What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-22 compared with 2023-03-31 · 946 added, 919 removed, 1085 unchanged (63% of the section changed)

15 unchanged sentences

As we are a smaller reporting company, our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting.

Table of Cont ents

Changes in internal control over financial reporting

3 unchanged sentences

Not applicable.

Table of Cont ents

Directors, Executive Officers and Corporate Governance .

1 unchanged sentence

Name Age Position

Punit Dhillon 42 Chief Executive Officer, Chairman, Director

Kaitlyn Arsenault 36 Chief Financial Officer

Margaret Dalesandro 76 Director

Deborah Charych 58 Director

Praveen Tyle 63 Director

Keith Ward 53 Director

Punit Dhillon 43

Chief Executive Officer, Chairman, Director

Kaitlyn Arsenault 37

Chief Financial Officer

Chief Development Officer

Margaret Dalesandro 77

Deborah Charych 59

Praveen Tyle 64

Keith Ward 54

Annalisa Jenkins

Biographies of Directors, Executive Officers and Significant Employees

Punit Dhillon.

Dhillon currently serves as the Chair of the Board of Directors and as the Company’s President and Chief Executive Officer.

Dhillon was appointed as a member of the Board of Directors in 2018.

Punit Dhillon currently serves as the Chair of the Board of Directors and as the Company’s President and Chief Executive Officer.

Dhillon was appointed as a member of the Board of Directors in January 2018.

In December 2019, Mr.

2 unchanged sentences

Dhillon was appointed as the Company's Chief Executive Officer.

Dhillon is currently a board member of Arch Therapeutics Inc., a US-based biotechnology company developing a novel approach to stop bleeding (hemostasis), control leaking (sealant), and manage wounds during surgery, trauma, and interventional care (OTCQB:

Dhillon was the co-founder and former President & CEO of OncoSec Medical Incorporated (NASDAQ:

Dhillon is currently a board member and audit committee chair of Arch Therapeutics Inc., a US-based biotechnology company (OTCQB:

Dhillon was the co-founder and former President & CEO of OncoSec Medical, Inc.

ONCS), a leading biopharmaceutical company developing cancer immunotherapies for the treatment of solid tumors, where he served as an executive until March 2018 and as a director until February 2020.

He led OncoSec through over $250 million in capital raised, NASDAQ listing and launched the registration study, KEYNOTE695, of their proprietary immunotherapy product for melanoma in combination with Keytruda, based on a drug collaboration with Merck.

Prior to that, from September 2003 to March 2011, Mr.

1 unchanged sentence

INO), a DNA vaccine development company.

From February 2017 to August 2020, Mr.

Dhillon was a director of Emerald Health Sciences a private company that made strategic equity investments related to endocannabinoid based science and clinical products.

Collectively, Mr.

6 unchanged sentences

Kaitlyn Arsenault, CPA .

Arsenault was appointed as the Company’s Chief Financial Officer in October 2021.

Kaitlyn Arsenault was appointed as the Company’s Chief Financial Officer in October 2021.

From 2014 to 2021, Ms.

Arsenault previously served as the President of KA Consulting, Inc., a registered public accounting firm in San Francisco, CA, providing independent technical accounting consulting services for emerging public and private companies in the pharmaceutical, life sciences, technology, and FinTech industries.

Arsenault served as the President of KA Consulting, Inc., a registered public accounting firm in San Francisco, CA, providing independent technical accounting consulting services for emerging public and private companies in the pharmaceutical, life sciences, technology, and FinTech industries.

From September 2016 to October 2021, she served as the Company’s Head of Financial Reporting and Technical Accounting.

4 unchanged sentences

Arsenault's prior track record with the Company, extensive experience with pharmaceutical, life science, and technology companies, and vast exposure to different accounting and financial issues in the public markets give her the qualifications and skills necessary to serve as an officer of the Company.

Tuan Tu Diep.

Tuan Tu Diep was appointed as the Company’s Chief Development Officer in January 2022, after serving as the Company’s Senior Vice President of Development from October 2020 to January 2022.

From March 2020 to October 2020, Mr.

Diep served as the Director of Business Process of Element Bioscience, a next-generation sequencing company focused on the the development of revolutionary and proprietary technology to deliver high-quality sequencing on their benchtop instrument, AVITI.

In addition, he served as the President of Emerald Health Bioceuticals from October 2019 through January 2020.

From July 2018 to October 2019, Mr.

Diep served as the Vice President of Strategic Operations of Emerald Health Sciences USA, a private life science company that made strategic equity investments related to endocannabinoid based science and clinical products.

Diep was a founding employee of OncoSec Medical Inc.

(NASDAQ:ONCS) a leading biopharmaceutical company developing cancer immunotherapies for the treatment of solid tumors, where he served in multiple roles of increasing responsibility from 2011 to 2018.

Here he led the initiation of OncoSec's first clinical trials in melanoma nd merkel cell carcinoma.

As OncoSec's business development lead he was instrumental in establishing a partnership and clinical collaboration with Merck & Co.

MRK) for the evaluation of Keytruda with OncoSec's lead drug, tavokinogene telsaplasmid and launched the pivotal trial, KEYNOTE-695.

Diep is an experienced executive that has taken multiple drugs from early preclinical development to the clinic.

He has demonstrated a proficiency in managing the initiation and execution of multiple clinical trials;

including the manufacture, release, and distribution of drugs and devices for clinical use;

managing the completion of financial audits for both private and public companies;

overseeing due diligence activities related to partnering and licensing initiatives;

and playing significant roles in raising funds in public markets.

Diep received his Bachelor degree in Human Kinetics from the University of British Columbia in 2004 and his Masters of Science from the University of Toronto in 2006.

Diep’s vast experience with life science companies gives him the qualifications and skills necessary to serve as an officer of the Company.

Margaret Dalesandro .

4 unchanged sentences

In addition, she served as Chair of the OncoSec Medical Incorporated Board from early 2020 through 2021.

Since 2021, Dr Dalesandro has served on the board of Seelos Therapeutics, a company focusing on the development of treatments for central nervous system diseases (NASDAQ:

Since 2021, Dr Dalesandro has served on the board and chaired the Nominating and Corporate Governance Committee of Seelos Therapeutics (NASDAQ:SEEL), a company focusing on the development of treatments for central nervous system diseases including ALS.

Since 2023, Dr.

Dalesandro has been the President of Brecon Pharma Consulting LLC., a full-service pharma/biotech consultancy focusing on identifying and obtaining critical information early in product development.

Dalesandro has served on the Board of Ambrx Biopharma Inc (NASDAQ:

AMAM), a company expert in the development of antibody drug conjugates (ADCs), immune-oncology and bispecific candidates for the treatment of cancers including prostate and breast cancer.

In January 2024, Ambrx announced an agreement of sale to Johnson & Johnson for $2 billion.

Since 2012, Dr.

Dalesandro has been the President of Brecon Pharma Consulting LLC., a full-service pharma/biotech consultancy focusing on technical due diligence and creating strategic development plans identifying and obtaining critical information early in pharma/biotech product development.

Dalesandro has over thirty-five years of experience leading strategic product development in the pharmaceutical, biotechnology, and diagnostics industries.

From 2009 to 2012, she served as the Business Director of Integrative Pharmacology in the Life Sciences (Corning Integrated Pharmacology - CIP) division at Corning Incorporated, leading all aspects of the CIP business including commercial, technical, P&L, competitive assessment, strategy, and talent management;

from 2002 to 2009, as Vice President of Project, Portfolio and Alliance Management at ImClone Systems Incorporated, which was a biopharmaceutical company dedicated to developing biologic medicines in the area of oncology;

From 2009 to 2012, she served as the Business Director of Integrative Pharmacology in the Life Sciences (Corning Integrative Pharmacology - CIP) division at Corning Incorporated (NYSE:GLW), leading all aspects of the CIP business including commercial, technical, P&L, competitive assessment, strategy, and talent management;

from 2002 to 2009, as Vice President of Project, Portfolio, and Alliance Management at ImClone Systems Incorporated, which was a biopharmaceutical company dedicated to developing biologic medicines in the area of oncology and purchased by Eli Lilly (NYSE:LLY) for $6 billion.

During her time at ImClone Systems, she contributed significantly to the development and approval of breakthrough oncology drugs including:

Erbitux, Cyramza and Lartruvo;

from 2000 to 2002, as Executive Director of Project and Portfolio Management at GlaxoSmithKline, a global pharmaceutical company producing treatments for respiratory illnesses, HIV, immuno-inflammation, and oncology (among others) (NYSE:

and from 1998 to 2000, as Senior Consultant at Cambridge Pharma Consultancy, Europe's largest pharmaceutical R&D strategy consulting firm.

During her tenure from 1989 to 1998 at Centocor Incorporated, a biotechnology company forming a part of the Johnson & Johnson group of companies and specializing in the production of treatments for infectious, cardiovascular, and autoimmune

Table of Cont ents

diseases and cancer, Dr.

Dalesandro developed and presently holds the patents on a diagnostic test for acute coronary syndrome based on the detection of platelet surface integrins.

During her tenure from 1989 to 1998 at Centocor Incorporated, a biotechnology company forming a part of the Johnson & Johnson group of companies and specializing in the production of antibody treatments for infectious, cardiovascular, and autoimmune diseases and cancer, Dr.

Dalesandro played a key role in the development of Remicade, the first anti-TNF alpha antibody developed for autoimmune disease and ReoPro for the prevention of myocardial ischemia.

She also holds the patents on a diagnostic test for acute coronary syndrome based on the detection of platelet surface integrins.

Dalesandro received her Ph.D.

in Biochemistry from Bryn Mawr College and completed an NIH Post-Doctoral Fellowship in Molecular Immunology at Wake Forest University School of Medicine.

Dalesandro’s significant experience with life science and technology companies give her the qualifications and skills necessary to serve as a director of the Company.

in Biochemistry from Bryn Mawr College and completed an NIH Post-Doctoral Fellowship in Molecular Immunology at Wake Forest University School of Medicine and the University of Pennsylvania..

Dalesandro’s extensive experience with life science and technology companies gives her the qualifications and skills necessary to serve as a director of the Company.

Deborah Charych.

Deborah Charych is currently a member of the Board and has served as a member since February 2023.

Since October 2018, Dr.

From October 2018 to September 2022, Dr.

Charych has served as the Co-Founder, Chief Technology Officer, and Advisor of RayzeBio, Inc, an oncology company focused on the targeted delivery of radionuclides.

Charych conceived and led the scientific and operational R&D strategy for RayzeBio, leading a successful Series A financing and launch in August 2020, as well as subsequent Series B, C, and D rounds.

Charych conceived and led the scientific and operational R&D strategy for RayzeBio, recently acquired by BMS for $4.1 billion, leading a successful Series A financing and launch in August 2020, as well as subsequent Series B, C, and D rounds.

Prior to launching RayzeBio, Dr.

11 unchanged sentences

Praveen Tyle.

Dr Tyle is currently the Founder of Potens Pharmaceuticals, which is focussed on helping companies develop drug development programs with speed to market.

Praveen Tyle is currently a member of the Board and has served as a member since July 2021.

1 unchanged sentence

Tyle has served as a member of the board at Kiora Pharmaceuticals, a pharmaceutical company that develops therapies for the treatment of eye diseases (NASDAQ:

KPRX) and since 2003, he has served as a member of the board at Orient Europharma Co., Ltd., a pharmaceutical company operating primarily in Asia and producing a wide range of prescription drugs and nutrition products.

KPRX) and currently serves as its Chairman and since 2003, he has served as a member of the board at Orient Europharma Co., Ltd., a pharmaceutical company operating primarily in Asia and producing a wide range of prescription drugs and nutrition products.

Since 2021, Dr.

27 unchanged sentences

Ward’s significant experience in biotech and pharmaceutical companies give him the qualifications and skills necessary to serve as a director of the Company.

Table of Cont ents

Andrew Schwab is a Founding Partner and Managing Member of 5AM Venture Management, LLC, a venture capital firm focused on life science investments founded in 2002.

Schwab was previously a Principal at Bay City Capital, a life sciences investment firm, where he was involved with companies such as Cubist Pharmaceuticals, Inc., PTC Therapeutics, Inc., Symyx Technologies, Inc.

and Syrrx, Inc.

Previously, Mr.

Schwab was Vice President of Business Development at Digital Gene Technologies, Inc., and a Vice President in the life science investment banking group of Montgomery Securities.

Schwab has led the firm’s investments in and currently serves on the Board of Directors of Skye Bioscience, Inc.

(formerly Bird Rock Bio, Inc.), Camp4 Therapeutics Corporation, Escient Pharmaceuticals, Inc., Fellow Health, Inc., Novome Biotechnologies, Inc., Radionetics Oncology, Inc., Rarecyte, Inc., Scientist.com, and TMRW Life Sciences, Inc.

Schwab previously served on the Board of Directors of various companies, including BlueLight Therapeutics, Inc, Cleave Therapeutics, Inc., DVS Sciences, Inc.

(which was acquired by Fluidigm Corporation), Enliven Therapeutics, Inc., Flexion Therapeutics, Inc., Ikaria, Inc.

(which was acquired by Mallinckrodt plc and spun out Bellerophon Therapeutics, Inc.), Ilypsa, Inc.

(which was acquired by Amgen, Inc.), Miikana Therapeutics, Inc.

(which was acquired by EntreMed, Inc.), Panomics Inc.

(which was acquired by Affymetrix, Inc.), Pear Therapeutics, Inc., Precision NanoSystems, Inc.

(which was acquired by Danaher Corporation), Purigen Biosystems, Inc., Synosia Therapeutics Holding AG (which was acquired by Biotie Therapies Corp.), Viveve Medical, Inc., and 5:01 Acquisition Corp.

Schwab also currently serves on the boards of trustees of the California Academy of Sciences and Davidson College.

He holds a B.S.

degree with Honors in Genetics & Ethics from Davidson College.

Schwab’s extensive experience in the biotechnology industry give him the qualifications and skills necessary to serve as a director of the Company.

Paul Grayson.

Paul Grayson has served as President and Chief Executive Officer of Radionetics Oncology, a clinical stage biotechnology company focused on novel radiopharmaceutical products, since November 2023.

From July 2020 to November 2023 President and Chief Executive Officer of Tentarix Biotherapeutics Inc., a biotechnology company, and as President and Chief Executive Officer of Bird Rock Bio, Inc., a clinical stage biopharmaceutical company, from June 2011 until its acquisition by the Company.

From November 2019 to July 2020, Mr.

Grayson also served as a partner at Versant Ventures, a venture capital firm.

Grayson currently serves on the board of directors of Radionetics Oncology.

He received a Bachelor of Arts in Biochemistry and Computer Science from the University of California, Los Angeles and a Master of Business Administration from the University of California, Irvine.

Grayson’s extensive experience in the biotechnology industry give him the qualifications and skills necessary to serve as a director of the Company.

Annalisa Jenkins.

Annalisa Jenkins is currently a member of the Board and has served as a member since March 2024.

From November 2017 until April 2019, Dr.

Jenkins served as the President and Chief Executive Officer of PlaqueTec Ltd., a biotechnology company focusing on coronary artery disease treatment and prevention.

Previously, Dr.

Jenkins served as the President and Chief Executive Officer and a member of the board of directors of Dimension Therapeutics, Inc., a biotechnology company focused on rare and metabolic diseases associated with the liver, from September 2014 until its sale to Ultragenyx Pharmaceutical Inc.

in November 2017.

Jenkins also serves on the board of directors of many public companies, including Avrobio, Inc.

AVRO), Affimed N.V.

AFMD), Compass Pathways (Nasdaq:

CMPS), Mereo Biopharma Group plc (Nasdaq:

MREO), and a number of privately held biotechnology and life science companies, and serves as a trustee to a number of non-profit organizations.

Jenkins previously served on the board of numerous biotechnology and life science companies, including AgeX Therapeutics, Inc.

(NYSE American:

AGE), Silence Therapeutics, Ardelyx, Inc., OncoSec Medical Incorporated, and Sensyne Health plc., and she served as a committee member of the science board to the FDA, which advised leadership on complex scientific and technical issues.

Jenkins also previously held leadership roles at Merck Serono Pharmaceuticals as Head of Global Research and Development, and at Bristol-Myers Squibb as Senior Vice President and Head of Global Medical Affairs.

Jenkins graduated with a degree in medicine from St.

Bartholomew’s Hospital in the University of London and subsequently trained in cardiovascular medicine in the UK National Health Service.

Earlier in her career, Dr.

Jenkins served as a medical officer in the British Royal Navy.

Jenkins significant industry experience and training give her the qualifications and skills necessary to serve as a director of the Company.

Section 16(a) Beneficial Ownership Reporting Compliance

S ection 16(a) of the Exchange Act requires our directors, executive officers, and any persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC.

Section 16(a) of the Exchange Act requires our directors, executive officers, and any persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC.

SEC regulation requires executive officers, directors and greater than 10% stockholders to furnish us with copies of all Section 16(a) forms they file.

7 unchanged sentences

Board and Committee Meetings

During 2022, our Board met six times (including telephonic meetings) and took action by written consent fifteen times.

During 2023, our Board met eight times (including telephonic meetings) and took action by written consent twenty-two times.

Each director attended at least 75% of the meetings held by the Board and by each committee on which she or he served while she or he was a director, either in person or by teleconference, during the year.

3 unchanged sentences

All our directors - other than Dr.

Charych, who was elected as director in 2023 - attended our most recent meeting of stockholders.

Charych, Andy Schwab, Paul Grayson and Dr.

Annalisa Jenkins who were elected as directors in 2023 and 2024 - attended our most recent meeting of stockholders in 2022.

Audit Committee and Financial Expert

On February 23, 2015, our Board established an audit committee that operates under a written charter that has been approved by our Board.

The members of our audit committee are Dr.

Our Audit Committee is composed of Dr.

Keith Ward, Dr.

1 unchanged sentence

Praveen Tyle.

Ward serves as chairman of the audit committee and our Board has determined that he is an “audit committee financial expert” as defined by applicable SEC rules.

The Board has determined that Dr.

Dalesandro and Dr.

Tyle are independent directors as that term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules, and we have determined that each of Dr.

Dalesandro and Dr.

Tyle, as audit committee members, meet the more stringent requirements under Rule 5605(c)(2) of the Nasdaq Listing Rules.

Our audit committee met five times (including telephonic meetings) and acted by written consent two times in 2022.

Our audit committee is responsible for:

(1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) approving fees for the independent auditor and any outside advisors engaged by the audit committee.

The Audit Committee Charter is filed as Exhibit 99.1 to our Report on Form 8-K filed on February 27, 2015.

Table of Cont ents

Ward is the chairperson of our Audit Committee.

Keith Ward, Dr.

Margaret Dalesandro and Dr.

Praveen Tyle meet the requirements for independence for audit committee members under the SEC rules and regulations.

Each member of our Audit Committee is financially literate.

In addition, our board has determined that Dr.

Ward is an “audit committee financial expert” as defined in applicable SEC rules.

This designation does not impose any duties, obligations, or liabilities that are greater than are generally imposed on members of our Audit Committee and our Board.

Our Audit Committee is responsible for, among other things:

our accounting and financial reporting processes, including our financial statement audits and the integrity of our financial statements;

our compliance with legal and regulatory requirements;

reviewing and approving related party transactions;

selecting and hiring our registered independent public accounting firm;

the qualifications, independence and performance of our independent registered public accountants;

and the preparation of the audit committee report to be included in our annual proxy statement.

During the fiscal year ended December 31, 2023, the Audit Committee met five times.

Compensation Committee

On May 31, 2015, our Board established a compensation and compliance committee which operated under a written charter that was approved by the Board.

In 2018, the Board dissolved the former compensation and compliance committee and established a new compensation committee which operates under a written charter approved by the Board.

The members of our compensation committee are Dr.

Praveen Tyle, and Dr.

Margaret Dalesandro.

Praveen Tyle serves as chairman of the compensation committee.

The Board has determined that Dr.

Our Compensation Committee is composed of Dr.

Praveen Tyle, Dr.

Margaret Dalesandro and Dr.

Praveen Tyle are independent directors as that term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules.

Our compensation committee met three times (including telephonic meetings) during 2022 and took no action by written consent during 2022.

Our compensation committee is responsible for the oversight of, and the annual and ongoing review of, the Chief Executive Officer, the compensation of the senior management team, and the bonus programs in place for employees, which includes:

(1) reviewing the performance of the Chief Executive Officer and such other senior officers as the Board may request, and determining the bonus entitlement for such officer or officers on an annual basis and recommending the same to the Board for approval; (2) determining the proposed annual compensation of our executive officers for each fiscal year and recommending the same to the Board for approval; (3) reviewing and discussing the bonus plan proposed for our senior management team with the Chief Executive Officer; (4) reviewing and discussing the terms and conditions of proposed grants of stock options to directors, employees, consultants and advisors with the Chief Executive Officer; (5) reviewing and recommending to the Board the compensation of the Board and committee members; (6) reviewing and discussing with the Chief Executive Officer the standard forms of employment and consulting contracts used by us; (7) reviewing and discussing with the Chief Executive Officer the general benefit plans in place for employees; (8) engaging and setting the compensation for independent counsel and other advisors and consultants; and (9) reviewing and assessing the adequacy of its Charter and submitting any recommended changes to our Board for its consideration and approval.

Annalisa Jenkins.

Praveen Tyle is the chairperson of our Compensation Committee.

The composition of our Composition Committee meets the requirements for independence under the SEC rules and regulations.

Our Compensation Committee is responsible for, among other things:

evaluating, recommending, approving and reviewing executive officer compensation arrangements, plans, policies and programs;

administering our cash-based and equity-based compensation plans;

and making recommendations to the Board regarding any other Board responsibilities relating to executive compensation.

During the fiscal year ended December 31, 2023, the Compensation Committee met five times.

Nomination and Corporate Governance Committee

In 2018, our Board established a nomination and corporate governance committee that operates under a written charter approved by the Board.

The members of our nomination and corporate governance committee are Dr.

Margaret Dalesandro, Dr.

Praveen Tyle and Dr.

Margaret Dalesandro serves as chairman of the nomination and corporate governance committee.

The Board has determined that Dr.

Our Nominating and Corporate Governance Committee is composed of Dr.

Margaret Dalesandro, Dr.

Praveen Tyle, and Dr.

Keith Ward are independent directors as that term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules.

Our nomination and corporate governance committee met three times during 2022 (including telephonic meetings) and took action by written consent one time.

Our nominating and corporate governance committee is responsible for assisting the Board in (1) identifying qualified individuals to become Board members, consistent with criteria approved by the Board, (2) determining the composition of the Board and its committees, (3) selecting the director nominees for the next annual meeting of shareholders, (4) monitoring a process to assess Board, committee and management effectiveness, (5) aiding and monitoring management succession planning and (6) developing, recommending to the Board, implementing and monitoring policies and processes related to our corporate governance guidelines.

Praveen Tyle, Dr.

Keith Ward, Dr.

Annalisa Jenkins and Dr.

Deborah Charych.

Charych is the chairperson of our Nominating and Corporate Governance Committee.

The composition of our Nominating and Corporate Governance Committee meets the requirements for independence under the SEC rules and regulations.

Our Nominating and Corporate Governance Committee is responsible for, among other things:

identifying, considering and recommending candidates for membership on our Board;

overseeing the process of evaluating the performance of our Board;

and advising our Board on other corporate governance matters.

During the fiscal year ended December 31, 2023, the Nominating and Corporate Governance Committee met five times.

Nominations to the Board of Directors

6 unchanged sentences

A shareholder who wishes to communicate with our Board may do so by directing a written request addressed to our Chief Executive Officer, at the address appearing on the first page of this filing.

Table of Cont ents

Code of Ethics and Insider Trading Policy

On October 31, 2014, we adopted a formal code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, as well as our other officers, directors and employees.

A copy of our code of ethics is available on our website at http://www.skyebioscience.com .

We intend to disclose any future amendments to provisions of our code of ethics, or waivers of provisions required to be disclosed under the rules of the SEC, on a current report on Form 8-K or at the same location on our website identified in the preceding sentence.

Code of Ethics

The Board has established a formal code of business conduct and ethics that applies to our officers, directors and employees.

Any amendment or waiver disclosed on our website will remain available on our website for at least 12 months after the initial disclosure.

We maintain an Insider Trading Compliance Policy that prohibits our officers, directors and employees from purchasing or selling any type of security while in possession of material, non-public information relating to the security, whether the issuer of such security is the Company or any other company.

Additionally, no officer, director or employee shall purchase or sell any security of the Company during the period beginning on the 14th calendar day before the end of any fiscal quarter of the Company and ending upon completion of the second full trading day after the public release of earnings data for such fiscal quarter or during any other trading suspension period declared by the Company.

Any waiver of the code of business conduct and ethics for our executive officers or directors must be approved by the Board, and any such waiver shall be promptly disclosed to the stockholders.

Insider Trading Policy

We maintain a Policy on Insider Trading and Insider Information that prohibits our officers, directors and employees from purchasing or selling any type of security while in possession of material, non-public information relating to the security, whether the issuer of such security is the Company or any other company.

Additionally, no officer, director or employee shall purchase or sell any security of the Company during the period beginning on the 15th calendar day of the last month of each fiscal quarter of the Company and ending upon completion of the second full trading day after the public release of earnings data for such fiscal quarter or during any other trading suspension period declared by the Company.

It prohibits officers, directors, or employees from pledging our stock as collateral to secure loans and from engaging in hedging transactions, including zero-cost collars and forward sale contracts.

It further prohibits margin purchases of our stock, short sales of our stock, and any transactions in puts, calls or other derivative securities involving our stock.

Availability of Corporate Governance Materials

Stockholders may view our corporate governance materials, including the charters of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee and our Code of Business Conduct and Ethics, on our website at www.skyebioscience.com under “Governance” on the “Investors” page, and these documents are available in print to any stockholder who sends a written request to such effect to Skye Bioscience, Inc., 11250 El Camino Real, Suite 100, San Diego, CA 92130, Attention:

Corporate Secretary.

Information on or accessible from our website is not and should not be considered a part of this Annual Report on Form 10-K.

Executive Compensation .

The Company effected a reverse stock split at a ratio of one-for-two hundred and fifty (1-for-250) effective September 8, 2023 (the “Reverse Stock Split”).

All share amounts and exercise prices included herein have been adjusted to reflect the Reverse Stock Split.

Summary Compensation Table

5 unchanged sentences

($) (1) Non-Equity Incentive Plan Compensation

($) Nonqualified Deferred Compensation Earnings

Other Compensation

Kaitlyn Arsenault 2022 325,856 130,031 — — — — — 455,887

Chief Financial Officer (2) 2021 75,000 19,031 58,000 269,240 — — 181,473 602,744

Punit Dhillon 2023 450,000 — 994,364 92,974 270,000 1,807,338

CEO 2022 432,577 74,000 — — 161,904 668,481

(1) Amounts reflect the full grant date fair value of stock options and awards, computed in accordance with ASC Topic 718 - Stock based compensation , rather than the amounts paid to or realized by the named individual.

(2) For the year ended December 31, 2021, other compensation consists of consulting fees charged to the Company by KA Consulting, Inc.

and RoseRyan, Inc.

Arsenault's services.

(3) For the years ended December 31, 2022 and 2021, other compensation consists of personal tax preparation fee reimbursements per the executives employment agreement.

(4) In connection with the Acquisition, the Board approved transaction bonuses to be paid to the CEO and CFO of $111,000 and $148,000, respectively, upon the closing of the Acquisition (see Note 5).

As the Acquisition was completed on November 10, 2022, the amounts stated included the transaction bonuses.

Table of Cont ents

Kaitlyn Arsenault 2023 340,000 — 656,234 138,056 136,000 1,270,290

Chief Financial Officer 2022 325,856 55,500 — — 87,731 469,087

(1) Amounts reflect the full grant date fair value of RSUs, computed in accordance with ASC Topic 718 - Stock based compensation , rather than the amounts paid to or realized by the named executive officers.

The valuation assumptions used in the valuation of options and RSUs may be found in Note 2 to our financial statements included in this annual report on Form 10-K for the year ended December 31, 2023.

The amount reported is also the amount that would be reported assuming the highest level of performance conditions are achieved.

The restricted stock units vest upon achievement of the following performance milestones, subject to continued services to the Company through the applicable vesting date:

an incremental 25% of the restricted stock units vest upon the Company achieving a market capitalization of $125 million, $250 million, $400 million, respectively, and an additional 25% vests if the Company achieves a value of $500 million or greater at an exit event.

If the Company achieves an exit value greater than $500 million at an earlier date, subject to the executive’s continued services with the Company through such exit event, all of the restricted stock units will vest.

No restricted stock units will vest until the compensation committee of the Company determines that shares can be sold into the market to cover withholding tax obligations associated with the vesting of the restricted stock units.

As of December 31, 2023, no market capitalization milestone was achieved and no restricted stock units were vested.

Amounts reflect the full grant date fair value of stock options, computed in accordance with ASC Topic 718 - Stock based compensation , rather than the amounts paid to or realized by the named executive officers.

The value of stock option awards was estimated using the Black-Scholes option pricing model.

The valuation assumptions used in the valuation of options and restricted stock units may be found in Note 2 to our financial statements included in this annual report on Form 10-K for the year ended December 31, 2023.

(2) Amounts reflect the cash bonuses earned by our named executive officers for performance of services in 2023 and 2022.

Bonuses were based upon achievement of corporate performance goals as determined by the Board.

Narrative Disclosure to Summary Compensation Table

Our compensation committee has historically determined the compensation of our named executive officers.

Our compensation committee typically reviews and discusses management’s proposed compensation with the Chief Executive Officer for all executives other than the Chief Executive Officer.

Based on those discussions and its discretion, the compensation committee then approves the compensation of each executive officer after discussions without members of management present.

Base salaries for our named executive officers are initially established through arm’s-length negotiations at the time of the executive officer’s hiring, taking into account such executive officer’s qualifications, experience, the scope of his or her responsibilities and competitive market compensation paid by other companies for similar positions within the industry and geography.

Annual base salaries are intended to provide a fixed component of compensation to our named executive officers, reflecting their skill sets, experience, roles and responsibilities.

Base salaries are reviewed, determined, and approved periodically, typically in connection with our annual performance review process, and adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance and experience.

The annualized 2023 base salaries for our named executive officers were as follows:

(i) $450,000 for Mr.

Dhillon and (ii) $340,000 for Ms.

Annual Performance-Based Compensation

In addition to base salaries, our named executive officers are eligible to receive annual performance-based bonuses, which are designed to provide appropriate incentives to our executive officers to achieve annual performance goals and to reward them for achievement towards these goals.

Performance based milestones are approved by the board at the beginning of the year and executive officers are assessed against these performance-based milestones subsequent to year end.

With respect to 2023, our compensation committee awarded a bonus of $161,904 to Mr.

Dhillon, a bonus of $87,731 to Ms.

Please see “Employment and Severance Agreements —Employment Agreements” below for additional information.

Equity Incentives

We believe that our ability to grant equity-based awards is a valuable and necessary compensation tool that aligns the long-term financial interests of our employees, consultants and directors with the financial interests of our shareholders.

Our compensation committee periodically reviews the equity incentive compensation of our executive officers, including our named executive officers, and from time to time may grant equity incentive awards to them.

In August 2023, we completed the acquisition of Bird Rock Bio, Inc.

and closed a concurrent private placement financing and a convertible note financing.

Following the completion of the transaction, our compensation committee, and its advisors undertook a review of the compensation of our executive officers, directors and employees.

Following such review, on August 25, 2023, we granted each of Mr.

Dhillon and Ms.

Arsenault (i) an option to purchase 9,013 and 13,383 shares of our common stock, respectively, at an exercise price per share of $3.50 and (ii) a contingent option award to, purchase 21,586 and 32,053 shares of our common stock, respectively, at an exercise price per share of $3.50, subject to the approval of an amendment to our Amended and Restated 2014 Omnibus Incentive Plan (the “A&R 2014 Incentive Plan”) to increase the number of shares authorized for issuance under the A&R 2014 Incentive Plan (the “Plan Amendment”).

On September 29, 2023 holders of a majority of the voting power of the outstanding capital stock of the Company (the “Majority Stockholders”) and the Board approved the Plan Amendment.

These options vest in equal monthly installments over four years, subject to continued services to the Company through the applicable vesting date.

If a change in control occurs, 100% of such options will become fully vested.

Additionally, on August 25, 2023, we granted each of Mr.

Dhillon and Ms.

Arsenault (i) performance-based RSUs covering 81,110 and 53,529 shares of our common stock, respectively, and (ii) contingent performance-based RSUs covering 194,270 and 128,209 shares of our common stock, respectively, subject to approval of the Plan Amendment, which was approved by the Majority Stockholders and the Board on September 29, 2023.

These RSUs vest upon achievement of the f ollowing performance milestones, subject to continued services to the Company through the applicable vesting date:

25% of the restricted stock units vest upon the Company achieving a market capitalization of $125 million, $250 million, $400 million, respectively, and an additional 25% vests if the Company achieves a value of $500 million or greater at an exit event.

No RSUs will vest until the compensation committee of the Company determines that shares can be sold into the market to cover withholding tax obligations associated with the vesting of the restricted stock units.

As of December 31, 2023, no market capitalization milestone was achieved and no restricted stock units were vested.

For additional information, please see below under “ Outstanding Equity Awards at Fiscal Year End .”

Employment and Severance Arrangements

Employment Agreements and Equity Awards

Employment Agreement with Punit Dhillon

On August 7, 2020, we entered into an employment agreement with Mr.

Punit Dhillon, our Chief Executive Officer.

The agreement provides for an annual base salary of $400,000 per year and an annual discretionary bonus up to fifty percent (50%) of his base salary based on Mr.

Dhillon, our Chief Executive Officer.

The agreement provides for an annual base salary of $400,000 per year and an annual discretionary bonus up to 50% of his base salary based on Mr.

Dhillon’s achievement of annual corporate milestones agreed to by the Board.

Effective June 1, 2022, Mr.

Dhillon's annual base salary was increased to $450,000 per year and his annual discretionary bonus eligibility was increased to sixty percent (60%) of his base salary.

Dhillon will also receive the normal benefits available to other similarly situated executives and will be entitled to severance pay under the circumstances described below.

Dhillon's annual base salary was increased to $450,000 per year and his annual discretionary bonus eligibility was increased to 60% of his base salary.

Dhillon also receives the normal benefits available to other similarly situated executives and will be entitled to severance pay under the circumstances described below.

Dhillon’s employment with the Company is at-will.

Except for termination of Mr.

The employment agreement provides that, except for a termination of Mr.

Dhillon’s employment for “Cause,” “By Death”, “By Disability” (as such terms are defined in his employment agreement), Mr.

Dhillon will be entitled to a severance payment equal to twenty-four (24) months of his then current base salary, less applicable statutory deductions and withholdings if terminated by the Company.

In connection with his appointment, the Company granted Mr.

Dhillon options to purchase 9,000,000 shares of the Company’s common stock at an exercise price of $0.045 per share (the then market price of the Company’s shares), with 10% of such options vested immediately upon grant and the remaining 90% vesting equally on each six-month anniversary of the grant date over the following four and a half years from the grant date.

During the year ended December 31, 2021, Mr.

Dhillon was granted 2,000,000 restricted stock units and 3,090,000 stock options.

The restricted stock units vest in three equal annual installments commencing on the first anniversary of the grant date, which was December 14, 2021.

The stock options vest 25% on the one year anniversary of the grant date and 1/48th monthly thereafter.

Dhillon is entitled to a severance payment equal to 24 months of his then current base salary, less applicable statutory deductions and withholdings if terminated by the Company.

Employment Agreement with Kaitlyn Arsenault

On October 4, 2021, we entered into an employment agreement with Ms.

Kaitlyn Arsenault, our Chief Financial Officer.

The agreement provides for an annual base salary of $300,000 per year and an annual discretionary bonus of up to thirty five percent (35%) of her base salary based in part on Ms.

Arsenault, our Chief Financial Officer.

The agreement provides for an annual base salary of $300,000 per year and an annual discretionary bonus of up to 35% of her base salary based in part on Ms.

Arsenault’s achievement of milestones agreed to by the Board.

Effective June 1, 2022, Ms.

Arsenault's annual base salary was increased to $340,000 per year and her annual discretionary bonus eligibility was increased to forty percent (40%) of her base salary.

Arsenault will also receive the normal benefits available to other similarly situated executives and will be entitled to severance pay under the circumstances described below.

Arsenault’s annual base salary was increased to $340,000 per year and her annual discretionary bonus eligibility was increased to 40% of her base salary.

Arsenault also receives the normal benefits available to other similarly situated executives and will be entitled to severance pay under the circumstances described below.

Arsenault’s employment with the Company is at-will.

Except for termination of Mr.

Arsenault’s employment for “Cause,” “By Death” or “By Disability” (as such terms are defined in her employment agreement), Ms.

Arsenault will be entitled to a severance payment equal to six (6) months of her then current base salary, less applicable statutory deductions and withholdings, if she is terminated by the Company.

In connection with her appointment, the Company granted Ms.

Arsenault options to purchase 1,600,000 shares of the Company’s common stock at an exercise price of $0.09 per share (the then market price of the Company’s shares), with 10% of such options vested immediately upon grant and the remaining 90% vesting equally in semi-annual installments over four years from issuance.

During the year ended December 31, 2021, Ms.

Arsenault was granted 1,000,000 restricted stock units and 1,770,000 stock options.

The restricted stock units vest in three equal annual installments commencing on the first anniversary of the grant date, which was December 14, 2021.

The stock options vest 25% on the one year anniversary of the grant date and 1/48th monthly thereafter.

On September 15, 2021, prior to Ms.

Arsenault's appointment as CFO, Ms.

Arsenault was granted 400,000 stock options in connection with her consulting arrangement with us.

The stock options vest 10% on the grant date and 90% in equal annual installments thereafter over a period of four years.

The employment agreement provides that, except for a termination of Ms.

Arsenault’s employment for “Cause,” “By Death” or “By Disability” (as such terms are defined in her employment agreement), (a) in the event that following a “Change of Control” (as defined in the Company's Amended and Restated 2014 Omnibus Incentive Plan) Ms.

Arsenault’s employment is terminated by the Company, she will be entitled to a severance payment equal to 12 months of her then current base salary less applicable statutory deductions and withholdings, and (b) in the event that prior to a Change of Control, Ms.

Arsenault’s employment is terminated by the Company, she would be entitled to a severance payment equal to (i) 6 months of her then current base salary, less applicable statutory deductions and withholdings, if such termination were to occur before April 4, 2023, (ii) 9 months of her then current base salary, less applicable statutory deductions and withholdings, if such termination were to occur on or after April 4, 2023 and before October 4, 2024, and (iii) 12 months of her then current base salary, less applicable statutory deductions and withholdings, if such termination were to occur on or after October 4, 2024.

The foregoing description of the employment agreements above does not purport to be complete and is qualified in its entirety by reference to the full text of the employment agreements attached hereto as an exhibit and incorporated by reference herein.

Severance Arrangements

In February 2015, we adopted a change in control severance plan, in which our named executive officers participate, that provides for the payment of severance benefits if the executive’s service is terminated within twelve months following a change in control, either due to a termination without cause or upon resignation for a good reason (as each term is defined in the plan).

In either such event, and provided the executive timely executes and does not revoke a general release of claims against us, he or she will be entitled to receive:

(i) a lump sum cash payment equal to at least six months’ of the executive’s monthly compensation, plus an additional month for each full year of service over six years, (ii) Company-paid premiums for continued health insurance for a period equal to the length of the cash severance period or, if earlier, when executive becomes covered

Table of Cont ents

under a subsequent employer’s healthcare plan, and (iii) full vesting of all then-outstanding unvested stock options and restricted stock awards.

The foregoing descriptions of the change of control severance plan does not purport to be complete and is qualified in its entirety by reference to the full text of such change of control severance plan attached hereto as an exhibit and incorporated by reference herein.

Outstanding Equity Awards at Fiscal Year-end

7 unchanged sentences

Date Number of

Vested (#) Market

Shares or Units of

Stock That Have Not

Shares or Units of Stock That Have Not

Vested ($) (1)

Shares, Units or Other Rights That Have Not Vested

Market or Payout Value Of

Shares, Units or Other Rights That Have Not Vested

Punit Dhillon, 10/10/2018 (2)

6 unchanged sentences

8/25/2023 (8)

752 8,261 3.50 8/25/2033

9/29/2023 (8)

1,798 19,788 3.50 9/29/2033

8/25/2023 (9)

81,110 220,619

9/29/2023 (9)

194,270 528,414

Kaitlyn Arsenault 9/15/2021 (6)

6 unchanged sentences

8/25/2023 (8)

1,116 12,267 3.50 8/25/2033

9/29/2023 (8)

2,671 28,159 3.50 9/29/2033

8/25/2023 (9)

53,529 145,599

9/29/2023 (9)

128,209 348,728

(1) The market value of shares that have not vested is calculated based on the per share closing price of our common stock on December 31, 2023.

11 unchanged sentences

10% vests on the grant date and 90% vests in equal semi-annually installments thereafter over four years.

(8) The options specified above vest as follows:

monthly on the grant date thereafter over four years.

(9) The restricted stock units vest on the following performance milestones:

an incremental 25% of the RSUs vest upon the Company achieving a market capitalization of $125 million, $250 million, $400 million, respectively, and an additional 25% vests if the Company achieves a value of $500 million or greater at an exit event.

No RSUs shall vest until the compensation committee of the Company determines that shares can be sold into the market to cover withholding tax obligations associated with the vesting of the restricted stock units.

As of December 31, 2023, no market capitalization milestone was achieved and no RSUs were vested.

Exercises of Options

4 unchanged sentences

• Upon election to the Board, non-employee directors receive a one-time award of 20,000 stock options which vest in twelve equal monthly installments.

In subsequent annual periods, each non-employee director receives a grant of 250,000 common stock options which vest in twelve equal monthly installments.

Table of Cont ents

In subsequent annual periods, each non-employee director receives a grant of 20,000 stock options which vest in twelve equal monthly installments.

Non-employee directors who serve as members of special committees of the Board receive additional compensation as follows:

5 unchanged sentences

$2,500 per year ($5,000 for the chair)

On January 5, 2023, each of Drs.

Dalesandro, Tyle, and Ward received 1,000 options, and on February 14, 2023, Dr.

Charych received 1,000 options, which options vest monthly over 12 months.

These grants were made in consideration of their service as a director of the Company for the year ended December 31, 2022 and were consistent with the non-employee director compensation policy in place at the time of the grant.

On August 25, 2023, each director other than Mr.

Grayson received an annual grant of 20,000 stock options, which vest monthly over 12 months.

These grants were made in consideration of their service as a director of the Company for the year ended December 31, 2023 and were consistent with the non-employee director compensation policy as of December 31, 2023.

In connection with Mr.

Grayson’s appointment to the Board and in recognition of his skills, experience and future contributions to the Company, the Company paid Mr.

Grayson a cash bonus of $350,000 on September 18, 2023.

In addition, in recognition of his skills, experience and future contributions to the Company, on August 25, 2023, we granted Mr.

Grayson performance-based RSUs covering 72,531 shares of our common stock and contingent performance-based RSUs covering 173,721 shares of our common stock, subject to approval of the Plan Amendment, which was approved by the Majority Stockholders and the Board on September 29, 2023.

The restricted stock units vest on the following milestones:

If the Company achieves an exit value greater than $500 million at an earlier date, subject to Mr.

Grayson’s continued services with the Company through such exit event, all of the restricted stock units will vest.

As of December 31, 2023, no market capitalization milestone was achieved and no RSUs were vested.

The table below summarizes the compensation paid by us to our non-employee directors for the year ended December 31, 2023.

1 unchanged sentence

DIRECTOR COMPENSATION

Other Compensation

Jim Heppell (2)

24,069 — 73,368 47,512 144,949

Margaret Dalesandro

54,516 — 61,842 (2)

Praveen Tyle (4)

58,184 — 61,842 (3)

Keith Ward (5)

61,504 — 61,842 (4)

Bobby Rai 5,617 — — — 5,617

(1) As of December 31, 2022, each non-employee director is entitled to an annual grant of 250,000 common stock options, all of which vest in twelve equal monthly installments.

The amounts reported under “Option Awards” in the above table reflect the grant date fair value of these awards as determined in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation - Stock Compensation .

Deborah Charych

35,688 — 66,592 (5)

15,988 — 58,092 (6)

889,458 — (7)

(1) The amounts reported under "Stock Awards" and “Option Awards” in the above table reflect the grant date fair value of these awards as determined in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation - Stock Compensation .

The value of stock option awards was estimated using the Black-Scholes option pricing model.

The valuation assumptions used in the valuation of options granted may be found in Note 8 to our financial statements included in this annual report on Form 10-K for the year ended December 31, 2023.

The annual Board member grants for the year ended December 31, 2022, were approved in 2023.

(2) On May 18, 2022, Mr.

Heppell resigned from our Board and concurrently entered into a consulting agreement with us pursuant to which Mr.

Heppell would provide mutually agreed upon services related to the wind down of EHT.

In connection with the consulting agreement, Mr.

Heppell was granted options to purchase 4,000,000 shares of common stock.

These options have an exercise price of $0.04, and were subject to certain performance vesting and other vesting conditions pursuant to the consulting agreement.

The vesting conditions of the stock option award provided that 50% of the options were vested upon grant and the remaining 50% (the "Second Tranche") would vest upon the sale of a real estate asset held by EHT at an amount greater than or equal to an amount specified in the Arrangement Agreement (the " Vesting Condition").

On February 9, 2023, the closing date of the sale of the real estate asset held by EHT, the Second Tranche of stock options was cancelled as the Vesting Condition was not satisfied.

The value of the stock option award was estimated using the Black-Scholes option pricing model.

In addition, on September 14, 2021, Mr.

Heppell was granted options to purchase 150,000 shares of common stock.

These options have an exercise price of $0.12, vest monthly over one year and have a term of 10 years from the grant date.

The value of the stock option award was estimated using the Black-Scholes option pricing model and totaled $18,300.

In addition, on August 7, 2020, Mr.

Heppell was granted options to purchase 1,000,000 shares of common stock.

These options have an exercise price of $0.05, vest 10% on the date of grant with the remaining 90% vesting semi-annually over two years and have a term of 10 years from the grant date.

The value of the stock option award was estimated using the Black-Scholes option pricing model and totaled $40,000.

In addition, on October 10, 2018, Mr.

Heppell was granted options to purchase 200,000 shares of common stock.

These options have an exercise price of $0.31, are fully vested and have a term of 10 years from the grant date.

The value of the stock option award was estimated using the Black-Scholes option pricing model and totaled $45,000.

The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2022 for Mr.

Heppell was 5,350,000, of which 3,350,000 were fully vested.

(3) On September 14, 2021, Dr.

Dalesandro was granted options to purchase 150,000 shares of common stock.

These options have an exercise price of $0.12, vest monthly over one year and have a term of 10 years from the grant date.

The value of the stock option award was estimated using the Black-Scholes option pricing model and totaled $18,300.

In addition, on August 7, 2020, Dr.

Dalesandro was granted options to purchase 250,000 shares of common stock.

These options have an exercise price of $0.05 and vest 10% on the date of grant with the remaining 90% vesting semi-annually over two years and have a term of 10 years from the grant date.

The value of the stock option award was estimated using the Black-Scholes option pricing model and totaled $10,000.

The aggregate number of shares issuable

Table of Cont ents

upon exercise of option awards outstanding at December 31, 2022 for Dr.

The annual Board member grants for the year ended December 31, 2023, were granted on August 25, 2023.

As of December 31, 2023, each non-employee director is entitled to an annual grant of 20,000 common stock options, all of which vest in twelve equal monthly installments.

(2) The aggregate number of shares issuable upon exercise of option awards outstanding on December 31, 2023 for Dr.

Dalesandro was 22,601, of which 9,267 were fully vested.

(4) On September 14, 2021, Dr.

Tyle was granted options to purchase 25,000 shares of common stock.

These options have an exercise price of $0.12, vest monthly over one year and have a term of 10 years from the grant date.

The value of the stock option award was estimated using the Black-Scholes option pricing model and totaled $3,050.

In addition, on July 22, 2021, Dr.

Tyle was granted options to purchase 250,000 shares of common stock.

These options have an exercise price of $0.14 and vest 10% on the date of grant with the remaining 90% vesting semi-annually over two years and have a term of 10 years from the grant date.

The value of the stock option award was estimated using the Black-Scholes option pricing model and totaled $34,750.

(3) The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2023 for Dr.

Tyle was 22,101, of which 8,767 were fully vested.

(5) On December 14, 2021, Dr.

Ward was granted options to purchase 250,000 shares of common stock.

These options have an exercise price of $0.06, vest monthly over one year and have a term of 10 years from the grant date.

The value of the stock option award was estimated using the Black-Scholes option pricing model and totaled $12,750.

(4) The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2023 for Dr.

Ward was 22,001, of which 8,667 were fully vested.

(6) Under the consulting agreement, Mr.

Heppell is entitled to a monthly fee of $6,300, which was increased to $16,600 per month upon the closing of the Acquisition.

The consulting agreement provides Mr.

Heppell with a termination payment in an amount equal to the monthly fees through the then-remaining term of the agreement if Mr.

Heppell’s engagement is terminated by the Company without cause.

The consulting contract has been accounted for as an in-substance severance arrangement and $139,615 is recognized in severance expense during the year ended December 31, 2022.

The monthly fee for Mr.

Heppell's consulting agreement was adjusted to include the increased fee payments when the Acquisition closed.

As of December 31, 2022, $47,512 has been paid to Mr.

Heppell and $16,600 is owed and recognized in accounts payable - related party.

The remaining portion of the consulting contract of $75,503 is accrued for in other current liabilities - related party.

The consulting agreement with Mr.

Heppell was terminated on February 9, 2023.

(5) The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2023 for Dr.

Charych was 21,001, of which 7,501 were fully vested.

(6) The aggregate number of shares issuable upon exercise of option awards outstanding at December 31, 2023 for Mr.

Schwab was 20,001, of which 6,667 were fully vested.

(7) As of December 31, 2023, Mr.

Grayson had 246,252 restricted stock units with market and performance based vesting conditions.

The restricted stock units vest on the following milestones:

If the Company achieves an exit value greater than $500 million at an earlier date, subject to Mr.

Grayson’s continued services with the Company through such exit event, all of the restricted stock units will vest.

As of December 31, 2023, no market capitalization milestone was achieved and no restricted stock units were vested.

(8) Amount includes the prorated annual cash retainer that Mr.

Grayson received for his service from August 18, 2023 to December 31, 2023 and a cash bonus of $350,000 in connection with Mr.

Grayson’s appointment to the Board and in recognition of his skills, experience and future contributions to the Company.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

13 unchanged sentences

2022 Employee Stock Purchase Plan — — 112,000

Equity compensation plans not approved by security holders

Total 1,346,075 $ — 599,672

Table of Cont ents

Security Ownership of Certain Beneficial Owners and Management

14 unchanged sentences

Ownership Percent

Emerald Health Sciences, Inc.

More than 5% Beneficial Owners

Entities affiliated with 5am Ventures

11,884,898 (1) 40.29 %

Entities affiliated with Versant Ventures III LLC.

2,530,950 (2) 8.86 %

Altium Growth Fund, L.P.

1,801,518 (3) 6.42 %

Entities affiliated with Sphera Global Healthcare Management L.P.

1,501,518 (4) 5.35 %

Named Executive Officers and Directors

Punit Dhillon 289,780 (5) 1.02 %

Kaitlyn Arsenault 1,744,114 (4) *%

Kaitlyn Arsenault, CPA 159,066 (6) *%

Tuan Tu Diep 76,997 (7) *%

Margaret Dalesandro 21,767 (8) *%

2 unchanged sentences

Deborah Charych 20,167 (11) *%

Andrew Schwab 19,167 (12) *%

Paul Grayson 190,522 (13) *%

Annalisa Jenkins 6,667 (14) *%

All executive officers and directors as a group (10 persons) 826,567 2.9 %

*Denotes less than 1% of our outstanding shares of common stock.

(1) The address of Sciences is 10 th Floor, 595 Howe St., Vancouver, British Columbia, Canada V6B 1A1.

(2) Based on a Schedule 13DA filed with the Company on March 17, 2023.

*Denotes beneficial ownership of less than 1% of our outstanding shares of common stock.

(1) Based on a Schedule 13D/A filed with the SEC on March 13, 2024, which reported that the beneficial ownership includes (i) 8,393,520 shares of Common Stock held by 5AM Ventures VII L.P.

(“Ventures VII”) and (ii) 1,705,393 shares of Common Stock issuable upon exercise of warrants held by Ventures VII that are currently exercisable, (iii) 1,718,189 shares of Common Stock held by 5AM Ventures II, L.P.

(“Ventures II”) and (iv) 67,796 shares held by 5AM Co-Investors II, L.P.

(“Co-Investors II”).

5AM Partners VII, LLC (“Partners VII”) serves as sole general partner of Ventures VII and shares voting and dispositive power over the securities held by Ventures VII.

5AM Partners II, LLC (“Partners II”) serves as sole general partner of Ventures II and Co-Investors II.

Kush Parmar, Dr.

Diekman are managing members of Partners II.

Each of Partners II, Andrew J.

Kush Parmar, Dr.

Diekman shares voting and dispositive power over the securities held by Ventures II and Co-Investors II.

Schwab, one of our directors, is an affiliate of Ventures VII, Ventures II, and Co-Investors II.

Each of Partners VII, Partners II, Andrew J.

Kush Parmar, Dr.

Diekman disclaim beneficial ownership of such shares except to the extent of its or their pecuniary interest therein.

The address of all entities affiliated with Ventures VII is c/o 5AM Ventures, 501 2nd Street, Suite 350, San Francisco, CA 94107.

(2) Based on a Schedule 13G filed with the SEC on August 28, 2023, which reported that the beneficial ownership includes (i) 1,995,916 shares of Common Stock held by Versant Venture Capital III, L.P.

(“Versant III”), (ii) 520,173 shares of Common Stock issuable upon exercise of warrants held by Versant Venture Capital III, L.P.

that are currently exercisable, (iii) 11,788 shares of Common Stock held by Versant Side Fund III, L.P.

(“Side Fund III”) and (iv) 3,073 shares of Common Stock issuable upon exercise of warrants held by Side Fund III that are currently exercisable.

Versant Ventures III, LLC (“Versant Ventures III”) is the sole general partner of Versant III and Side Fund III.

Versant Ventures III shares voting and investment power over the securities held by Versant III and Side Fund III and as a result may be deemed to have beneficial ownership over such securities.

The address of all entities affiliated with Ventures III is c/o Versant Ventures, One Sansome Street, Suite 1650, San Francisco, CA 94104.

(3) Based on a Schedule 13G filed with the SEC on February 5, 2024 and other information available to the Company.

Consists of 1,801,518 shares of common stock held by Altium Growth Fund, LP.

Altium Capital Management, LP, the investment manager of Altium Growth Fund, LP, has voting and investment power over these securities.

Jacob Gottlieb is the managing member of Altium Capital Growth GP, LLC, which is the general partner of Altium Growth Fund, LP.

Each of Altium Growth Fund, LP and Jacob Gottlieb disclaims beneficial ownership over these securities.

The principal address of Altium Capital Management, LP is 152 West 57th Street, 20th Floor, New York, NY.

(4) Based on a Schedule 13G filed with the SEC on February 8, 2024 and other information available to the Company.

Consists of (i) 256,920 shares of Common Stock are held directly by Sphera Global Healthcare Master Fund, which has delegated its investment management authority to Sphera Global Healthcare Management LP (the "Management Company") and (ii) 1,244,598 shares of common stock are held directly by Sphera Biotech Master Fund, L.P., which has delegated its investment management authority to the Management Company.

The Management Company is managed, controlled, and operated by its general partner, Sphera Global Healthcare GP Ltd., the shares of which are owned 90% by Sphera Funds Management Ltd.

Their business address is 4 Itzak Sade, Building A, 29th Floor, Tel Aviv 6777504, Israel.

(5) Includes (i) 9,343 shares of common stock held by a family trust of which Mr.

Dhillon is the trustee, (ii) 18,961 shares of common stock held directly by Mr.

Dhillon, (iii) 331,500 shares of common stock issuable upon exercise of warrants, (iv) 8,173,906 shares of common stock underlying options that may be exercised within 60 days of March 29, 2023.

(4) Includes 1,410,781 shares of common stock underlying options that may be exercised or RSUs that vest within 60 days of March 29, 2023.

Dhillon, (iii) 1,326 shares of common stock issuable upon exercise of warrants, (iv) includes 53,616 and 206,534 shares of common stock underlying options and RSUs, respectively, that may be exercised within 60 days of March 20, 2024.

(6) Includes 20,096 and 136,303 shares of common stock underlying options and RSUs, respectively,that may be exercised within 60 days of March 20, 2024.

(7) Includes 19,706 and 54,624 shares of common stock underlying options and RSUs, respectively, that may be exercised within 60 days of March 20, 2024.

(8) Includes 21,767 shares of common stock underlying options that may be exercised within 60 days of March 20, 2024.

2 unchanged sentences

(11) Includes 20,167 shares of common stock underlying options that may be exercised within 60 days of March 20, 2024.

Table of Cont ents

(9) Consists of (i) 5,408,930 shares beneficially owned by our current executive officers and directors as of March 22, 2023 and (ii) 10,865,938 shares subject to options exercisable or RSUs that vest within 60 days of March 22, 2023, of which 10,865,938 are vested as of such date.

(12) Includes 19,167 shares of common stock underlying options that may be exercised within 60 days of March 20, 2024.

(13) Includes 5,833 and 184,689 shares of common stock underlying options and RSUs, respectively, that may be exercised within 60 days of March 20, 2024.

(14) Includes 6,667 shares of common stock underlying options that may be exercised within 60 days of March 20, 2024.

Changes in Control

3 unchanged sentences

Except as specified below, there have been no other transactions with related persons in the last two fiscal years, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets as of December 31, 2023 and 2022, and in which any related person had or will have a direct or indirect material interest.

Compensation arrangements for our directors and Named Executive Officers are described in Item 11 of this Form 10-K under the section entitled "Executive Compensation."

Emerald Health Sciences

In January 2018, we entered into a securities purchase agreement with Emerald Health Sciences, Inc.

("Sciences") pursuant to which Sciences purchased a majority of the equity interest us, resulting in a change in control transaction.

Sciences holds a significant interest in our equity as of December 31, 2022 and has provided us with financing under the Amended Credit Agreement.

Jim Heppell was the Chief Executive Officer and a member of the Board of Directors of EHS during the year ended December 31, 2022 and was also a member of the Board of Directors of the Company until May 2022.

On October 5, 2018, we entered into the Credit Agreement with Sciences.

The Credit Agreement originally provided for an unsecured credit facility of up to $20,000,000.

Advances under the Credit Agreement accumulated interest at an annual rate of 7% and the original maturity date of the facility was October 5, 2022.

From November 1, 2018 to March 2019, Sciences advanced us an aggregate of $6,000,000 under the Credit Agreement.

In connection with the advances under the Credit Agreement, we issued Sciences 7,500,000 warrants with an original exercise price of $0.50 per share and a term of five years.

The warrants were fully vested at issuance.

On December 20, 2019, we entered into a Warrant Exchange Agreement, pursuant to which Sciences exercised 40.8 million warrants and paid the aggregate exercise price of approximately $4.08 million for the related warrant shares in the form of a reduction of the corresponding amount of obligations outstanding under the Credit Agreement.

Upon consummation of the transaction under the Warrant Exchange Agreement, the total remaining principal amount excluding discounts under the Credit Agreement was $2,014,500.

On April 29, 2020, we entered into an Amended and Restated Multi-Draw Credit Agreement with Sciences (the "Amended Credit Agreement"), which amended and restated the Credit Agreement, as reported in the current report on the Form 8-K filed with the SEC on April 29, 2020.

During the year ended December 31, 2020, we received non-convertible advances of $150,000 and $300,000 pursuant to the Amended Credit Agreement.

The advances bear interest at 7% per annum and mature on October 5, 2022.

The net proceeds of each advance were used for general corporate purposes.

On March 29, 2021, we entered into amendment two to the Amended Credit Agreement to defer interest payments through the earlier of maturity or prepayment of the principal balance.

On September 15, 2021, we further amended the Amended Credit Agreement to close our access to any further disbursements.

On November 17, 2022, we entered into an amendment to the Amended Credit Agreement, pursuant to which (i) the Company agreed to prepay 25% of the outstanding principal amount under the Amended Credit Agreement, equal to $616,125, plus all accrued interest of $328,737 (ii) the parties agreed to extend the maturity date to the earlier of December 30, 2022 or the Termination Date (as such term is defined in the Amended Credit Agreement), (iii) the parties agreed to amend the exercise price of the warrants to purchase Company common stock held by Sciences to $0.017 per share and (iv) the parties agreed to use good faith efforts to enter into a customary piggyback registration rights agreement.

On December 14, 2022, the Company and Sciences entered into a piggyback registration rights agreement pursuant to which, among other things, the Company agreed to provide registration rights for the shares of common stock underlying the warrants to purchase Company common stock held by Sciences should the Company file a registration statement with the SEC for the purpose of effecting a public offering of common stock.

On December 30, 2022, we entered into an amendment to the Amended Credit Agreement to extend the maturity date to the earlier of (a) five business days after the closing of the sale of VDL (b) February 28, 2023 or (c) the Termination Date (as such term is defined in the Amended Credit Agreement).

Table of Cont ents

On May 18, 2022, Jim Heppell resigned from our board of directors and concurrently entered into a consulting agreement with us pursuant to which Mr.

Heppell will provide mutually agreed upon services related to the wind down of EHT.

The consulting agreement had an initial minimum term of one-year and will be automatically renewed for a one-year period on the anniversary of the contract unless terminated with 60 days' notice.

Under the consulting agreement, Mr.

Heppell was entitled to a monthly fee of $6,300, which was increased to $16,600 per month upon the closing of the Acquisition.

The consulting agreement provides Mr.

Heppell with a termination payment in an amount equal to the monthly fees through the then-remaining term of the agreement if Mr.

Heppell’s engagement is terminated by us without cause.

In addition, Mr.

Heppell was awarded 4,000,000 stock options which are subject to certain performance and other conditions.

The Company has accounted for the consulting contract as an in-substance severance arrangement and recognized $139,615 in severance expense during the year ended December 31, 2022.

The accrual for Mr.

Heppell's severance was adjusted to include the increased fee payments when the Company closed the Acquisition.

As of December 31, 2022, the Company recognized $16,600, in accounts payable - related party and $75,503 in other current liabilities - related party under this consulting agreement.

As of December 31, 2022, Mr.

Heppell is also a board member and the CEO of Sciences.

Heppell also served on VivaCell's board until he tendered his resignation on January 10, 2022.

In addition, the Board Observer Agreement in place with Sciences was amended in September 2021 to allow any board member or officer of Sciences to act as a representative of Sciences on a non-voting observer basis in meetings of the Board.

On December 14, 2021, the Board Observer Agreement was terminated.

Effective February 16, 2023, the Company and Sciences entered into a master transaction agreement (the "MTA").

Under the MTA, (i) Sciences agreed to exercise 16,641,486 warrants to purchase common stock of the Company (the "Warrants") (ii) the parties agreed that the aggregate exercise price for the Warrants of $282,905 was to be paid through a reduction in the debt owed by the Company to Sciences (the "Credit Consideration") under the Amended Credit Agreement.

On February 22, 2023, the Company issued 16,641,486 shares of common stock to Sciences in connection with the exercise of the Warrants.

Pursuant to the terms of the MTA, after the application of the Credit Consideration to the amounts owed under the Amended Credit Agreement, Sciences agreed to convert the remaining balance of $1,597,236 owed by the Company to Sciences under the Amended Credit Agreement into 41,379,164 shares of common stock of the Company at a conversion price of $0.0386, in accordance with an amendment to the Amended Credit Agreement set forth in the MTA.

Following the issuance of shares described above, the Amended Credit Agreement was terminated in its entirety per the terms of the MTA.

Additionally, under the MTA, Sciences agreed to use its best efforts to transfer all of the common stock of the Company held by Sciences to its shareholders on a pro-rata basis at or immediately prior to the Company's listing to a nationally recognized stock exchange, subject to compliance with applicable securities laws.

On October 5, 2018, we entered into a multi-draw credit agreement with Emerald Health Sciences, Inc.

(“Sciences”), who was previously a beneficial holder of more than 5% of our capital stock, for an unsecured credit facility of up to $20,000,000 (as amended or restated from time to time, the “Credit Agreement”).

On November 17, 2022, we entered into an amendment to the Credit Agreement (the “November 2022 Amendment”), pursuant to which we prepaid outstanding principal amount under the Credit Agreement, equal to $616,125, plus outstanding accrued interest of $328,737 and extended the maturity date for the loan underlying the Credit Agreement.

In addition, pursuant to the November 2022 Amendment, we agreed to amend the exercise price of all of the warrants to purchase Company common stock held by Sciences to $4.25 per share.

On February 16, 2023, the Company and Sciences entered in a master transaction agreement (the “Master Transaction Agreement”) pursuant to which Sciences agreed to exercise 66,566 warrants to purchase common stock of the Company (the “Warrants”) and the parties agreed that the aggregate exercise price for the Warrants of $282,906 was to be paid through a reduction in the debt owed by the Company to Sciences (the “Credit Consideration”) under the Credit Agreement.

Pursuant to the terms of the Master Transaction Agreement, after the application of the Credit Consideration to the amounts owed under the Credit Agreement, Sciences agreed to convert the remaining balance of $1,597,236 owed under the Credit Agreement into 165,517 shares of common stock of the Company at a conversion price of $9.65.

Following the issuance of the shares described above, the Credit Agreement was terminated in its entirety.

During the periods ended December 31, 2023 and December 31, 2022, the Company paid to Sciences nil and $616,125 in principal and interest under the Credit Agreement.

On August 15, 2023, Sciences waived their right to include such shares in the registration statement to be filed with the Securities and Exchange Commission in connection with the Merger and 2024 Financing (as such terms are defined below).

Jim Heppell, a director of the Company from January 2019 until May 18, 2022 was also the CEO and a board member of Sciences until March 10, 2023.

VivaCell Biotechnology España, S.L.U (formerly known as Emerald Health Biotechnology España, S.L.U.)

In January 2021 and April 2021, we entered into two separate Collaborative Research Agreements with VivaCell Biotechnology Espana, S.L.U ("VicaCell"), a research and development entity with substantial expertise in cannabinoid science and a subsidiary of Emerald Health Research, Inc.

In January 2021 and April 2021, we entered into two separate Collaborative Research Agreements with VivaCell Biotechnology Espana, S.L.U ("VivaCell"), a research and development entity with substantial expertise in cannabinoid science and a subsidiary of Emerald Health Research, Inc.

which is 100% owned by Sciences.

Under the agreements, VivaCell will provide research and development services pursuant to agreed upon project plans for the research and development of SBI-200 and the preclinical development services for novel derivatives.

The term of each agreement is initially for a one-year period.

The agreements will terminate upon delivery and acceptance of the final deliverables under the project plans or if either party is in breach of the terms of the contract and such breach remains uncured for 45 days.

Payment for services are based on the negotiated amounts for the completion of agreed upon objectives as provided in the Collaborative Research Agreements.

For the years ended December 31, 2023 and 2022, we incurred $0 and $87,927, respectively, in expenses under the Collaborative Research Agreements.

As of December 31, 2021, the Company has recognized a prepaid asset in the amount of $8,056 to be offset against future research and development costs under the Collaborative Research Agreements.

No amounts were due to or from VivaCell under these agreements for the year ended December 31, 2023.

The foregoing summary of the Collaborative Research Agreements do not purport to be complete and are qualified in their entirety by the full text of such agreement, a copy of which is attached as an exhibit hereto and incorporated by reference herein.

On October 11, 2021, we entered into an Exclusive Sponsored Research Agreement (the “ESRA”) with VivaCell to fund certain research and development programs which are of mutual interest to both the Company and VivaCell.

We will have the right to use all data, products, and information, including intellectual property which are generated in the performance of the research under each and all projects funded by the Company pursuant to the ESRA, and VivaCell assigns and agrees to assign, to us all rights to any intellectual property created or reduced-to-practice under, or as a part of, a project funded by us pursuant to the ESRA.

The foregoing summary of the ESRA does not purport to be complete and is qualified in its entirety by the full text of such agreement, a copy of which is attached as an exhibit hereto and incorporated by reference herein.

Table of Cont ents

We have agreed to pay to VivaCell a royalty based on any and all licensing revenue or other consideration paid to us by a third-party licensee, assignee or purchaser of intellectual property rights created under the ESRA.

In addition, upon a change of control transaction we have agreed to pay an amount equal to the royalty percentage multiplied by the fair value of the intellectual property created under the ESRA.

Pursuant to the ESRA, VivaCell will provide a budget to be approved by us for each project, and we will make payments in accordance with the approved budget and pay an annual retainer to VivaCell of $200,000 per year.

The initial term of the agreement is one year, with automatic renewal for successive one-year terms unless either party terminates upon 60 days' prior written notice to the other party pursuant to the ESRA.

On May 8, 2023, the Company terminated the ESRA effective March 31, 2023 and Vivacell waived the required notice period under the ESRA.

For the years ended December 31, 2023 and 2022, we incurred $50,000 and $200,000 in expenses under the ESRA.

As of December 31, 2022 and 2021, we recognized accounts payable of $50,000 and a prepaid asset in the amount of $5,376 to be offset against future research and development costs under the ESRA.

As of December 31, 2023 and 2022, we recognized accounts payable of $0 and $50,000, respectively.

On March 1, 2022, we entered into a research project with VivaCell under the ESRA Agreement for the development of a screening platform for anteroposterior ocular diseases.

The project budget is $190,500.

For the year ended December 31, 2022, we incurred $167,000 of research and development expenses under the ESRA.

As of December 31, 2022, we recognized $7,835, in other current liabilities - related parties related to the first research project.

As of December 31, 2022, we recognized $47,001, in accounts payable - related parties under this agreement.

For the year ended December 31, 2023 and 2022, we incurred $39,167 and $167,000, respectively, of research and development expenses under the ESRA.

As of December 31, 2023 and 2022, we recognized $0 and $7,835, respectively, in other current liabilities - related parties related to the first research project.

As of December 31, 2023 and 2022, we recognized $0 and $47,001 , respectively, in accounts payable - related parties under this agreement.

Merger and 2023 Financing

On August 18, 2023, the Company completed the acquisition of Bird Rock Bio, Inc., a Delaware corporation (“Bird Rock”), in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated August 15, 2023 (the “Merger Agreement”), by and among the Company, Aquila Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”) and Bird Rock.

Pursuant to the Merger Agreement, Merger Sub merged with and into Bird Rock, with Bird Rock surviving such merger as a wholly owned subsidiary of the Company (the “Merger”).

Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), the Company issued to certain former stockholders of Bird Rock, an aggregate of 3,872,184 shares of the common stock of the Company, par value $0.001 per share (the “Common Stock”), valued at approximately $20.0 million based on the 60 trading day volume weighted average price of the Common Stock as of an agreed upon date.

In connection with the execution of the Merger Agreement, on August 15, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors (collectively, the “Investors”), pursuant to which the Company sold to the Investors an aggregate of 2,325,537 shares of Common Stock (the “PIPE Shares”), at a price of $5.16 per share, and accompanying warrants to purchase up to 2,325,537 of Common Stock (the “PIPE Warrants”), for an aggregate purchase price of $12.0 million (the “2023 Financing”).

Pursuant to the Merger Agreement and the Purchase Agreement, at the Effective Time, the Company issued to certain former stockholders of Bird Rock, an aggregate of 2,228,638 shares of Common Stock as a result of the participation of such former stockholders or their respective affiliates in the 2023 Financing.

Following the consummation of t he Merger and the Financing, each of 5am Ventures and Affiliates and Versant Ventures and Affiliates became owner s of more than 5% of our common stock.

On August 15, 2023, in connection with the execution of the Merger Agreement and the Purchase Agreement the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with certain investors, pursuant to which such holders of Company securities will have certain customary registration rights, including rights with respect to the filing of a registration statement under the Securities Act within 180 days from the date of the Registration Rights Agreement.

Indemnification Agreements

We have entered into indemnification agreements with each of our directors and executive officers.

The indemnification agreements, our articles of incorporation and our bylaws require us to indemnify our directors to the fullest extent not prohibited by Nevada law.

Subject to certain limitations, our bylaws also require us to advance expenses incurred by our directors and officers.

Review, Approval and Ratification of Related Party Transactions

12 unchanged sentences

Praveen Tyle, Dr.

Keith Ward and Dr.

Keith Ward, Dr.

Annalisa Jenkins and Dr.

Deborah Charych are independent members of our Board, as that term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules.

Principal Accounting Fees and Services .

The aggregate fees billed for each of the fiscal years ended December 31, 2022 and 2021, for professional services rendered by Mayer Hoffman McCann P.C.

for the audit of our annual consolidated financial statements included in our Annual Report on Form 10-K and quarterly reviews of the unaudited interim consolidated financial statements included in our Quarterly Reports on Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the years ended December 31, 2022 and 2021 were $36,292 and $366,736, respectively.

Substantially all MHM’s personnel, who work under the control of MHM shareholders, are employees of wholly owned subsidiaries of CBIZ, Inc., which provides personnel and various services to MHM in an alternative practice structure.

The aggregate fees billed for each of the fiscal years ended December 31, 2023 and 2022, for professional services rendered by Marcum LLP.

for the audit of our annual consolidated financial statements included in our Annual Report on Form 10-K and quarterly reviews of the unaudited interim consolidated financial statements included in our Quarterly Reports on Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the years ended December 31, 2023 and 2022 were $285,000 and $125,861, respectively.

Table of Cont ents

Audit Related Fees

1 unchanged sentence

Pre-Approval Policies and Procedures

Prior to engaging Mayer Hoffman McCann P.C.

and Marcum LLP to perform audit services, our Board obtains an estimate for the service to be performed.

Prior to engaging Marcum LLP to perform audit services, our Board obtains an estimate for the service to be performed.

All of the services described above were approved by the members of the Audit Committee of the Board in accordance with its procedures.

Table of Cont ents

Exhibits, Financial Statement Schedules .

2 unchanged sentences

688 ), are included in this Annual Report on Form 10-K.

Financial Statements.

The following consolidated financial statements of Skye Bioscience, Inc., together with the report thereon of Mayer Hoffman McCann P.C., an independent registered public accounting firm (PCAOB Firm No.

199 ), are included in this Annual Report on Form 10-K.

Table of Cont ents

SKYE BIOSCIENCE, INC.

AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report s of Independent Registered Public Accounting Firms

Reports of Independent Registered Public Accounting Firm (PCAOB ID 688 )

Consolidated Balance Sheets as of December 31, 2023 and 2022

1 unchanged sentence

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2022 and 2021

Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2023 and 2022

Notes to the Consolidated Financial Statements

Table of Cont ents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Skye Bioscience, Inc.

and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Skye Bioscience, Inc.

(the “Company”) as of December 31, 2022, the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph - Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 1, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations.

These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

and Subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ deficit and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provides a reasonable basis for our opinion.

Critical Audit Matters

6 unchanged sentences

March 21, 2024

Table of Cont ents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Skye Bioscience, Inc.

and Subsidiaries:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Skye Bioscience, Inc., formerly known as Emerald Bioscience, Inc., and Subsidiaries ("Company") as of December 31, 2021, and the related consolidated statements of comprehensive loss, stockholders’ equity, and cash flows for the year ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Uncertainty

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has incurred recurring operating losses and is dependent on additional financing to fund operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters are described in Note 1 to the financial statements.

The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial statements based on our audit.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

Accordingly, we express no such opinion.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there were no critical audit matters.

/s/ Mayer Hoffman McCann P.C.

We have served as the Company's auditor from 2014 to 2022.

Irvine, California

March 25, 2022

Table of Cont ents

SKYE BIOSCIENCE, INC.

3 unchanged sentences

Current assets

Cash and cash equivalents $ 1,244,527 $ 8,983,007

$ 1,256,453 $ 1,244,527

Restricted cash 9,080,202 4,580

Prepaid expenses 425,259 780,807

Prepaid expenses - related party — 13,432

Assets held for sale — 6,432,216

2 unchanged sentences

Property, plant and equipment, net 43,276 87,854

Operating lease right-of-use asset, net 71,191 146,972

Operating lease right-of-use asset

237,983 71,191

Other assets 8,309 8,309

Total assets $ 11,940,411 $ 9,111,072

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities

2 unchanged sentences

Accrued interest - related party 126,027 15,814

Accrued interest - legal contingency

Accrued payroll liabilities 888,381 657,734

1 unchanged sentence

Other current liabilities - related parties — 95,850

Derivative liability 3 59,732

Estimate for legal contingency 6,053,468 6,205,310

Multi-draw credit agreement - related party — 450,000

Convertible multi-draw credit agreement - related party, net of $ 0 and $ 487,668 discount and $ 0 and $ 1,927 issuance costs, at December 31, 2022 and 2021, respectively

1,848,375 1,524,905

Convertible multi-draw credit agreement - related party

Convertible note - related party, net of discount

Operating lease liability, current portion 72,038 78,700

4 unchanged sentences

Commitments and contingencies (Note 13)

Stockholders’ (deficit) equity

Stockholders’ deficit

Preferred stock, $ 0.001 par value;

50,000,000 shares authorized at December 31, 2022;

200,000 shares authorized at December 31, 2023 and 2022;

no shares issued and outstanding at December 31, 2023 and 2022

Common stock, $ 0.001 par value;

5,000,000,000 shares authorized at December 31, 2022;

100,000,000 and 20,000,000 shares authorized at December 31, 2023 and 2022, respectively;

12,349,243 and 3,654,119 shares issued and outstanding at December 31, 2023 and 2022, respectively

913,528 476,108

Additional paid-in-capital 102,238,382 63,726,057

Accumulated deficit ( 104,382,549 ) ( 66,737,765 )

Total stockholders’ (deficit) equity ( 3,008,054 ) 5,864,166

Total liabilities and stockholders’ (deficit) equity $ 9,111,072 $ 9,855,088

Total stockholders’ deficit

( 2,131,818 ) ( 3,008,054 )

Total liabilities and stockholders’ deficit

$ 11,940,411 $ 9,111,072

See accompanying notes to the consolidated financial statements.

Table of Cont ents

SKYE BIOSCIENCE, INC.

4 unchanged sentences

Research and development $ 5,819,461 $ 6,011,805

Cost to acquire IPR&D asset

General and administrative 7,852,340 6,094,617

4 unchanged sentences

Change in fair value of derivative liability ( 3 ) ( 59,729 )

Gain on forgiveness of PPP loan — ( 117,953 )

Interest expense 906,270 665,133

1 unchanged sentence

Finance charge — 120,228

Loss from asset sale 307,086 —

Debt conversion inducement expense 1,383,285 —

Wind-down costs 409,347 456,508

10 unchanged sentences

See accompanying notes to the consolidated financial statements.

Table of Cont ents

SKYE BIOSCIENCE, INC.

7 unchanged sentences

Depreciation and amortization 124,251 114,998

Net gain on disposal of asset

Stock-based compensation expense 987,510 629,032

Change in fair value of derivative liability ( 3 ) ( 59,729 )

Amortization of debt discount - related party 489,595 593,802

Amortization of debt discount

329,890 489,595

Estimate for legal contingency ( 151,843 ) 6,205,310

Gain on debt forgiveness — ( 117,953 )

Loss from divestiture of asset

Debt conversion inducement expense 1,383,285 —

Accrued interest conversion expense 15,952 —

Cost to acquire IPR&D asset 21,215,214 —

Foreign currency remeasurement gain ( 45,350 ) —

Changes in assets and liabilities:

2 unchanged sentences

Other current assets ( 257,790 ) 112,907

Other asset — ( 8,309 )

Accounts payable ( 576,384 ) 688,269

1 unchanged sentence

Accrued interest – related party 126,027 ( 159,097 )

Accrued interest - legal contingency

Accrued payroll liabilities 230,647 313,284

2 unchanged sentences

Operating lease liability ( 76,566 ) ( 82,372 )

Net cash, cash equivalents and restricted cash used in operating activities ( 12,744,072 ) ( 6,474,888 )

Net cash and restricted cash used in operating activities

( 13,952,178 ) ( 12,744,072 )

Cash flows from investing activities:

Proceeds from asset sale, net of legal expenses 5,532,266 —

Cash divested net of proceeds from the sale of an asset — ( 66,458 )

Purchases of property and equipment ( 12,550 ) ( 28,060 )

Cash from asset acquisition, net of transaction costs of $ 1,475,144 for the year ended December 31, 2022

Net cash, cash equivalents and restricted cash provided by (used in) investing activities 5,214,395 ( 90,866 )

Cash acquired in asset acquisition, net of transaction costs of $ 0 and $ 1,475,144 for the years ended December 31, 2023 and 2022, respectively

1,076,740 5,308,913

Net cash and restricted cash provided by investing activities

6,596,456 5,214,395

Cash flows from financing activities:

Proceeds from the issuance of common stock and warrants - net of $ 0 and $ 935,260 of issuance costs in 2022 and 2021, respectively

Proceeds from warrant exercises — 6,999,999

Proceeds from PIPE financing, net of $ 265,053 issuance costs

Proceeds from convertible note - related party

Financing costs allocated to warrants issued with convertible debt

Proceeds from pre-funded warrant exercises — 1,967

Proceeds from option exercises — 4,783

Repayment of loan payable ( 259,335 ) ( 275,537 )

1 unchanged sentence

Repayment of Amended Credit Agreement — ( 616,125 )

Net cash, cash equivalents and restricted cash (used in) provided by financing activities ( 208,794 ) 13,079,356

Net (decrease) increase in cash, cash equivalents and restricted cash ( 7,738,471 ) 6,513,602

Cash, cash equivalents and restricted cash , beginning of year

Net cash and restricted cash provided by (used in) financing activities

16,443,270 ( 208,794 )

Cash, cash equivalents and restricted cash, end of year $ 1,249,107 $ 8,987,578

Net increase (decrease) in cash and restricted cash

9,087,548 ( 7,738,471 )

Cash and restricted cash , beginning of year

$ 1,249,107 $ 8,987,578

Cash and restricted cash, end of year

$ 10,336,655 $ 1,249,107

Supplemental disclosures of cash-flow information:

Reconciliation of cash and restricted cash:

Cash and cash equivalents $ 1,244,527 $ 8,983,007

$ 1,256,453 $ 1,244,527

Restricted cash 9,080,202 4,580

Total cash and restricted cash shown in the consolidated statements of cash flows $ 10,336,655 $ 1,249,107

Table of Cont ents

Cash paid during the year for:

2 unchanged sentences

Supplemental disclosures of non-cash financing activities:

Financing of insurance premium $ 203,884 $ 275,537

Common stock warrant exercises 282,906 —

Conversion of multi-draw credit agreement 1,565,470 —

Conversion of accrued interest due to related party 31,766 —

Right of use asset obtained in exchange for operating lease liabilities 241,134 —

Stock issued for assets 20,532,846 —

Deferred issuance costs — 22,471

Purchases of property and equipment in other current liabilities — 11,300

Financing of D&O insurance premium 275,537 —

Release of share liability 13,000 —

Release of share liability to additional paid-in-capital — 13,000

Asset acquisition costs in other current liabilities and accounts payable — 102,857

3 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

Stockholders' (Deficit) Equity

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

Stockholders' Deficit

Common Stock Additional

2 unchanged sentences

Stockholders'

(Deficit) Equity

Shares Amounts

1 unchanged sentence

Stock-based compensation expense 5,935 6 629,026 — 629,032

Issuance of common stock and warrants, net of issuance costs of $ 935,260

58,111,112 58,111 6,004,663 — 6,062,774

Exercise of pre-funded warrants

Exercise of common stock warrants 116,666,668 116,666 6,883,333 — 6,999,999

Exercise of stock options 106,250 107 4,676 — 4,783

78,667 79 1,888 — 1,967

Common stock, options and warrants issued for asset acquisition, net of issuance costs of $ 25,511

1,665,083 1,665 9,856,490 — 9,858,155

Finance charge from Sciences warrant modification — 120,228 — 120,228

Net loss for the year ended December 31, 2022

— — — ( 19,481,602 ) ( 19,481,602 )

Balance, December 31, 2022 3,654,119 $ 3,654 $ 63,726,057 $ ( 66,737,765 ) $ ( 3,008,054 )

Stock-based compensation expense 10,333 10 987,500 — 987,510

Exercise of pre-funded warrants 19,666,667 19,667 ( 17,700 ) — 1,967

Common stock, options and warrants issued for asset acquisition, net of issuance costs of $ 25,511

Exercise of common stock warrants

66,566 67 282,839 — 282,906

Finance charge from Sciences warrant modification — — 120,228 — 120,228

Conversion of multi-draw credit agreement - related party and accrued interest

165,517 166 2,980,355 — 2,980,521

Common stock issued in acquisition of IPR&D asset

5,436,378 5,436 21,604,150 — 21,609,586

PIPE Financing, net of equity issuance costs $ 265,053

2,989,981 2,990 11,731,957 — 11,734,947

Warrants issued with Convertible Note — — 925,550 — 925,550

Common stock issued for fractional share adjustment in reverse stock split

26,349 26 ( 26 ) — —

Net loss for the year ended December 31, 2023

— — — ( 37,644,784 ) ( 37,644,784 )

Balance, December 31, 2023 12,349,243 $ 12,349 $ 102,238,382 $ ( 104,382,549 ) $ ( 2,131,818 )

See accompanying notes to the consolidated financial statements.

Table of Cont ents

SKYE BIOSCIENCE, INC.

4 unchanged sentences

Skye Bioscience, Inc.

(the "Company") was initially incorporated in Nevada on March 16, 2011 as Load Guard Logistics, Inc.

On October 31, 2014, the Company closed a reverse merger transaction (the "Merger") pursuant to which Nemus, a California corporation ("Nemus Sub"), became the Company’s wholly owned subsidiary, and the Company assumed the operations of Nemus Sub.

Nemus Sub was incorporated in the State of California on July 17, 2012.

On November 3, 2014, the Company changed its name to Nemus Bioscience, Inc.

by merging with Nemus Sub to form a Nevada company.

Effective March 25, 2019, the Company changed its name from Nemus Bioscience, Inc.

to Emerald Bioscience, Inc.

Effective January 19, 2021, the Company changed its name from Emerald Bioscience, Inc.

to Skye Bioscience, Inc.

(the “Company” or “Skye”) was incorporated in Nevada on March 16, 2011.

The Company is a clinical stage pharmaceutical company located in San Diego, California, focused on the discovery, development and commercialization of novel classes of therapeutic drugs that modulate the endocannabinoid system, which has been shown to play a vital role in overall human health.

Notably, the Company is developing drugs with novel mechanisms of action targeting the CB1 receptor through its own research efforts acquired intellectual property and license agreements.

In August 2019, the Company formed a new subsidiary in Australia, SKYE Bioscience Pty Ltd.

(formerly "EMBI Australia Pty Ltd."), an Australian proprietary limited company ("SKYE Bioscience Australia"), in order to qualify for the Australian government’s research and development tax credit for research and development dollars spent in Australia.

The primary purpose of SKYE Bioscience Australia is to conduct clinical trials for the Company’s product candidates.

The Company is a clinical stage pharmaceutical company located in San Diego, California that researches, develops and plans to commercialize cannabinoid derivatives through its own directed research efforts and through multiple license agreements with the University of Mississippi ("UM").

On May 11, 2022, the Company entered into an Arrangement Agreement, as amended on June 14, 2022, July 15, 2022 and October 14, 2022 (the “Arrangement Agreement”) with Emerald Health Therapeutics, Inc., a corporation existing under the laws of the Province of British Columbia, Canada (“EHT”), pursuant to a plan of arrangement under the Business Corporations Act (British Columbia) (the “Acquisition”) (Note 3).

On November 10, 2022, the Company completed the Acquisition and each share of EHT common stock outstanding immediately prior to the effective time of the Acquisition was transferred to the Company in exchange for 1.95 shares of the Company's common stock (the “Exchange Ratio”).

In addition, on November 10, 2022, EHT entered into a share purchase agreement with a third party for the sale of EHT's wholly owned subsidiary, Verdélite Sciences, Inc.

for an aggregate purchase price of $ 9,385,064 , subject to certain adjustments (the "Verdélite SPA").

The sale of this subsidiary will complete the divestiture of EHT's most significant former operating assets (Note 3).

The Company conducted its Phase 1 clinical trial for glaucoma at SKYE Bioscience Australia.

On August 18, 2023, the Company completed a strategic transaction to acquire a clinical asset pursuant to an Agreement and Plan of Merger and Reorganization, dated as of August 15, 2023, by and among the Company, Bird Rock Bio, Inc.

and Aquila Merger Sub, Inc., pursuant to which Aquila Merger Sub, Inc.

merged with and into Bird Rock Bio, Inc.

with Bird Rock Bio, Inc.

surviving as a wholly owned subsidiary of the Company (the “BRB Acquisition”).

In connection with the BRB Acquisition, Bird Rock Bio changed its name from Bird Rock Bio, Inc.

to Bird Rock Bio Sub, Inc ("BRB").

In the BRB Acquisition, the Company issued to certain former stockholders of BRB an aggregate of 5,436,378 shares of the common stock of the Company, valued at $ 21,609,586 (Note 3).

As of December 31, 2023, the Company has devoted substantially all its efforts to securing product licenses, carrying out its own research and development, building infrastructure and raising capital.

The Company has not yet realized revenue from its planned principal operations and is a number of years away from potentially being able to do so.

Liquidity and Going Concern

Liquidity and Capital Resources

The Company has incurred operating losses and negative cash flows from operations since inception and as of December 31, 2023, had a working capital deficit of $ 2,250,156 and an accumulated deficit of $ 104,382,549 .

2 unchanged sentences

For the years ended December 31, 2023 and 2022, the Company incurred net losses of $ 37,644,784 and $ 19,481,602 , respectively.

The Company expects to continue to incur significant losses and negative cash flows from operations through 2023 and expects to incur significant losses and negative cash flows from operations in the future.

The Company’s continued existence is dependent on its ability to raise sufficient additional funding to cover operating expenses and to carry out its research and development activities.

As the Company has recently begun its Phase 1 clinical trial in December 2022, it has increased research and development spending and increased cash used in operating activities.

During the year ended December 31, 2022, the Company expended significant resources on the Acquisition and experienced various transactional delays which resulted in the further extension of the outside date to close the Acquisition.

Due to these delays, in October 2022 the Company entered into a working capital loan from EHT to provide funds to continue operations through the date of closing of the Acquisition (Note 3).

These two factors, among others, have resulted in an overall increase in cash used in operating activities for the year ended December 31, 2022.

Based on the Company’s expected cash requirements, management expects that the Company will be able to complete its Phase 1 clinical trial.

However, if the Company cannot obtain additional funding by the second half of 2023, it will not have enough funds to continue clinical studies.

These conditions give rise to substantial doubt as to the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.

Table of Cont ents

On November 10, 2022, the Acquisition was completed and the Company acquired the cash and other assets of EHT (Note 3).

Management expects that the Acquisition will provide funding for the Company into the second quarter of 2023, and that the Company expects to collect payments from the sale of VDL through 2026.

During the year ended December 31, 2022, the Company met its operational funding requirements during the pre-closing period by, among other things, laying off two employees and entering into a $ 700,000 working capital Loan Agreement with EHT (Note 3).

In early 2023, the Company will continue with the liquidation of EHT's assets, including the closing of the Verdélite SPA, and explore additional financing options (Note 15).

However, the Company cannot provide any assurances that the additional funding needed to will be available on reasonable terms, or at all.

If the Company raises additional funds by issuing equity securities, dilution to existing stockholders would result.

Further, in January 2023, the Company was subject to an unfavorable outcome in a lawsuit with a former employee which resulted in the recognition of an estimated legal contingency of $ 6,205,310 .

The Company strongly believes that this case was incorrectly decided as to liability, the amount of compensatory damages, and the appropriateness and amount of punitive damages.

The Company intends to vigorously challenge the verdict in the trial court and appeal and pursue reimbursement under its existing insurance policies.

However, the outcome of the litigation and the amount recoverable under its existing insurance policies, if any, is inherently uncertain (Note 14).

On October 5, 2018, the Company entered into a Multi-Draw Credit Agreement (the "Credit Agreement") with Emerald Health Sciences ("Sciences"), a related party (See Note 13).

On April 29, 2020, the Company entered into an Amended and Restated Multi-Draw Credit Agreement (the "Amended Credit Agreement") with Sciences.

As of December 31, 2022, the Company had an outstanding principal balance of $ 1,848,375 under the Amended Credit Agreement.

The outstanding advances plus accrued interest under the Amended Credit Agreement were due on October 5, 2022 and the Company executed an extension of the maturity date to December 30, 2022 in exchange for the repricing of Sciences warrants and the repayment of 25 % of the outstanding principal balance plus accrued interest.

The Company subsequently negotiated an additional extension of the maturity date to the earlier of February 28, 2023 or the closing Verdélite SPA.

On February 16, 2023, Sciences exercised all of its outstanding warrants and converted the remaining balance of the Amended Credit Agreement (See Notes 5 & 15).

On July 8, 2022, Sciences distributed its shareholdings in EHT to the individual shareholders of Sciences in the form of a return of capital.

As a result, the common ownership interest by Sciences in both Skye and EHT was eliminated.

On February 16, 2023, Sciences covenanted to use it best efforts to distribute its shareholdings in SKYE to the individual shareholders of Sciences upon Skye listing to a national exchange.

During the second quarter of 2022, the Company was indirectly impacted by a cyberattack on the contract manufacturer for its Phase 1 clinical trial material.

This disruption delayed the Company's production timeline and the anticipated initiation of enrollment in the Company's Phase 1 clinical study for SBI-100 Ophthalmic Emulsion ("SBI-100 OE") to the fourth quarter of 2022.

It is possible that the Company may encounter other similar issues relating to supply chain issues, a lack of production or laboratory resources, global economic and political conditions, pandemics or cyberattacks that could cause business disruptions and clinical trial delays which will need to be managed in the future.

The factors to take into account in going concern judgements and financial projections include travel bans, restrictions, government assistance and potential sources of replacement financing, financial health of service providers and the general economy.

The Company does not believe that inflation has had a material impact on its operating results during the periods presented.

However, inflation, led by supply chain constraints, federal stimulus funding, increases to household savings, and the sudden macroeconomic shift in activity levels arising from the loosening or removal of many government restrictions and the broader availability of COVID-19 vaccines, has had, and may continue to have, an impact on general and administrative costs such as professional fees, employee costs and travel costs, and may in the future adversely affect the Company's operating results.

In addition, increased inflation has had, and may continue to have, an effect on interest rates.

Increased interest rates may adversely affect the terms under which the Company can obtain, any potential additional funding.

Notably, the Company relies on third party manufacturers to produce its product candidates.

The manufacturing of SBI-100 OE is conducted in the United States and Europe.

Formulation of the eye drop for testing is also performed in the United States but can rely on regulatory-accepted excipients that can be sourced from countries outside the United States.

Since the COVID-19 pandemic, global supply chain disruptions have become more common and the Company may encounter future issues related to sourcing materials that are part of the eye drop formulation or manufacturing process, as well as impacting volunteer and/or patient recruitment in Australia for clinical studies.

The location of the clinical trial site is in Australia and since the COVID-19 outbreak in that country, multiple cities have experienced health emergency lockdowns which have had a negative impact on the conduct and timelines of the clinical studies.

Table of Cont ents

After considering the plans to alleviate substantial doubt, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.

The accompanying Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company expects to continue to incur significant losses and negative cash flows from operations through 2024 and in the future.

Historically, the Company has funded its operations through convertible debt, public equity financings, asset acquisitions and private investments in public equity.

On August 18, 2023, the Company entered into the Convertible Note Financing, the August PIPE Financing and BRB Acquisition which provided the Company with the necessary funds to continue operations post an appeal bond to stay the execution of the judgment in the Cunning Lawsuit (Note 13) and reposition the Company to focus on nimacimab as its lead clinical asset for obesity.

Following the August 2023 financings, the Company executed a 1:250 reverse stock split and increased its authorized shares outstanding (Note 7).

On January 31, 2024 and March 13, 2024, the Company completed two private placement equity transactions with institutional investors, in which it raised combined net aggregate proceeds of approximately $ 83,500,000 .

The capital from the January and March financings will allow the Company to fund its planned Phase 2 clinical trials for glaucoma and obesity through top line data.

The Company’s consolidated financial statements have been prepared on the basis of the Company continuing as a going concern for the next 12 months.

Based on its current operational requirements, the Company believes that its current cash, and cash equivalents will be sufficient to fund its projected operations for at least 12 months from the date of the issuance of these consolidated financial statements.

Impact of Geopolitical and Macroeconomic Factors

It is possible that the Company may encounter supply chain issues related to global economic and political conditions such as a lack of production or laboratory resources.

pandemics or cyberattacks that could cause business disruptions and clinical trial delays which will need to be managed in the future.

There may also be significant uncertainty resulting from the impact of other geopolitical and macroeconomic factors, including global pandemics, inflation, supply chain issues, rising interest rates, future bank failures, increased geopolitical tensions between the U.S.

and China and the impact of the Russia/Ukraine conflict and the Israel-Hamas war.

Summary of Significant Accounting Policies

3 unchanged sentences

Actual results could differ from those estimates.

Certain reclassifications have been made to the amounts in prior periods to conform to the current period’s presentation, primarily the separate classification of prepaid expenses, other current assets, estimate for legal contingency, accrued interest for legal contingency, and other current liabilities.

Such reclassifications did not have a material impact on the Consolidated Financial Statements.

Reverse Stock Split

On September 6, 2023, the Company filed a Certificate of Change and Certificate of Correction with the Secretary of State of the State of Nevada which effected a reverse stock split at a ratio of one-for-two hundred and fifty (1-for-250) of the Company's issued and outstanding shares of common stock as of 12:01 a.m.

Eastern Standard Time on September 8, 2023 .

The Company did not issue fractional shares in the reverse stock split and elected to issue one whole share for each fractional share which resulted in the issuance of 26,349 common shares to our existing stockholders.

The Company's financial statements have been adjusted on a retrospective basis to reflect the change.

Assets Held for Sale

On November 10, 2022, the Company completed the Acquisition of EHT in accordance with the Arrangement Agreement.

At the time of the Acquisition there were arrangements in place to sell the acquired assets and liabilities that comprised of two of EHT's subsidiaries, Emerald Health Therapeutics Canada, Inc.

("EHTC") and Verdélite Sciences, Inc.

As a result, EHTC and VDL were considered held for sale since the Acquisition and the Company has classified the associated assets of VDL as held for sale on the Consolidated Balance Sheets and the period costs related to both EHTC and VDL have been presented as wind-down costs in the Consolidated Statements of Operations.

EHTC was divested on December 28, 2022 (see Note 3).

On November 10, 2022, the Company completed the EHT Acquisition.

At the time of the EHT Acquisition there were arrangements in place to sell the acquired assets and liabilities that comprised two of EHT's subsidiaries, Emerald Health Therapeutics Canada, Inc.

("EHTC") and VDL.

As a result, EHTC and VDL were considered held for sale since the EHT Acquisition and the Company has classified the associated assets of VDL as held for sale on the Consolidated Balance Sheets and the period costs related to both EHTC and VDL have been presented as wind-down costs in the Consolidated Statements of Operations.

EHTC was divested on December 28, 2022, and VDL was divested on February 9, 2023 (see Note 3).

Assets meeting the held-for-sale criteria are classified as held for sale on the Consolidated Balance Sheets in subsequent periods until sold.

Assets that meet the held-for-sale criteria are held for sale and reported at the lower of their carrying value or their fair value, less estimated costs to sell.

Changes in fair value are recorded as a gain or loss in the results of operations but not to exceed the original carrying value.

The divestiture of VDL was completed after the balance sheet date on February 9, 2023, refer to Note 15 - Subsequent events for further detail.

Due to the asset acquisition accounting on the date of the EHT Acquisition, AVI had no initial carrying value.

Derecognition of Nonfinancial Assets

The Company generally accounts for sales of nonfinancial assets that are outside the scope of our ordinary activities under ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets.

Pursuant to ASC 610-20, the Company applies the guidance in ASC 606 to determine if a contract exists, identify the distinct nonfinancial assets, and determine when control transfers and, therefore, when to derecognize the nonfinancial asset.

Additionally, the Company applies the measurement principles of ASC 606 to determine the amount of consideration, if any, to include in the calculation of the gain or loss for the sale of the nonfinancial asset.

Refer to Note 3 for further information.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries SKYE Bioscience Australia, EHT, Avalite Sciences, Inc.

("AVI"), VDL, EHTC and Nemus Sub.

All intercompany accounts and transaction have been eliminated in consolidation.

The accompanying consolidated financial statements as of December 31, 2023, include the accounts of the Company and its wholly owned subsidiaries SKYE Bioscience Australia, EHT, AVI, BRB, Ruiyi Acquisition Corporation, and Nemus Sub.

All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

1 unchanged sentence

Actual results could differ from those estimates.

The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates and judgments as to the appropriate carrying values of equity instruments, debt with embedded features, estimates related to the Company's estimation of the percentage of completion under its research and development contracts, contingent legal liabilities, fair value of assets acquired in the Acquisition, and the valuation of stock based compensation awards, which are not readily apparent from other sources.

The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates and judgements used in determining stock based compensation expense and estimates related to the Company's estimation of the percentage of completion under its research and development contracts, which are not readily apparent from other sources.

Risks and Uncertainties

5 unchanged sentences

The Company has not experienced any losses on such accounts and does not believe it is exposed to any significant credit risk.

As of December 31, 2022, and 2021, the Company has $ 25,842 and $ — cash equivalents, respectively.

Restricted cash on the balance sheet represents a certificate of deposit held by the Company’s bank as collateral for the Company’s credit cards.

Table of Cont ents

December 31, 2023, restricted cash on the balance sheet collateralizes an irrevocable letter of credit (Note 13).

As of December 31, 2022, restricted cash is a certificate of deposit held by the Company’s bank as collateral for the Company’s credit cards.

Property, Plant and Equipment, net

Property, plant and equipment are stated at cost less accumulated depreciation and amortization.

Property, plant and equipment is stated at cost less accumulated depreciation and amortization.

Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, generally three to five years .

15 unchanged sentences

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date.

Any interest or penalties would be recorded in the Company’s Consolidated Statements of Comprehensive Income (Loss) in the period incurred.

Any interest or penalties would be recorded in the Company’s Consolidated Statements of Operations in the period incurred.

When necessary, the Company recognizes interest and penalties related to income tax matters in income tax expense.

2 unchanged sentences

Due to the substantial doubt related to the Company’s ability to utilize its deferred tax assets, a valuation allowance for the full amount of the deferred tax assets has been established at December 31, 2023 and 2022.

As a result of this valuation allowance, there are no income tax benefits reflected in the accompanying Consolidated Statements of Comprehensive Income (Loss) to offset pre-tax losses.

As a result of this valuation allowance, there are no income tax benefits reflected in the accompanying Consolidated Statements of Operations to offset pre-tax losses.

The Company recognizes a tax benefit from uncertain tax positions when it is more likely than not (50%) that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position.

2 unchanged sentences

The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

Table of Cont ents

The Company accounts for convertible debt instruments with embedded conversion features in accordance with ASC 470-20, Debt with Conversion and Other Options ("ASC 470-20") if it is determined that the conversion feature should not be bifurcated from their host instruments.

16 unchanged sentences

The Company generally accounts for warrants issued in connection with debt and equity financings as a component of equity, unless the warrants include a conditional obligation to issue a variable number of shares or there is a deemed possibility that the Company may need to settle the warrants in cash.

For warrants issued with a conditional obligation to issue a variable number of shares or the deemed possibility of a cash settlement, the Company records the fair value of the warrants as a liability at each balance sheet date and records changes in fair value in other expense (income), net in the Consolidated Statements of Operations.

For warrants issued with a conditional obligation to issue a variable number of shares or the deemed possibility of a cash settlement, the Company records the fair value of the warrants as a liability at each balance sheet date and records changes in fair value in other expense, net in the Consolidated Statements of Operations.

Debt Issuance Costs and Interest

2 unchanged sentences

For debt facilities that provide for multiple advances, the Company initially defers any issuance costs until the first advance is made and then amortizes the costs over the life of the facility.

Revenue Recognition

The Company accounts for its collaboration arrangement under the provisions of Accounting Standard Codification Topic 606, Revenue from Contract with Customers , or ASC 606.

In accordance with ASC 606, when a customer obtains control of promised goods or services, in an amount that reflects the consideration expected to be received in exchange for those goods or services, the Company performs the following five steps in determining the appropriate amount of revenue to be recognized as it fulfills its obligations under such agreements:

• identification of the promised goods and services in the contract;

• determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract;

• measurement of the transaction price, including any constraint on variable consideration;

• allocation of the transaction price to the performance obligations;

• recognition of revenue when, or as, we satisfy each performance obligation.

If an agreement includes a license to the Company's intellectual property and that license is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.

For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligations to determine whether the combined performance obligations are satisfied over time or at a point in time.

If over time, the Company evaluates the measure of progress over time proportionate to the costs incurred to perform the services using an input method as a measure of progress towards satisfying the performance obligation.

Any change made to estimated progress towards completion of a performance obligation due to changes in the estimated activities required to complete the performance obligation and, therefore, revenue recognized will be recorded as a change in estimate.

The Company receives payments from its collaborators based on billing schedules established in each contract.

Upfront payments and other payments may require deferral of revenue recognition to a future period until the Company performs its obligation under its collaboration arrangements.

Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional.

Research and Development Expenses and Licensed Technology

Research and development costs are expensed when incurred.

These costs may consist of external research and development expenses incurred under agreements with third party contract research organizations and investigative sites, third party manufacturing organizations and consultants;

These costs may consist of external research and development expenses incurred under agreements with third party contract research organizations and investigative sites;

third party manufacturing organizations and consultants;

license fees;

employee-related expenses, which include salaries and benefits for the personnel involved in the Company’s preclinical and clinical drug development activities, other expenses and equipment and laboratory supplies.

employee-related expenses, which include salaries and benefits for the personnel involved in the Company’s preclinical;

and clinical drug development activities, other expenses and equipment and laboratory supplies.

Costs incurred for the rights to use licensed technologies in the research and development process, including licensing fees and milestone payments, are charged to research and development expense as incurred in situations where the Company has not identified an alternative future use for the acquired rights, and are capitalized in situations where there is an identified alternative future use.

No ne of the costs associated with the use of licensed technologies has been capitalized to date.

Table of Cont ents

None of the costs associated with the use of licensed technologies has been capitalized to date.

Similarly, costs incurred to acquire in-process research and development ("IPR&D") are charged to research and development expense in the situation where the Company has not identified an alternative future use and are capitalized in the situation where there is an alternative future use.

All costs associated with the acquisition of IPR&D have been expensed to date.

Stock-Based Compensation Expense

2 unchanged sentences

The Company uses the Black-Scholes valuation method for estimating the grant date fair value of stock options using the following assumptions:

• Volatility - Expected volatility is estimated using the historical stock price performance over the expected term of the award.

• Volatility - Stock price volatility is estimated over the expected term based on a blended daily rate of industry peers stock volatility.

• Expected term - The expected term is based on a simplified method which defines the life as the weighted average of the contractual term of the options and the vesting period for each award.

2 unchanged sentences

• Dividends - The dividend yield assumption is based on the Company’s history and expectation of paying no dividends in the foreseeable future.

The Company accounts for liability-classified stock option awards (“liability options”) under ASC 718 - Compensation - Stock Compensation (“ASC 718”), under which the Company accounts for its awards containing other conditions as liability classified instruments.

Liability options are initially recognized at fair value in stock-compensation expense and subsequently re-measured to their fair values at each reporting date with changes in the fair value recognized in share-based compensation expense or additional paid-in capital upon settlement or cancellation.

Additionally, the Company uses the Monte Carlo Simulation model to evaluate the derived service period and fair value of awards with market conditions, including assumptions of historical volatility and risk-free interest rate commensurate with the vesting term.

Loss Per Common Share

6 unchanged sentences

For additional information regarding the loss per share (see Note 9).

In February 2016, the FASB issued Accounting Standards Update, or ASU, No.

2016-02, Leases (Topic 842), to enhance the transparency and comparability of financial reporting related to leasing arrangements.

The Company adopted the standard effective January 1, 2019.

The Company applies ASU, No.

2016-02, Leases (Topic 842), in accounting for operating lease arrangements.

At the inception of an arrangement, the Company determines whether the arrangement is, or contains, a lease based on the unique facts and circumstances present.

5 unchanged sentences

Operating leases are recognized on the Consolidated Balance Sheets as operating lease right-of-use assets, operating lease liability, current portion and operating lease liability, net of current portion.

Asset Acquisition

Asset Acquisitions

The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

2 unchanged sentences

Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets.

Table of Cont ents

For asset acquisitions, a cost accumulation model is used to determine the cost of an asset acquisition.

5 unchanged sentences

Amounts held in escrow where we have legal title to such balances but where such accounts are not held in the Company's name, are recorded on a gross basis as an asset with a corresponding liability in our consolidated balance sheet.

The cost of an asset acquisition, including transaction costs, are allocated to identifiable assets acquired and liabilities assumed based on a relative fair value basis.

Unless an acquired asset is expensed at the date of acquisition, in accordance with other applicable GAAP, the cost of an asset acquisition, including transaction costs, are allocated to identifiable assets acquired and liabilities assumed based on a relative fair value basis.

Goodwill is not recognized in an asset acquisition.

11 unchanged sentences

The local currencies of its foreign subsidiaries are the Canadian Dollar (“CAD”) or Australian dollar (“AUD”).

Assets and liabilities are translated based on the exchange rates at the balance sheet date ( 0.7384 for the CAD, 0.6792 for the AUD as of December 31, 2022 and 0.72610 for the AUD as of December 31, 2021), while expense accounts are translated at the weighted average exchange rate for the period ( 0.7361 for the CAD and 0.6748 for the AUD for the year ended December 31, 2022 and 0.71510 for the AUD as of December 31, 2021).

Equity accounts are translated at historical exchange rates.

The resulting translation adjustments are recognized in general and administrative expenses in the consolidated financial statements.

During the years ended December 31, 2022 and 2021, the Company recorded foreign currency translations of $ 63,717 and $ 6,684 , respectively, which are reflected in general and administrative expenses in the accompanying Consolidated Statements of Operations.

Assets and liabilities are remeasured based on the exchange rates at the balance sheet date 0.7549 for the CAD, 0.6818 for the AUD as of December 31, 2023 and 0.7384 for the CAD and 0.6792 for the AUD as of December 31, 2022, while expense accounts are remeasured at the weighted average exchange rate for the period 0.7453 for the CAD and 0.6697 for the AUD for the year ended December 31, 2023 and 0.7361 for the CAD and 0.6748 for the AUD as of December 31, 2022.

Equity accounts are remeasured at historical exchange rates.

The resulting remeasurement adjustments are recognized in general and administrative expenses in the consolidated financial statements.

During the years ended December 31, 2023 and 2022, the Company recorded foreign currency remeasurements of $ 61,767 and $ 63,717 , respectively, which are reflected in general and administrative expenses in the accompanying Consolidated Statements of Operations.

Foreign currency gains and losses resulting from transactions denominated in foreign currencies are recorded in the Consolidated Statements of Operations.

1 unchanged sentence

Commitments and Contingencies

The Company follows ASC 440 & ASC 450, subtopic 450-20 to report accounting for contingencies and commitments respectively.

The Company follows ASC 440, Commitments and ASC 450, Contingencies , subtopic 450-20 to report accounting for contingencies and commitments respectively.

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur.

1 unchanged sentence

In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

Table of Cont ents

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements.

2 unchanged sentences

Based upon information available at this time, management believes that the current litigation matter related to the Cunning lawsuit will have a material adverse effect on the Company’s consolidated financial position, results of operations and cash flows.

Refer to Note 14 - Commitments and Contingencies for additional information .

Refer to Note 13 for additional information.

In accordance with ASC 450, Contingencies, subtopic 450-20, the Company does not reflect a contingency that may result in a gain until it is realized.

Recent Accounting Pronouncements

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

The aim of ASU 2021-08 is to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to (1) Recognition of an acquired contract liability, and (2) Payment terms and their effect on subsequent revenue recognized by the acquirer.

The ASU will be effective for annual reporting periods after December 15, 2022, should be applied on a prospective basis and early adoption is permitted.

The adoption of ASU 2021-08 does not currently impact the Company's financial statements.

The Company plans to adopt the provisions of this ASU on the effective date.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Account Standards Update (“ASU”) No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

This ASU replaces the existing incurred loss impairment model with an expected loss model.

It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities.

These changes will result in earlier recognition of credit losses.

The amendments in this ASU are effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The Company adopted ASU 2016-13 as of January 1, 2023 and the adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures .

This ASU requires greater disaggregation of information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid.

This ASU applies to all entities subject to income taxes and is intended to help investors better understand an entity’s exposure to potential changes in jurisdictional tax legislation and assess income tax information that affects cash flow forecasts and capital allocation decisions.

This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

This ASU should be applied on a prospective basis although retrospective application is permitted.

The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss.

This ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in this ASU and existing segment disclosures in Topic 280.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments in this ASU should be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures, and does not expect the standard will have a material impact on the Company’s consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

1 unchanged sentence

This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related EPS guidance for both Subtopics.

The ASU will be effective for annual reporting periods after December 15, 2023 and interim periods within those annual periods and early adoption is permitted in fiscal periods ending after December 15, 2020.

The ASU will be effective for annual reporting periods beginning after December 15, 2023 and interim periods within those annual periods and early adoption is permitted in fiscal periods ending after December 15, 2020.

Upon implementation, the Company may use either a modified retrospective or full retrospective method of adoption.

The adoption of ASU 2020-06 will likely impact the way the Company calculates its (loss) earnings per share, result in expanded disclosures around convertible instruments and remove the requirement to assess and record beneficial conversion features.

The Company currently plans to adopt the provisions of this ASU on the effective date.

However, it reserves the right to early adopt these provisions.

Recently Adopted Accounting Pronouncements

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832), Disclosures by Business Entities about Government Assistance .

The aim of ASU 2021-10 is to increase the transparency of government assistance including the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements.

Diversity currently exists in the recognition, measurement, presentation, and disclosure of government assistance received by business entities because of the lack of specific authoritative guidance in GAAP.

The ASU will be effective for annual reporting periods after December 15, 2021, and early adoption is permitted.

The Company adopted ASU 2021-10 Government Assistance on January 1, 2022 using the prospective adoption method as rebates from the ATO in prior periods have not been material to the Company's financial statements.

The Company accounts for the tax rebates received from the ATO under such guidance.

The Company accounts for the rebates that it receives under the AusIndustry research and development tax incentive program under the income recognition model of IAS 20.

Under this model, when there is reasonable assurance that the rebate will be received, the Company recognizes the income from the tax rebate as an offset to research and development expense during the period which the benefit applies to the research and development costs incurred.

Refer to disclosures under Government Assistance in Note 2 - the Summary of Significant Accounting Policies for additional information on the Company's treatment of tax rebates.

The adoption of ASU 2020-06 will, result in expanded disclosures around convertible instruments and remove the requirement to assess and record beneficial conversion features.

The Company currently plans to adopt the provisions of this ASU on the effective date using a modified retrospective method of adoption.

Asset Acquisitions

BRB Acquisition

On August 18, 2023, the Company acquired 100 % of Bird Rock Bio Sub, Inc.

pursuant to an Agreement and Plan of Merger and Reorganization, dated August 15, 2023.

The purpose of the acquisition was to acquire BRB's clinical asset, nimacimab, an antibody targeting the CB1 receptor, for development to treat obesity.

Pursuant to the BRB Acquisition, the Company issued 3,872,184 shares of Skye common stock to the former preferred shareholders of BRB equal to $ 20,000,000 in base merger consideration priced at $ 5.16 .

In addition, the former preferred shareholders of BRB were entitled to additional merger consideration for each dollar invested in the August 2023 PIPE Financing (Note 7).

Because the August 2023 PIPE Financing and BRB Acquisition occurred contemporaneously and in contemplation of each other, in accounting for the transaction, the Company allocated the shares issued as additional merger consideration between the BRB Acquisition and PIPE Financing using a residual allocation method, whereby the fair value of the consideration transferred was first allocated to the monetary assets and August 2023 PIPE Financing proceeds with the remainder allocated to the IPR&D asset.

As a result, 1,564,194 additional shares of common stock were allocated to the BRB Acquisition.

Below is a summary of the total consideration, assets acquired and the liabilities assumed in connection with the BRB Acquisition:

August 18, 2023

Purchase consideration

Common stock $ 21,609,586 (a)

Total consideration $ 21,609,586

Assets acquired and liabilities assumed:

Cash and cash equivalents 1,076,740

Prepaid expenses 4,800

Accounts payable ( 73,473 )

Other current liabilities ( 613,695 )

Total net assets acquired $ 21,609,586

(a) Equal to the aggregate common shares issued of 5,436,378 , multiplied by the Company's closing stock price of $ 3.975 as of August 18, 2023.

The cost to acquire the IPR&D asset related to nimacimab was expensed on the date of the BRB Acquisition as it was determined to have no future alternative use.

Accordingly, costs associated with the BRB Acquisition to acquire the asset were expensed as incurred.

Acquisition of Emerald Health Therapeutics, Inc.

On May 11, 2022, the Company entered into the Arrangement Agreement, as amended on June 14, 2022, July 15, 2022 and October 14, 2022 with EHT, pursuant to a plan of arrangement under the Business Corporations Act (British Columbia).

The Acquisition was consummated on November 10, 2022 (the "Closing Date").

The Company evaluated the accounting for the transaction and accounted for the Acquisition as an asset acquisition due to the wind-down state of EHT (Note 1).

The primary purpose of the Acquisition was to utilize EHT's remaining cash and cash equivalents and liquidate the primary real estate asset owned by EHT in order to fund the Company's operations.

On November 10, 2022, the Company completed the EHT Acquisition and each share of EHT common stock outstanding immediately prior to the effective time of the EHT Acquisition was transferred to the Company in exchange for 1.95 shares of the Company's common stock (the “Exchange Ratio”).

The Company evaluated the accounting for the transaction and accounted for the EHT Acquisition as an asset acquisition due to the wind-down state of EHT.

The primary purpose of the EHT Acquisition was to utilize EHT's remaining cash and cash equivalents and liquidate the primary real estate asset owned by EHT in order to fund the Company's operations.

To account for the Acquisition, the Company measured the equity interests issued on the Closing Date (including the value of the options and warrants rolled over) and accumulated the direct costs attributable to the Acquisition.

Table of Cont ents

Upon closing the Acquisition, the Company acquired net assets with an estimated fair value of $ 15,045,412 .

The fair value of the consideration was allocated on a relative fair value basis to the “qualifying assets” in the Acquisition and any excess in the fair value of the assets initially reduced the value of the qualifying assets before reducing the value of the assets held for sale.

The only qualifying asset identified in the Acquisition was AVI.

Upon closing the EHT Acquisition, the Company acquired net assets with an estimated fair value of $ 15,045,412 .

The fair value of the consideration was allocated on a relative fair value basis to the “qualifying assets” in the EHT Acquisition and any excess in the fair value of the assets initially reduced the value of the qualifying assets before reducing the value of the assets held for sale.

The only qualifying asset identified in the EHT Acquisition was AVI.

The fair value of AVI at the time of Acquisition was $ 1,536,275 and the value attributable to AVI was fully eliminated in the Acquisition accounting .

EHT is currently in the final stages of its realization process to wind down all prior operations and liquidate substantially all of its remaining assets.

As of the date of this Annual Report on Form 10K we have divested both of EHT's former operating entities and are in the process of resolving legacy tax matters with the Canadian tax authorities.

In addition, EHT's remaining subsidiary, AVI, owns a vacant laboratory facility that is fully-licensed to handle controlled substances under Canadian regulations, which the Company is currently evaluating for research, development and manufacturing activities.

In negotiating the Exchange Ratio, the Company performed a review of EHT's assets and the costs expected to wind down operations.

However, there are inherent risks and uncertainties around the ultimate liquidation value of EHT.

Upon the Closing Date of the Acquisition, the Company issued each EHT shareholder 1.95 shares of Skye common stock, for each share of EHT common stock outstanding as of the Closing Date.

On November 10, 2022, the Company issued 416,270,514 shares of stock as consideration in the Acquisition and no fractional shares of Skye Common Stock were issued (Note 13).

and Canadian federal income tax purposes, the Acquisition constitutes a taxable exchange by the EHT shareholders.

As of December 31, 2023 the Company has divested both of EHT's former operating entities and as of January 15, 2024, the divestiture of substantially all of EHTs assets, including the real estate held by AVI, is complete.

Upon the Closing Date of the EHT Acquisition, the Company issued each EHT shareholder 1.95 shares of Skye common stock, for each share of EHT common stock outstanding as of the Closing Date.

On November 10, 2022, the Company issued 1,665,083 shares of stock as consideration in the EHT Acquisition and no fractional shares of Skye Common Stock were issued.

and Canadian federal income tax purposes, the EHT Acquisition constitutes a taxable exchange by the EHT shareholders.

In addition, all outstanding stock options and warrants of EHT were exchanged for replacement options and warrants of Skye with identical terms, as adjusted in accordance with the Exchange Ratio.

On July 11, 2022, the Company and EHT entered into a consulting agreement pursuant to which representatives of the Company provided administrative assistance to EHT to assist EHT in satisfying its financial reporting, operational and regulatory obligations.

EHT incurred $ 150 for each hour of services provided by the Company.

The consulting agreement terminated on the date of the closing of the Acquisition (Note 13).

The consulting agreement had an effective date of May 12, 2022 and as of December 31, 2022, the Company recorded a receivable of $ 22,542 , which has been eliminated in consolidation at December 31, 2022.

Below is a summary of the total consideration, assets acquired and the liabilities assumed in connection with the Acquisition:

21 unchanged sentences

Common Stock, The Company issued 1,665,083 shares of common stock at $ 5.75 per share for an aggregate fair value of $ 9,574,222 .

Table of Cont ents

EHT Rollover Stock Options, The estimated fair value of options issued as consideration in the Acquisition was $ 105,929 and 8,282,626 SKYE options were issued after applying the Exchange Ratio.

EHT Rollover Stock Options, The estimated fair value of options issued as consideration in the EHT Acquisition was $ 105,929 and 33,132 SKYE options were issued after applying the Exchange Ratio.

The assumptions to value these options were as follows (see Note 8):

4 unchanged sentences

Expected term (years) 0.02 - 4.83

EHT Rollover Warrants, The estimated fair value of warrants issued as consideration for the Acquisition was $ 203,515 60,947,407 SKYE warrants were issued after applying the Exchange Ratio.

EHT Rollover Warrants, The estimated fair value of warrants issued as consideration for the Acquisition was $ 203,515 and 243,781 SKYE warrants were issued after applying the Exchange Ratio.

The assumptions used to value these warrants are as follows:

7 unchanged sentences

This amount is primarily composed of the following balances:

The adjusted the fair value of the VDL assets held for sale of $ 8,540,732 , net of direct liquidation costs of $ 390,241 , which includes legal costs, advisory fees and other professional fees.

The adjusted fair value of the VDL assets held for sale of $ 8,540,732 , net of direct liquidation costs of $ 390,241 , which includes legal costs, advisory fees and other professional fees.

In addition, the VDL assets were further reduced by $ 2,072,981 as a result of the relative fair value allocation.

8 unchanged sentences

The net related party loan balance was $ 680,901 as of the closing of the Acquisition.

After the closing of the Acquisition, this balance eliminates in consolidation.

After the closing of the EHT Acquisition, this balance eliminates in consolidation.

Other current assets, The Company acquired other current assets related to EHT and its subsidiaries which are considered held for held for sale in the amount of $ 356,961 .

5 unchanged sentences

Short-term liability EHT received an upfront deposit of $ 557,010 for the sale of VDL,

Table of Cont ents

Other current liabilities, The Company acquired liabilities related to EHT and its subsidiaries which are considered in the amount of $ 722,839 .

3 unchanged sentences

In accordance with ASC 450, the Company has recorded a contingent liability related credits due to customers of EHT's former operations.

At the time of the Acquisition, this liability was estimated at $ 135,700 .

Wind-down costs consist primarily of employee payroll and benefits, legal fees related to divesting of EHT’s assets and post closing Acquisition related fees, other professional fees for accounting and tax, tax payments, insurance, contract termination costs and operational costs through the cease operations date at each site.

The Company estimates that EHT will incur the following costs in the periods specified below to wind-down its operations:

Quarter ending:

March 31, 2023 315,400

Thereafter 170,500

Total future estimated costs:

*The timing and realization of the expected costs are based on management’s estimates and are subject to change based on various factors, including but not limited to, the sale of EHT facilities at terms favorable to Skye, the timely termination of obsolete contracts, the implementation of cost-cutting measures necessary to maximize the remaining asset balance, the effective management of the termination of remaining personnel and related severance payments, the implementation of a successful transition plan, which includes the effective cessation of regulatory activities and the successful migration of historical data.

At the time of the EHT Acquisition, this liability was estimated at $ 135,700 .

Divestiture of Emerald Health Therapeutics Canada, Inc.

On December 28, 2022, approximately six weeks after the Acquisition, the Company entered into a Share Purchase Agreement (“SPA”) with a third-party whereby the Company transferred all of its outstanding and fully paid, non-assessable 11,776,338 shares of common stock (the "EHTC Common Shares"), all of which were held by EHT with no par value, for the total purchase price of $ 110,759 .

On December 28, 2022, approximately six weeks after the EHT Acquisition, the Company entered into a Share Purchase Agreement (“SPA”) with a third-party whereby the Company transferred all of its outstanding and fully paid, non-assessable 11,776,338 shares of common stock (the "EHTC Common Shares"), all of which were held by EHT with no par value, for the total purchase price of $ 110,759 .

The purchase price also includes the transfer of two licenses issued by Health Canada.

EHTC was classified as an asset acquisition and did not meet the criteria of a business at the of Acquisition, and was considered held for sale at the time of Acquisition.

EHTC was classified as an asset acquisition and did not meet the criteria of a business at the of EHT Acquisition, and was considered held for sale at the time of EHT Acquisition.

Therefore, the sale of EHTC is determined to be treated as the sale of an asset to a third-party due to the discontinued state of the business at the date of divestment.

No gain or loss related to the divestiture of EHTC was recorded.

Verdélite SPA

On November 10, 2022, EHT and C3, a third-party, entered into the Verdélite SPA effective November 8, 2022, pursuant to which C3 would acquire all of the outstanding shares of VDL, the holder of EHT's most significant real estate asset, for an aggregate purchase price of approximately $ 9,385,064 , subject to certain adjustments.

Prior to closing the Acquisition EHT received a $ 553,800 cash deposit.

Upon closing, the Company will receive cash proceeds of $ 5,547,000 .

Divestiture of VDL

On November 10, 2022, EHT and C3, a third-party, entered into the Verdélite SPA, as amended, effective November 8, 2022, pursuant to which C3 would acquire all of the outstanding shares of VDL, the holder of EHT's most significant real estate asset.

On February 9, 2023, u pon closing the transactions contemplated by the Verdélite SPA, the Company sold all of the outstanding shares of VDL for an aggregate purchase price of approximately $ 9,451,233 .

Prior to closing the EHT Acquisition, EHT received a $ 557,705 cash deposit, which was considered in the sale as of the closing date.

Upon closing, the Company received gross proceeds, net of legal and advisory fees as of the closing date, of $ 5,532,266 .

The remainder of the purchase price will be paid as follows:

(i) USD$ 369,200 will be payable in five ( 5 ) equal monthly installments payable on the last day of each month beginning on December 31, 2023 and ending April 30, 2024, with interest in accordance with the terms of the Verdélite SPA and (ii) USD$ 2,769,000 will be payable in three ( 3 ) equal installments on each of the 18-month , 30-month , and 42-month anniversaries of the VDL Closing Date, with interest in accordance with the terms of the Verdélite SPA.

This transaction closed on February 9, 2023 (see Note 15).

Prepaid Expenses

(i) $ 370,350 will be payable in five ( 5 ) equal monthly installments payable on the last day of each month beginning on December 31, 2023, and ending April 30, 2024, with interest in accordance with the terms of the Verdélite SPA and (ii) $ 2,777,625 will be payable in three (3) equal installments on each of the 18-month , 30-month , and 42-month anniversaries of the VDL Closing Date, with interest in accordance with the terms of the Verdélite SPA.

The Company recognized the sale of VDL when control transferred on February 9, 2023.

In accordance with recognition guidance, the Company has determined to fully reserve for the remaining receivables and will record a gain on the sale when additional cash payments are received.

For the year ended December 31, 2023, the Company has recorded a loss on sale of asset of $ 307,086 in other expense based on the difference between the carrying amount of the assets sold and the net cash proceeds.

Prepaid Expenses, Other Current Assets and Other Current Liabilities

Prepaid expenses consist of the following:

3 unchanged sentences

$ 425,259 $ 780,807

Table of Cont ents

Other current assets consist of the following:

As of December 31

AusIndustry incentive $ 540,604 $ 179,687

Vendor deposits 172,439 101,386

Excise Tax Bonds 125,784 74,121

Other tax receivables 32,458 —

Other current assets

17,644 126,394

$ 888,929 $ 481,588

Other current liabilities consist of the following:

As of December 31

Research and development costs $ 467,784 $ 40,597

Legal expenses

258,213 227,350

EHT Acquisition related liabilities

180,897 369,111

Consulting fees

Professional fees

22,068 86,682

Insurance loan payable — 55,451

Deposit - Verdélite SPA

Other accrued liabilities

22,190 89,454

$ 998,552 $ 1,422,445

Warrants and Derivative Liabilities

There are significant judgments and estimates inherent in the determination of the fair value of the Company’s warrants and derivative liabilities.

These judgments and estimates include assumptions regarding the Company’s future operating performance, the time to completing a liquidity event, if applicable, and the determination of the appropriate valuation methods.

If the Company had made different assumptions, the fair value of the warrants and derivative liabilities could have been significantly different (See Note 2).

There are significant judgements and estimates inherent in the determination of the fair value of the Company’s warrants.

These judgements and estimates include assumptions regarding the Company’s future operating performance and the determination of the appropriate valuation methods.

If the Company had made different assumptions, the fair value of the warrants could have been significantly different (See Note 2).

Warrants vested and outstanding as of December 31, 2023 are summarized as follows:

Source Exercise

(Years) Number of

Pre 2015 Common Stock Warrants $ 1.00 10 1,110,000

Price Remaining Term

2015 Common Stock Warrants 1,250.00 1.32 400

2016 Common Stock Warrants to Service Providers 287.50 2.84 160

2018 Emerald Financing Warrants 0.10 5 3,400,000

Emerald Multi-Draw Credit Agreement Warrants 0.02 5 7,500,000

2019 Common Stock Warrants 87.50 0.89 32,000

7 unchanged sentences

December 2019 EHT Common Stock Warrants* 37.75 1.00 3,783

December 2019 EHT Common Stock Warrants* 0.15 5 945,750

February 2020 EHT Common Stock Warrants* 37.25 1.11 80,694

June 2020 EHT Common Stock Warrants* 0.10 3 22,135,132

August 2023 Convertible Note Common Stock Warrants 5.16 9.64 340,000

August 2023 PIPE Financing Common Stock Warrants 5.16 9.64 2,325,537

Total warrants outstanding as of December 31, 2023 3,280,940

*Replacement warrants issued on November 10, 2022 in conjunction with the Acquisition (see Note 3).

As of December 31, 2022, all of the Company's warrants are fully vested with the exception of the "2022 Common Stock Warrants to Service Provider."

As of December 31, 2023, all of the Company's warrants are fully vested.

August 2023 PIPE Financing Common Stock Warrants

In connection with the PIPE Financing (Note 7), the Company issued 2,325,537 common stock warrants.

The warrants were equity classified at issuance and $ 4,784,894 of the gross proceeds from the PIPE Financing were allocated to the common stock warrants on a relative fair value basis.

The warrants vested immediately and the fair value of $ 7,881,972 was determined using the Black-Scholes Merton option pricing model with the following assumptions:

Dividend yield 0.00 %

Volatility factor 87.88 %

Risk-free interest rate 4.26 %

Expected term (years) 10.00

Underlying common stock price $ 5.16

August 2023 Convertible Note Common Stock Warrants

In connection with the Convertible Note (See Note 6), the Company issued 340,000 common stock warrants.

The warrants were equity classified at issuance and $ 931,576 of the gross proceeds from the Convertible Note were allocated to the common stock warrants on a relative fair value basis.

The warrants vested immediately and the fair value of $ 1,144,886 was determined using the Black-Scholes Merton option pricing model with the following assumptions:

Dividend yield 0.00 %

Volatility factor 87.88 %

Risk-free interest rate 4.26 %

Expected term (years) 10

Underlying common stock price $ 5.16

February 2023 Sciences Warrant Exercises

Effective February 16, 2023, Company and Sciences entered into a Master Transaction Agreement (the "MTA").

Under the MTA, Sciences agreed to exercise 66,566 common stock warrants at $ 4.25 per share (the "MTA Warrants").

Under the MTA, the parties agreed that the aggregate proceeds from the exercise of the MTA Warrants of $ 282,906 was to be paid through a reduction of the Amended Credit Agreement owed by the Company to Sciences (Note 6).

On February 22, 2023, the Company issued 66,566 shares of common stock to Sciences in connection with the exercise of the MTA Warrants (Note 7).

November 2022 Sciences Warrant Repricing

On November 17, 2022, the Company entered into an Amendment and Acknowledgement Agreement (the "Amendment Agreement") with Sciences.

Under the terms of the Amendment Agreement, the exercise prices of all the outstanding Emerald Multi-Draw Credit Agreement Warrants and the December 2019 EHT Common Stock Warrants were repriced to $ 0.017 .

Under the terms of the Amendment Agreement, the exercise prices of all the outstanding Sciences Multi-Draw Credit Agreement Warrants and the December 2019 EHT Common Stock Warrants were repriced to $ 4.25 .

Refer to Note 6 for further information on the Amendment Agreement.

1 unchanged sentence

The aggregate modified fair value of $ 150,851 resulted in an increase in fair value of $ 120,228 .

The Company recorded the incremental fair value as a financial charge to other expense in the Consolidated Statements of Operations for the year ended December 31, 2022.

The Company recorded the incremental fair value as a finance charge to other expense in the Consolidated Statements of Operations for the year ended December 31, 2023.

On the date of modification, the Company revalued the warrants with a Black-Scholes valuation method using the following assumptions as of the repricing date:

Table of Cont ents

November 17, 2022

18 unchanged sentences

Underlying common stock price $ 9.25

July 2021 Inducement Warrants and September 2021 Financing Warrants

In connection with the July 2021 Inducement (Note 7), the Company issued 21,166,667 common stock warrants and 1,481,667 warrants to the placement agent.

The warrants were equity classified at issuance and the Company recorded the fair value of the common stock warrants and placement agent warrants of $ 2,790,884 and $ 192,224 , respectively, as equity issuance costs related to the September 2021 Financing within equity.

The warrants were vested at issuance and were valued utilizing the Black-Scholes Merton option pricing model with the following assumptions:

Warrants Placement Agent

Dividend yield — % — %

Volatility factor 137.87 % 137.87 %

Risk-free interest rate 0.73 % 0.73 %

Expected term (years) 5.0 5.0

Underlying common stock price $ 0.15 $ 0.15

In connection with the September 2021 Financing (Note 7), the Company issued 77,777,779 common stock warrants, 19,666,667 pre-funded warrants, and 5,444,445 common stock warrants to the placement agent.

The warrants were equity classified at issuance and the Company allocated $ 3,265,676 and $ 943,489 of the gross proceeds to the common stock warrants and pre-funded warrants on a relative fair value basis, respectively.

The common stock warrants issued to the placement agent were valued at $ 421,522 and recorded as equity issuance costs within equity.

The warrants vested immediately and were valued utilizing the Black-Scholes Merton option pricing model with the following assumptions:

Table of Cont ents

Warrants Pre-funded

Warrants Placement Agent

Dividend yield — % — % — %

Volatility factor 136.02 % 135.06 % 136.02 %

Risk-free interest rate 1.01 % 1.55 % 1.01 %

Expected term (years) 5.0 10.0 5.00

Underlying common stock price $ 0.09 $ 0.09 $ 0.09

Derivative Liability

The following tables summarize the activity of derivative liability for the periods indicated:

Year Ended December 31, 2022

Derivative Liability Fair

Derivative Liability Issued Change in

Fair value of

Liability Reclassification

of Derivative

to Equity December 31,

Derivative Liability

Emerald Financing - warrant liability

59,732 — ( 59,729 ) — 3

Total derivative liability $ 59,732 $ — $ ( 59,729 ) $ — $ 3

During the year ended December 31, 2023, the warrant shares underlying the Emerald Financing Warrant Liability expired unexercised and the decrease in fair value during the year ended December 31, 2023 was nominal.

The following table summarizes the activity of the derivative liability for the period indicated:

Year Ended December 31, 2022

1 unchanged sentence

Fair value of

Liabilities Reclassification of Derivatives to Equity

2021, Fair Value of Derivative Liabilities

Reclassification of Derivatives to Equity

2022, Fair Value of Derivative Liabilitiy

Emerald Financing - warrant liability 59,732 — ( 59,729 ) — 3

10 unchanged sentences

The warrant liability is valued at the balance sheet dates using the following assumptions:

As of December 31,

December, 31, 2022

Dividend yield — %

3 unchanged sentences

Underlying common stock price $ 4.00

Table of Cont ents

The Emerald Financing Warrants expired exercised subsequent to year end.

Multi-Draw Credit Agreement - Related Party

The Company’s debt with Sciences consists of the following:

The Company’s convertible debt consists of the following:

As of December 31,

Price 2022 2021

Total principal value of convertible debt—related party $ 0.40 $ 1,848,375 $ 2,014,500

Total principal value of convertible note - related party, net of debt discount

$ 5,000,000 $ —

Total principal value of convertible multi-draw credit agreement - related party

Unamortized debt discount ( 610,749 ) —

1 unchanged sentence

Carrying value of total convertible debt—related party $ 4,371,998 $ 1,848,375

Total principal value of non-convertible debt—related party n/a — 450,000

Total carrying value of advances under the multi-draw credit agreement $ 1,848,375 $ 1,974,905

On October 5, 2018, the Company entered into the Credit Agreement with Sciences, a related party (See Note 13).

On April 29, 2020, the Company entered into the Amended Credit Agreement with Sciences, which amends and restates the Credit Agreement.

For all pre-existing and new advances, the Amended Credit Agreement removed the change in control as an event of default and deferred the quarterly payment of interest until the Company completed a capital raise of at least $ 5,000,000 .

As of August 2020, interest ceased being deferred as a result of the August 2020 Financing.

The amendments to the pre-existing advances were accounted for as a modification.

On March 29, 2021, the Company amended the Amended Credit Agreement to defer interest payments through the earlier of maturity or prepayment of the principal balance.

On September 15, 2021, the Company further amended the Amended Credit Agreement to close the disbursement line.

The amendments were considered a modification for accounting purposes.

Convertible Note - Related Party

On August 15, 2023, the Company entered into a Secured Note and Warrant Purchase Agreement with MFDI, LLC (“MFDI”), pursuant to which the Company issued to MFDI a $ 5,000,000 secured convertible promissory note (the "Convertible Note") and a warrant to purchase 340,000 shares of common stock on August 18, 2023 (the "Convertible Note Financing") (Notes 5 & 12).

The Convertible Note bears interest at a rate of 10 % per annum and matures on August 18, 2024, unless earlier repurchased or converted.

The Convertible Note may be converted at any time and the conversion price is fixed at $ 5.16 .

Accrued interest will be payable quarterly within 30 days of the last day of each calendar quarter.

The Company may prepay the principal or interest outstanding under the Note at any time without penalty.

In accounting for the Convertible Note, the Company allocated $ 4,068,424 in proceeds to the debt host and $ 931,576 in proceeds to the freestanding warrants based on relative fair value.

The debt discounts of $ 931,576 and $ 26,316 related to the warrants, and debt issuance costs, respectively, are being amortized over the term of the Convertible Note using the effective interest rate method.

Amortization of the debt discount is recognized as non-cash interest expense in Other expense within the Consolidated Statements of Operations.

In addition, the Company recorded $ 6,026 in equity issuance costs as a deduction to additional paid in capital in the Statements of Stockholders' Deficit.

For the year ended December 31, 2023, the effective interest rate on the Convertible Note was 31.39 %, the remaining amortization period on the debt was 0.63 years and the fair value of the underlying conversion shares did not exceed the carrying value of the debt at December 31, 2023.

On July 24, 2023, the Company entered into a loan agreement in the principal amount of $ 250,000 (the “Bridge Loan”) with MFDI, LLC.

The Bridge Loan was obtained in order to provide bridge financing for the operations of the Company until it completed the BRB Acquisition.

Concurrent with the closing of the BRB Acquisition, August 2023 PIPE Financing and Convertible Note Financing, the Bridge Loan was cancelled and converted into an investment in the August 2023 PIPE Financing (Note 7).

All interest and rights related to the Bridge Loan were concurrently cancelled.

Multi-Draw Credit Agreement- Related Party

On October 5, 2018, the Company entered into the Credit Agreement with Sciences, a related party (Note 12).

Between April 29, 2020 and March 29, 2021, the Company and Sciences entered into a series of Amendments until the disbursement line was closed on September 15, 2021 (the "Amended Credit Agreement").

The amendments were considered a modifications for accounting purposes.

On November 17, 2022, the Company entered into Amendment No.

6 unchanged sentences

5 to the Amended Credit Agreement to extend the maturity date to the earlier of (a) five business days after the closing of the sale of VDL (b) February 28, 2023 or (c) the Termination Date (as such term is defined in the Amended Credit Agreement).

Advances under the Amended Credit Agreement are unsecured and bear interest at an annual rate of 7 %.

At Sciences' election, convertible advances and unpaid interest may be converted into common stock at the fixed conversion price of the underlying advance, subject to customary adjustments for stock splits, stock dividends, recapitalizations, etc.

The Amended Credit Agreement provides for customary events of default which may result in the acceleration of the maturity of the advances in addition to, but not limited to, cross acceleration to certain other indebtedness of the Company.

In the case of an event of default arising from specified events of bankruptcy or insolvency or reorganization, all outstanding advances will become due and payable immediately without further action or notice.

If any other event of default under the Amended Credit Agreement occurs or is continuing, Sciences may, by written notice, terminate its commitment to make any advances and/or declare all the advances with any other amounts payable due immediately.

If any amount under the Amended Credit Agreement is not paid when due, such overdue amount shall bear interest at an annual default interest rate of the applicable rate plus 10 %, until such amount is paid in full.

In connection with each advance under the Amended Credit Agreement, the Company agreed to issue to Sciences warrants to purchase shares of common stock in an amount equal to 50 % of the number of shares of common stock that each advance may be converted into.

The warrants have a term of five years that are immediately exercisable upon issuance.

All of the warrants issued under the Credit Agreement had an initial exercise price of $ 0.50 per share which was reset to $ 0.017 per share in connection with Amendment No.

The exercise price is subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events or upon any distributions of assets, including cash, stock or other property to the Company’s stockholders (See Note 7).

Table of Cont ents

In accounting for each advance and the warrants issued under the Amended Credit Agreement, the Company allocated the proceeds between the debt host and the freestanding warrants on a relative fair value basis for each advance.

On the date of each advance, if the effective conversion rate of the debt was less than the market value of the Company’s common stock, the Company recorded a beneficial conversion feature as a discount to the debt and an increase to additional paid-in capital.

The debt discounts related to the warrants, beneficial conversion features and compound derivatives, if any, are being amortized over the term of the Amended Credit Agreement using the effective interest rate method.

Amortization of the debt discount is recognized as non-cash interest expense and the compound derivatives related to the contingent interest feature and acceleration upon default provision were remeasured at fair value in subsequent periods in the Company’s Consolidated Balance Sheets.

From November 1, 2018 to March 2019, Sciences advanced the Company an aggregate of $ 6,000,000 under the Credit Agreement.

In connection with the advances under the Credit Agreement, the Company issued Sciences 7,500,000 warrants with an original exercise price of $ 0.50 per share and a term of five years .

The warrants were fully vested at issuance.

During the year ended December 31, 2019, the Company used $ 3,985,500 in proceeds from the exercise of the 2020 Emerald Financing Warrants to prepay a portion of the outstanding principal balance.

After the prepayment, the total remaining principal amount excluding discounts under the Credit Agreement was $ 2,014,500 .

On April 29, 2020, the Company entered into an Amended and Restated Multi-Draw Credit Agreement with Sciences (the "Amended Credit Agreement"), which amended and restated the Credit Agreement, as reported in the current report on the Form 8-K filed with the SEC on April 29, 2020.

During the year ended December 31, 2020, the Company received non-convertible advances of $ 150,000 and $ 300,000 pursuant to the Amended Credit Agreement.

The advances bear interest at 7 % per annum and mature on October 5, 2022.

The net proceeds of each advance were used for general corporate purposes.

Aggregate financing costs of $ 63,007 have been incurred and are recorded as a discount to the debt host along with discounts recorded on the convertible advances were amortized through the original maturity date of October 5, 2022 using the effective interest rate method, interest expense related to the discounts was recognized as non-cash interest expense in Other expense within the Consolidated Statements of Operations.

The terms of the Amended Credit Agreement provided that convertible advances and unpaid interest may be converted into common stock at the applicable fixed conversion price of the underlying advance, subject to customary adjustments for stock splits, stock dividends, recapitalizations, etc.

Effective February 16, 2022, upon entering the MTA, the remaining principal balance plus accrued interest was offset by the aggregate exercise price of $ 282,906 from the exercise of the MTA Warrants (Note 5) and the Company induced conversion by reducing the conversion price of the Amended Credit Agreement from $ 100.00 to $ 9.65 .

The remaining balance of $ 1,597,236 was converted into 165,517 shares of common stock of the Company.

In connection with the induced conversion, the Company recorded a debt conversion inducement expense of $ 1,383,285 equal to the fair value of the incremental shares issued upon conversion.

Following the issuance of shares described above, the Amended Credit Agreement was terminated in its entirety per the terms of the MTA.

For the years ended December 31, 2023 and 2022, the effective interest rate related to the convertible portion of the Amended Credit Agreement was 0.00 % and 29.20 %, respectively.

As of December 31, 2022, the debt discount on the convertible advances was fully amortized.

As of December 31, 2022, the fair value of the shares underlying the convertible advances under the Amended Credit agreement was $ 73,935 .

As of December 31, 2022, the if-converted value did not exceed the principal balance.

Subsequent to year end, the Company entered into a Master Transaction Agreement with Sciences (the "MTA") that resulted in the conversion of the remaining principal balance of $ 1,848,375 plus accrued interest under the Amended Credit Agreement into 41,379,164 shares of common stock of the Company at a conversion price of $ 0.039 .

Refer to Note 15 - Subsequent Events for further information.

On April 24, 2020, the Company received funding from the PPP Loan Lender pursuant to the PPP of the CARES Act administered by the SBA for a principal amount of $ 116,700 .

The PPP Loan had an interest rate of 1.00 % per year and funds from the PPP Loan could only be used by the Company for payroll costs, costs for continuing group healthcare benefits, mortgage interest payments, rent, utility and interest on any other debt obligations that were incurred before October 9, 2020.

On April 5, 2021, the Company submitted an application for the full forgiveness of the PPP Loan to the PPP Loan Lender for the full amount of the loan.

On May 20, 2021, the Company received notification that the application was accepted and that the full amount of the PPP Loan including accrued interest was forgiven.

During the year ended December 31, 2021, the Company has recorded a gain on forgiveness of the PPP loan in an amount of $ 117,953 .

Insurance premium loan payable

On February 28, 2022, the Company entered into an annual financing arrangement for a portion of its Directors and Officers Insurance Policy (the “D&O Insurance”) with Marsh & McLennan in an amount of $ 275,537 .

The loan is payable in equal monthly installments of $ 31,149 , matures on October 28, 2022 and bears interest at a rate 4.17 % per annum.

On February 28, 2023, the Company entered into an annual financing arrangement for a portion of its Directors and Officers Insurance Policy (the “D&O Insurance”) with First Insurance Funding in an amount of $ 203,884 .

The loan is payable in equal monthly installments of $ 23,374 , matures on January 31, 2024, and bears interest at a rate 4.24 % per annum.

As of December 31, 2023 a total of $ 21,238 remains in prepaid expenses and the loan has been repaid.

Table of Cont ents

On February 28, 2022, the Company entered into an annual financing arrangement for a portion of its Directors and Officers Insurance Policy with First Insurance Funding in an amount of $ 275,537 .

The loan is payable in equal monthly installments of $ 31,150 , matures on January 31, 2023 and bears interest at a rate 4.17 % per annum.

As of December 31, 2022, a total of $ 22,961 remains in prepaid expenses and the loan has been repaid.

Interest Expense

1 unchanged sentence

Related party interest expense – stated rate $ 202,254 $ 169,640

Interest Expense - insurance premium loan payable 5,896 —

PPP loan interest expense – stated rate — 446

Insurance premium loan payable – stated rate 6,485 5,896

Legal judgment interest expense

Premium on irrevocable letter of credit

Other interest expense 3,100 —

Non-cash interest expense:

6 unchanged sentences

Awards available for grant under the 2014 Plan 487,672 169,099

Shares for issuance under our equity incentive plan 112,000 112,000

Restricted stock unit awards issued and outstanding 847,777 10,665

1 unchanged sentence

Common stock underlying the Amended Credit Agreement — 18,642

Common stock underlying the Convertible Note - Related Party 968,973 —

Warrants issued and outstanding 3,280,940 788,539

1 unchanged sentence

Increase to Authorized Shares of Capital Stock

On February 5, 2021, the Company increased its authorized shares of common and preferred stock to 5,000,000,000 and 50,000,000 , respectively.

July 2021 Inducement and September 2021 Financing

On July 21, 2021, the Company entered into an Inducement Offer to Exercise Common Stock Purchase Warrants (the “July 2021 Inducement”) with certain institutional investors and H.C.

Wainwright & Co., LLC ("Wainwright") acting as the placement agent.

As a result, on July 26, 2021, the investors exercised 21,166,667 warrants at their original exercise price of $ 0.06 , for gross proceeds of $ 1,270,000 .

In exchange, the Company granted 21,166,667 new warrants with substantially the same terms and an exercise price of $ 0.15 per share (Notes 5).

On September 27, 2021, the Company entered into a Securities Purchase Agreement with certain institutional investors for the issuance and sale of securities, with Wainwright acting as the placement agent, pursuant to which the Company sold 58,111,112 shares of common stock and 19,666,667 pre-funded warrants, and issued 77,777,779 common stock warrants, in a registered public offering which closed on September 29, 2021 (the “September 2021 Financing”).

The common stock and pre-funded warrants were sold at a price per share of $ 0.09 and $ 0.0899 , respectively, for gross aggregate proceeds of $ 6,998,034 .

The common stock warrants and pre-funded warrants have an exercise price of $ 0.09 and $ 0.0001 , respectively.

The common stock warrants have a term of five years , and the pre-funded warrants are exercisable until all the pre-funded warrants have been exercised in full (Note 5).

In connection with the July 2021 Inducement and September 2021 Financing, the Company incurred cash issuance costs of $ 935,260 , for net proceeds of $ 6,062,774 .

Additionally, the Company issued warrants to purchase 6,926,112 shares of common stock to the placement agent, which represent 7 % of the total shares of common stock and pre-funded warrants sold in the offering and 7 % of the Inducement Warrants issued (Note 5).

Table of Cont ents

On November 6, 2023, the Company increased its authorized shares of common stock to 100,000,000 .

Common Stock Issuance

BRB Acquisition

On August 18, 2023, the Company issued an aggregate of 5,436,378 shares of common stock in connection with the BRB Acquisition (Note 3).

August 2023 PIPE Financing

Concurrent with the BRB Acquisition and Convertible Note Financing, on August 15, 2023, the Company entered into the August 2023 PIPE Financing, pursuant to which on August 18, 2023, the Company issued an aggregate of 2,989,981 shares of common stock and accompanying warrants to purchase up to 2,325,537 shares of common stock (the " August 2023 PIPE Financing Common Stock Warrants" - Note 5 ) for an aggregate purchase price of $ 12,000,000 .

The August 2023 PIPE Financing was priced at $ 5.16 per share based on the 60-day volume-weighted average share price preceding August 15, 2023.

The two lead investors in the PIPE Financing were also former preferred shareholders of BRB.

As an incentive to participate in the August 2023 PIPE Financing, the Agreement and Plan of Merger and Reorganization with BRB entitled each BRB stockholder participating in the August 2023 PIPE Financing an additional share of common stock for every share of common stock purchased in the PIPE Financing.

As a result, the two former BRB preferred shareholders who participated in the August 2023 PIPE Financing were issued an additional 2,228,638 shares of common stock.

Because the PIPE Financing and BRB Acquisition occurred contemporaneously and in contemplation of one another, the Company allocated 664,444 of the common shares issued in the BRB Acquisition to the August 2023 PIPE Financing (Note 3).

In connection with the August 2023 PIPE Financing, the Company incurred $ 265,053 in direct equity issuance costs for net proceeds of $ 11,734,947 .

Stock Issued for Services

On November 1, 2023, the Company released 5,000 shares of common stock to a service provider (Note 8).

On March 2, 2022, the Company released 600 shares of common stock to a service provider (Note 8).

EHT Acquisition

On November 10, 2022, the Company issued 1,665,083 shares of common stock to EHT shareholders at a 1.95 conversion rate as consideration in the EHT Acquisition (Note 3).

Warrant Exercises

During the December 31, 2023, 66,566 of the outstanding stock warrants held by Sciences in conjunction with the MTA, with an intrinsic value of $ 332,830 were exercised in exchange for 66,566 shares of common stock for proceeds of $ 282,906 which were applied to the balance of the Amended Credit Agreement (Note 6).

During the year ended December 31, 2022, 78,667 pre-funded warrants with an intrinsic value of $ 1,178,033 were exercised in exchange for 78,667 shares of common stock for proceeds of $ 1,967 .

As of December 31, 2023 all of the pre-funded warrants from the September 2021 Financing have been exercised.

During the year ended December 31, 2021, 11,800,000 pre-funded warrants with an intrinsic value of $ 460,200 were exercised in exchange for 11,800,000 shares of common stock for gross proceeds of $ 11,800 .

As of December 31, 2021 all of the pre-funded warrants from the August 2020 Financing have been exercised.

During the year ended December 31, 2021, 116,666,668 of the 2020 common stock warrants, including the warrants that were exercised in connection with the July 2021 Inducement discussed above, with an intrinsic value of $ 8,764,967 were exercised in exchange for 116,666,668 shares of common stock for gross proceeds of $ 6,999,999 .

Common Stock Issuance

On March 2, 2022, the Company released 150,000 shares of common stock to a service provider (Note 8).

On November 10, 2022, the Company issued 416,270,514 shares of common stock to EHT shareholders at a 1.95 conversion rate as consideration in the Acquisition (Note 3).

Induced Conversion of Amended Credit Agreement

During the year ended December 31, 2023, the Company issued 165,517 shares of common stock to Sciences.

The shares were issued in conjunction with the MTA, in exchange for the remaining principal balance plus accrued interest less the aggregate exercise price of $ 282,905 from the exercise of the MTA Warrants in the amount of $ 1,597,236 at a conversion price of $ 9.65 (Note 6).

Restricted Stock Units Released

On December 14, 2023, the Company released 5,333 restricted stock units that had vested to executives of the Company (Note 8).

On December 14, 2022, the Company released 5,333 restricted stock units that had vested to executives of the Company (Note 8).

Stock-Based Compensation

2 unchanged sentences

The 2014 Plan authorizes the issuance of awards including stock options, stock appreciation rights, restricted stock, stock units and performance units to employees, directors, and consultants of the Company.

On June 14, 2022, in connection with the Acquisition, the Board approved the 2014 Amended and Restated Omnibus Incentive Plan (the “2014 Amended and Restated Plan”) which replaced the 2014 Plan in its entirety.

On June 14, 2022, the Board approved the 2014 Amended and Restated Omnibus Incentive Plan (the “2014 Amended and Restated Plan”) which replaced the 2014 Plan in its entirety.

The 2014 Amended and Restated Plan, among other things, fixed the number of shares that can be issued under the plan to 364,879 , provided that each January 1 beginning in 2023 and ending on (and including) January 1, 2032 the number of shares will increase by 5 % of the outstanding shares of Common Stock as of the prior December 31, unless the Board of Directors of the Company decides to a lesser increase.

1 unchanged sentence

The 2014 Amended and Restated Plan authorizes the issuance of awards including stock options, stock appreciation rights, restricted stock, stock units and performance units to employees, directors, and consultants of the Company.

On September 29, 2023, the Board and Majority Stockholders adopted and approved Amendment No.

1 to the 2014 Amended and Restated Plan.

Amendment No.

1 to the 2014 Amended and Restated Plan became effective on November 6, 2023.

The 2014 Amended and Restated Plan was amended to increase the number of shares of the Company’s common stock authorized for issuance under the Plan by 1,299,297 to an aggregate pool of 1,846,883 , while retaining the automatic share replenishment feature.

The Company has reserved shares for issuance under our equity incentive plan upon share option exercise.

6 unchanged sentences

Cancelled 37,789

Granted ( 12,632,626 )

RSU releases 5,333

RSU grants ( 842,445 )

Option grants ( 388,555 )

Available as of December 31, 2023 487,672

Table of Cont ents

Stock Options

11 unchanged sentences

Outstanding, December 31, 2022 171,980 $ 45.00 7.14 $ —

12,632,626 0.49

Forfeited ( 37,789 ) 116.95

4 unchanged sentences

*The aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company’s stock exceeded the exercise price of the stock options at December 31, 2023 for those stock options for which the quoted market price was in excess of the exercise price ("in-the-money options").

(1) Includes 8,282,626 rollover options issued under the 2014 Plan related to the Acquisition.

Upon the closing of the Acquisition, the entire fair value of the EHT rollover options was allocated to the purchase consideration.

As a result the assumptions below exclude the EHT rollover options (See Note 3)

During the years ended December 31, 2022 and 2021, the Company received $ — and $ 4,783 gross proceeds from the exercise of stock options.

The weighted-average grant-date fair value of stock options granted for the years ended December 31, 2022 and 2021, excluding EHT rollover options issued related to the Acquisition, was $ 0.04 and $ 0.07 , respectively.

The weighted-average grant-date fair value of stock options granted for the years ended December 31, 2023 and 2022, excluding EHT rollover options issued related to the EHT Acquisition, was $ 2.95 and $ 10.00 , respectively.

The total fair value of the stock options that vested during the years ended December 31, 2023 and 2022 was $ 512,470 and $ 466,263 , respectively.

7 unchanged sentences

126.27 - 132.58 %

In connection with the termination of Dr.

Avtar Dhillon's Independent Contractor Agreement on October 14, 2021 (Note 11), the Company modified Dr.

Dhillon's option awards to accelerate the vesting of 1,650,000 unvested stock options and, extend the post-termination exercise period from 30 days to five years for all of his outstanding awards.

The approval of the modification and receipt of notice to terminate the Independent Contractor Agreement on September 14, 2021, resulted in the recognition of $ 309,487 in stock compensation expense for the year ended December 31, 2021 .

Table of Cont ents

In connection with the Acquisition the Company issued a total of 8,282,626 stock options to EHT option holders on November 10, 2022 (Note 3).

In connection with the EHT Acquisition, the Company issued a total of 33,131 stock options to EHT option holders on November 10, 2022 (Note 3).

The exercise price and rollover option shares were adjusted by the Exchange Ratio at the Acquisition date and retain the vest periods as originally issued.

Stock Option Awards with Performance and Other Conditions

During the year ended December 31, 2022, the Company granted 4,000,000 stock options with an exercise price of $ 0.04 which include a combination of performance vesting conditions and other vesting conditions pursuant to a consulting agreement entered with Mr.

Jim Heppell, a former director of Skye and related party of the Company (Note 13).

The vesting conditions of the stock option award provide that 50 % of the options are vested upon grant and the remaining 50 % will vest upon the sale of a real estate asset held by EHT at an amount greater than or equal to an amount specified in the agreement.

None of the options were exercisable until the Acquisition was consummated on November 10, 2022, (Note 3).

The conditions related to the sale of EHT's real estate are considered other conditions and the condition related to the closing of the Acquisition is considered a performance condition.

When a performance condition is deemed to be probable of achievement, time-based vesting and recognition of stock-based compensation expense commences.

As a result, no share-based compensation expense will be recognized for these stock options until the performance condition is considered to be probable.

As of December 31, 2022, the Company has determined that the sale of the real estate asset is not deemed probable, as the consummation of the sale is not solely within the control of the Company.

As of December 31, 2022, the Company has included $ 73,368 related to the first tranche of these awards in total stock-based compensation expense below.

The Company has evaluated the second tranche and has determined that due to the other conditions contained in these awards that they will be recorded as liability options once the Acquisition is deemed probable and will be remeasured through their settlement date or cancellation (Note 15).

Restricted Stock Units

1 unchanged sentence

The RSUs cliff vest 33 % per year on the anniversary of the grant date over a three year period.

On August 25, 2023, the Company granted RSUs to its executive management team and to certain members of the Board with market and performance based conditions.

The RSUs are eligible to vest subject to the achievement and attainment of certain market capitalization target goals (market-based conditions) or the achievement of a successful exit (a performance-based condition);

provided, however, that no RSUs shall vest until the Compensation Committee of the Board determines that shares can be sold into the market to cover withholding tax obligations associated with the vesting of the RSUs.

The following is a summary of restricted stock unit activity during the year ended December 31, 2023:

1 unchanged sentence

Unvested, December 31, 2022 10,665 $ 14.43

Granted 842,445 3.59

Released ( 5,333 ) 14.43

Unvested, December 31, 2023 847,777 $ 3.66

The Company used the Monte Carlo Simulation model to evaluate the derived service period and fair value of awards with market and performance conditions, including assumptions of historical volatility and risk-free interest rate commensurate with the vesting term.

The fair value of the Company's performance-based RSUs were estimated on the date of grant under the following assumptions:

Year Ended December 31, 2023

Dividend yield 0.00 %

Volatility factor 87.4 - 87.9 %

Risk-free interest rate 4.21 - 4.54 %

Derived service periods (years)

During the first quarter of 2024, the first three market based conditions of the RSUs were met.

Awards Granted Outside the 2014 Amended and Restated Plan

During the year ended December 31, 2021, the Company granted 1,200,000 and 300,000 restricted shares of common stock to a non-employee consultant for investor relations services under two successive six month service contracts.

Half of the shares will be issued within the first month of entering each service contract and the remaining half will be issued within thirty days from contract completion.

Table of Cont ents

During the year ended December 31, 2023, the Company granted shares of common stock to a non-employee consultant for investor relations services.

Half of the shares were issued upon entering each service contract and the remaining half will be issued on October 31, 2024, unless the agreement is earlier terminated.

The following is a summary of restricted stock activity outside of the 2014 Amended and Restated Plan during the year ended December 31, 2023:

1 unchanged sentence

Unvested, December 31, 2022 — $ —

Granted 10,000 1.55

Released ( 5,000 ) —

21 unchanged sentences

Net loss available to common stockholders ( 37,644,784 ) 7,006,038 $ ( 5.37 )

Table of Cont ents

For the Year Ended December 31, 2022

6 unchanged sentences

Unvested restricted stock units 847,777 10,665

Unvested restricted stock — 150,000

Unvested restricted stock (service provider)

Common shares underlying convertible debt 968,973 18,642

Warrants 3,280,940 788,539

Total 5,600,988 989,826

The components of loss before the income tax provision consist of the following:

3 unchanged sentences

The components of the income tax expense consisted of the following:

Year Ended December 31,

Current income tax expense 2023 2022

Federal $ — $ —

State 3,600 6,741

5 unchanged sentences

At December 31, 2023, the Company had federal and state NOLs aggregating $ 110,288,344 and $ 113,806,359 , respectively.

If not used, $ 13,129,037 of Federal NOLs and $ 46,792,947 of state NOLs will begin to expire in 2033.

$ 29,180,112 of federal NOLs and $ 133,168 of state NOLs will carry forward indefinitely subject to an 80% limitation against taxable income.

If not used, $ 46,622,953 of Federal NOLs and $ 113,678,291 of state NOLs will begin to expire in 2031, $ 63,665,391 of federal NOLs and $ 128,068 of state NOLs will carry forward indefinitely subject to an 80% limitation against taxable income.

At December 31, 2023, the Company had Australia NOLs aggregating $ 233,321 which do not expire and $ 43,762,031 of Canadian NOLS which begin to expire in 2024.

At December 31, 2023, the Company had Canadian capital loss carryforwards of approximately $ 64,743,505 which may be carried forward indefinitely.

Table of Cont ents

At December 31, 2022, the Company had federal and California research credit carryforwards of approximately $ 454,417 and $ 132,221 , respectively.

At December 31, 2023, the Company had federal and California research credit carryforwards of $ 3,480,111 and $ 2,073,709 , respectively.

The federal research credit carry forwards will begin to expire in 2027, unless previously utilized.

2 unchanged sentences

Additionally, the Company had Canadian SR&ED credits as of December 31, 2023 of $ 940,180 which may be carried forward indefinitely.

Utilization of the domestic NOL and research credits could be subject to a substantial annual limitation due to ownership change limitations that may have occurred, or that could occur in the future, as required by Section 382 and 383 of the Internal Revenue Code of 1986, as amended (the Code), as well as similar state provisions.

Utilization of the domestic NOL's and research credits could be subject to a substantial annual limitation due to ownership change limitations that may have occurred, or that could occur in the future, as required by Section 382 and 383 of the Internal Revenue Code of 1986, as amended (the Code), as well as similar state provisions.

These ownership changes may limit the amount of NOLs and credits that can be utilized annually to offset future taxable income and tax, respectively.

6 unchanged sentences

As of December 31,

Current deferred tax assets/(liabilities):

State taxes $ 756 $ 441

Current deferred tax assets and (liabilities):

Net operating loss $ 40,900,348 $ 30,648,168

Capital loss carryforwards 17,157,029 8,824,896

Contingent legal accrual 1,320,526 1,306,098

Depreciation 663,197 286,452

Amortization 225,678 216,077

1 unchanged sentence

Capitalized research and development costs

1,835,326 1,000,777

Lease liability 51,086 16,565

Contingent legal accrual 1,306,097 —

Capital loss carryforwards 8,824,896 —

Net operating loss 30,648,168 8,887,647

State taxes 777 756

Other 663,067 473,429

4 unchanged sentences

Right-of-use asset $ ( 49,976 ) $ ( 14,984 )

Discount - Amended Credit Agreement — ( 102,791 )

Total deferred tax liabilities ( 49,976 ) ( 14,984 )

1 unchanged sentence

The provision for income taxes on earnings subject to income taxes differs from the statutory Federal rate at December 31, 2023 and 2022, due to the following:

Table of Cont ents

As of December 31,

4 unchanged sentences

Uncertain tax positions 1,008,482 884,911

Reduction in compound derivative 4,974,768 —

Reduction in deferreds upon divestiture — 4,974,768

Non-deductible interest — 35,624

2 unchanged sentences

Rate adjustment 6,042 ( 3,568 )

Other permanent difference 132,366 20,916

Foreign rate differential

( 1,918,633 ) 14,934

Divestiture of VDL

In process research and development

( 17,293 ) 121,000

Provision for income taxes $ 3,600 $ 6,741

The Company records a valuation allowance against deferred tax assets to the extent that it is more likely than not that some portion, or all of, the deferred tax assets will not be realized.

As a result of this valuation allowance, there are no income tax benefits reflected in the accompanying Consolidated Statements of Operations to offset pre-tax losses.

Due to the the substantial doubt related to the Company's ability to utilize its deferred tax assets, a valuation allowance for the full amount of the deferred tax assets has been established at December 31, 2023.

During the year ended December 31, 2023, the valuation allowance increased by $ 22,504,068 .

4 unchanged sentences

The Company elects to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only.

On April 22, 2020, the Company entered into the PPP Loan with the PPP Loan Lender.

In accordance with the Consolidated Appropriations Act, 2021 enacted on December 27, 2020, certain qualified expenses used with the funds of the PPP Loan are fully deductible for Federal income tax purposes.

In 2021, the Company received forgiveness of the PPP loan.

This amount is not considered taxable for Federal or state income tax purposes.

Under the FASB’s accounting guidance related to income tax positions, among other things, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority.

5 unchanged sentences

Gross increase - current period tax positions 1,243,191 1,087,413

Gross increase - prior period tax positions 2,316,932 —

Gross decrease – prior period tax positions — ( 19 )

3 unchanged sentences

The Company had no accrual for interest or penalties on the Company’s Consolidated Balance Sheets at December 31, 2023 and 2022 and has no t recognized interest and/or penalties in the Consolidated Statements of Operations for the years then ended .

Table of Cont ents

Other Current Liabilities

Other current liabilities consist of the following:

As of December 31

Research and development costs $ 40,597 $ 140,953

Legal expense 227,350 133,537

Insurance loan payable 55,451 —

Board fees — 44,984

Deposit - Verdelite SPA 553,800 —

Acquisition related contingent liability 134,896 —

Total other accrued liabilities 410,348 56,368

$ 1,422,442 $ 375,842

Significant Contracts - University of Mississippi

UM 5050 and UM 8930 License Agreements

In July 2018, the Company renewed its ocular licenses for UM 5050 and UM 8930.

On May 24, 2019, the ocular delivery licenses were replaced by “all fields of use” licenses for both UM 5050 and UM 8930 (collectively, the “License Agreements”).

Pursuant to the License Agreements, UM granted the Company an exclusive, perpetual license, including, with the prior written consent of UM, not to be unreasonably withheld, the right to sublicense, the intellectual property related to UM 5050 and UM 8930 for all fields of use.

The License Agreements contain certain milestone payments, royalty and sublicensing fees payable by the Company, as defined therein.

Each License Agreement provides for an annual maintenance fee of $ 75,000 payable on the anniversary of the effective date.

The Company made upfront payments for UM 5050 and UM 8930 of $ 100,000 and $ 200,000 , respectively.

In addition, in March 2020, the Company was notified by the United States Patent and Trademark Office, that a notice of allowance was issued for SBI-200, under the UM 8930 License Agreement.

As a result, the Company was required to pay UM a fee of $ 200,000 .

The milestone payments payable for each license are as follows:

i) $ 100,000 paid within 30 days following the submission of the first Investigational New Drug Application ("NDA") to the Food and Drug Administration or an equivalent application to a regulatory agency anywhere in the world, for a product;

ii) $ 200,000 paid within 30 days following the first submission of an NDA, or an equivalent application to a regulatory agency anywhere in the world, for each product that is administered in a different route of administration from that of the early submitted product(s);

iii) $ 400,000 paid within 30 days following the approval of an NDA, or an equivalent application to a regulatory agency anywhere in the world, for each product that is administered in a different route of administration from that of the early approved product(s).

Licensed Intellectual Property

The Company in-licenses the intellectual property used in its glaucoma product, SBI-100 OE, from the University of Mississippi under an "all fields of use" license.

The license grants the Company an exclusive, perpetual license, including, with the prior written consent of UM, not to be unreasonably withheld, the right to sublicense.

The License Agreement provides for an annual maintenance fee of $ 75,000 payable on the anniversary of the effective date.

The remaining milestone payments under the license are as follows:

i) $ 200,000 paid within 30 days following the first submission of an Investigational New Drug Application ("NDA") , or an equivalent application to a regulatory agency anywhere in the world, for each product that is administered in a different route of administration from that of the early submitted product(s);

ii) $ 400,000 paid within 30 days following the approval of an NDA, or an equivalent application to a regulatory agency anywhere in the world, for each product that is administered in a different route of administration from that of the early approved product(s).

The royalty percentage due on net sales under each License Agreement is in the mid-single digits.

2 unchanged sentences

Each License Agreement continues, unless terminated, until the later of the expiration of the last to expire of the patents or patent applications within the licensed technology or the expiration of the Company’s payment obligations under such License Agreement.

UM may terminate each License Agreement, by giving written notice of termination, upon the Company’s material breach of such License Agreement, including failure to make payments or satisfy covenants, representations or warranties without cure, noncompliance, a bankruptcy event, the Company’s dissolution or cessation of operations, the Company’s failure to make reasonable efforts to commercialize at least one product or failure to keep at least one product on the market after the first commercial sale for a continuous period of one year , other than for reasons outside the Company’s control, or the Company’s failure to meet certain pre-established development milestones.

The Company may terminate each License Agreement upon 60 days’ written notice to UM.

Table of Cont ents

As of December 31, 2022, the Company has paid the fee due for the notice of patent allowance for the proprietary molecule under the UM 8930 License Agreement.

In July 2022, the Company met milestone i) above under its UM 5050 license agreement upon submission of our application for authorization to conduct the Company's Phase 1 trial of SBI-100 OE to the Therapeutic Goods Administration in Australia.

As of December 31, 2022, none of the other milestones under these license agreements have been met.

UM 5070 License Agreement

In January 2017, the Company entered into a license agreement with UM pursuant to which UM granted the Company an exclusive, perpetual license, including the right to sublicense, to intellectual property related to a platform of cannabinoid-based molecules ("UM 5070"), to research, develop and commercialize products for the treatment of infectious diseases.

The Company paid UM an upfront license fee of $ 65,000 under the license agreement.

Under the license agreement, the Company is also responsible for annual maintenance fees of $ 25,000 that will be credited against any royalties incurred, contingent milestone payments upon achievement of development and regulatory milestones, and royalties on net sales of licensed products sold for commercial use.

The aggregate milestone payments due under the license agreement if all the milestones are achieved is $ 700,000 and the royalty percentage due on net sales is in the mid-single digits.

The Company must also pay to UM a percentage of all licensing fees we receive from any sublicensees, subject to a minimum royalty on net sales by such sublicensees.

The Company’s royalty obligations apply on a country by country and licensed product by licensed product basis, and end upon the later of the date that no valid claim of a licensed patent covers a licensed product in a given country, or ten years after first commercial sale of such licensed product in such country.

The agreement was terminated effective January 8, 2022 pursuant to a termination notice provided to UM by the Company on November 9, 2021, and none of the milestones under this license agreement were met.

In July 2022, the Company paid $ 100,000 upon submitting its Investigational New Drug Application to the Food and Drug Administration for authorization to conduct the Company's Phase 1 trial of SBI-100 OE to the Therapeutic Goods Administration in Australia.

UM 5070 and 8930 License Agreements

Until January 8, 2022 and January 30, 2024, the Company licensed UM 5070 and UM 8930, respectively.

Under these agreements, the Company was required to pay annual maintenance fees and certain milestones.

However, after further evaluation, both licenses were terminated.

Tautomer Exclusive License Agreement

On November 30, 2023, the Company provided Tautomer Bioscience, (Pty) Limited (“Tautomer”).

with an exclusive license to develop and commercialize SBI-100 as a novel suppository formulation in the territory of the countries of the continent of Africa for chronic intractable pain and other indications in South Africa and the rest of Africa (the "Territory").

Under the terms of the agreement, Tautomer is responsible for all formulation, preclinical and clinical development, drug product manufacturing and regulatory costs.

The Company is entitled to receive from Tautomer milestone payments upon achievement of certain development, regulatory and commercial events of up to $ 11,350,000 and tiered double-digit royalties on net product sales in the Territory.

Additionally, the Company will be paid cost plus 20 % mark-up for all development work, including the supply of SBI-100.

We have retained certain rights and options to obtain rights to the future use of new jointly developed intellectual property and other intellectual property owned or controlled by Tautomer related to SBI-100.

Related Party Matters

1 unchanged sentence

In January 2018, the Company entered into a securities purchase agreement with Sciences pursuant to which Sciences purchased a majority of the equity interest in the Company, resulting in a change in control (the "Emerald Financing").

While Sciences no longer maintains a controlling interest in the Company, it holds a significant equity interest as of December 31, 2022 and has provided the Company with financing under the Amended Credit Agreement (Note 6).

On December 19, 2019, the Company entered into an Independent Contractor Services Agreement with Dr.

Avtar Dhillon, at the time, a member of Sciences Board of Directors and its CEO, pursuant to which Dr.

Dhillon provided ongoing corporate finance and strategic business advisory services to the Company.

In exchange for his services, Dr.

Dhillon received a monthly fee of $ 10,000 , per month for his services.

On September 14, 2021, Dr.

Dhillon provided his notice to terminate the Independent Contractor Services Agreement, with an effective termination date of October 14, 2021.

As of October 14, 2021, the Company no longer has any obligations or business relationship with Dr.

No expenses were incurred under this agreement during the year ended December 31, 2022.

Under this agreement, for the year ended December 31, 2021, the Company incurred fees of $ 94,516 .

While Sciences no longer maintains a controlling interest in the Company, MFDI has significant influence over Sciences and has been issued the Convertible Note from the Company (Note 6) and participated in the August 2023 PIPE Financing (Note 7).

As of December 31, 2023, the Amended Credit Agreement has been extinguished and all of the warrants held by Sciences were exercised pursuant to the MTA (Notes 5 & 6).

On May 18, 2022, Jim Heppell resigned from the Company's board of directors and concurrently entered into a consulting agreement with the Company pursuant to which Mr.

2 unchanged sentences

Under the consulting agreement, Mr.

Heppell is entitled to a monthly fee of $ 6,300 , which was increased to $ 16,600 per month upon the closing of the Acquisition.

The consulting agreement provides Mr.

Heppell with a termination payment in an amount equal to the monthly fees through the then-remaining term of the agreement if Mr.

Heppell’s engagement is terminated by the Company without cause.

Heppell is entitled to a monthly fee of $ 6,300 , which was increased to $ 16,600 per month upon the closing of the EHT Acquisition.

The consulting agreement provided Mr.

Heppell with a termination payment of $ 74,700 on March 1, 2023, equal to the monthly fees through the then-remaining term of the agreement if Mr.

Heppell’s engagement was terminated by the Company without cause.

In addition, Mr.

Heppell was awarded 4,000,000 stock options which are subject to certain performance and other conditions (Note 8).

The Company has accounted for the consulting contract as an in-substance severance arrangement and recognized $ 139,615 in severance expense during the year ended December 31, 2022.

Heppell was awarded 16,000 stock options which are subject to certain performance and other conditions.

On February 9, 2023, the Company provided notice and terminated the consulting agreement with Mr.

Heppell effective March 11, 2023 and effective March 10, 2023, Mr.

Heppell was removed from the Board of Sciences and no longer serves as Sciences CEO.

During the year ended December 31, 2023, the first tranche of stock options issued to Mr.

Heppell were cancelled, unexercised, and the second tranche of stock options were cancelled upon the closing of the Verdélite SPA.

The Company accounted for the consulting contract as an in-substance severance arrangement.

During the year ended December 31, 2023, no severance expense was recognized.

The Company recognized $ 139,615 in severance expense during the year ended December 31, 2022.

The accrual for Mr.

Heppell's severance was adjusted to include the increased fee payments when the Company closed the Acquisition.

Heppell's severance was adjusted to include the increased fee payments when the Company closed the EHT Acquisition.

As of December 31, 2022, the Company recognized $ 16,600 , in accounts payable - related party and $ 75,503 in other current liabilities - related party under this consulting agreement.

As of December 31, 2022, Mr.

Heppell is a board member of Emerald Health Pharmaceuticals, Inc.

and was a board member of EHT until the closing of the Acquisition (Note 3).

As of December 31, 2022, Sciences owns 12.4 % and 48 % of the Company and Emerald Health Pharmaceuticals, Inc., respectively.

As of December 31, 2022, Mr.

Heppell is also a board member and the CEO of Sciences.

Heppell also served on VivaCell's board until he tendered his resignation on January 10, 2022.

Table of Cont ents

On December 14, 2021, the Board Observer Agreement was terminated.

Emerald Health Pharmaceuticals, Inc.

On April 30, 2021, the Company entered into a month-to-month lease agreement with Emerald Health Pharmaceuticals, Inc.

("EHP") an affiliate of the Company with a significant common shareholder, as the sublessor and the Company as the sublessee.

The Company shared the same office location as Emerald Health Pharmaceuticals in San Diego, California until the termination of the sublease on August 31, 2021.

Under the sublease agreement, the Company paid monthly base rent of $ 4,000 in addition to its share of common area expenses and utilities.

For the years ended December 31, 2022 and 2021, the Company recognized $ — and $ 15,453 , respectively, in expense under the sublease.

As of December 31, 2022, the Company has $ 11,300 in accounts payable due to EHP related to the purchase of office furniture.

As of December 31, 2023, the Company no longer has any obligations or business relationship with Mr.

VivaCell Biotechnology España, S.L.U (formerly known as Emerald Health Biotechnology España, S.L.U.)

In January 2021 and April 2021, the Company entered into two separate Collaborative Research Agreements pursuant to a Master Services Agreement with VivaCell Biotechnology España, S.L.U ("VivaCell"), a research and development entity with substantial expertise in cannabinoid science and a subsidiary of Emerald Health Research, Inc.

which is 100 % owned by Sciences.

Under the Collaborative Research Agreements, VivaCell will provide research and development services pursuant to agreed upon project plans for the research and development of SBI-200 and the preclinical development services for novel derivatives.

The term of each agreement is initially for a one-year period.

The agreements terminate upon delivery and acceptance of the final deliverables under the project plans or if either party is in breach of the terms of the contract and such breach remains uncured for 45 days.

Payment for services are based on the negotiated amounts for the completion of agreed upon objectives as provided in the Collaborative Research Agreements.

For the years ended December 31, 2022 and 2021, the Company incurred $ 87,927 and $ 220,418 , respectively, in expenses under the Collaborative Research Agreements.

As of December 31, 2021, the Company has recognized a prepaid asset in the amount of $ 8,056 to be offset against future research and development costs under the Collaborative Research Agreements.

No amounts were due to or from VivaCell under these agreements for the year ended December 31, 2022.

On October 11, 2021, the Company entered into an Exclusive Sponsored Research Agreement (the “ESRA”) with VivaCell to fund certain research and development programs which are of mutual interest to both the Company and VivaCell.

The Company will have the right to use all data, products, and information, including intellectual property which are generated in the performance of the research under each and all projects funded by the Company pursuant to the ESRA, and VivaCell assigns and agrees to assign, to the Company all rights to any intellectual property created or reduced-to-practice under, or as a part of, a project funded by the Company pursuant to the ESRA.

In 2021, the Company entered into two separate Agreements pursuant to a Master Services Agreement with VivaCell Biotechnology España, S.L.U ("VivaCell"), a subsidiary of Emerald Health Research, Inc., which is 100 %-owned by Sciences.

Under the Agreements, VivaCell will provide research and development services pursuant to agreed-upon project plans for the research and development of SBI-200 and the preclinical development services for novel derivatives.

Payment for services are based on the negotiated amounts for the completion of agreed upon objectives as provided in the Agreements.

The Company did not incur any expenses for the year ended December 31, 2023.

For the year ended December 31, 2022, the Company incurred $ 87,927 in expenses under the Agreement.

In 2021, the Company entered into an Exclusive Sponsored Research Agreement (the “ESRA”) with VivaCell to fund certain research and development programs.

The Company will have the right to use all data, products, and information, including intellectual property, which are generated in the performance of the research under each and all projects funded by the Company pursuant to the ESRA.

VivaCell assigns and agrees to assign to the Company all rights to any intellectual property created or reduced-to-practice under or as a part of a project funded by the Company pursuant to the ESRA.

The Company has agreed to pay to VivaCell a royalty based on any and all licensing revenue or other consideration paid to the Company by a third-party licensee, assignee or purchaser of intellectual property rights created under the ESRA.

In addition, upon a change of control transaction, the Company has agreed to pay an amount equal to the royalty percentage multiplied by the fair value of the intellectual property created under the ESRA.

Pursuant to the ESRA, VivaCell will provide a budget to be approved by the Company for each project, and the Company will make payments in accordance with the approved budget and pay an annual retainer to VivaCell of $ 200,000 per year.

For the years ended December 31, 2022 and 2021, the Company incurred $ 200,000 and $ 44,624 in expenses under the ESRA.

As of December 31, 2022 and 2021, the Company has recognized accounts payable of $ 50,000 and a prepaid asset in the amount of $ 5,376 to be offset against future research and development costs under the ESRA.

The initial term of the agreement is one year , with automatic renewal for successive one-year terms unless either party terminates upon 60 days' prior written notice to the other party pursuant to the ESRA.

For the years ended December 31, 2023 and 2022, the Company incurred $ 50,000 and $ 200,000 , respectively, in research and development expenses related to the retainer under the ESRA.

As of December 31, 2023 and 2022, the Company has recognized $ 0 and $ 50,000 in accounts payable - related parties, respectively, related to the retainer under the ESRA.

On March 1, 2022, the Company entered into a research project with VivaCell under the ESRA Agreement for the development of a screening platform for anteroposterior ocular diseases.

The project budget is $ 190,500 .

For the year ended December 31, 2022, the Company incurred $ 167,000 of research and development expenses under the ESRA.

As of December 31, 2022, the Company recognized $ 7,835 , in other current liabilities - related parties related to the first research project.

As of December 31, 2022, the Company recognized $ 47,001 , in accounts payable - related parties under this agreement.

Table of Cont ents

For the years ended December 31, 2023 and 2022, the Company incurred $ 39,167 and $ 167,000 , respectively, of research and development expenses under the ESRA.

As of December 31, 2023 and 2022, the Company recognized $ 0 and $ 7,835 in other current liabilities, and $ 0 and $ 47,001 in accounts payable- related parties under this agreement.

On May 8, 2023, the Company terminated the ESRA effective March 31, 2023, and Vivacell waived the required notice period under the ESRA.

Management Conflicts

The Company's CEO Punit Dhillon, was a board member of the Company and EHT (Note 3) through the closing date of the Acquisition.

Dhillon also served as a board member of Sciences, VivaCell and, Emerald Health Pharmaceuticals, Inc.

("EHP") until he tendered his resignation from such boards on August 10, 2020, September 22, 2021 and August 19, 2022, respectively.

On July 8, 2022, Punit Dhillon was appointed to serve as the interim principal executive officer of EHP under a consulting arrangement.

On October 28, 2022, Mr.

Dhillon resigned as the interim principal executive officer of EHP and the consulting arrangement was terminated.

Until the date of the EHT Acquisition, the Company's CEO, Punit Dhillon, was a board member of the Company and EHT (Note 3).

On February 28, 2022, the Company entered into a standard consulting agreement with the CEO's brother to assist with diligence on the EHT Acquisition due to his knowledge and expertise as a former executive of EHT.

1 unchanged sentence

The consulting agreement may be terminated by either party upon providing 15 days of advance notice.

For the year ended December 31, 2022, the Company incurred $ 46,684 , in consulting expenses under this agreement of which $ 21,977 is included in wind down costs.

As of December 31, 2022, the Company recorded $ 12,511 to other current liabilities - related parties related to this consulting agreement.

For the years ended December 31, 2023 and 2022, the Company incurred $ 35,087 and $ 46,684 , respectively, in consulting expenses under this agreement.

As of December 31, 2023 and 2022, the Company recorded $ 0 and $ 12,511 to other current liabilities - related parties related to this consulting agreement.

Effective June 30, 2023, this contract was terminated.

Commitments and Contingencies

The Company leases office space for its corporate headquarters, located at 1250 El Camino Real, San Diego, California 92130.

The lease is effective from September 1, 2021 through October 31, 2023 and contains a renewal option for a two-year extension after the current expiration date.

The Company does not expect that the renewal option will be exercised, and has therefore excluded the option from the calculation of the right of use asset and lease liability.

The Company leases office space for its corporate headquarters, located at 11250 El Camino Real, Suite 100 San Diego, California 92130.

The original lease term was effective from September 1, 2021 through October 31, 2023 and contained a renewal option for a two-year extension after the current expiration date.

At the commencement date, the Company did not expect to exercise the renewal option, and has therefore excluded the option from the calculation of the right of use asset and lease liability.

The lease provides for two months of rent abatement and the initial monthly rent is $ 8,067 per month with annual increases of 3 % commencing on November 1, 2022.

The lease includes non-lease components (i.e., property management costs) that are paid separately from rent, based on actual costs incurred, and therefore were not included in the right-of-use asset and lease liability but are reflected as an expense in the period incurred.

The lease included non-lease components (i.e., property management costs) that are paid separately from rent, based on actual costs incurred, and therefore were not included in the right-of-use asset and lease liability but are reflected as an expense in the period incurred.

In calculating the present value of the lease payments, the Company has elected to utilize its incremental borrowing rate based on the lease term.

The Company entered into an amended and restated lease agreement on June 27, 2023 for its corporate headquarters, extending the lease term to 36 months, retroactive to September 1, 2021 through October 31, 2026.

The Company treated the amended and restated lease agreement as a single modified lease.

For the years ended December 31, 2023 and 2022, lease expense comprised of $ 97,986 and $ 90,701 , respectively in lease cost from the Company's non-cancellable operating lease.

16 unchanged sentences

An unfavorable outcome to any legal matter, if material, could have a materially adverse effect on the Company’s operations or financial position, liquidity or results of operations.

Table of Cont ents

Wendy Cunning vs Skye Bioscience, Inc.

1 unchanged sentence

The case, entitled Wendy Cunning vs Skye Bioscience, Inc., was filed in U.S.

District Court for the Central District of California (the “Cunning Lawsuit”).

District Court (the "District Court") for the Central District of California (the “Cunning Lawsuit”).

On January 18, 2023, a jury rendered a verdict in favor of Ms.

Cunning and awarded her $ 512,500 in economic damages (e.g., lost earnings, future earnings and interest), $ 840,960 in non-economic damages (e.g., emotional distress) and $ 3,500,000 in punitive damages.

The plaintiff's counsel has also filed a motion for attorney fees claiming fees of $ 1,351,850 and a multiplier of 1.5 , for a total of $ 2,027,775 .

On February 13, 2023, the Company received the final judgment on the special verdict (the "Final Judgment") from the District Court.

On August 2, 2023, the District Court ruled on the plaintiff's motion for attorney fees and awarded the plaintiff $ 1,200,008 .

Based on this order, the Company reduced the aggregate estimate for the legal contingency by $ 151,842 , the difference between the attorney fees awarded by the District Court and the Company's previous estimate.

Immediately prior to the closing of the PIPE Financing, on August 17, 2023, the Company obtained a stay on enforcement of the judgment in the Cunning Lawsuit by posting an appeal bond in the amount of $ 9,080,202 .

On October 19, 2023, the Company received the final orders from the District Court denying the post-trial motions that the Company filed with the District Court in March 2023 seeking judgment as a matter of law, a new trial, and/or a reduction of the judgment.

Additionally, in March of 2023, the Company appealed the judgment in the Cunning Lawsuit with the Ninth District Court of Appeals, which is moving forward now that the District Court has ruled on the post-trial motions.

In March 2024, the Company filed the opening brief for the appeal with the Ninth District Court of Appeals.

The Company strongly believes that this case was incorrectly decided as to liability, the amount of compensatory damages, and the appropriateness and amount of punitive damages.

The Company intends to challenge the verdict in the trial court and appeal and pursue reimbursement under its existing insurance polices, but given the jury verdict, we have determined that a loss is probable and accordingly have recorded a legal contingency expense and a current balance sheet liability for the total amount of the jury verdict.

The Company has recorded an aggregate estimate for the legal contingency of $ 6,205,310 based on the outcome Management assessed to be the best estimate that is reasonably possible to occur.

Dependent on the appeal, it is reasonably possible that the legal contingency booked could materially change after the issuance of these financials.

EHT Class Action Lawsuit

In July 2020, Emerald Health Therapeutics, Inc., a subsidiary of the Company, was added as a defendant in a proposed class action commenced against a large number of Canadian license holders including Aurora Cannabis Inc.;

Aurora Cannabis Enterprises Inc.;

Aleafia Health Inc.;

Canopy Growth Corporation;

Emblem Cannabis Corp.;

Cronos Group Inc.;

Tilray Canada Ltd.;

Organigram Holdings Inc.;

OrganigramCo;

MediPharm Labs Corp.;

Broken Coast Cannabis Ltd.;

Emerald Cannabis Corporation;

and EmeraldCo.

The proposed class action was commenced in the Alberta Court of Queen’s Bench sitting at Calgary.

The plaintiffs allege that the defendants, including Emerald Health Therapeutics, Inc., marketed and sold medicinal and recreational cannabis products with an advertised content of THC and CBD and that the amount of THC and/or CBD as contained on the label was wrong and outside the permissible variability limits.

The claim alleges the following causes of action indiscriminately against all of the defendants:

breach of contract and breach of consumer protection legislation, including the various Sale of Goods Acts and Consumer Protection Acts;

common law and statutory misrepresentation;

negligence in product labelling;

breach of the duty to warn;

unjust enrichment;

waiver of tort.

The claim seeks an aggregate of $ 505 million in damages as against all of the defendants) and $ 5,000,000 in punitive damages against each defendant plus an accounting of revenues from each defendant.

We are disputing the allegations and have been and will continue to vigorously defend against the claims.

The Company disputes the allegations and has been and will continue to vigorously defend against the claims.

The proceedings are still at an early stage.

Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult, particularly where key factual and legal issues have not been resolved.

For these reasons, the ultimate timing or outcome cannot be predicted, or possible losses or a range of possible losses cannot be reasonably estimated.

The Company is challenging the verdict in the Ninth District Court of Appeals and is pursuing reimbursement under its existing insurance policies, but given the jury verdict, the Company has determined that a loss is probable and accordingly have recorded a legal contingency expense and a current balance sheet liability for the total amount of the jury verdict.

The Company has recorded an aggregate estimate for the legal contingency of $ 6,053,468 plus accrued interest of $ 234,750 at an annual interest rate of 4.87 % on the judgment and 5.38 % on the legal fees, which is determined by the Superior Court of California.

Depending on the judge's final order on the post-trial motions and appeal, it is reasonably possible that the legal contingency booked could materially change after the issuance of these financials.

Skye Bioscience, Inc.

vs Partner Re Ireland Insurance

In February 2023, the Company brought a suit against the Company's D&O carrier, Partner Re Ireland Insurance DAC ("Partner Re"), bringing claims for (a) breach of contract, (2) tortious breach of the implied covenant of good faith and fair dealing and (3) declaratory relief that Partner Re is obligated to reimburse the Company for the defense fees and costs incurred in defense of the Cunning Lawsuit and must indemnify the Company for any settlement or judgment in the Cunning Lawsuit.

The Company's allegations arise out of Partner Re's refusal to reimburse the Company for costs incurred by the Company in defending the Cunning Lawsuit.

The case, entitled Skye Bioscience, Inc., v.

Partner Re Ireland Insurance DAC, was filed in the United Stated District Court for the Central District of California.

On April 17, 2023, Partner Re filed a motion to dismiss the Company's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).

On June 20, 2023, the judge issued a final ruling in favor of the Company and denied Partner Re's motion to dismiss the Company's lawsuit.

In its ruling, the Court rejected Partner Re's primary basis for denying coverage.

Based on the outcome, the Company is pursuing up to $ 5,000,000 in coverage less the deductible to cover legal expenses incurred and the final verdict or settlement of the Cunning Lawsuit.

Subsequent Events

Sciences Warrant Exercise and Conversion of Amended Credit Agreement

Effective February 16, 2023, Company and Sciences entered into the MTA.

Sciences is the largest stockholder of the Company, with beneficial ownership of 17.44 % of the Company's outstanding common stock following the transactions described below.

Under the MTA, Sciences agreed to exercise 16,641,486 warrants to purchase common stock of the Company (the "MTA Warrants").

Under the MTA, the parties agreed that the aggregate exercise price for the MTA Warrants of $ 282,905 was to be paid through a reduction in the debt owed by the Company to Sciences (the "Credit Consideration") under that certain Amended Credit Agreement.

On February 22, 2023, the Company issued 16,641,486 shares of common stock to Sciences in connection with the exercise of the MTA Warrants.

Pursuant to the terms of the MTA, after the application of the Credit Consideration to the amounts owed under the Amended Credit Agreement, Sciences agreed to convert the remaining balance of $ 1,597,236 owed by the Company to Sciences under the Amended Credit Agreement into 41,379,164 shares of common stock of the Company at a conversion price of $ 0.0386 , in accordance with an amendment to the Amended Credit Agreement set forth in the MTA.

Following the issuance of shares described above, the Amended Credit Agreement was terminated in its entirety per the terms of the MTA.

Table of Cont ents

Termination of Related Party Contractor

On February 9, 2023, the Company terminated the consulting agreement with Mr.

The second tranche of stock options issued to Mr.

Heppell were cancelled upon the closing of the Verdélite SPA.

Divestiture of VDL

On February 9, 2023, EHT, and C3 entered into a second amendment to the Verdélite SPA whereby the parties amended the Verdélite SPA to allow for the first installment payment to be paid through a promissory note (the "Promissory Note").

On February 9, 2023, the parties closed the transactions contemplated by the Verdélite SPA and o n February 10, 2023, the Promissory Note was paid off in its entirety and the Company received a closing payment of $ 5,547,000 .

Upon the divestiture of the VDL, C3 and VDL are not considered related parties to the Company.

Refer to Note 3 for additional information on the Verdélite SPA, including the payment terms of the remaining installments .

Table of Cont ents

Sale of Real Estate Held by AVI

On January 15, 2024, the Company closed the sale of the real estate held by AVI, which comprised of substantially all of AVI's assets..

The real estate and related equipment was sold to Tab Labs, Inc.

for an aggregate purchase price of $ 1,139,572 .

PIPE Financings

January 2024 PIPE Financing

On January 29, 2024, the Company entered into a Securities Purchase Agreement, pursuant to which on January 31, 2023, the Company issued an aggregate of 11,713,664 shares of common stock and 9,978,739 pre-fund warrants to purchase up to 9,978,739 shares of common stock (the "January 2024 PIPE Financing") for an aggregate purchase price of $ 49,991,010 .

The January 2024 PIPE Financing was priced at $ 2.31 per common share and per $ 2.30 pre-funded warrant based on the 5-day average share price preceding January 29, 2024.

The pre-funded warrants are exercisable at any time for $ 0.001 .

In connection with the PIPE Financing, the Company incurred $ 3,824,841 in direct equity issuance costs for net proceeds of $ 46,166,169 .

March 2024 PIPE Financing

On March 11, 2024, the Company entered into a Securities Purchase Agreement, pursuant to which on March 13, 2024, the Company issued an aggregate of 4,000,000 shares of common stock (the "March 2024 PIPE Financing") for an aggregate purchase price of $ 40,000,000 .

The March 2024 PIPE Financing was priced at $ 10.00 per common share.

In connection with the PIPE Financing, the Company incurred $ 2,625,000 in direct equity issuance costs for net proceeds of approximately $ 37,375,000 .

Stock-based Compensation

On February 29, 2024, the Company granted certain employees and directors 275,000 RSUs with market based vesting conditions.

The RSUs vest on the following milestones:

(i) 25 % vests upon achieving a market cap of $ 750,000,000 and a stock price of $ 20.00 per share, (ii) 25 % vests upon achieving a market cap of $ 1,000,000,000 and a stock price of $ 30.00 per share, (iii) 25 % vests upon achieving a market cap of $ 1,250,000,000 and a stock price of $ 32.50 per share, and (iv) 25 % vest upon achieving a market cap of $ 1,500,000,000 or greater and a stock price of $ 35.00 per share;

provided, however, that no RSUs shall vest until the compensation committee of the Company determines that shares can be sold into the market to cover withholding tax obligations associated with the vesting of the RSUs.

Upon a change in control of the Issuer, 100 % of the RSUs will become fully vested.

On February 29, 2024, the Company granted certain employees and directors 703,100 stock options to buy shares of the Company's common stock with and exercise price of $ 14.56 .

Of the aggregate grant, 250,000 shares will vest over a 1 year period and 488,100 shares will vest over a 4-year period .

The following exhibits are filed with this Annual Report on Form 10-K.

20 unchanged sentences

(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on February 15, 2023)

3.1 Articles of Incorporation of Registrant, as amended (incorporated by reference to Exhibit 3.1 to our Report on Form 10-K filed on March 2, 2021)

Agreement and Plan of Merger and Reorganization, dated August 15, 2023, by and among Skye Bioscience, Inc., Aquila Merger Sub, Inc., and Bird Rock Bio, Inc.

Articles of Incorporation of Registrant, as amended

3.2 Amended and Restated Bylaws of Registrant (incorporated by reference to Exhibit 3.2 to our Report on Form 10-K filed on March 2, 2021)

2 unchanged sentences

4.3 2018 Emerald Financing Warrants (incorporated by reference to Exhibit 4.1 and contained in Exhibit 10.1 in exhibit to our Current Report on Form 8-K filed January 22, 2018)

4.4 Emerald Multi-Draw Credit Agreement Warrants (incorporated by reference to Exhibit 4.10 to our Annual Report on Form 10-K filed on March 14, 2019)

4.4 2019 Common Stock Warrants (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on November 21, 2019)

1 unchanged sentence

4.6 2021 Inducement Warrants (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q filed November 10, 2021)

4.8 September 2021 Lock-up Agreement (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q filed November 10, 2021)

4.7 2021 Common Stock Warrants (incorporated by reference to Exhibit 4.1 to our Quarterly Report on Form 10-Q filed November 10, 2021)

1 unchanged sentence

4.9 2021 Common Stock Warrants to Placement Agent (incorporated by reference to Exhibit 4.3 to our Quarterly Report on Form 10-Q filed November 10, 2021)

4.12* 2022 Form of Warrant Issued to Former EHT Warrant Holders

Table of Cont ents

4.13 Piggyback Registration Rights Agreement, dated December 14, 2022, by and between the Company and Emerald Health Sciences, Inc.

(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on December 19, 2022)

2022 Form of Warrant Issued to Former EHT Warrant Holders (incorporated by reference to Exhibit 4.12 to our Annual Report on Form 10-K filed on March 31, 2023)

2023 Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on August 21, 2023 )

2023 Form of Secured Convertible Promissory Note issued by Skye Bioscience, Inc.

to MFDI, LLC (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on August 21, 2023 )

2023 Common Stock Purchase Warrant issued by Skye Bioscience, Inc.

to MFDI, LLC (incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K filed on August 21, 2023 )

Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

1 unchanged sentence

2014 Amended and Restated Omnibus Incentive Plan (incorporated by reference to Appendix D our definitive proxy statement filed on August 31, 2022)

10.2† Form of Stock Option Agreement under 2014 Amended and Resta ted Omnibus Incentive Plan (incorporated by reference to Exhibit 10.5 to our Current Report on Form 8-K filed on November 3, 2014)

10.2† Amendment No.

1 to Amended and Restated 2014 Omnibus Incentive Plan (incorporated by reference to Annex B to our definitive information statement filed on October 17, 2023)

Form of Stock Option Agreement under 2014 Amended and Restated Omnibus Incentive Plan (incorporated by reference to Exhibit 10.5 to our Current Report on Form 8-K filed on November 3, 2014)

Form of Restricted Stock Unit Agreement under 2014 Amended and Restated Omnibus Incentive Plan (incorporated by reference to Exhibit 10.5 to our Annual Report on Form 10-K filed on March 28, 2022)

4 unchanged sentences

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on January 12, 2015)

10.8† Officer Change in Control Severance Plan (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on February 27, 2015)

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.

4 to our Current Report on Form 8-K filed on August 21, 2023 )

Employment Agreement, dated August 10, 2020, by and between Emerald Bioscience, Inc.

2 unchanged sentences

and Kaitlyn Arsenault (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on October 6, 2021)

10.11** License Agreement, dated January 10, 2017, between Nemus and the University of Mississippi, School of Pharmacy (UM 5070) (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K/A filed on January 20, 2017)

10.12** Restated and Amended License Agreement, dated as of May 24, 2019, by and between the Company and University of Mississippi, School of Pharmacy (UM 5050) (incorporated by reference to Exhibit 10.12 to our Annual Report on Form 10-K filed on March 28, 2022)

10.13** Restated and Amended License Agreement, dated as of May 24, 2019, by and between the Company and University of Mississippi, School of Pharmacy (UM 8930) (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 29, 2019)

10.14 Amended and Restated Multi-Draw Credit Agreement, dated April 29, 2020, by and between Emerald Bioscience, Inc.

and Emerald Health Sciences, Inc.

(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on April 29, 2020)

10.15 Amendment No.

2 to the Amended and Restated Multi-Draw Credit Agreement, dated March 29, 2021 (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed May 7, 2021)

10.16 Amendment No.

3 to the Amended and Restated Multi-Draw Credit Agreement, dated September 15, 2021 (incorporated by reference to Exhibit 10.17 to our Annual Report on Form 10-K filed on March 2 8 , 2022)

10.17 Amendment and Acknowledgment Agreement, dated November 17, 2022, by and between the Company and Emerald Health Sciences, Inc.

(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on November 23, 2022)

10.18 Amendment No.

5 to Multi-Draw Credit Agreement, dated December 30, 2022, by and between the Company and Emerald Health Sciences, Inc.

(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on January 6, 2023)

10.19 Master Transaction Agreement, dated February 16, 2023, by and between the Company and Emerald Health Sciences, Inc.

(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 23, 2023)

Table of Cont ents

10.13 Collaborative Research Agreement, dated January 2021, by and between Skye Bioscience, Inc.

2 unchanged sentences

and Emerald Health Biotechnology España, S.L., (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on August 6, 2021)

10.22** Exclusive Sponsored Research Agreement, dated October 11, 2021, by and between the Company and Emerald Health Biotechnology España, S.L.

(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on October 15, 2021)

Exclusive License Agreement, dated November 30, 2023, by and between the Company and Tautomer Bioscience (Pty) Limited (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on December 5, 2023 )

10.16 Offer to Sell, dated November 29, 2023, by and among Colliers Macaulay Nicolls Inc., Tab Labs Inc.

and Avalite Sciences, Inc.

(incorporated by reference to Exhibit 10.

2 to our Current Report on Form 8-K filed on December 5, 2023 )

Securities Purchase Agreement, dated as of August 15, 2023, by and among Skye Bioscience, Inc.

and the Investors named therein (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on August 21, 2023 )

Registration Rights Agreement, dated as of August 15, 2023, by and among Skye Bioscience, Inc.

and the Investors named therein (incorporated by reference to Exhibit 10.

2 to our Current Report on Form 8-K filed on August 21, 2023 )

Secured Note and Warrant Purchase Agreement, dated as of August 15, 2023, by and among Skye Bioscience, Inc.

and MFDI, LLC (incorporated by reference to Exhibit [10.1] to our Current Report on Form 8-K filed on August 21, 2023 )

10.2 F orm of Lock-Up Agreement (incorporated by reference to Exhibit 10.5 to our Q uarterly Report on Fo rm 10-Q filed on November 14, 2023)

10.21 Piggyback Registration Rights Agreement, dated December 14, 2022, by and between the Company and Emerald Health Sciences, Inc.

(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on December 19, 2022)

10.23 Office Lease, dated as of August 25, 2021, by and between ROIC California, LLC and the Company (incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K filed on September 15, 2021)

16.1 Changes in Registrant's Certifying Accountant - Letter of Mayer Hoffman McCann P.C.

to the Securities and Exchange Commission, dated June 17, 2022 (incorporated by reference to Exhibit 16.1 to our Current Report on Form 8-K filed on June 1 7 , 2022)

16.2 Changes in Registrant's Certifying Accountant - Letter of Friedman, LLP to the Securities and Exchange Commission, dated September 29, 2022 (incorporated by reference to Exhibit 16.1 to our Current Report on Form 8-K filed on October 3, 2022)

21.1* Subsidiaries of the Registrant

23.1* Independent Registered Public Accounting Firm's Consent

23.2* Independent Registered Public Accounting Firm's Consent

C onsent of Marcum LLP

31.1* Certification of Principal Executive Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934

4 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.ins†† Instance Document

101.sch†† XBRL Taxonomy Schema Document

101.cal†† XBRL Taxonomy Calculation Linkbase Document 101.def†† XBRL Taxonomy Definition Linkbase Document 101.lab†† XBRL Taxonomy Label Linkbase Document

101.pre†† XBRL Taxonomy Presentation Linkbase Document

Policy relating to recovery of erroneously awarded compensation, as required by applicable listing standards adopted pursuant to 17 CFR 240.10D-1

Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed Herewith

** Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.

*** Furnished Herewith

** Portions of this exhibit have been omitted in compliance with Regulation S-K Item 601(b)(10)(iv).

† Management contract or compensatory plan or arrangement.

†† In accordance with Regulation S-T, XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not otherwise subject to liability under these sections.

Form 10-K Summary .

Table of Cont ents

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

26 unchanged sentences

/s/ Keith Ward March 21, 2024

/s/ Andrew Schwab

March 21, 2024

Andrew Schwab

/s/ Paul Grayson

March 21, 2024

/s/ Annalisa Jenkins

March 21, 2024

Annalisa Jenkins

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures