aspire Capital under the First Purchase Agreement to purchase an aggregate of 1,180,000 shares of common stock, at a per share price of $2.00, resulting in gross cash proceeds of approximately $2.4 million. As of September 30, 2018, MYnd has issued purchase notices to Aspire Capital under the Second Purchase Agreement to purchase an aggregate of 884,671 shares of common stock, resulting in gross cash proceeds of approximately $1.9 million. On November 26, 2018, MYnd received shareholder approval to remove the exchange cap under the Second Purchase Agreement in compliance with the applicable listing rules of the Nasdaq Stock Market. Pursuant to Nasdaq Listing Rule 5635(d), shareholder approval is required prior to the issuance of securities in connection with a transaction other than a public offering involving the sale, issuance or potential issuance by MYnd of common stock (or securities convertible into or exercisable common stock) equal to 20% or more of the common stock outstanding before the issuance for less than the greater of book or market value of the stock. Following receipt of shareholder approval, MYnd may issue an additional $8.1 million, up to an aggregate of $10 million, of common stock to Aspire Capital under the Second Purchase Agreement. The issuance of shares of common stock that were issued from time to time to Aspire Capital under the First and Second Purchase Agreement were exempt from registration under the Securities Act, pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act.

Sales by Aspire Capital of shares acquired pursuant to the First Purchase Agreement and Second Purchase Agreement under an effective registration statement, may result in dilution to the interests of other holders of MYnd’s common stock. The sale of a substantial number of shares of MYnd’s common stock by Aspire Capital, or anticipation of such sales, could cause the trading price of MYnd’s common stock to decline or make it more difficult for MYnd to sell equity or equity-related securities in the future at a time and at a price that MYnd might otherwise desire. However, MYnd has the right under the First Purchase Agreement and Second Purchase Agreement to control the timing and amount of sales of MYnd’s shares to Aspire Capital.

Were MYnd’s common stock to be considered penny stock, and therefore subject to the penny stock rules, U.S. broker-dealers may be discouraged from effecting transactions in shares of MYnd’s common stock.

The U.S. Securities and Exchange Commission (the “SEC”) has adopted a number of rules to regulate “penny stock” that may restrict transactions involving shares of MYnd’s common stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended. These rules may have the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market if current price and volume information with respect to transactions in such securities is provided by the exchange or system). MYnd’s securities have in the past constituted “penny stock” within the meaning of the rule. Were MYnd’s common stock to again be considered “penny stock” and therefore become subject to the penny stock rules, the additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in shares of MYnd’s common stock, which could severely limit the market liquidity of such shares and impede their sale in the secondary market.

A U.S. broker-dealer selling a penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the penny stock regulations require the U.S. broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared in accordance with SEC standards relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price information with respect to the penny stock held in a customer’s account and information with respect to the limited market in penny stocks.

Stockholders should be aware that, according to SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, resulting in investor losses. MYnd’s management is aware of the abuses that have occurred historically in the penny stock market. Although MYnd does not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to MYnd’s securities in the event MYnd’s common stock were to again be considered a penny stock and therefore become subject to penny stock rules.

Other than a dividend of warrants each exercisable for one share of common stock that was distributed on July 27, 2017, MYnd has not paid dividends in the past and do not expect to pay dividends for the foreseeable future, and any return on investment may be limited to potential future appreciation on the value of MYnd’s common stock.

MYnd currently intend to retain any future earnings to support the development and expansion of MYnd’s business and do not anticipate paying cash dividends in the foreseeable future. MYnd’s payment of any future dividends will be at the discretion of MYnd’s board of directors after taking into account various factors, including without limitation, MYnd’s financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that MYnd may be a party to at the time. To the extent MYnd does not pay dividends, MYnd’s stock may be less valuable because a return on investment will only occur if and to the extent MYnd’s stock price appreciates, which may never occur. In addition, investors must rely on sales of their common stock after price appreciation as the only way to realize their investment, and if the price of MYnd’s stock does not appreciate, then there will be no return on investment. Investors seeking cash dividends should not purchase MYnd’s common stock.

The rights of the holders of common stock may be impaired by the potential issuance of preferred stock.

MYnd’s certificate of incorporation gives MYnd’s board of directors the right to create new series of preferred stock. As a result, the board of directors may, without stockholder approval, issue preferred stock with voting, dividend, conversion, liquidation or other rights which could adversely affect the voting power and equity interest of the holders of common stock. Preferred stock, which could be issued with the right to more than one vote per share, could be utilized as a method of discouraging, delaying or preventing a change of control. The possible impact on takeover attempts could adversely affect the price of MYnd’s common stock. Although MYnd has no present intention to issue any additional shares of preferred stock or to create any new series of preferred stock, MYnd may issue such shares in the future.

MYnd’s officers, directors and principal stockholders can exert significant influence over MYnd and may make decisions that are not in the best interests of all stockholders.

MYnd’s officers, directors and principal stockholders (greater than 5% stockholders) collectively control approximately 28.32% of MYnd’s issued and outstanding common stock and 36.44% on a fully diluted basis (after giving effect to the full conversion of the Preferred Series A shares). As a result, these stockholders are able to affect the outcome of, or exert significant influence over, all matters requiring stockholder approval, including the election and removal of directors and any change in control. This concentration of ownership of MYnd’s common stock could have the effect of delaying or preventing a change of control of MYnd or otherwise discouraging or preventing a potential acquirer from attempting to obtain control of MYnd. This, in turn, could have a negative effect on the market price of MYnd’s common stock. It could also prevent MYnd’s stockholders from realizing a premium over the market prices for their shares of common stock. Moreover, the interests of this concentration of ownership may not always coincide with MYnd’s interests or the interests of other stockholders, and accordingly, they could cause MYnd to enter into transactions or agreements that MYnd would not otherwise consider.

Transactions involving MYnd’s common stock engaged in by MYnd’s largest stockholders, directors or executive officers may have an adverse effect on the price of MYnd’s stock.

MYnd’s officers, directors and principal stockholders (greater than 5% stockholders) collectively control approximately 28.32% of MYnd’s issued and outstanding common stock and 36.44% on a fully diluted basis (after giving effect to the full conversion of the Preferred Series A shares). Subsequent sales of MYnd’s shares by these stockholders could have the effect of lowering MYnd’s stock price. The perceived risk associated with the possible sale of a large number of shares by these stockholders, or the adoption of significant short positions by hedge funds or other significant investors, could cause some of MYnd’s stockholders to sell their stock, thus causing the price of MYnd’s stock to decline. In addition, actual or anticipated downward pressure on MYnd’s stock price due to actual or anticipated sales of stock by MYnd’s directors or officers could cause other institutions or individuals to engage in short sales of MYnd’s common stock, which may further cause the price of MYnd’s stock to decline.

From time to time MYnd’s directors and executive officers may sell shares of MYnd’s common stock on the open market. These sales will be publicly disclosed in filings made with the SEC. In the future, MYnd’s directors and executive officers may sell a significant number of shares for a variety of reasons unrelated to the performance of MYnd’s business. MYnd’s stockholders may perceive these sales as a reflection on management’s view of the business and result in some stockholders selling their shares of MYnd’s common stock. These sales could cause the price of MYnd’s stock to drop.

Anti-takeover provisions may limit the ability of another party to acquire MYnd, which could cause MYnd’s stock price to decline.

Delaware law contains provisions that could discourage, delay or prevent a third party from acquiring MYnd, even if doing so may be beneficial to MYnd’s stockholders, which could cause MYnd’s stock price to decline. In addition, these provisions could limit the price investors would be willing to pay in the future for shares of MYnd’s common stock.

Non-U.S. investors may have difficulty effecting service of process against MYnd or enforcing judgments against MYnd in courts of non-U.S. jurisdictions.

MYnd is a company incorporated under the laws of the State of Delaware. All of MYnd’s directors and officers reside in the United States. It may not be possible for non-U.S. investors to effect service of process within their own jurisdictions upon MYnd’s company and MYnd’s directors and officers. In addition, it may not be possible for non-U.S. investors to collect from MYnd’s company, its directors and officers, judgments obtained in courts in such non-U.S. jurisdictions predicated on non-U.S. legislation.

If securities or industry analysts do not publish or cease publishing research or reports about MYnd, MYnd’s business or MYnd’s market, or if they change their recommendations regarding MYnd’s stock adversely, MYnd’s stock price and trading volume could decline.

The trading market for MYnd’s common stock will be influenced by the research and reports that industry or securities analysts may publish about MYnd, MYnd’s business, MYnd’s market or MYnd’s competitors. If any of the analysts who may cover MYnd change their recommendation regarding MYnd’s stock adversely, or provide more favorable relative recommendations about MYnd’s competitors, MYnd’s stock price would likely decline. If any analyst who may cover MYnd were to cease coverage of MYnd’s company or fail to regularly publish reports on MYnd, MYnd could lose visibility in the financial markets, which in turn could cause MYnd’s stock price or trading volume to decline.

Risks Relating to the Spin-Off

The spin-off will occur immediately prior to, and is expressly conditioned upon, the closing of the Merger. All of those risk factors with respect to MYnd stated above are applicable to the shares of stock of MYnd California to be distributed further to the Spin-off. If any of those risks and uncertainties develops into actual events, these events could have a material adverse effect on MYnd California’s businesses, financial conditions or results of operations.

Risks Related to Emmaus’ Financial Condition and Capital Requirements

Emmaus has incurred losses since inception and expects to continue to incur substantial losses for the foreseeable future, and Emmaus may never become profitable.

Emmaus has had limited revenue and have sustained significant losses since inception. Emmaus’ net losses were $33.4 million and $38.9 million for the year ended December 31, 2017 and the nine months ended September 30, 2018, respectively, and Emmaus had an accumulated deficit of $137.6 million as of September 30, 2018. Since inception, Emmaus has funded Emmaus’ operations through the private sale of equity securities and convertible notes and from other loans. Emmaus is likely to sustain operating losses for the foreseeable future, and Emmaus expects that Emmaus will continue to fund Emmaus’ operations primarily through the issuance of equity or debt securities, or other sources, such as possible strategic partnerships. Such financings or other sources may not be available in amounts or on terms acceptable to Emmaus, if at all. Emmaus’ failure to raise capital as and when needed would inhibit Emmaus’ ability to continue operations and implement Emmaus’ commercialization and product development plans.

Emmaus expects to continue to incur significant operating losses and negative cash flow as it expands the commercialization of Endari™ in the U.S., seeks marketing authorization for Endari (Xyndari) in the EU and other foreign jurisdictions and commences its planned pilot Phase 2 trial of its pharmaceutical-grade L-glutamine oral powder, or PGLG, treatment for diverticulosis or other indications. These losses have had and will continue to have an adverse effect on Emmaus’ stockholders’ equity, total assets and working capital. Emmaus is unable to predict the extent of any future losses or if or when Emmaus will become profitable. Emmaus’ strategy depends heavily on the success of Endari for SCD. If Emmaus is unable to successfully expand the commercialization of Endari or any of Emmaus’ other product candidates, or if Emmaus experiences significant delays or unexpected costs in doing so, Emmaus’ business may fail. Even if Emmaus does achieve profitability, Emmaus may not be able to sustain or increase profitability.

Emmaus has limited cash resources and will require substantial additional funding and may be unable to raise capital when needed, which could force Emmaus to delay, reduce or eliminate planned activities or result in Emmaus’ inability to continue as a going concern.

Emmaus had cash and cash equivalents of $16.7 million as of September 30, 2018. Emmaus will require additional capital to successfully expand the commercialization of Endari for SCD and for potential future clinical trials and regulatory approvals of its PGLG, for diverticulosis or other indications, as well as further research and preclinical development of Emmaus’ CAOMECS technology. Emmaus has no committed sources of additional funding and Emmaus’ access to funding is uncertain. If Emmaus is not able to secure any needed funding, Emmaus may not be able to continue as going concern and may be forced to curtail commercialization of Endari or potential future clinical trials, seek to merge or be acquired by another company, cease operations altogether, file for bankruptcy, or undertake any combination of the foregoing. In such event, the holders of Emmaus’ common stock may lose their entire investment in Emmaus’ Company. Emmaus’ future capital requirements will depend on many factors, including the factors described below under “Risks Related to Commercialization of Endari” and “Risks Related to Development of Emmaus’ Product Candidates” and other factors discussed below in this section.

In addition, if Emmaus does not meet Emmaus’ payment obligations to third parties as they become due, Emmaus may be subject to litigation claims and its ability to raise additional capital would be adversely affected. Even if Emmaus is successful in defending against these claims, litigation could result in substantial costs and would be a distraction to management and may result in unfavorable results that could further adversely impact Emmaus’ financial condition.

Raising additional capital may cause dilution to Emmaus’ stockholders, restrict Emmaus’ operations or require Emmaus to relinquish rights.

Emmaus may seek additional capital through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements. To the extent that additional capital is raised through the sale of equity securities or securities convertible into or exchangeable for equity securities, the issuance of those securities would dilute existing stockholders’ percentage ownership in Emmaus. The terms of such securities may include liquidation or other preferences that could adversely affect the rights of Emmaus’ existing stockholders. Moreover, the incurrence of debt financing could result in a substantial portion of Emmaus’ future operating cash flow, if any, being dedicated to the payment of principal and interest on such indebtedness and could impose restrictions on Emmaus’ operations. This could render Emmaus more vulnerable to competitive pressures and economic downturns.

Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include grants of security interests in Emmaus’ assets or covenants limiting or restricting Emmaus’ ability to take specific actions such as incurring debt, making capital expenditures or declaring dividends. If Emmaus raises additional funds through collaboration, strategic alliance and licensing arrangements with third parties, Emmaus may have to relinquish valuable rights to Emmaus’ technologies, future revenue streams or product candidates, or grant licenses on terms that are unfavorable to Emmaus.

Emmaus has issued and may continue to issue debt instruments that are convertible or may include warrant features, which could result in the calculation of discounts on the debt issued and increased amortization of discount expenses and, therefore, increased net loss.

Under current accounting rules, Emmaus is required to recognize discounts on debt issued with stock conversion features or with attached or accompanying warrants which can result in amortization of the discount as an expense in Emmaus’ consolidated statement of comprehensive loss, based on the fair value of beneficial conversion feature or warrant on the date of issue. If Emmaus grant stock conversion features or warrants with debt instruments to attract capital, the expenses associated with amortization of the calculated discount may adversely affect Emmaus’ net loss. However, if Emmaus does not grant stock conversion features or warrants with debt instruments, Emmaus may not be able to attract debt capital.

The market price and trading volume of shares of common stock held by Emmaus in other companies could decline.

Emmaus holds marketable securities in other companies. The marketable securities recorded on Emmaus’ balance sheets are marked-to-market on a quarterly basis and could fluctuate significantly and may decline for many reasons, including reasons unrelated to the companies’ performance, such as reports by industry analysts, investor perceptions, share arbitrage, the exercise of options or warrants or the conversion of convertible notes or announcements by Emmaus’ competitors regarding their own performance, as well as general economic and industry conditions. A decline in the market value of Emmaus’ marketable securities would reduce its total assets and stockholders’ equity or increase its stockholders’ deficit, which could have a material adverse effect on the ability to satisfy the NASDAQ Approval Condition.

Risks Related to Commercialization of Endari

Emmaus is at an early stage in the commercialization of Endari. Emmaus cannot predict if or when Emmaus will generate sufficient revenues to become profitable.

Endari for treatment of SCD was approved for sale by the FDA on July 7, 2017, and in January 2018 Emmaus began marketing and selling Endari in the U.S., so there is limited historical basis upon which to assess how Emmaus will respond to regulatory, competitive or other challenges to Emmaus’ ability to commercialize Endari on a profitable basis. Emmaus is unable to predict the amount of revenues or profits, if any, that Emmaus will generate from the sale of Endari.

Emmaus’ ability to generate sufficient revenues from Endari and to transition to profitability and generate positive cash flow will depend on numerous factors described in the following risk factors, and Emmaus may continue to incur losses and negative cash flow and may never transition to profitability or positive cash flow. In particular, Emmaus expects Emmaus’ operating expenses to continue to increase in the near-term as Emmaus expands the commercialization of Endari, and Emmaus may not be able to generate sufficient revenues to offset this anticipated increase in expenses. If Emmaus is unable to transition to profitability and generate positive cash flow over time, Emmaus’ business, results of operations and financial condition would be materially and adversely affected, which could result in Emmaus’ inability to continue operations.

Emmaus is dependent on the commercial success of Emmaus’ only approved product, Endari, and, although Emmaus expects to generate significant revenues from sales of Endari, Emmaus may never become profitable.

In the near term, Emmaus’ ability to become profitable will depend upon the commercial success of Endari. In addition to the risks discussed elsewhere in this section, Emmaus’ ability to generate future revenues from the sale of Endari will depend on a number of factors, including, but not limited to:

Because of the numerous risks and uncertainties associated with Emmaus’ commercialization efforts, Emmaus is unable to predict the extent to which Emmaus will generate revenues from Endari or the timing for when or the extent to which Emmaus will become profitable, if ever. Even if Emmaus does achieve significant revenues from Endari and become profitable, Emmaus may not be able to sustain Emmaus’ revenues or maintain or increase profitability on an ongoing basis.

If Endari does not achieve broad market acceptance or coverage by third-party payors, the revenues that Emmaus generate from that product will be limited.

The commercial success of Endari will depend upon the acceptance of that product by physicians, patients, healthcare payors and the medical community. Coverage and reimbursement for that product by third-party payors is also necessary for commercial success. The degree of market acceptance of Endari will depend on a number of factors, including:

Emmaus’ efforts to educate the medical community and third-party payors on the benefits of Endari and gain broad market acceptance may require significant resources and may never be successful. If Endari does not achieve an adequate level of acceptance by physicians, third-party payors and patients, Emmaus may not generate sufficient revenue from that product to become or remain profitable.

In addition, SCD treatments can be costly to third-party payors and patients. Accordingly, hospitals and physicians may resist prescribing Endari and third-party payors, and patients may not purchase Endari due to cost considerations.

Emmaus has no internal manufacturing capabilities. Emmaus purchase PGLG utilized in connection with Endari from third parties. Emmaus’ ability to obtain PGLG in sufficient quantities and quality, and on a timely basis, is critical to Emmaus’ commercialization of Endari. There is no assurance that these suppliers will produce PGLG in the quantities and quality and at the times it is needed, if at all. Moreover, the replacement of any of these suppliers could lead to significant delays and increases in Emmaus’ costs.

Emmaus relies on third parties for the commercial supply of Endari. Emmaus’ ability to commercially supply Endari will depend, in part, on Emmaus’ ability to successfully outsource most, if not all, of the aspects of its commercial manufacture at competitive costs and in accordance with regulatory requirements. If Emmaus fails to maintain supply relationships with these third parties, Emmaus may be unable to continue to commercialize Endari.

If Emmaus’ third-party suppliers fail to deliver the required commercial quantities of Endari on a timely basis and at commercially reasonable prices, and Emmaus is unable to find one or more replacement manufacturers or suppliers on a timely basis, Endari sales could be interrupted, which could have a material adverse effect on Emmaus’ business, results of operations and financial condition.

The manufacture of pharmaceutical products generally requires significant expertise and capital investment, often including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, particularly in scaling up and validating initial production. These problems can include difficulties with production costs and yields, quality control, including stability of the product, quality assurance testing, shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. Additionally, Emmaus’ manufacturers may experience difficulties due to resource constraints, labor disputes, unstable political environments or natural disasters. If Emmaus’ manufacturers were to encounter any of these difficulties, or otherwise fail to comply with their contractual obligations for any reason, Emmaus’ ability to commercially supply Endari could be jeopardized. Any delay or interruption in Emmaus’ ability to commercially supply Endari will result in the loss of potential revenues and could adversely affect the market’s acceptance of that product.

Manufacturers and suppliers are subject to regulatory requirements including current cGMPs which cover, among other things, manufacturing, testing, quality control and recordkeeping relating to Endari, and are subject to ongoing inspections by FDA, the Drug Enforcement Agency, DEA, and other regulatory agencies. Emmaus does not control the manufacturing processes of third-party manufacturers, and Emmaus will be currently completely dependent on them. If any of Emmaus’ third-party manufacturers cannot successfully manufacture product that conforms to Emmaus’ specifications and the applicable regulatory authorities’ strict regulatory requirements, they will not be able to secure or maintain regulatory approval for the manufacturing facilities. In addition, Emmaus has no control over the ability of third-party manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or any other applicable regulatory authorities do not approve these facilities for the manufacture of Endari or if they withdraw any such approval in the future, Emmaus may need to find alternative manufacturing facilities, which would significantly impact Emmaus’ ability to commercially supply Endari.

Emmaus may not be successful in executing sales and marketing strategies for Endari.

Emmaus has contracted for a targeted sales force of sales representatives and for Endari™ marketing, trade and distribution functions. There is no assurance that Emmaus’ will be successful in commercializing Endari. Emmaus’ potential competitors currently have in-house sales and marketing organizations and significantly greater experience than Emmaus does in selling, marketing and distributing pharmaceuticals, and Emmaus may not be able to compete successfully with them.

Emmaus faces intense competition, including from non-pharmaceutical grade L-glutamine supplements, and if Emmaus’ competitors market or develop alternative treatments that are demonstrated to be safer or more effective than Endari, Emmaus’ commercial opportunities will be reduced or eliminated.

L-glutamine is manufactured in large quantities, primarily by a few large chemical companies, and processed and sold as nutritional supplements. The sale of non-pharmaceutical grade L-glutamine supplements at prices lower than the prices that Emmaus must charge for Endari to become and remain profitable could have a material adverse effect on Emmaus’ results of operations.

The pharmaceutical industry is characterized by rapidly advancing technologies, intense competition and a strong emphasis on developing proprietary therapeutics. Emmaus faces competition from a number of sources, some of which may target the same indications as Endari, such as pharmaceutical companies, including generic drug companies, biotechnology companies, drug delivery companies and academic and research institutions, many of which have greater financial resources, marketing capabilities, including well-established sales forces, manufacturing capabilities, research and development capabilities, experience in obtaining regulatory approvals for product candidates and other resources than Emmaus.

If Emmaus is unable to achieve and maintain adequate levels of coverage and reimbursement for Endari, on reasonable pricing terms, its commercial success may be severely hindered.

Successful sales of Endari depend on the availability of adequate coverage and reimbursement from third-party payors. Patients who are prescribed medicine for the treatment of their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their prescription drugs. Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to new product acceptance. Coverage decisions may depend upon clinical and economic standards that disfavor new drug products when more established or lower cost therapeutic alternatives are already available or subsequently become available. Assuming Emmaus obtain coverage for Endari, the resulting reimbursement payment rates might not be adequate or may require co-payments that patients find unacceptably high. Patients are unlikely to use Endari unless reimbursement is adequate to cover a significant portion of the cost of Endari.

In addition, the market for Endari will depend significantly on access to third-party payors’ drug formularies, or lists of medications for which third-party payors provide coverage and reimbursement. The industry competition to be included in such formularies often leads to downward pricing pressures on pharmaceutical companies. Also, third-party payors may refuse to include a particular branded drug in their formularies or otherwise restrict patient access to a branded drug when a less costly generic equivalent or other alternative is available.

Third-party payors, whether governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, in the United States, no uniform policy of coverage and reimbursement for drug products exists among third-party payors. Therefore, coverage and reimbursement for drug products can differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and costly process that will require Emmaus to provide scientific and clinical support for the use of Endari to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained.

Further, Emmaus believes that future coverage and reimbursement will likely be subject to increased restrictions in the United States. Third-party coverage and reimbursement for Endari may cease to be available or adequate in the United States, which could have a material adverse effect on Emmaus’ business, results of operations, financial condition and prospects.

The majority of Endari sales are to specialty distributors and specialty pharmacies who, in turn, resell Endari to pharmacies, hospitals and other customers. The loss of any of these specialty distributors and specialty pharmacies’ accounts or a material reduction in their Endari purchases could have a material adverse effect on Emmaus’ business, results of operations, financial condition and prospects.

In addition, these customers comprise a significant part of the distribution network for pharmaceutical products in the United States. This distribution network has undergone, and may continue to undergo, significant consolidation marked by mergers and acquisitions. As a result, a small number of large distributors control a significant share of the market. Consolidation of drug distributors has increased, and may continue to increase, competitive and pricing pressures on pharmaceutical products. Emmaus cannot assure you that Emmaus can manage these pricing pressures or that specialty distributor and specialty pharmacy purchases will not fluctuate unexpectedly from period to period.

Emmaus’ sales of Endari can be greatly affected by the inventory levels Emmaus’ distributors carry. Emmaus will monitor inventory of Endari using a combination of methods. However, Emmaus’ estimates of specialty distributor inventories may differ significantly from actual inventory levels. Significant differences between actual and estimated inventory levels may result in excessive production (requiring Emmaus to hold substantial quantities of unsold inventory), inadequate supplies of products in distribution channels, insufficient product available at the retail level, and unexpected increases or decreases in orders from Emmaus’ specialty distributors. These changes may cause Emmaus’ revenues to fluctuate significantly from quarter to quarter, and in some cases may cause Emmaus’ operating results for a particular quarter to be below Emmaus’ expectations or the expectations of securities analysts or investors. In addition, at times, specialty distributor purchases may exceed customer demand, resulting in reduced specialty distributor purchases in later quarters, which may result in substantial fluctuations in Emmaus’ results of operations from period to period. If Emmaus’ financial results are below expectations for a particular period, the market price of Emmaus’ common stock may drop significantly.

Emmaus expects to rely on third parties to perform many necessary services for Endari, including services related to distribution, invoicing, storage and transportation.

Emmaus expects to retain third-party service providers to perform a variety of functions related to the sale and distribution of Endari, key aspects of which will be out of Emmaus’ direct control. For example, Emmaus may rely on third parties to provide key services related to logistics, warehousing and inventory management, distribution, contract administration and chargeback processing, accounts receivable management and call center management and, as a result, most of Emmaus’ Endari inventory may be stored at warehouses maintained by the service providers. If these third-party service providers fail to comply with applicable laws and regulations, fail to meet expected deadlines, or otherwise do not carry out their contractual duties to Emmaus, or encounter physical damage or natural disaster at their facilities, Emmaus’ ability to deliver Endari to meet commercial demand would be significantly impaired. In addition, Emmaus expects to utilize third parties to perform various other services for Emmaus relating to sample accountability and regulatory monitoring, including adverse event reporting, safety database management and other product maintenance services. If the quality or accuracy of the data maintained by these service providers is insufficient, Emmaus’ ability to continue to market Endari could be jeopardized or Emmaus could be subject to regulatory sanctions. Emmaus does not currently have the internal capacity to perform these important commercial functions, and Emmaus may not be able to maintain commercial arrangements for these services on reasonable terms.

Emmaus will need to increase the size and complexity of Emmaus’ organization in the future, and Emmaus may experience difficulties in managing Emmaus’ growth and executing Emmaus’ growth strategy.

Emmaus’ management and personnel, systems and facilities currently in place may not be adequate to support Emmaus’ business plan and future growth. With the commercialization of Endari scheduled to begin in the first quarter of 2018, Emmaus will need to expand Emmaus’ scientific, sales and marketing, managerial, operational, financial and other resources to support Emmaus’ planned development and commercialization activities.

Emmaus’ need to effectively manage Emmaus’ operations, growth and projects related to Endari requires that Emmaus:

In addition, historically, Emmaus has utilized and continues to utilize the services of part-time outside consultants to perform a number of tasks for Emmaus, including tasks related to accounting and finance, compliance programs, clinical trial management, regulatory affairs, formulation development and other drug development functions. Emmaus’ growth strategy related to Endari may also entail expanding Emmaus’ use of consultants to implement these and other tasks going forward. Because Emmaus relies on consultants for certain functions of Emmaus’ business, Emmaus will need to be able to effectively manage these consultants to ensure that they successfully carry out their contractual obligations and meet expected deadlines. There can be no assurance that Emmaus will be able to manage Emmaus’ existing consultants or find other competent outside consultants, as needed, on economically reasonable terms, or at all. If Emmaus is not able to effectively expand Emmaus’ organization by hiring new employees and expanding Emmaus’ use of consultants, Emmaus may be unable to successfully implement the tasks necessary to effectively execute on Emmaus’ Endari-related development and commercialization activities and, accordingly, may not achieve Emmaus’ goals.

If Emmaus fails to attract and keep management and other key personnel, as well as Emmaus’ board members, Emmaus may be unable to successfully commercialize Endari.

Emmaus’ ability to compete in the highly competitive biotechnology and pharmaceuticals industries depends upon Emmaus’ ability to attract and retain highly qualified managerial, scientific, medical and other personnel. Emmaus is highly dependent on Emmaus’ management, scientific and medical personnel, as well as Emmaus’ board members. The loss of the services of any of these individuals could impede, delay or prevent the commercialization of Endari. If Emmaus loses the services of any of these individuals, Emmaus may not be able to find suitable replacements on a timely basis or at all, and Emmaus’ business would likely be harmed as a result. Emmaus does not maintain “key man” insurance policies on the lives of these individuals or the lives of any of Emmaus’ other employees.

Emmaus may not be able to attract or retain qualified management and other key personnel in the future due to the intense competition for qualified personnel among biotechnology, pharmaceutical and other businesses. Emmaus’ industry has experienced a high rate of turnover of management personnel in recent years. As such, Emmaus could have difficulty attracting experienced personnel to Emmaus’ company and may be required to expend significant financial resources in Emmaus’ employee recruitment and retention efforts. Many of the other biotechnology and pharmaceutical companies with whom Emmaus compete for qualified personnel have greater financial and other resources, different risk profiles and longer histories in the industry than Emmaus do. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high-quality candidates than that which Emmaus has to offer. If Emmaus is not able to attract and retain the necessary personnel to accomplish Emmaus’ business objectives, Emmaus may experience constraints that will impede significantly Emmaus’ ability to implement Emmaus’ business strategy and achieve Emmaus’ business objectives.

In addition, Emmaus has scientific and clinical advisors who will assist Emmaus in Emmaus’ commercialization strategies for Endari. These advisors are not Emmaus’ employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to Emmaus. In addition, Emmaus’ advisors may have arrangements with other companies to assist those companies in developing products or technologies that may compete with ours.

Emmaus faces potential product liability exposure relating to Endari and, if successful claims are brought against Emmaus, Emmaus may incur substantial liability if Emmaus’ insurance coverage for those claims is inadequate.

The commercial use of Endari will expose Emmaus to the risk of product liability claims. This risk exists even if a product is approved for commercial sale by the FDA and manufactured in facilities licensed and regulated by the FDA, such as the case with Endari. Endari is designed to affect important bodily functions and processes. Any side effects, manufacturing defects, misuse or abuse associated with Endari could result in injury to a patient or even death. In addition, a liability claim may be brought against Emmaus even if Endari merely appears to have caused an injury. Product liability claims may be brought against Emmaus by consumers, health care providers, pharmaceutical companies or others selling or otherwise coming into contact with Endari. If Emmaus cannot successfully defend itself against product liability claims, Emmaus could incur substantial liabilities. In addition, regardless of merit or eventual outcome, product liability claims may result in:

Emmaus has obtained product liability insurance coverage for commercial product sales with a $5 million per occurrence and a $5 million annual aggregate coverage limit. Emmaus also carry commercial excess and umbrella coverage with an additional $10 million per occurrence and an additional $10 million annual aggregate coverage limit. Emmaus’ insurance coverage may not be sufficient to cover all of Emmaus’ product liability related expenses or losses and may not cover Emmaus for any expenses or losses Emmaus may suffer. Moreover, insurance coverage is becoming increasingly expensive and, in the future, Emmaus may not be able to maintain insurance coverage at a reasonable cost, in sufficient amounts or upon adequate terms to protect Emmaus against losses due to product liability. If Emmaus determine that it is prudent to increase Emmaus’ product liability coverage based on sales of Endari, Emmaus may be unable to obtain this increased product liability insurance on commercially reasonable terms or at all. Large judgments have been awarded in class action or individual lawsuits based on drugs that had unanticipated side effects, including side effects that are less severe than those of Endari. A successful product liability claim or series of claims brought against Emmaus could cause Emmaus’ stock price to decline and, if judgments exceed Emmaus’ insurance coverage, could decrease Emmaus’ cash and have a material adverse effect Emmaus’ business, results of operations, financial condition and prospects.

Emmaus’ business involves the use of hazardous materials and Emmaus and Emmaus’ third-party manufacturers and suppliers must comply with environmental laws and regulations, which can be expensive and restrict how Emmaus does business.

Emmaus’ third-party manufacturers’ and suppliers’ activities involve the controlled storage, use and disposal of hazardous materials. Emmaus and Emmaus’ manufacturers and suppliers are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. In some cases, these hazardous materials and various wastes resulting from their use will be stored at Emmaus’ and Emmaus’ manufacturers’ facilities pending use and disposal. Emmaus cannot completely eliminate the risk of contamination, which could cause an interruption of Emmaus’ Endari commercialization efforts, injury to Emmaus’ employees and others, environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. Although Emmaus expects that the safety procedures utilized by Emmaus’ third-party manufacturers for handling and disposing of these materials will generally comply with the standards prescribed by these laws and regulations, Emmaus cannot guarantee that this will be the case or eliminate the risk of accidental contamination or injury from these materials. In such an event, Emmaus may be held liable for any resulting damages and such liability could exceed Emmaus’ resources. Emmaus does not currently carry biological or hazardous waste insurance coverage and Emmaus’ property and casualty and general liability insurance policies specifically exclude coverage for damages and fines arising from biological or hazardous waste exposure or contamination.

Endari will be subject to ongoing and continued regulatory review, which may result in significant expense and limit Emmaus’ ability to commercialize Endari.

Even after U.S. regulatory approval for a product is obtained as is the case with Endari, the FDA may still impose significant restrictions on the approved indicated uses for which the product may be marketed or on the conditions of approval. For example, a product’s approval may contain requirements for potentially costly post-approval studies and surveillance, including Phase 4 clinical trials, to monitor the safety and efficacy of the product. Emmaus will also be subject to ongoing FDA obligations and continued regulatory review with respect to the manufacturing, processing, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for Endari. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs, good clinical practices and good laboratory practices.

Manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations. If Emmaus or a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where, or processes by which, the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturer or Emmaus, including requiring product recall, notice to physicians, withdrawal of the product from the market or suspension of manufacturing.

If Emmaus, Endari or the manufacturing facilities for Endari fail to comply with applicable regulatory requirements, a regulatory agency may:

In addition, Emmaus’ product labeling, advertising and promotion are subject to regulatory requirements and continuing regulatory review. The FDA strictly regulates the promotional claims that may be made about prescription drug products. In particular, a drug product may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling, although the FDA does not regulate the prescribing practices of physicians. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability, including substantial monetary penalties and criminal prosecution.

The FDA’s regulations, policies or guidance may change and new or additional statutes or government regulations may be enacted that could further restrict or regulate post-approval activities relating to Endari. Emmaus cannot predict the likelihood, nature or extent of adverse government regulation that may arise from future legislation or administrative action. If Emmaus is not able to achieve and maintain regulatory compliance, Emmaus may not be permitted to market Endari, which would adversely affect Emmaus’ ability to generate revenue and achieve or maintain profitability.

Endari may cause undesirable side effects or have other unexpected properties that could result in post-approval regulatory action.

If Emmaus or others identify undesirable side effects, or other previously unknown problems, caused by Endari or other products with the same or related active ingredients, a number of potentially significant negative consequences could result, including:

Any of the above events resulting from undesirable side effects or other previously unknown problems could prevent Emmaus from achieving or maintaining market acceptance of Endari and could substantially increase the costs of commercializing Endari.

Emmaus is subject to numerous complex regulations and failure to comply with these regulations, or the cost of compliance with these regulations, may harm Emmaus’ business.

The research, testing, development, manufacturing, quality control, approval, labeling, packaging, storage, recordkeeping, promotion, advertising, marketing, distribution, possession and use of Endari are subject to regulation by numerous governmental authorities in the United States. The FDA regulates drugs under the Federal Food, Drug and Cosmetic Act (the “FDCA”) and implementing regulations. Noncompliance with any applicable regulatory requirements can result in refusal to approve products for marketing, warning letters, product recalls or seizure of products, total or partial suspension of production, prohibitions or limitations on the commercial sale of products or refusal to allow the entering into of federal and state supply contracts, fines, civil penalties and/or criminal prosecution. Additionally, the FDA and comparable governmental authorities have the authority to withdraw product approvals that have been previously granted. Moreover, the regulatory requirements relating to Endari may change from time to time, and it is impossible to predict what the impact of any such changes may be.

Health care reform measures and changes in policies, funding, staffing and leadership at the FDA and other agencies could hinder or prevent the commercial success of Endari.

In the United States, there have been a number of legislative and regulatory changes to the healthcare system in ways that could affect Emmaus’ future results of operations and the future results of operations of Emmaus’ potential customers. For example, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 established a new Part D prescription drug benefit, which became effective January 1, 2006. Under the prescription drug benefit, Medicare beneficiaries can obtain prescription drug coverage from private sector plans that are permitted to limit the number of prescription drugs that are covered in each therapeutic category and class on their formularies. If Endari is not widely included on the formularies of these plans, Emmaus’ ability to market Endari may be adversely affected.

Furthermore, there have been and continue to be a number of initiatives at the federal and state levels that seek to reduce healthcare costs. In March 2010, President Obama signed into law the Patient Protection and Affordable Health Care Act of 2010, as amended by the Health Care and Education Affordability Reconciliation Act of 2010 (jointly, the “PPACA”), which includes measures to significantly change the way health care is financed by both governmental and private insurers. Among the provisions of the PPACA of importance to the pharmaceutical industry are the following:

Additionally, individual states have become increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, and marketing cost disclosure and transparency measures, and designed to encourage importation from other countries and bulk purchasing. Legally-mandated price controls on payment amounts by third-party payors or other restrictions could harm Emmaus’ business, results of operations, financial condition and prospects.

In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This can reduce demand for Endari or put pressure on Emmaus’ product pricing, which could negatively affect Emmaus’ business, results of operations, financial condition and prospects.

The commercial success of Endari will depend, in part, upon the availability of coverage and reimbursement from third-party payors at the federal, state and private levels. Third-party payors include governmental programs such as Medicare or Medicaid, private insurance plans and managed care plans. These third-party payors may deny coverage or reimbursement for a product or therapy in whole or in part if they determine that the product or therapy was not medically appropriate or necessary. Also, third-party payors have attempted to control costs by limiting coverage through the use of formularies and other cost-containment mechanisms and the amount of reimbursement for particular procedures or drug treatments.

Additionally, given recent federal and state government initiatives directed at lowering the total cost of healthcare, Congress and state legislatures will likely continue to focus on healthcare reform, the cost of prescription drugs and the reform of the Medicare and Medicaid programs. While Emmaus cannot predict the full outcome of any such legislation, it may result in decreased reimbursement for prescription drugs, which may further exacerbate industry-wide pressure to reduce prescription drug prices. This could harm Emmaus’ ability to market Endari and generate revenues. In addition, legislation has been introduced in Congress that, if enacted, would permit more widespread importation or re-importation of pharmaceutical products from foreign countries into the United States, including from countries where the products are sold at lower prices than in the United States. Such legislation, or similar regulatory changes, could lead to a decision to decrease Emmaus’ prices to better compete, which, in turn, could adversely affect Emmaus’ business, results of operations, financial condition and prospects. It is also possible that other legislative proposals having similar effects will be adopted.

Furthermore, regulatory authorities’ assessment of the data and results required to demonstrate safety and efficacy can change over time and can be affected by many factors, such as the emergence of new information, including on other products, changing policies and agency funding, staffing and leadership. Emmaus cannot be sure whether future changes to the regulatory environment will be favorable or unfavorable to Emmaus’ business prospects.

If Emmaus fails to comply with federal and state healthcare laws, including fraud and abuse and health information privacy and security laws, Emmaus could face substantial penalties and Emmaus’ business, results of operations, financial condition and prospects could be adversely affected.

As a pharmaceutical company, even though Emmaus does not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to Emmaus’ business. Emmaus could be subject to healthcare fraud and abuse and patient privacy regulation by both the federal government and the states in which Emmaus conduct Emmaus’ business. The laws that may affect Emmaus’ ability to operate include:

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available under the U.S. federal Anti-Kickback Statute, it is possible that some of Emmaus’ business activities could be subject to challenge under one or more of such laws. If Emmaus or Emmaus’ operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to Emmaus, Emmaus may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in U.S. federal or state health care programs, and the curtailment or restructuring of Emmaus’ operations. Any penalties, damages, fines, curtailment or restructuring of Emmaus’ operations could materially adversely affect Emmaus’ ability to operate Emmaus’ business and Emmaus’ financial results.

The FDA provides guidelines with respect to appropriate promotion and continuing medical and health education activities. Although Emmaus endeavor to follow these guidelines, the FDA or the Office of the Inspector General: U.S. Department of Health and Human Services may disagree, and Emmaus may be subject to significant liability, including civil and administrative remedies as well as criminal sanctions. In addition, management’s attention could be diverted, and Emmaus’ reputation could be damaged.

Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated. Any action against Emmaus for violation of these laws, even if Emmaus successfully defend against it, could cause Emmaus to incur significant legal expenses and divert Emmaus’ management’s attention from the operation of Emmaus’ business. Moreover, achieving and sustaining compliance with applicable federal and state privacy, security and fraud laws may prove costly.

Emmaus may not be able to obtain and enforce patent rights or other intellectual property rights that cover Endari and that are of sufficient breadth to prevent third parties from competing against Emmaus.

Emmaus’ success with respect to Endari will depend, in part, on Emmaus’ ability to preserve Emmaus’ trade secrets and to prevent third parties from infringing upon Emmaus’ proprietary rights. Emmaus will not be able to obtain composition of matter patents or methods of use patents that cover Endari. As a result, competitors who obtain the requisite regulatory approval can offer products with the same active ingredients as Endari.

Proprietary trade secrets and unpatented know-how are also very important to Emmaus’ business. Although Emmaus has taken steps to protect Emmaus’ trade secrets and unpatented know-how, by entering into confidentiality agreements with third parties, and proprietary information and invention agreements with certain employees, consultants and advisors, third parties may still obtain this information or Emmaus may be unable to protect Emmaus’ rights. Emmaus also have limited control over the protection of trade secrets used by Emmaus’ licensors, collaborators and suppliers. There can be no assurance that binding agreements will not be breached, that Emmaus would have adequate remedies for any breach, or that Emmaus’ trade secrets and unpatented know-how will not otherwise become known or be independently discovered by Emmaus’ competitors. If trade secrets are independently discovered, Emmaus would not be able to prevent their use. Enforcing a claim that a third party illegally obtained and is using Emmaus’ trade secrets or unpatented know-how is expensive and time consuming, and the outcome is unpredictable.

Although Emmaus expects all of Emmaus’ employees to assign their inventions to Emmaus, and all of Emmaus’ employees, consultants, advisors and any third parties who have access to Emmaus’ proprietary know-how, information or technology to enter into confidential information and invention agreements, Emmaus cannot provide any assurances that all such agreements have been duly executed or will be held enforceable.

If Emmaus is sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in that litigation would have a material adverse effect on Emmaus’ business.

Emmaus’ commercial success depends upon Emmaus’ ability and the ability of Emmaus’ collaborators to develop, manufacture, market and sell Endari and use Emmaus’ proprietary technologies without infringing the proprietary rights of third parties. As the medical device, biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that others may assert Endari infringes their patent rights. Moreover, it is not always clear to industry participants, including Emmaus, which patents cover various types of medical devices, drugs, products or their methods of use. Thus, because of the large number of patents issued and patent applications filed in Emmaus’ fields, there may be a risk that third parties may allege they have patent rights encompassing Endari.

In addition, there may be issued patents of third parties of which Emmaus is currently unaware that are infringed or are alleged to be infringed by Endari. Because some patent applications in the United States may be maintained in secrecy until the patents are issued, because patent applications in the United States are typically not published until eighteen months after filing, and because publications in the scientific literature often lag behind actual discoveries, Emmaus cannot be certain that others have not filed patent applications for technology covered by Emmaus’ own and in-licensed issued patents or Emmaus’ pending applications. Emmaus’ competitors may have filed, and may in the future file, patent applications covering Endari. Any such patent application may have priority over Emmaus’ own and in-licensed patent applications or patents, which could further require Emmaus to obtain rights to issued patents covering such technologies. If another party has filed an U.S. patent application on inventions similar to those owned or in-licensed to Emmaus, Emmaus or, in the case of in-licensed technology, the licensor may have to participate in an interference proceeding to determine priority of invention.

If another party has reason to assert a substantial new question of patentability against any of Emmaus’ claims in Emmaus’ own and in-licensed U.S. patents, the third party can request that the patent claims be reexamined, which may result in a loss of scope of some claims or a loss of the entire patent. In addition to potential infringement suits and, interference and reexamination proceedings, Emmaus may become a party to patent opposition proceedings where either the patentability of the inventions subject of Emmaus’ patents are challenged, or Emmaus is challenging the patents of others. The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful.

Emmaus may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property rights alleging that Endari and/or proprietary technologies infringe their intellectual property rights. These lawsuits are costly and could adversely affect Emmaus’ results of operations and divert the attention of managerial and technical personnel. There is a risk that a court would decide that Emmaus or Emmaus’ commercialization partners are infringing the third party’s patents and would order Emmaus or Emmaus’ partners to stop the activities covered by the patents. In addition, there is a risk that a court will order Emmaus or Emmaus’ partners to pay the other party damages for having violated the other party’s patents.

If a third-party’s patents was found to cover Endari, proprietary technologies or their uses, Emmaus or Emmaus’ collaborators could be enjoined by a court and required to pay damages and could be unable to continue to commercialize Endari or use Emmaus’ proprietary technologies unless Emmaus or they obtained a license to the patent. A license may not be available to Emmaus or Emmaus’ collaborators on acceptable terms, if at all. In addition, during litigation, the patent holder could obtain a preliminary injunction or other equitable relief which could prohibit Emmaus from making, using or selling Endari pending a trial on the merits, which could be years away.

There is a substantial amount of litigation involving patent and other intellectual property rights in the device, biotechnology and pharmaceutical industries generally. If a third party claims that Emmaus or Emmaus’ collaborators infringe its intellectual property rights, Emmaus may face a number of issues, including, but not limited to: