Skye Bioscience Inc.(US:SKYE)2023-03-31 20:14Financial Performance - The net loss for the year ended December 31, 2022, was $19,481,602, compared to a net loss of $8,522,182 for the year ended December 31, 2021, indicating a significant increase in losses [175]. - As of December 31, 2022, the accumulated deficit was $66,737,765, with negative cash flows from operations amounting to $12,744,072 [175]. - The company incurred operating losses and negative cash flows from operations of $12,744,072 in 2022, compared to $6,474,888 in 2021, reflecting a net loss from operations of $19,481,602 [203][204]. - The company expects to continue incurring significant losses and negative cash flows through 2023, primarily to advance drug candidates into clinical development [198]. - For the year ended December 31, 2022, the company reported a net other expense of $1,163,129, primarily due to interest expense and wind-down costs associated with the Acquisition, representing a 73% increase from $672,368 in 2021 [197]. Cash and Liquidity - The company had unrestricted cash of $1,244,527 as of December 31, 2022, down from $8,983,007 as of December 31, 2021, reflecting a decrease in liquidity [175]. - As of December 31, 2022, the company had an accumulated deficit of $66,737,765 and a working capital deficit of $3,175,408, with unrestricted cash decreasing to $1,244,527 from $8,983,007 in 2021 [200]. - The company anticipates that without additional funding during the second quarter of 2023, it may not have sufficient funds to meet its obligations and continue operations [200]. - The closing payment from the sale of VDL in February 2023 provided the company with $5,547,000, extending its cash runway into the second quarter of 2023 [168]. - Cash provided by investing activities in 2022 was $5,214,395, mainly from cash proceeds received from the Acquisition, while cash used in financing activities was $(208,794) [203][205][206]. Research and Development - Research and development expenses for the year ended December 31, 2022, were $6,011,805, an increase of 105% compared to $2,931,437 in 2021 [193]. - The increase in research and development expenses was primarily due to $2,348,534 for the manufacturing of Phase 1 clinical trial material for SBI-100 OE [193]. - The company expects to incur future research and development expenditures to support preclinical and clinical studies [193]. - SBI-100 OE is being developed to treat glaucoma and ocular hypertension, utilizing a proprietary nanoemulsion formulation [170]. - SBI-200 is being researched for its potential therapeutic applications in various eye diseases, with early studies showing promising properties [173]. - The Phase 1 trial for SBI-100 OE commenced in December 2022, with expectations to complete enrollment in the first half of 2023 [172]. - The company expects to begin its Phase 2 clinical trial for SBI-100 OE in mid-2023, following FDA clearance of its Investigational New Drug application [172]. Expenses and Legal Contingencies - General and administrative expenses for the year ended December 31, 2022, were $6,094,617, reflecting a 24% increase from $4,916,277 in 2021 [194]. - The increase in general and administrative expenses was mainly due to $746,952 in employee wages and board fees related to new hires and bonuses [194]. - The increase in general and administrative expenses also included $732,529 in professional and legal fees associated with preliminary diligence costs related to an acquisition [194]. - An estimated legal contingency of $6,205,310 was recorded for the year ended December 31, 2022, related to the Cunning Lawsuit [196]. - The company recognized an estimated legal contingency of $6,205,310 related to the Cunning Lawsuit, which increased overall legal costs for the year ended December 31, 2022 [200]. Acquisitions and Assets - The acquisition of EHT was completed on November 10, 2022, with an exchange ratio of 1.95 shares of Skye Bioscience common stock for each share of EHT common stock [168]. - The company acquired net assets with an estimated fair value of $15,045,412 upon closing the Acquisition, receiving $6,784,057 in cash [200]. - The company evaluates acquisitions to determine if they should be accounted for as a business combination or asset acquisition, requiring significant judgment [187]. Going Concern - The company’s independent registered public accounting firm expressed substantial doubt about its ability to continue as a going concern due to recurring operating losses [200]. - The outstanding principal balance under the Amended Credit Agreement was $1,848,375 as of December 31, 2022, with an extension of the maturity date to February 28, 2023 [200].