Psyched Wellness Ltd.

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(formerly Duncan Park Holdings Corporation)

Management’s Discussion and Analysis

For the three and nine months ended August 31, 2020 and 2019

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

Introduction

The following is the Management’s Discussion and Analysis (“MD&A”) of the results of operations and financial condition of Psyched Wellness Ltd. (formerly Duncan Park Holdings Corporation) (“Psyched”, “we” or the “Company”) as at and for the period ended August 31, 2020. This MD&A was written to comply with the requirements of National Instrument 51-102 – Continuous Disclosure Obligations. This MD&A should be read in conjunction with the Company’s unaudited condensed interim consolidated financial statements and related notes for the three and nine months ended August 31, 2020 and 2019, as well as the audited financial statements and related notes for the year ended November 30, 2019. The Company’s unaudited condensed interim consolidated financial statements for the three and nine months ended August 31, 2020 and 2019, and the financial information contained in this MD&A are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the IFRS Interpretations Committee (“IFRIC”). In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All figures are expressed in Canadian dollars unless stated otherwise.

This MD&A also covers the subsequent period up to October 26, 2020.

Description of Business

Psyched previously operated in the mining industry and devoted its efforts to establish commercially viable mineral properties by exploring for gold and other precious metals in politically stable areas of the world. By completing the Share Exchange (defined hereafter), the Company is changing its business focus to specialize on formulating, selling, and distributing mushroom-infused products and associated consumer packaged goods. The Company’s objective is to create premium mushroom products that have the potential to become a leading North American brand in the emerging functional food category.

On July 13, 2020, the Company changed its name to Psyched Wellness Ltd., to reflect the change of business to focus in the growing psychedelic space. The name change was a critical step for the Company, in order to capitalize and position it to participate in the growing interest in the psychedelic space as we build out our health and wellness products.

On October 21, 2020, the Company received approval for its listing on the the Canadian Securities Exchange (the “CSE”). Effective October 22, 2020, the Company’s common shares commenced trading under the ticker symbol “PYSC” on the CSE.

Recent Developments

Share exchange

On May 5, 2020, the Company entered into a share exchange agreement (the “Share Exchange”) with Psyched Wellness Corp. (“Psyched Wellness”), whereby the Company issued 18,000,000 common shares acquired all of the outstanding common shares of Psyched Wellness and became the sole shareholder of Psyched Wellness (see “Business Combination” for more details).

Change of officers and directors, and advisory team

On January 27, 2020, Keith Li was appointed as the new Chief Financial Officer (“CFO”) of the Company, replacing Hasan Zaidi.

On March 5, 2020, Christopher Hazelton was appointed as a director of the Company, following the resignation of David Shaddrick as director.

On May 5, 2020, upon closing of the Share Exchange, the Company appointed Jeffrey Stevens and David Shisel as the Chief Executive Officer (“CEO”) and the Chief Operating Officer (“COO”) of Psyched, respectively. Mr. Stevens replaced out-going CEO, Brian Presement. Along with Mr. Stevens and Mr. Hazelton, the Company also appointed Michael Nederhoff (Chairman), Terry Booth and Nicholas Kadysh to the Board of Directors (the “Board”).

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

On October 26, 2020, the Company announced that Brian Tancowny has joined its advisory board to support the management team on the scientific side as the Company progresses through the pre-clinical trials for Amanita Muscaria with our contract research organization (“CRO”) partners. With over 25 years of experience in research and development (“R&D”) with government, academic, and private sector partners, Mr. Tancowny has built and managed diverse research portfolios in animal and human health supplements, personal care products and medical therapeutics.

Financing activities

On April 23, 2020, the Company closed a non-brokered private placement (“Seed Financing”) through the issuance of 33,500,000 common shares at a price of $0.02 per common share, for gross proceeds of $670,000.

On April 23, 2020, the Company also settled an aggregate amount of $141,002 of indebtedness owed to certain arm’s length and non-arms’ length creditors through the issuance of 7,050,090 common shares of the Company (“Shares-forDebt Issuances”) at a price of $0.02 per common share.

On May 22, 2020, the Company completed the first tranche of a non-brokered private placement (“Series A Financing”) for gross proceeds of $1,637,000 through the issuance of 16,370,000 common shares at a price of $0.10 per common share.

On June 1, 2020, the Company completed the second tranche of the Series A Financing for gross proceeds of $2,231,500 through the issuance of 22,315,000 common shares at a price of $0.10 per common share.

On July 31, 2020, the Company completed the third and final tranche of the Series A Financing for gross proceeds of $187,595 through the issuance of 1,875,950 common shares at a price of $0.10 per common share.

Outlook and Strategy

Psyched’s objective is to create premium mushroom-infused products that have the potential to become a leading North American brand in the emerging functional food category. Over the next 12 months, Psyched intends to develop and launch a line of mushroom-infused functional tinctures, teas, and capsules designed to help with three health objectives: soothe the body, ease physical distress and assist with sleeping.

The Company has an aggressive plan for the remainder of 2020, where key focus areas include:

Approve a name change to reflect the change of business (done),
Obtain listing on a Canadian stock exchange and commence trading (done),
Increase the number of board members by one (done),
Implement a stock option plan (done),
Commence pre-clinical studies for safety, efficacy and dosage levels for Amanita muscaria , and
Commence shelf life study for Amanita Muscaria tincture.

The Company was approved for listing on the CSE on October 21, 2020 and commenced trading under the ticker symbol “PSYC” on October 22[nd] . In the last few months, the Company has completed equity financings for aggregate funds of approximately $4.7 million, and as at the end of the third quarter of 2020, the Company is sitting with more than $3.1 million of cash providing an adequate amount of capital to execute on the operational goals. Management continues to work with its advisors and CRO partners on R&D and formulation of its flagship product, an Amanita Muscaria mushroom-infused tincture. The Company completed the toxicology assessment, including safety margins analysis for human consumption, complete a gap analysis and path to market assessment, R&D on extraction methods, determine the applicable regulatory and labeling requirements, complete branding artwork and package design. The Company, through its CRO partners, has commenced a pre-clinical study including rodent testing to ensure the safety and efficacy of the product and to identify safe dosage levels. In addition, it has commenced a shelf life study to establish the durable life our product. A relationship with a Canadian-based distributor has been established, which will position the Company to get its products in Canadian retail locations. In addition to selling products in retail locations, management will build an e-commerce marketplace and evaluate various web fulfillment and logistics companies for distribution from the marketplace in the Canadian and United States (“US”) markets.

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

In the first half of 2021, the Company will expect to work on branding, sales and marketing efforts and supply chain manufacturing for commercial-scale manufacturing of Amanita Muscaria -infused products. Management has identified a contract manufacturing organization (“CMO”) partners that has all of the necessary regulatory approvals to manufacture the product, bottle, and label on behalf of the Company.

Overall Performance

Selected annual information

The Company’s selected financial information for the three most recently completed financial years ended November 30 are summarized as follows:

30 are summarized as follows:
	2019	2018	2017
	$	$	$
Operating expenses	(275,119)	(246,882)	(156,543)
Other expenses	(75,000)	(1,507)	(2,323,606)
Net loss	(350,119)	(248,389)	(2,480,149)
Loss per share	(0.086)	(0.079)	(0.787)
Total assets	4,779	137,155	83,028
Total liabilities	419,374	915,624	613,108
Shareholders’ deficiency	(414,595)	(778,469)	(530,080)

Selected quarterly financial results

The Company’s selected financial information for the eight most recently completed quarters as at August 31, 2020 are as follows:

as follows:
	Q3 2020	Q2 2020	Q1 2020	Q4 2019
	$	$	$	$
Operating expenses	(751,303)	(223,662)	(15,435)	(19,396)
Other income (expenses)	(5,197)	77,506	(827)	(75,000)
Net loss	(756,500)	(146,156)	(16,262)	(94,396)
Net loss per share – basic and diluted	(0.007)	(0.005)	(0.086)	(0.011)
Cash	3,134,753	1,831,188	8,046	1,471
Working capital (deficiency)	3,491,705	1,573,017	(430,857)	(414,595)
Total assets	4,025,570	2,557,937	11,294	4,779
	Q3 2019	Q2 2019	Q1 2019	Q4 2018
	$	$	$	$
Operating expenses	(34,902)	(121,898)	(98,923)	(70,397)
Other expenses	-	-	-	(1,507)
Net loss	(34,902)	(121,898)	(98,923)	(71,904)
Net loss per share – basic and diluted	(0.008)	(0.009)	(0.079)	(0.024)
Cash	-	-	4,794	55,757
Working capital deficiency	(670,539)	(635,637)	(952,393)	(853,469)
Total assets	93,924	92,038	92,743	137,155

Quarterly results of operations

During the three months ended August 31, 2020 (“Q3 2020”), the Company incurred total operating expenses of $751,303, as compared to total operating expenses of $34,902 during the three months ended August 31, 2019 (“Q3 2019”), for an increase of $716,401. The significant changes in operating expenses in the current period is primarily attributable to the following items:

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

Non-cash stock-based compensation of $287,725 recorded in Q3 2020 (Q3 2019 – $nil), in relation to the vesting of options granted on July 13, 2020.
Management and consulting fees of $103,464 in Q3 2020 (Q3 2019 – $nil), where the increase in fees is a result of new consulting agreements entered with the management team and other various arm’s length consultants in exchange for services to Psyched, as the Company has changed its business focus for the health and wellness products sector.
Professional fees of $88,444 in Q3 2020 (Q3 2019 – $19,446), for an increase of $68,998. In the current quarter, accounting and audit fees included in professional fees are fairly in line with the comparative period. The increase is primarily related to legal fees incurred on the Share Exchange and those related to the listing process.
R&D expenses of $119,667 (Q3 2019 – $nil), where the Company has been researching, developing and testing formulations for the Amanita Muscaria -derived water-based extract products: a line of water-based extracts intended to aid in de-stressing and relaxing; an agaric tea intended to promote the ease of sleeping; and capsules intended to promote mild euphoria. Also contributing to the R&D spending is the engagement of external laboratories to assist with completing work related to ingredient safety, identity testing, specifications and formulation in compliance with the Food and Drug Administration (“FDA”) standards in the US; and
Advertising and promotion expenses of $103,160 (Q3 2019 – $nil), as the Company has launched a marketing campaign through the engagement of a marketing and social media firm, as well as securing the services of a web design company to develop the web assets and graphic language of the Company.

During Q3 2020, the Company also incurred a payment of $10,000 (Q3 2019 – $nil) in maintaining certain of its mining claims standing related to previously entered option agreements, as management continues to develop a plan to monetize these claims. In addition, the Company settled additional past outstanding debts during the quarter, which resulted in a gain of settlement of $4,820 (Q3 2019 – $nil).

Net loss for the three months ended August 31, 2020 was $756,500 (loss of $0.007 per share), as compared to a net loss of $34,902 (loss of $0.008 per share) for Q3 2019.

Year-to-date results of operations

During the nine months ended August 31, 2020, the Company had incurred total operating expenses of $990,399, as compared to total operating expenses of $245,723 incurred during the nine months ended August 31, 2019, for an increase of $744,676. The significant items comprising operating expenses in the current period is primarily attributable to the following items:

Non-cash stock-based compensation of $287,725 for the nine months ended August 31, 2020 (2019 – $nil), in relation to the vesting of options granted on July 13, 2020.
Management and consulting fees of $212,455 for the nine months ended August 31, 2020 (2019 – $28,533), for an increase of $183,922. The substantial increase is a result of new consulting agreements entered with the management team and other various arm’s length consultants in exchange for services to Psyched, as the Company has changed its business focus for the health and wellness products sector.
Professional fees of $183,931 for the nine months ended August 31, 2020 (2019 – $127,829), for an increase of $56,102. In the current period, accounting and audit fees included in professional fees are fairly in line with the comparative period, whereas substantial costs were incurred in relation to the Share Exchange and the listing process with the CSE. In the comparative period in 2019, significant efforts were placed on certain corporate measures, including a share consolidation, a voluntary from the TSX Venture Exchange, and certain debt conversion and settlement which occurred in Fiscal 2019.
R&D expenses of $119,667 (2019 – $nil), where the Company has been researching, developing and testing formulations for the Amanita Muscaria -derived water-based extract products: a line of water-based extracts intended to aid in de-stressing and relaxing; an agaric tea intended to promote the ease of sleeping; and capsules intended to promote mild euphoria. Also contributing to the R&D spending is the engagement of external

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

laboratories to assist with completing work related to ingredient safety, identity testing, specifications and formulation in compliance with FDA standards in the US; and
Advertising and promotion expenses of $103,160 (2019 – $nil), as the Company has launched a marketing campaign through the engagement of a marketing and social media firm, as well as securing the services of a web design company to develop the web assets and graphic language of the Company.

During the nine months ended August 31, 2020, the Company also incurred a payment of $10,000 (2019 – $10,000) in maintaining certain of its mining claims standing related to previously entered option agreements, as management continues to develop a plan to monetize these claims.

In addition, the Company also incurred interest expenses on certain of its indebtedness for the nine months ended August 31, 2020. As part of the Shares-for-Debt Issuances, interest of $7,783 (2019 – $nil) was charged on the previously owed indebtedness prior to its settlement. In conjunction to the settlement of various debts previously owed by the Company, a gain of $83,002 (2019 – $nil) had been recognized. In comparison, interest of $740 was charged on promissory notes prior to a debt settlement, while total interest of $55,079 was charged in the comparative period in 2019, on certain term loans, promissory notes and convertible debentures.

Net loss for the nine months ended August 31, 2020 was $918,917 (loss of $0.020 per share), as compared to a net loss of $255,723 (loss of $0.068 per share) for the comparative period in 2019.

Cash flows

During the nine months ended August 31, 2020, net cash used by the Company in operating activities was $1,248,132, as compared to net cash used in operating activities of $85,757 for the comparative period in 2019. The substantial increase of spending in operations is in direct relation with the increased scope of activities through the Company’s shift into the psychedelic space, and other additional expenses in terms of advertising and promotional activities, as well as legal expenses incurred on the Share Exchange and its listing process.

During the nine months ended August 31, 2020, net cash provided by financing activities was $4,381,414, as compared to cash inflows of $30,000 in the comparative period in 2019 from proceeds received on a promissory note. Prior to the Share Exchange, the Company advanced funds of $117,521 to Psyched Wellness and made payments of $138,008 to settle debts previously owed to certain directors and officers of the Company (see “Key Management Compensation and Related Party Transactions” for details), which was offset by new sources of funds raised from April through July 2020. In April 2020, the Company closed the Seed Financing for gross proceeds of $670,000, and subsequently raised additional gross proceeds of $4,056,095 from closing of the three tranches of the Series A Financing. In connection to the Series A Financing, total finders’ fees of $237,160 were paid out in cash.

Working Capital and Liquidity Outlook

The Company currently has no regular cash flows from operations, and the level of operations is principally a function of availability of capital resources. The primary source of funding has been through the completion of private placement financings of equity securities and convertible debentures. While it was able to raise funds through the Seed Financing and the Series A Financing, the Company will likely have to continue to rely on equity or debt financings for its working capital requirements. There is no guarantee that the Company will be able to successfully complete such financings, as market conditions and business performance may dictate availability and interest.

As at August 31, 2020, the Company had current assets of $3,576,959 (November 30, 2019 – $4,779), including cash of $3,134,753 (November 30, 2019 – $1,471) to settle current liabilities of $85,254 (November 30, 2019 – $419,374), for a working capital $3,491,705 (November 30, 2019 – working capital deficiency of $414,595).

Management is actively monitoring cash forecasts and managing performance against its forecasts. As of the date of the MD&A, the Company has access to approximately $2.9 million of funds available at its disposal. The Company had also further improved its financial position by substantially settling previously owed debts. Nevertheless, management will continue to look for new sources of financing in the next 12 months, to fund its working capital to advance the Company’s operations.

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

Key Management Compensation and Related Party Transactions

Key management personnel compensation

Key management includes the Company’s directors and officers with authority and responsibility for planning, directing and controlling the activities of an entity, directly or indirectly.

The remuneration of directors and other members of key management personnel during the nine months ended August 31, 2020 and 2019 were as follows:

020 and 2019 were as follows:
	2020	2019
	$	$
Management and consulting fees	72,500	28,533
Professional fees	49,625	13,500
Stock-based compensation	236,098	-
	358,223	37,533

On March 25, 2020, the Company and S4 Management Group Inc. (“S4 Management”), an entity controlled by the CEO, entered into a consulting agreement, for a monthly renumeration of $8,000 in consideration of the CEO’s services to be provided to the Company. For the nine months ended August 31, 2020, S4 Management charged $32,000 (2019 – $nil) for consulting services provided to the Company, which are included in management and consulting fees. As at August 31, 2020, no balance was owed to S4 Management (November 30, 2019 – $nil).

On March 25, 2020, the Company and David Shisel, the COO of the Company, entered into a consulting agreement, for a monthly renumeration of $8,000 in consideration of the COO’s services to be provided to the Company. For the nine months ended August 31, 2020, the COO charged $32,000 (2019 – $nil) for consulting services provided to the Company, which are included in management and consulting fees. As at August 31, 2020, an amount of $8,800 (November 30, 2019 – $nil) owing to the COO was included in accounts payable and accrued liabilities. The amount outstanding is unsecured, non-interest bearing and due on demand.

During the nine months ended August 31, 2020, the Company paid a management bonus of $8,500 (2019 – $nil) to certain of its directors and officers for services rendered prior to the Share Exchange. Mr. Presement, the former CEO, received a cash bonus of $2,500, while Mr. Li, the CFO, Mr. Hazelton and Jeremy Goldman, a former director of the Company, were also paid a cash bonus of $2,000 each. The bonus was included in management and consulting fees.

During the nine months ended August 31, 2020, Branson Corporate Services Ltd. (“Branson”), where the CFO is employed, charged fees of $49,625 (2019 – $13,500), for CFO services provided to the Company, as well as other accounting and administrative services, which are included in professional fees. As at August 31, 2020, no balance was owed to Branson (November 30, 2019 – $19,755; included in accounts payable and accrued liabilities).

During the nine months ended August 31, 2019, the Company was charged $20,028 (USD$15,000) and $8,505, respectively, by David Shaddrick, a former President and CEO of the Company, and Harold Doran, a former CFO, for consulting and accounting services provided to the Company.

Stock-based compensation

On July 13, 2020, the Company granted 7,312,000 options, of which 6,000,000 options were granted to officers and directors. The options vest three months from the date of grant. During the nine months ended August 31, 2020, stockbased compensation of $236,098 (2019 – $nil) attributable to these 6,000,000 options was recorded in connection with the vesting of options.

Other related party transactions

On March 5, 2020, the Company entered into a settlement (“Debt Settlement”) with Eric Salsberg, a former director of the Company, and David Shaddrick, as debts of $216,190 previously owed to the parties were settled for payments of $79,173 and $58,835, respectively. As a result, the Company recorded a gain of $78,182 on the Debt Settlement. Eric

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

Salsberg was issued 1,000,000 common shares of the Company at a price of $0.02 per common share, as part of the Shares-for-Debt Issuances on April 23, 2020, to settle a remaining debt balance of $20,000.

On April 23, 2020, the Company entered into a Shares-for-Debt Issuance with Branson through the issuance of 1,779,750 common shares at a price of $0.02 per common share, to settle debts of $35,595.

On May 1, 2020, the Company advanced funds of $117,521 to Psyched Wellness, in exchange of a promissory note. The promissory note is unsecured, due on demand and bears interest at a rate of 12% per annum. Upon closing of the Share Exchange, the balance had been eliminated on consolidation. The Company recognized interest income of $155 on the promissory note from the period from issuance to May 5, 2020.

Risk Management

The Company’s financial instruments consist primarily of cash, accounts payable and promissory notes payable. The Company is exposed to various risks as it relates to these financial instruments. There have not been any changes in the nature of these risks or the process of managing these risks from previous reporting periods.

Credit risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. Cash is held with reputable Canadian chartered banks and in trust with the Company’s legal counsel, which is closely monitored by management. Management believes that the credit risk concentration with respect to financial instruments is minimal. The maximum exposure to credit risk at period-end is limited to the accounts receivable balance.

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company. The Company generates cash flow primarily from its financing activities. As at August 31, 2020, the Company had a cash balance of $3,134,753 (November 30, 2019 – $1,471) to settle current liabilities of $85,254 (November 30, 2019 – $419,374).

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet its liabilities as they come due. The Company has undertaken several proposed restructuring initiatives and other corporate measures to rationalize its capital and debt structure to better position the Company for future opportunities and meet its obligations as they come due. Until these initiatives and efforts are finalized, there is no assurance that one or any of these initiatives will be successful.

Foreign exchange risk

From time to time, the Company incurs transactions in currencies denominated in currencies other than the CAD, primarily in United States dollars (“USD”). The Company’s exposure to fluctuations in foreign exchange is related to amounts of USD denominated accounts payable as follows:

	August 31,	November 30,
	2020	2019
	$	$
Accounts payable and term loans	-	92,000

Significant Accounting Judgments and Estimates

The preparation of the Company’s unaudited condensed interim consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, revenue and expenses. On an ongoing basis, management evaluates its judgments and estimates in relation to assets, liabilities, revenue and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments and estimates.

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

Actual outcomes may differ from these estimates under different assumptions and conditions. These estimates are reviewed periodically, and adjustments are made as appropriate in the period they become known. Items for which actual results may differ materially from these estimates are described as follows:

Going concern

At each reporting period, management exercises judgment in assessing the Company’s ability to continue as a going concern by reviewing the Company’s performance, resources and future obligations.

Business combination

In a business acquisition, substantially all identifiable assets, liabilities and contingent liabilities acquired are recorded at the acquisition date at their respective fair values. The date on which the acquirer obtains control of the acquiree is generally the date on which the acquirer legally transfers the consideration, acquires the assets and assumes the liabilities of the acquiree – the closing date. However, the acquirer might obtain control on a date that is either earlier or later than the closing date. Management exercises judgment in considering all pertinent facts and circumstances in identifying the acquisition date.

Classification of an acquisition as a business combination or an asset acquisition depends on whether the assets acquired constitute a business, which can be a complex judgment. Whether an acquisition is classified as a business combination or asset acquisition can have a significant impact on the entries made on and after acquisition. In determining the fair value of all identifiable assets, liabilities and contingent liabilities acquired, the most significant estimates relate to contingent consideration and intangible assets. Management also exercises judgement in estimating the probability and timing of when earn-outs are expected to be achieved which is used as the basis for estimating fair value. For any intangible asset identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent valuation expert or management may develop the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows. The evaluations are linked closely to the assumptions made by management regarding the future performance of these assets and any changes in the discount rate applied.

Fair value of financial assets and financial liabilities

Fair value of financial assets and financial liabilities on the consolidated statements of financial position that cannot be derived from active markets, are determined using a variety of techniques including the use of valuation models. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. The judgments include, but are not limited to, consideration of model inputs such as volatility, estimated life and discount rates.

Goodwill

Goodwill is tested for impairment annually and whenever events or changes in circumstances indicate that the carrying amount of goodwill has been impaired. In order to determine if the value of goodwill has been impaired, the groups of assets (each a “Cash-Generating Unit or a “CGU”) to which goodwill has been allocated must be valued using present value techniques. The Company assesses impairment by comparing the recoverable amount of a long-lived asset, CGU, or CGU group to its carrying value. The recoverable amount is defined as the higher of: (i) value in use; or (ii) fair value less cost to sell. The determination of the recoverable amount involves significant estimates and assumptions. When applying this valuation technique, the Company relies on a number of factors, including historical results, business plans, forecasts and market data. Changes in the conditions for these judgments and estimates can significantly affect the assessed value of goodwill.

Warrants and options

Warrants and options are initially recognized at fair value, based on the application of the Black-Scholes valuation model (“Black-Scholes”). This pricing model requires management to make various assumptions and estimates which are susceptible to uncertainty, including the expected volatility of the share price, expected forfeitures, expected dividend yield, expected term of the warrants or options, and expected risk-free interest rate.

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

Income taxes

Income taxes and tax exposures recognized in the financial statements reflect management’s best estimate of the outcome based on facts known at the reporting date. When the Company anticipates a future income tax payment based on its estimates, it recognizes a liability. The difference between the expected amount and the final tax outcome has an impact on current and deferred taxes when the Company becomes aware of this difference.

In addition, when the Company incurs losses that cannot be associated with current or past profits, it assesses the probability of taxable profits being available in the future based on its budgeted forecasts. These forecasts are adjusted to take account of certain non-taxable income and expenses and specific rules on the use of unused credits and tax losses. When the forecasts indicate the sufficient future taxable income will be available to deduct the temporary differences, a deferred tax asset is recognized for all deductible temporary differences.

Summary of Significant Accounting Policies

The accounting policies applied by the Company in its unaudited condensed interim consolidated financial statements are the same as those noted in the Company’s audited financial statements for the year ended November 30, 2019, unless otherwise noted below.

Adoption of New Accounting Policies

The Company adopted the following standards, effective December 1, 2019. The changes were made in accordance with the applicable transitional provisions:

IFRS 16 – Leases (“IFRS 16”)

IFRS 16 was issued in January 2016 and replaces IAS 17 – Leases as well as some lease related interpretations. With certain exceptions for leases under twelve months in length or for assets of low value, IFRS 16 states that upon lease commencement a lessee recognizes a right-of-use (“ROU”) asset and a lease liability. The ROU asset is initially measured at the amount of the liability plus any initial direct costs. After lease commencement, the lessee shall measure the ROU asset at cost less accumulated amortization and accumulated impairment. A lessee shall either apply IFRS 16 with full retrospective effect or alternatively not restate comparative information but recognize the cumulative effect of initially applying IFRS 16 as an adjustment to opening equity at the date of initial application. IFRS 16 requires that lessors classify each lease as an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. Otherwise it is an operating lease.

The Company has reviewed its leasing arrangements outstanding as at December 1, 2019, in respect of the new lease standard, and had assessed that there was no material impact upon adoption of this new standard on the Company’s unaudited condensed interim consolidated financial statements.

IFRIC 23 – Uncertainty Over Income Tax Treatments (“IFRIC 23”)

IFRIC 23 clarifies the accounting for uncertainties in income taxes. The IFRS Interpretations Committee (“IFRIC”) concluded that an entity shall consider whether it is probable that a taxation authority will accept an uncertain tax treatment. If an entity concludes it is probable that the taxation authority will accept an uncertain tax treatment, then the entity shall determine taxable profit (tax loss), tax bases, unused tax losses and credits or tax rates consistently with the tax treatment used or planned to be used in its income tax filings. If an entity concludes it is not probable that the taxation authority will accept an uncertain tax treatment, the entity shall reflect the effect of uncertainty in determining the related taxable profit (tax loss), tax bases, unused tax losses and credits or tax rates. The Company had assessed that there was no material impact upon adoption of this new standard on its unaudited condensed interim consolidated financial statements.

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

Recent Accounting Pronouncements

At the date of authorization of the Company’s unaudited condensed interim consolidated financial statements, the IASB and IFRIC have issued the following amendments which are effective for annual periods beginning on or after December 1, 2020:

IAS 1 – Presentation of Financial Statements (“IAS 1”) and IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”)

IAS 1 and IAS 8 were amended in October 2018 to refine the definition of materiality and clarify its characteristics. The revised definition focuses on the idea that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements. The amendments are effective for annual reporting periods beginning on or after December 1, 2020.

Business Combination

On May 5, 2020, the Company completed the Share Exchange pursuant to which the Company acquired all issued and outstanding shares of Psyched Wellness from holders of Psyched Wellness shares (the “Share Exchange Agreement”). Upon closing of the Share Exchange, Psyched Wellness became a wholly-owned subsidiary of the Company. The Company determined that the Share Exchange was a business combination in accordance to the definition of IFRS 3 – Business Combination, and as such, has accounted for it in accordance with this standard, with the Company being the acquirer on the closing date.

The purchase price for the Share Exchange was $360,000 and was satisfied in full by the Company issuing to holders of Psyched Wellness shares an aggregate of 18,000,000 common shares. The purchase price and other terms of the Share Exchange Agreement were negotiated at arm’s length with the Board of the Company and Psyched Wellness.

The following table sets forth the preliminary allocation of the purchase price to the assets acquired, based on a preliminary estimate of fair value. Final valuations of assets and liabilities are not yet complete due to the timing of the Share Exchange. The preliminary allocation is subject to adjustments:

Purchase Price Consideration Paid
	$
Fair value of common shares issued	360,000
Fair value of settlement of pre-existing balance	117,676
Total consideration paid	477,676
Net Identifiable Asset Acquired
Accounts receivable	19,868
Prepaid expenses	30,600
Accounts payable and accrued liabilities	(21,403)
Total net identifiable assets acquired	29,065
Goodwill	448,611

Total consideration of $477,676 paid on the Share Exchange is comprised of the following components that were measured at the estimated fair value on the transaction date:

(i) The fair value of the 18,000,000 common shares, issued to holders of Psyched Wellness shares, was determined to be $360,000 based on the fair value of founders’ shares issued on April 23, 2020.
(ii) The effective settlement of a pre-existing relationship related to the promissory note to the Company by Psyched Wellness of $117,676, including interest of $155.

The net loss attributed to Psyched Wellness for the period from acquisition was $288,812.

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

Off Balance Sheet Arrangements

As at August 31, 2020 and the date of this MD&A, the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the results of operations or financial condition of the Company.

Subsequent Events

On October 21, 2020, the Company received approval for its listing on the CSE, and on October 22, 2020, its common shares commenced trading under the ticker symbol “PYSC” on the exchange.

On October 21, 2020, the Company also granted 1,500,000 options to various advisors and consultants. The options are exercisable at a price of $0.15 per common share for a period of five years. The options vest immediately on grant.

Disclosure of Outstanding Share Data as of October 26, 2020

	Authorized	Outstanding
Voting or equity securities issued and outstanding	Unlimited number of common shares	104,642,930 common shares
Securities convertible or exercisable into voting or equity		8,812,000 options and 2,369,200 warrants exercisable to acquire common shares of the Company.

Capital Management

The Company’s objectives when managing capital is to safeguard its ability to continue as a going concern and to maintain optimal returns to shareholders and benefits for its stakeholders. While the Company does not yet have any commercial operations, management monitors its capital structure and makes adjustments according to market conditions to meet its objectives given the current outlook of the business and industry in general. The Board of the Company does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the management team to sustain the future development of the business.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company’s capital management objectives, policies and processes have remained unchanged during the nine months ended August 31, 2020 and the year ended November 30, 2019.

The Company is not subject to any externally imposed capital requirements.

Risk Factors

There are numerous and varied risks, known and unknown, that may prevent the Company from achieving its goals. If any of these risks occur, the Company’s business, financial condition or results of operation may be adversely affected. In such case, the trading price of the Company’s common shares could decline, and investors could lose all or part of their investment. The following is a summary of risks that could be applicable to the business of the Company:

Limited operating history in psychedelic industry

The Company, with a limited operating history in the psychedelic industry, is in the early stage of development and must be considered as a start-up company. As such, the Company is subject to many risks common to such enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial and other resources and lack of revenue. There is no assurance that the Company will be successful in achieving a return on shareholders’ investment and the likelihood of success must be considered in light of its early stage of operations. The Company also has no history of earnings.

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

Because the Company has a limited operating history in an emerging area of business, investors should consider and evaluate its operating prospects in light of the risks and uncertainties frequently encountered by early-stage companies in rapidly evolving markets. These risks may include:

Risks that it may not have sufficient capital to achieve its growth strategy.
Risks that it may not develop its product and service offerings in a manner that enables it to be profitable and meet its patients’ or customers’ requirements.
Risks that its growth strategy may not be successful.
Risks that fluctuations in its operating results will be significant relative to its revenues; and
Risks relating to an evolving legal and regulatory regime for cannabis that varies significantly by jurisdiction.

The Company’s future growth will depend substantially on its ability to address these and the other risks described in this section. If it does not successfully address these risks, its business may be significantly harmed.

Additional financing

The Company believes that its raised capital is sufficient to meet its presently anticipated working capital and capital expenditure requirements for the near future. This belief is based on its operating plan which, in turn, is based on assumptions, which may prove to be incorrect. In addition, the Company may need to raise significant additional funds sooner to support its growth, respond to competitive pressures, acquire or invest in complementary or competitive businesses or technologies, or take advantage of unanticipated opportunities. If its financial resources are insufficient, it will require additional financing to meet its plans for expansion. The Company cannot be sure that this additional financing, if needed, will be available on acceptable terms or at all.

Furthermore, any debt financing, if available, may involve restrictive covenants, which may limit its operating flexibility with respect to business matters. If additional funds are raised through the issuance of equity securities, the percentage ownership of existing shareholders will be reduced, such shareholders may experience additional dilution in net book value, and such equity securities may have rights, preferences or privileges senior to those of its existing shareholders. If adequate funds are not available on acceptable terms or at all, the Company may be unable to develop or enhance its services and products, take advantage of future opportunities, repay debt obligations as they become due, or respond to competitive pressures, any of which could have a material adverse effect on its business, prospects, financial condition, and results of operations.

The market price of securities is volatile and may not accurately reflect the long-term value of the Company

Securities markets have a high level of price and volume volatility, and the market price of securities of many companies has experienced substantial volatility in the past. This volatility may affect the ability of holders of shares to sell their securities at an advantageous price. Market price fluctuations in the shares may be due to the Company’s operating results failing to meet expectations of securities analysts or investors in any period, downward revision in securities analysts’ estimates, adverse changes in general market conditions or economic trends, acquisitions, dispositions or other material public announcements by the Company or its competitors, along with a variety of additional factors. These broad market fluctuations may adversely affect the market price of the shares.

Financial markets historically at times experienced significant price and volume fluctuations that have particularly affected the market prices of equity securities of companies and that have often been unrelated to the operating performance, underlying asset values or prospects of such companies. Accordingly, the market price of the shares may decline even if the Company’s results, underlying asset values or prospects have not changed.

Additionally, these factors, as well as other related factors, may cause decreases in investment values that are deemed to be other than temporary, which may result in impairment losses. There can be no assurance that continuing fluctuations in price and volume will not occur. If such increased levels of volatility and market turmoil continue, the Company’s operations could be adversely impacted, and the trading price of the shares may be materially adversely affected.

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

Volatile global financial and economic conditions

Current global financial and economic conditions remain extremely volatile. Access to public and private capital and financing continues to be negatively impacted by many factors as a result of the global financial crisis and global recession. Such factors may impact the Company’s ability to obtain financing in the future on favorable terms or obtain any financing at all. Additionally, global economic conditions may cause a long-term decrease in asset values. If such global volatility, market turmoil and the global recession continue, the Company’s operations and financial condition could be adversely impacted.

Changes in applicable federal, provincial, or state laws and regulations, or the expansion of current, or the enactment of new laws or regulations relating to sale, manufacturing and distribution of mushroom-derived products, could adversely affect the Company’s business.

While the sale, manufacturing and distribution of Amanita Muscaria mushrooms are not currently subject to regulation under the Controlled Drugs and Substances Act in Canada and under the Federal Controlled Substances Act (“FCSA”) in the US, there is no certainty that this exclusion could not be altered by court or governmental action or reinterpretation. If either muscimol or products containing extracts from Amanita Muscaria would be become controlled substances, the Company may need to seek to adjust its product development efforts to ensure compliance with applicable laws and regulations, which may result in substantial delays to achieving commercial revenue, change in timing of securing the required permits and licenses and unforeseen costs, which would adversely affect the Company’s business.

There is no certainty that in the future FDA or Health Canada will not regulate the use of muscimol or Amanita Muscaria extracts and prohibit its use as a dietary ingredient in dietary supplements or a natural health product. There is no certainty that muscimol, or other dietary ingredients marketed by the Company, will be considered a grandfathered dietary ingredient under the Dietary Supplement Health and Education Act of 1994 (US) (“DSHEA”), meet the definition of a dietary ingredient, or would otherwise be permitted for use under the DSHEA. There is no certainty that the FDA would file a new dietary ingredient notification (“NDIN”) with no objections for muscimol or any other extract from Amanita Muscaria , or file a NDIN with no objections for any other dietary ingredients the Company seeks to market, and thus there is a possibility that certain extracts and dietary ingredients of the Company may not be marketed as dietary ingredients in dietary supplements in the US. It appears that a clinical trial on muscimol was commenced on or about June 23, 2000 to examine its ability to control seizures in patients with intractable epilepsy. The trial was a Phase I trial with three enrolled subjects and appears to have been terminated prior to completion.[1] Another interventional trial intended for subjects with Parkinson’s disease was commenced and withdrawn with no enrollment.[2] Under Section 201(ff)(3)(B) of the Food, Drug, and Cosmetic Act (US), a substance may not be used as a dietary ingredient if it includes “an article” that was first (1) approved as a new drug or (2) approved as an Investigational New Drug Application (“INDA”) for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public. Thus, it is possible that an INDA has been filed and/or authorized to study muscimol as a drug and FDA could take the position that muscimol is precluded from being an ingredient in dietary supplements. Similarly, other ingredients or extracts from Amanita muscaria that the Company may seek to market in the future may also be precluded from being marketed as dietary ingredients in dietary supplements.

Risk in the Company becoming subject to enforcement actions by various government authorities that would materially impact the Company’s business

The Company relies on the supply of muscimol and its extracts, which may be imported from other countries. In the US, neither Amanita Muscaria nor muscimol are scheduled under the FCSA and therefore, are not under the enforcement authority of the Drug Enforcement Administration (“DEA”). If in the future, the DEA exerts jurisdiction over Amanita Muscaria or muscimol products, the Company may become subject to additional licensing requirements, which may require additional capital. There is no assurance that the Company will be able to obtain any such licenses, be eligible to apply for such licenses, or comply with the current or evolving regulatory framework in any jurisdiction where it carries on its business or sells its products, which would adversely affect the Company’s business.

1 https://clinicaltrials.gov/ct2/show/NCT00005925

2 https://clinicaltrials.gov/ct2/show/NCT00921128

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

If the Company’s historical, current or future sales or operations were found to be in violation of such regulations, the Company may be subject to enforcement actions in such jurisdictions including, but not limited to penalties, including criminal and significant civil monetary penalties, damages, fines, imprisonment, exclusion from participation in government programs, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, private “ qui tam ” actions brought by individual whistleblowers in the name of the government, or refusal to allow the Company to enter into supply contracts, and the curtailment or restructuring of the Company’s operations, any of which could adversely affect the Company’s ability to operate its business and its results of operations.

The Company may become subject to additional government regulation and legal uncertainties that could restrict the demand for its services or increase its cost of doing business, thereby adversely affecting its financial results.

The activities of the Company are subject to regulation by governmental authorities. Achievement of the Company’s business objectives are contingent, in part, upon compliance with regulatory requirements enacted by these governmental authorities and obtaining all regulatory approvals, where necessary, for the sale of its products. The Company cannot predict the time required to secure all appropriate regulatory approvals for its products, or the extent of testing and documentation that may be required by governmental authorities. Any delays in obtaining, or failure to obtain regulatory approvals would significantly delay the development of markets and products and could have a material adverse effect on the business, results of operations and financial condition of the Company.

The Company’s operations are subject to a variety of laws, regulations and guidelines relating to the manufacture, management, transportation, storage and disposal of food and health supplement products including laws and regulations relating to health and safety and the conduct of operations. Changes to such laws, regulations and guidelines due to matters beyond the control of the Company may cause adverse effects to the Company’s operations.

While the impact of the changes are uncertain and are highly dependent on which specific laws, regulations or guidelines are changed and on the outcome of any such court actions, it is not expected that any such changes would have an effect on the Company’s operations that is materially different than the effect on similar-sized companies in the same business as the Company.

Local, provincial, state and federal laws and regulations governing muscimol are broad in scope and are subject to evolving interpretations, which could require the Company to incur substantial costs associated with bringing the Company’s operations into compliance. In addition, violations of these laws, or allegations of such violations, could disrupt the Company’s operations and result in a material adverse effect on its financial performance. It is beyond the Company’s scope to predict the nature of any future change to the existing laws, regulations, policies, interpretations or applications, nor can the Company determine what effect such changes, when and if promulgated, could have on the Company’s business.

Complying with new and existing government regulation, in Canada, the US and abroad, could increase the Company’s costs significantly and adversely affect its financial results.

The processing, formulation, manufacturing, packaging, labeling, advertising, distribution and sale of the Company’s products are subject to regulation by several Canadian and US federal departments and agencies, including Health Canada, the Natural and Non-Prescription Health Product Directorate, the FDA, the Federal Trade Commission, the Consumer Products Safety Commission, the US Public Health Service, the US Customs and Border Protection, the Occupational Safety and Health Administration, as well as various state, local and international laws and agencies of the localities in which the Company’s products are sold or marketed.

Government regulations may prevent or delay the introduction, or require the reformulation, of the Company’s products. Some agencies could require the Company to remove a particular product from the market, delay or prevent the import of raw materials for the manufacture of the Company’s products, or otherwise disrupt the Company’s marketing efforts. Any such government actions would result in additional costs, including lost revenues from any additional products that the Company might be required to remove from the market, which additional costs could be material. Any such government actions also could lead to liability, substantial costs and reduced growth prospects. Moreover, there can be no assurance that new laws or regulations imposing more stringent regulatory requirements on the dietary supplement industry will not be enacted or issued. In addition, complying with adverse event reporting requirements imposes

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

additional costs on the Company, which costs could become significant in the event more demanding reporting requirements are put into place.

Additional or more stringent regulations of dietary supplements and other products may be considered from time to time. These developments could require reformulation of certain products to meet new standards, recalls or discontinuance of certain products that cannot be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific substantiation, adverse event reporting or other new requirements. These developments also could increase the Company’s costs significantly.

Should Health Canada and/or the FDA or any provincial and state or local agencies or regulators amend its guidelines or impose more stringent interpretations of current laws or regulations, the Company may not be able to comply with these new guidelines. As the products manufactured by the Company, through CMOs engaged by the Company, will be ingested by consumers, the Company is always subject to the risk that one or more of its products that currently are not subject to regulatory action may become subject to regulatory action. Such regulations could require the reformation of certain products to meet new standards, market withdrawal or discontinuation of certain products not able to be reformulated, imposition of additional record keeping requirements, expanded documentation regarding the properties of certain products, expanded or different labeling and/or additional scientific substantiation. Failure to comply with applicable requirements could result in sanctions being imposed on the Company, its contract manufacturing partners or third-party distributors, including but not limited to fines, injunctions, product recalls, seizures and criminal prosecution.

Additionally, Health Canada and/or the FDA may not accept the evidence of safety for any new dietary ingredients that the Company, may decide to use, and Health Canada and/or the FDA’s refusal to accept such evidence could result in designation of such dietary ingredients as adulterated, until such time as reasonable expectation of safety for the ingredient can be established to the satisfaction of Health Canada or the FDA.

There can be no assurance that Health Canada and/or the FDA will not consider particular labeling statements used by the Company to be drug claims rather than acceptable statements of nutritional support, necessitating approval of a costly new drug application, or re-labeling to delete such statements. It is also possible that such agencies could allege false statements were submitted to it if structure/function claim notifications were either non-existent or so lacking in scientific support as to be plainly false.

As a dietary supplement distributor in the US and a natural health product distributor in Canada, the Company will be required to also follow cGMPs that apply to its specific distribution operations. Failure to comply with applicable cGMP regulations could result in sanctions being imposed on the Company, including fines, injunctions, civil penalties, delays, suspensions or withdrawals of approvals, operating restrictions, interruptions in supply, recalls, withdrawals, issuance of safety alerts, and criminal prosecutions, any of which could have a material adverse impact on the Company’s business, financial condition, results of operations, and prospects. The FDA could also make negative cGMP findings public through a Warning Letter or release of an FDA Form 483 Observation report through the Freedom of Information Act request. Such negative publicity would adversely affect the Company’s business, financial condition and results of operations.

The Company may become subject to additional laws or regulations or other federal, provincial, state, or foreign regulatory authorities. The laws or regulations which are considered favorable may be repealed, or more stringent interpretations of current laws or regulations may be implemented. Any or all of such requirements could be a burden to the Company and require it to:

Change the way the Company conducts business.
Use expanded or different labeling.
Recall, reformulate or discontinue certain products.
Keep additional records.
Increase the available documentation of the properties of its products; and/or
Increase the scientific proof of product ingredients, safety, and/or usefulness.

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

Regulatory approvals and permits

The Company and its management may be required to obtain and maintain certain permits, licenses and approvals in the jurisdictions in which it operates. There can be no assurance that the Company and its management will be able to obtain and/or maintain the necessary permits, licenses and approvals. Any regulatory authority with jurisdiction could also impose certain restrictions on the Company’s ability to operate in the relevant jurisdiction. Any material delay or failure to receive these items, or onerous regulatory restrictions would delay and/or inhibit the Company’s ability to conduct its business and would adversely affect the Company’s business, financial condition, and results of operations.

Securities Regulatory Authorities and CSE policies regarding business activities

The Canadian Securities Regulatory Authorities has not currently provided specific advice regarding issuers involved in the production and distribution of mushroom-derived products, such as the products that the Company intends to manufacture and distribute. As such, the Company believes that that a disclosure-based approach remains appropriate for issuers a business such as that of the Company. There can be no assurance that this heightened scrutiny will not in turn lead to the imposition of certain restrictions on the Company’s ability to invest in the US or any other jurisdiction. The CSE has stated that it is supportive of entrepreneurial issuers that operate in a rapidly evolving legal framework provided that the issuers offer appropriate risk disclosure and demonstrate that they are operating in accordance with applicable laws. It is possible that the Company may become subject to increase scrutiny by the securities regulators and/or the CSE as a result of the business, which may have a detrimental effect on the financial results of the Company.

Risks relating to product development and pre-clinical study design and execution

The Company has not begun to market any product or to generate revenues. The Company may be required to spend a significant amount of capital to fund research and development, animal studies and pre-clinical trials. As a result, the Company expects that its operating expenses will increase significantly and, consequently, it will need to generate significant revenues to become profitable. There can be no assurances that the intellectual property of the Company, or the Company’s products or technologies it may acquire, will meet applicable regulatory standards, obtain required regulatory approvals, be capable of being produced in commercial quantities at reasonable costs, or be successfully marketed. The Company may be undertaking additional laboratory, animal studies, and pre-clinical studies with respect to development of its products, and there can be no assurance that the results from such studies or trials will result in a commercially viable product or will not identify unwanted side effects.

Before obtaining marketing approval from regulatory authorities for the sale of its product candidates, the Company may be required to conduct pre-clinical studies in animals to demonstrate the safety and efficacy of the Company’s products. Pre-clinical testing is expensive and difficult to design and implement, can take many years to complete, and has uncertain outcomes. If testing and trials of the Company’s products fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, the Company would incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of its products. The Company may be required to demonstrate with substantial evidence through well-controlled clinical trials that its products are safe and effective for use in a diverse population before the Company can seek regulatory approvals for their commercial sale. Negative results from pre-clinical trials may prevent the commercialization of the Company’s products.

The outcome of pre-clinical studies may not predict the success of later trials and tests that may be required and interim results of pre-clinical studies do not necessarily predict final results. A number of companies in the industry have suffered significant setbacks due to lack of efficacy or unacceptable safety profiles, notwithstanding promising results in earlier tests and trials. Positive results from pre-clinical studies should not be relied upon as an indication of future commercial success. There is no assurance that the pre-clinical studies that it may conduct will demonstrate adequate efficacy and safety to result in regulatory approval to market any of its products in any jurisdiction. Products that the Company is developing may fail for safety or efficacy reasons at any stage of the testing process. If the Company cannot demonstrate safety and effectiveness of its products through pre-clinical clinical, it will need to re-evaluate its strategic plans. Furthermore, the quality and robustness of the results and data of any pre-clinical study the Company conducts will depend upon the selection of a patient population for clinical testing. If the selected population is not representative of the intended population, further clinical testing of product candidates or termination of research and development

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

activities related to the selected indication may be required. The Company’s ability to commence pre-clinical studies or the choice of product development path could compromise business prospects and prevent the achievement of revenue.

The Company may be subject to unanticipated costs or delays that would accelerate its need for additional capital or increase the costs of individual clinical trials. If the Company is unable to raise additional capital when required or on acceptable terms, it may have to significantly delay, scale back or discontinue the development and/or commercialization of one or more of its Amanita Muscaria -derived products.

Furthermore, the exact nature of the studies that various regulatory agencies may require is not known and can be changed at any time by the regulatory agencies, increasing the financing risk and potentially increasing the time to market that the Company faces, which could adversely affect the Company’s business, financial condition or results of operations.

Delays in projected development goals

The Company sets goals for, and makes public statements regarding, the expected timing of the accomplishment of objectives material to its success, the commencement and completion of research and development initiatives and the expected costs to develop its products. The actual timing and costs of these events can vary dramatically due to factors within and beyond the Company’s control, such as delays or failures in product tests and trials, issues related to the raw materials supply, uncertainties inherent in the regulatory approval process, market conditions and interest by the Company’s distribution partners in the Company’s products among other things. The Company may not make regulatory submissions or receive regulatory approvals as planned; its product development and testing initiatives may not be completed; or it may not secure partnerships that are critical to establishing commercial sales. Any failure to achieve one or more of these milestones as planned would have a material adverse effect on our business, financial condition, and results of operations.

The Company’s management has limited experience in the area of functional mushrooms

While the Company’s management team has experience in operating development-stage public companies and working with companies in highly regulated industries such as cannabis, this experience does not guarantee that the Company will be successful in developing products in the functional mushroom space or achieve commercial success selling these products. The Company’s management also relies on expertise and advice of its Board, Advisory Board and other industry domain experts who have experience in consumer package foods, government relations, clinical research, cannabis and dietary supplements industries, however, there is no assurance that such expertise will continue to be available to the Company’s management. With no direct experience in the functional mushrooms space and obtaining regulatory approvals for new food supplement products, management may not be fully aware of relevant industry trends, which may impact the ability of the Company to make the most prudent decisions and choices regarding the direction of the business. The Company’s business, financial condition or results of operations could be adversely affected if the internal infrastructure is inadequate, including if the Company is not able to secure outside consultants or source the necessary expertise to achieve certain business objectives.

Reliance on management and advisory board

The Company will need to expand and effectively manage its managerial, operational, financial, development and other resources in order to successfully pursue its development and commercialization efforts of its products. The success of the Company is currently dependent on the performance of its management team, which also relies on advice and guidance of certain members of the Board and Advisory Board, not all of whom are or will be bound by formal contractual employment agreements.

The Company’s success depends on its continued ability to attract, retain and motivate highly qualified people. The loss of the services of these persons would have a material adverse effect on the Company’s business and prospects in the short term and could delay or prevent the commercialization of its products, and the business may be harmed as a result. The Company may not be able to attract or retain qualified management and scientific personnel in the future due to the intense competition for qualified personnel with extensive management experience in such fields as pharmaceutical regulations, finance, manufacturing, marketing, law, and investment. If the Company is not able to attract and retain the necessary personnel to accomplish its business objectives, the achievement of its development objectives, its ability to

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

raise additional capital and its ability to implement its business strategy may be significantly reduced and could have a material adverse effect on the Company and its prospects.

Reliance on third-party suppliers, manufacturers, distributors and contractors

Due to the uncertain regulatory landscape for regulating mushroom-infused products in Canada and the US, the Company’s third-party suppliers, manufacturers, distributors, and contractors may elect, at any time, to decline or withdraw services necessary for the Company’s operations. Loss of these suppliers, manufacturers, distributors, and contractors may have a material adverse effect on the Company’s business and operational results.

The Company relies on CMOs over whom it may have limited control

The Company has limited manufacturing experience and will rely on CMOs to manufacture its products. The Company will rely on CMOs for manufacturing, filling, packaging, storing, and shipping of product in compliance with the Health Canada's and the FDA’s cGMP regulations applicable to the Company’s products. Health Canada and the FDA ensure the quality of products by carefully monitoring manufacturers’ compliance with cGMP regulations. The cGMP regulations contain minimum requirements for the methods, facilities and controls used in manufacturing, processing, and packing of the product. While the Company is collaborating with the Initial CMO that it expects to engage once the product formulation process is completed, there can be no assurances that the Initial CMO will be able to meet the Company’s timetable and requirements or that the Company will be able to enter into a definitive agreement with the Initial CMO. If the Company is unable enter into definitive agreement with the Initial CMO or to arrange for alternative third-party manufacturing sources on commercially reasonable terms or in a timely manner, the Company may be delayed in rolling out its products. Further, CMOs must operate in compliance with cGMP and failure to do so could result in, among other things, the disruption of product supplies. The Company’s dependence upon third parties for the manufacturing of its products may adversely affect the Company’s profit margins and its ability to develop and deliver products on a timely and competitive basis.

No assurance of commercial success

The successful commercialization of the Company’s products will depend on many factors, including, the Company’s ability to establish and maintain working partnerships with industry participants in order to market its products, the Company’s ability to supply a sufficient amount of its products to meet market demand, and the number of competitors within each jurisdiction within which the Company may from time to time be engaged. There can be no assurance that the Company or its industry partners will be successful in their respective efforts to develop and implement, or assist in developing and implementing, a commercialization strategy for the Company’s products.

Risks associated with increasing competition

There is potential that the Company will face intense competition from other companies, some of which can be expected to have longer operating histories and more financial resources and manufacturing and marketing experience the Company. Increased competition by larger and better financed competitors could materially and adversely affect the business, financial condition, and results of operations of the Company.

Mushroom-derived products industry may become highly competitive in the future. The Company may increasingly compete with numerous other businesses in the industry, many of which may come to possess greater financial and marketing resources and other resources than the Company. Such business is often affected by changes in consumer tastes and discretionary spending patterns, national and regional economic conditions, demographic trends, consumer confidence in the economy, traffic patterns, local competitive factors, cost and availability of raw material and labour, and governmental regulations. Any change in these factors could materially and adversely affect the Company’s operations.

Due to the early stage of the industry in which the Company operates, the Company expects to face additional competition from new entrants. If the number consumers of such products in the target jurisdictions increases, the demand for products will increase and the Company expects that competition will become more intense, as current and future competitors begin to offer an increasing number of diversified products. To remain competitive, the Company will require a continued high level of investment in research and development, marketing, sales and client support. The Company may not have sufficient resources to maintain research and development, marketing, sales and client support

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

efforts on a competitive basis which could materially and adversely affect the business, financial condition and results of operations the Company.

The success of new and existing products and services is uncertain

The Company expects to commit significant resources and capital to develop and market existing and new products, services and enhancements. These products and services are relatively untested, and the Company cannot provide any assurance that it will achieve market acceptance for these products and services, or other new products and services that it may offer in the future. Moreover, these and other new products and services may face significant competition with new and existing competitors. In addition, new products, services and enhancements may pose a variety of technical challenges and require the Company to attract additional qualified employees. The failure to successfully develop and market these new products, services or enhancements could seriously harm the Company’s business, financial condition and results of operations. Moreover, if the Company fails to accurately project demand for our new or existing products, it may encounter problems of overproduction or underproduction which would materially and adversely affect its business, financial condition and results of operations, as well as damage our reputation and brand.

Negative publicity or consumer perception may affect the success of our business

The success of the psychedelic industry may be significantly influenced by the public’s perception of mushroom-infused products, which could be controversial topics, and there is no guarantee that future scientific research, publicity, regulations, medical opinion, and public opinion relating to psychedelics will be favorable. The psychedelic industry is an early-stage business that is constantly evolving with no guarantee of viability. The market for mushroom-infused products is uncertain, and any adverse or negative publicity, scientific research, limiting regulations, medical opinion and public opinion (whether or not accurate or with merit) relating to the consumption of mushroom-infused products, whether in Canada, the US or elsewhere, may have a material adverse effect on our operational results, consumer base and financial results. Among other things, such a shift in public opinion could cause jurisdictions to abandon initiatives the psychedelic industry, thereby limiting the number of new jurisdictions into which the Company could identify potential acquisition opportunities.

Liability for activity of employees, contractors and consultants

The Company could be liable for fraudulent or illegal activity by its employees, contractors and consultants resulting in significant financial losses to claims or regulatory enforcement actions against the Company. Failure to comply with relevant laws could result in fines, suspension of licenses and civil or criminal action being taken against the Company. Consequently, the Company is subject certain risks, including that employees, contractors and consultants may inadvertently fail to follow the law or purposefully neglect to follow the law, either of which could result in material adverse effects to the financial condition of the Company.

Factors which may prevent realization of growth targets

The Company is currently in the early development stage. There is a risk that the additional resources will be needed, and milestones will not be achieved on time, on budget, or at all, as they are can be adversely affected by a variety of factors, including some that are discussed elsewhere in these risk factors and the following as it relates to the Company:

Delays in obtaining, or conditions imposed by, regulatory approvals.
Facility design errors.
Environmental pollution.
Non-performance by third party contractors.
Increases in materials or labour costs.
Construction performance falling below expected levels of output or efficiency.
Breakdown, aging or failure of equipment or processes.
Contractor or operator errors.
Labour disputes, disruptions or declines in productivity.
Inability to attract sufficient numbers of qualified workers.
Disruption in the supply of energy and utilities; and
Major incidents and/or catastrophic events such as fires, explosions, earthquakes or storms.

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

Management of growth

The Company may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls. The ability of the Company to manage growth effectively will require it to continue to implement and improve its operational and financial systems and to expand, train and manage its employee base. The inability of the Company to deal with this growth may have a material adverse effect on the Company’s business, financial condition, results of operations and prospects.

Conflicts of interest

Certain directors and officers of the Company are also directors, officers, or shareholders of other companies, which may give rise to conflicts of interest from time-to-time. The directors of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in a conflict is required under the applicable corporate laws to disclose his interest and to abstain from voting on such matter.

Constraints on marketing products

The development of the Company’s business and operating results may be hindered by applicable restrictions on sales and marketing activities imposed by government regulatory bodies. The regulatory environment in Canada, the US or other jurisdictions may limit the Company’s ability to compete for market share in a manner similar to other industries. If the Company is unable to effectively market its products and compete for market share, or if the costs of compliance with government legislation and regulation cannot be absorbed through increased selling prices for its products, the Company’s revenues and operating results could be adversely affected.

Operating risk and insurance coverage

The Company’s insurance coverage is intended to address all material risks to which it is exposed and is adequate and customary in its current state of operations. However, such insurance is subject to coverage limits and exclusions and may not be available for the risks and hazards to which the Company is exposed. In addition, no assurance can be given that such insurance will be adequate to cover the Company’s liabilities or will be generally available in the future or, if available, that premiums will be commercially justifiable. If the Company were to incur substantial liability and such damages were not covered by insurance or were in excess of policy limits, or if the Company were to incur such liability at a time when it is not able to obtain liability insurance, its business, results of operations and financial condition could be materially adversely affected.

Uninsurable risks

The psychedelic business is subject to several risks that could result in damage to or destruction of properties or facilities or cause personal injury or death, environmental damage, delays in production and monetary losses and possible legal liability. It is not always possible to fully insure against such risks, and the Company may decide not to take out insurance against such risks as a result of high premiums or other reasons. Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of the securities of the Company. The Company does not currently have any insurance policies covering its properties or the operation of its business and any liabilities that may arise as a result any of the above noted risks may cause a material adverse effect on the financial condition of the Company.

Enforcement of proprietary rights

The Company may be unable to adequately protect or enforce its proprietary rights. Its continuing success will likely depend, in part, on its ability to protect internally developed or acquired, intellectual property and maintain the proprietary nature of its technology through a combination of licenses and other intellectual property arrangements, without infringing the proprietary rights of third parties. The Company cannot prove assurance that its intellectual property owned by the Company will be held valid at the foreign government level if challenged, or that other parties will not claim rights in or ownership of its proprietary rights.

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

Ability to introduce and market new products

The Company is heavily reliant on the production and distribution of mushroom-derived products and believes that the anticipated market for its potential products will continue to exist and expand. If the Company’s products do not achieve sufficient market acceptance, it will be difficult for the Company to achieve profitability. The Company expects that its products will account for substantially all of its revenue for the foreseeable future. If the mushroom or functional foods market declines or the Company’s products fail to achieve greater market acceptance once the products are introduced, the Company will not be able to increase its revenues in order to achieve consistent profitability.

Even when product development is successful and regulatory approval has been obtained, the Company’s ability to generate significant revenue depends on the acceptance of its products by consumers. The Company cannot be sure that its mushroom-derived products will achieve the expected market acceptance and revenue if and when they obtain the requisite regulatory approvals. The market acceptance of any product depends on a number of factors, including the indication statement and warnings approved by regulatory authorities on the product label, continued demonstration of efficacy and safety in commercial use, the price of the product, the nature of any post-approval risk management plans mandated by regulatory authorities, competition, and marketing and distribution support. Any factors preventing or limiting the market acceptance of the Company’s products could have a material adverse effect on our business, results of operations, and financial condition.

Because the mushroom-derived products industry is in a nascent stage with uncertain boundaries, there is a lack of information about comparable companies available for potential investors to review in deciding about whether to invest in the Company and, few, if any, established companies whose business model the Company can follow or upon whose success the Company can build. There can be no assurance that the Company’s estimates are accurate or that the market size is sufficiently large for its business to grow as projected, which may negatively impact its financial results.

Difficult to forecast

The Company must rely largely on its own market research to forecast sales as detailed forecasts are not generally obtainable from other sources at this early stage of the industry. A failure in the demand for its products to materialize as a result of competition, technological change, market acceptance or other factors could have a material adverse effect on the business, results of operations and financial condition of the Company.

Internal controls

Effective internal controls are necessary for the Company to provide reliable financial reports and to help prevent fraud. Although the Company will undertake a number of procedures and will implement a number of safeguards, in each case, in order to help ensure the reliability of its financial reports, including those imposed on the Company under Canadian securities law, the Company cannot be certain that such measures will ensure that the Company will maintain adequate control over financial processes and reporting. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm the Company’s results of operations or cause it to fail to meet its reporting obligations. If the Company or its auditors discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in the Company’s financial statements and materially adversely affect the trading price of the Company’s common shares.

Dividends

The Company has no earnings or dividend record and does not anticipate paying any dividends on the Company’s shares in the foreseeable future. Dividends paid by the Company would be subject to tax and, potentially, withholdings.

Limited market for securities

There can be no assurance that an active and liquid market for the Company’s shares will develop or be maintained and an investor may find it difficult to resell any securities of the Company.

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

Disruption of business

Conditions or events including, but not limited to, those listed below could disrupt the Company’s operations, increase operating expenses, resulting in delayed performance of contractual obligations or require additional expenditures to be incurred: (i) extraordinary weather conditions or natural disasters such as hurricanes, tornadoes, floods, fires, extreme heat, earthquakes, etc.; (ii) a local, regional, national or international outbreak of a contagious disease, including the COVID-19 coronavirus, Middle East Respiratory Syndrome, Severe Acute Respiratory Syndrome, H1N1 influenza virus, avian flu, or any other similar illness could result in a general or acute decline in economic activity (see also, “Public Health Crises, including COVID-19”); (iii) political instability, social and labour unrest, war or terrorism; or (iv) interruptions in the availability of basic commercial and social services and infrastructure including power and water shortages, and shipping and freight forwarding services including via air, sea, rail and road.

Public health crises

The Company’s business, operations and financial condition could be materially adversely affected by the outbreak of epidemics or pandemics or other health crises beyond our control, including the current outbreak of COVID-19. On January 30, 2020, the World Health Organization declared the COVID-19 outbreak a global health emergency. Many governments have likewise declared that the COVID-19 outbreak in their jurisdictions constitutes an emergency. Reactions to the spread of COVID-19 have led to, among other things, significant restrictions on travel, business closures, quarantines and a general reduction in consumer activity. While these effects are expected to be temporary, the duration of the business disruptions and related financial impact cannot be reasonably estimated at this time.

Such public health crises can result in volatility and disruptions in the supply and demand for various products and services, global supply chains and financial markets, as well as declining trade and market sentiment and reduced mobility of people, all of which could affect interest rates, credit ratings, credit risk and inflation. The risks to the Company of such public health crises also include risks to employee health and safety and a slowdown or temporary suspension of operations in geographic locations impacted by an outbreak. At this point, the extent to which COVID-19 may impact the Company is uncertain; however, it is possible that COVID-19 may have a material adverse effect on the Company’s business, results of operations and financial condition.

Disclosure of Internal Controls over Financial Reporting

Management has established processes to provide them sufficient knowledge to support representations that they have exercised reasonable diligence that (i) the audited financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the audited financial statements; and (ii) the audited financial statements fairly present in all material respects the financial condition, results of operations and cash flows of the Company, as of the date of and for the periods presented.

In contrast to non-venture issuers, this MD&A does not include representations relating to the establishment and maintenance of disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”). In particular, management is not making any representations relating to the establishment and maintenance of: controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in its filings or other reports or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Investors should be aware that inherent limitations on the ability of management of the Company to design and implement on a cost-effective basis DC&P and ICFR may result in additional risks to the quality, reliability, transparency and timeliness of filings and other reports provided under securities legislation.

Cautionary Note Regarding Forward Looking Statements

This MD&A includes “forward-looking statements”, within the meaning of applicable securities legislation, which are based on the opinions and estimates of management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “budget”, “plan”, “continue”, “estimate”, “expect”, “forecast”, “may”, “will”, “project”, “predict”,

Psyched Wellness Ltd. (Duncan Park Holdings Corporation) Management’s Discussion and Analysis For the nine months ended August 31, 2020

“potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar words suggesting future outcomes or statements regarding an outlook. Such risks and uncertainties include, but are not limited to, risks associated with the mining industry (including operational risks in exploration development and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections in relation to production, costs and expenses; the uncertainty surrounding the ability of the Company to obtain all permits, consents or authorizations required for its operations and activities; and health safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the ability of Company to fund the capital and operating expenses necessary to achieve the business objectives of the Company, the uncertainty associated with commercial negotiations and negotiating with foreign governments and risks associated with international business activities, as well as those risks described in public disclosure documents filed by the Company. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in securities of the Company should not place undue reliance on these forward-looking statements. Statements in relation to “reserves” are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future.

Readers are cautioned that the foregoing lists of risks, uncertainties and other factors are not exhaustive. The forwardlooking statements contained in this MD&A are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or in any other documents filed with Canadian securities regulatory authorities, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws. The forward-looking statements are expressly qualified by this cautionary statement.

Management’s Responsibility for Financial Information

Management is responsible for all information contained in this report. The Company’s unaudited condensed interim consolidated financial statements have been prepared in accordance with IFRS and include amounts based on management’s informed judgments and estimates. The financial and operating information included in this report is consistent with that contained in the financial statements in all material aspects.

The Audit Committee has reviewed the unaudited condensed interim consolidated financial statements and this MD&A with management. The Board of the Company has approved the unaudited condensed interim consolidated financial statements and this MD&A on the recommendation of the Audit Committee.

October 26, 2020

Jeffrey Stevens Chief Executive Officer

AI assistant

Psyched Wellness Ltd. — Interim / Quarterly Report 2020

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