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1 month ago
41 The struggling Lucy had been touting the deal since last year.
Vancouver-based BlueSky Wellness Inc. announced this week that it canned its planned merger with Lucy Scientific Discovery (NASDAQ: LSDI).
The e-commerce hemp maker said it plans to “actively explore alternative transactions” to continue its growth and meet its goals.
Last September, Lucy imagined the planned all-stock deal would diversify and add to its revenue streams, citing BlueSky’s online sales, which saw over $20 million in each of the past two years with brands such as Keoni and Blush Wellness under its name.
The two had planned to introduce Lucy’s Amanita Muscaria mushrooms brand, Mindful, to its e-commerce platforms, leveraging a mysterious High Times deal to optimize customer acquisition costs, Lucy said then.
But the struggling Lucy has been riding the wheels off this deal in news releases and in financial filings, despite seeing climbing debt with no revenue in sight.
“Despite collaborative efforts, the necessary capital needed to consummate the transaction has not been raised within the specified timeframe,” the company said in a news release. “Additionally, BlueSky acknowledges the recent market dynamics affecting Lucy Scientific, including a considerable decline in share price over the past six months.”
BlueSky said that its management team consists of experienced executives from major consumer packaged goods companies, including PepsiCo and General Mills, who have a history of successful ventures in the cannabis, hemp, and psychedelic sectors.
“BlueSky’s unique suite of marketing capabilities, brand-building prowess and a highly-skilled team with extensive relationships within the Canadian cannabis and the broader CPG industry are poised for continued growth,” it said.
Lucy’s future?
The termination of the deal is just more bad news for Lucy shareholders who had been told that this deal along with the High Times deal was essential to the future of the company. Lucy said in its last earnings filing, “The failure to complete one or both of these acquisitions could adversely affect our business, financial condition, and results of operations.”
The hoped-for revenue streams have now dried up as there have also been no updates on the High Times deal since the media company’s Chairman Adam Levin was alleged to have committed securities fraud by the SEC. Investors had been told both deals were expected to close in a matter of months.
Adding to the pressure is the slide in the stock price that Blue Sky mentioned. If the price doesn’t go up, the stock will be delisted from the Nasdaq marketplace. If Lucy can’t get the stock price over a dollar by March 19, it will likely ask for a second 180 period to work on getting the price higher. Even then, Lucy could appeal a Nasdaq decision to delist. The company recently engaged in a one-for-ten (1-10) reverse split of its common shares lifting the stock back over a dollar and it was lately trading at $1.93. Lucy did not announce to shareholders that Bluesky canceled the deal.
