Acquisition of EHT |
6 Months Ended |
|---|---|
Jun. 30, 2022 | |
| Business Combination and Asset Acquisition [Abstract] | |
| Acquisition of EHT | Acquisition of Emerald Health Therapeutics, Inc. On May 11, 2022, the Company and EHT entered into an Arrangement Agreement, as subsequently amended on June 14, 2022 and July 15, 2022, pursuant to which Skye will acquire all of the issued and outstanding shares of EHT pursuant to a plan of arrangement under the Business Corporations Act of British Columbia. As of June 30, 2022, EHT was a related party of the Company due to the investments by Sciences in both Skye and EHT (Notes 9 & 11).
Under the Arrangement Agreement, the Company will issue each EHT shareholder (other than the shares held by EHT dissenting shareholders) 1.95 shares of Skye common stock, for each share of EHT common stock outstanding as of the closing date of the Acquisition. As of June 30, 2022, it is expected that the Company will issue 416,270,585 shares of stock as consideration in the Acquisition and no fractional shares of Skye Common Stock will be issued. It is expected that, for U.S. and Canadian federal income tax purposes, the Acquisition shall constitute a taxable exchange by the EHT shareholders of EHT Shares for Skye Common Stock. In addition, all outstanding stock options and warrants of EHT will be exchanged for replacement options and warrants of Skye on identical terms, as adjusted in accordance with the Exchange Ratio.
The obligations of Skye and EHT to consummate the Arrangement are subject to certain conditions, including, but not limited to the following:
a.obtaining the required approvals of Skye’s and EHT’s shareholders;
b.obtaining an interim order and final order from the Supreme Court of British Columbia approving the Acquisition;
c.the absence of any injunction or similar restraint prohibiting or making illegal the consummation of the Acquisition or any of the other transactions contemplated by the Arrangement Agreement;
d.no material adverse effect having occurred;
e.subject to certain materiality exceptions, the accuracy of the representations and warranties of each party;
f.the performance in all material respects by each party of its obligations under the Arrangement Agreement;
g.the conditional approval by the Canadian Stock Exchange (“CSE”) of the listing of Skye Common Stock and the common stock, options or warrants to be issued to in connection with the Arrangement; and
h.the EHT shareholders shall not have exercised dissent rights in respect of more than 5% of the outstanding EHT shares.
The Company is currently evaluating the expected accounting for the transaction and expects that the Acquisition will be accounted for as an asset acquisition due to the wind-down state of EHT (Note 1). The primary purpose of the Acquisition is to utilize EHT's remaining cash and cash equivalents and liquidate the primary real estate asset owned by EHT in order to fund the Company's operations. In addition, EHT owns a vacant laboratory facility that is fully-licensed to handle controlled substances under Canadian regulations, which the Company is currently evaluating for research and development activities and to support certain manufacturing capabilities. In negotiating the Exchange Ratio, the Company performed a review of EHT's assets and the costs expected to wind down operations. However, there is inherent risk and uncertainty around what the ultimate liquidation value of EHT will be.
The Acquisition is anticipated to close in the fourth quarter of 2022. As of June 30, 2022, the Company has deferred $842,193 in asset acquisition costs.
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