Lucy Scientific Discovery (LSDI) - 2023 Q2 - Quarterly Report

Financial Performance - The company reported a net loss of $2,305,548 for the six months ended December 31, 2022, with an accumulated deficit of $37,732,890 as of the same date[88]. - The net loss for the three months ended December 31, 2022, was $933,807, compared to a net loss of $1,532,785 for the same period in 2021, representing a 39.1% improvement[108]. - The comprehensive loss for the six months ended December 31, 2022, was $2,005,885, compared to $2,726,821 for the same period in 2021, indicating a 26.4% improvement[118]. - The company expects to incur significant operating losses for at least the next several years, with increased losses anticipated due to enhancements in manufacturing and research facilities[131]. - The company has incurred significant operating losses since inception and expects to continue incurring losses as it enhances product offerings[131]. Capital and Financing - The company completed its IPO on February 13, 2023, issuing 1,875,000 common shares at a price of $4.00 per share, resulting in aggregate net cash proceeds of $5.8 million[91]. - The gross proceeds from the IPO were $7.5 million, with net proceeds of approximately $5.8 million after expenses[118]. - Cash provided by financing activities for the six months ended December 31, 2022 was $310,869, down from $1,780,241 in the same period of 2021[125]. - The Origo Credit Agreement allows for a line of credit of up to $4,869,775, with no amounts outstanding as of December 31, 2022[127]. - Management believes sufficient working capital will be available to meet liquidity needs for the next twelve months[134]. - The company may finance cash needs through public or private equity or debt offerings, but may face challenges in raising additional funds[133]. Operational Developments - The first commercial sale of psilocybin was agreed upon on February 27, 2023, marking a key operational milestone as the company transitions to revenue generation[93]. - The company has not yet manufactured all psychedelics-based products allowable under its Dealer's Licence, which could impact revenue generation[82]. - The company plans to expand its product offerings and seek regulatory authorization for distribution and export of its products[92]. - The company is focused on establishing its contract manufacturing and research services while developing its intellectual property portfolio[86]. - The company has a 25,000 square foot facility near Victoria, British Columbia, dedicated to research, development, and large-scale production of psychotropics-based medicines[85]. Expenses and Cash Flow - Selling, general and administrative expenses decreased to $448,534 for the three months ended December 31, 2022, from $763,523 in the same period of 2021, a reduction of approximately 41.3%[108]. - Interest expense decreased to $485,278 for the three months ended December 31, 2022, from $598,339 in the same period of 2021, a reduction of approximately 19%[109]. - Cash used in operating activities during the six months ended December 31, 2022, was $370,967, a decrease from $1,628,837 in the same period of 2021[122]. - Cash used in investing activities for the six months ended December 31, 2022 was $33,365 related to the purchase of digital assets[124]. - Cash at the end of the year was $26,059, down from $374,006 at the end of December 31, 2021[122]. Lease and Accounting - The company applies ASC 842 to identify leases, distinguishing them from service contracts based on customer control of the asset[152]. - Future lease payments are discounted using the company's incremental borrowing rate, significantly impacting lease liabilities and interest expense[153]. - The lease term is assessed based on lease conditions, with the original lease term determined as the most likely outcome due to uncertainty in extensions or early terminations[154]. - The company has no off-balance sheet arrangements as defined by SEC regulations[136]. - The company is classified as a "smaller reporting company" and is not required to provide certain market risk disclosures[156].