What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 132 added, 349 removed, 208 unchanged (70% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

2025 December 31,

1 unchanged sentence

Cash and cash equivalents $ 46,421,299 $ 68,415,741

Restricted cash 9,080,202 9,080,202

Short-term investments 12,802,650 —

Prepaid expenses 575,382 201,962

1 unchanged sentence

Total current assets 63,027,781 70,827,247

79,808,229 11,650,843

Property and equipment, net 1,304,148 1,432,752

1 unchanged sentence

Other assets 53,910 53,910

$ 81,535,660 $ 11,940,411

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Total assets $ 64,793,240 $ 72,763,773

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable $ 1,713,832 $ 569,252

Accrued interest - related party — 126,027

Accrued payroll liabilities 656,131 1,114,255

Accrued interest - legal contingency — 234,750

Other current liabilities 847,849 654,201

Estimate for accrued legal contingencies and related expenses 1,913,003 1,818,751

Convertible note - related party, net of discount — 4,371,998

Operating lease liability, current portion 188,645 182,428

Total current liabilities 5,319,460 4,338,887

5,624,223 13,900,999

Non-current liabilities

1 unchanged sentence

Total liabilities 5,542,926 4,612,049

5,732,285 14,072,229

Commitments and contingencies (Note 7)

Stockholders’ equity (deficit)

Stockholders’ equity

Preferred stock, $ 0.001 par value;

200,000 shares authorized at September 30, 2024 and December 31, 2023;

no shares issued and outstanding at September 30, 2024 and December 31, 2023

200,000 shares authorized at March 31, 2025 and December 31, 2024;

no shares issued and outstanding at March 31, 2025 and December 31, 2024

Common stock, $ 0.001 par value;

100,000,000 shares authorized at September 30, 2024 and December 31, 2023;

30,338,290 and 12,349,243 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

100,000,000 shares authorized at March 31, 2025 and December 31, 2024;

30,974,559 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

30,975 30,975

Additional paid-in-capital 201,272,330 199,070,421

196,976,230 102,238,382

Accumulated deficit ( 142,052,991 ) ( 130,949,672 )

( 121,203,193 ) ( 104,382,549 )

Total stockholders’ equity (deficit)

75,803,375 ( 2,131,818 )

Total liabilities and stockholders’ equity (deficit)

$ 81,535,660 $ 11,940,411

Total stockholders’ equity 59,250,314 68,151,724

Total liabilities and stockholders’ equity $ 64,793,240 $ 72,763,773

See accompanying notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended

September 30, For the For the Nine Months Ended

September 30,

2024 2023 2024 2023

For the three months ended March 31,

Operating expenses

Research and development $ 7,197,257 $ 1,946,450

$ 4,883,337 $ 1,254,653 $ 10,908,538 $ 4,227,967

Cost to acquire IPR&D asset

— 21,215,214 — 21,215,214

General and administrative 4,562,305 4,205,800

Change in estimate for legal contingencies

( 4,553,468 ) — ( 4,553,468 ) ( 151,842 )

Total operating expenses 11,759,562 6,152,250

4,968,796 24,705,766 19,526,617 30,648,916

Operating loss ( 11,759,562 ) ( 6,152,250 )

Other (income) expense

Interest (income) expense

( 90,766 ) 271,307 796,222 476,135

Interest expense 1,452 436,936

Interest income ( 619,054 ) ( 427,554 )

(Gain) loss from asset sales ( 72,837 ) — ( 1,217,978 ) 307,086

Debt conversion inducement expense — — — 1,383,285

Wind-down costs — ( 14,677 ) — 455,504

Other expense (income)

801 — 2,200 ( 3 )

Gain on sale of asset — ( 1,145,141 )

Other (income) expense ( 40,641 ) 1,040

Total other (income) expense, net ( 658,243 ) ( 1,134,719 )

( 1,070,499 ) 240,068 ( 2,716,044 ) 2,572,338

Loss before income taxes ( 11,101,319 ) ( 5,017,531 )

Provision for income taxes 2,000 2,000

— — 10,071 3,600

Net loss $ ( 11,103,319 ) $ ( 5,019,531 )

Loss per common share:

$ ( 0.10 ) $ ( 3.17 ) $ ( 0.48 ) $ ( 6.38 )

Weighted average shares of common stock outstanding used to compute earnings per share:

38,819,387 7,880,546 35,317,352 5,207,411

Basic $ ( 0.28 ) $ ( 0.18 )

Diluted $ ( 0.28 ) $ ( 0.18 )

Weighted average shares of common stock outstanding used to compute loss per share:

Basic 39,651,888 27,999,901

Diluted 39,651,888 27,999,901

See accompanying notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended

September 30,

For the Three Months Ended

Cash flows from operating activities:

3 unchanged sentences

Stock-based compensation expense 2,201,909 2,478,179

Change in fair value of derivative liabilities

Amortization of debt discount — 237,205

Write-down of vendor deposits

Change in estimate for legal contingencies

( 4,553,468 ) 7,009

(Gain) loss from divestiture of assets

( 1,217,978 ) 307,086

Loss from disposal of assets

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 )

Gain on sale of asset — ( 1,145,141 )

Changes in assets and liabilities:

2 unchanged sentences

Accounts payable 1,215,779 ( 60,652 )

Accounts payable - related parties — ( 113,601 )

Accrued interest - related party ( 126,027 ) 60,274

Accrued interest - legal contingency — 75,073

( 234,750 ) —

Accrued payroll liabilities ( 458,124 ) ( 534,919 )

1 unchanged sentence

Other current liabilities 216,701 83,673

Other current liabilities - related parties — ( 95,850 )

Net cash used in operating activities ( 9,185,480 ) ( 4,708,123 )

1 unchanged sentence

Proceeds from the sale of assets, net of sales costs — 1,145,141

1,217,978 5,532,266

Purchase of short-term investments ( 12,802,650 ) —

Purchase of property and equipment ( 6,312 ) ( 3,181 )

Cash from asset acquisition, net of transaction costs — 1,076,740

Net cash (used in) provided by investing activities ( 12,808,962 ) 1,141,960

( 336,025 ) 6,603,473

Cash flows from financing activities:

Proceeds from convertible note - related party

Proceeds from the issuance of common stock and warrants, net of equity issuance costs of $ 0 and $ 4,338,393 , respectively

83,556,563 11,734,947

Financing costs allocated to warrants issued with convertible debt

Repayment of insurance premium loan payable — ( 236,681 )

Net cash provided by financing activities — 85,652,617

83,556,563 16,465,924

Net increase in cash and restricted cash

66,156,161 12,961,937

Net (decrease) increase in cash, cash equivalents and restricted cash ( 21,994,442 ) 82,086,454

Cash, cash equivalents and restricted cash, beginning of period $ 68,415,741 $ 10,336,655

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

Cash, cash equivalents and restricted cash, end of period $ 46,421,299 $ 92,423,109

$ 76,492,816 $ 14,211,044

Supplemental disclosures of cash-flow information:

Reconciliation of cash, cash equivalents and restricted cash:

Cash, and cash equivalents

$ 67,412,614 $ 5,126,245

Cash and cash equivalent $ 46,421,299 $ 83,342,907

Restricted cash — 9,080,202

2 unchanged sentences

Supplemental disclosures of non-cash financing activities:

Common stock warrant exercises $ — $ 282,905

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

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

Financing of insurance premium — 203,884

Right of use asset obtained in exchange for operating lease liabilities

Stock issued for assets

Conversion of convertible note - related party to common stock

Accrued financing charges $ — $ 2,096,054

See accompanying notes to the unaudited condensed consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Common Stock Additional

5 unchanged sentences

Stock-based compensation expense — — 2,201,909 — 2,201,909

Issuance of common stock and warrants, net of issuance costs of $ 6,434,447

15,713,664 15,714 83,540,849 — 83,556,563

Net loss — — — ( 5,019,531 ) ( 5,019,531 )

Net loss for the three months ended March 31, 2025 — — — ( 11,103,319 ) ( 11,103,319 )

Balance, March 31, 2025 30,974,559 $ 30,975 $ 201,272,330 $ ( 142,052,991 ) $ 59,250,314

Stock-based compensation expense 5,000 5 1,828,469 — 1,828,474

Net loss — — — ( 7,902,816 ) ( 7,902,816 )

Balance, June 30, 2024 28,067,907 $ 28,068 $ 190,085,879 $ ( 117,304,896 ) $ 72,809,051

Stock-based compensation expense — — 1,921,617 — 1,921,617

Conversion of convertible note - related party 968,973 969 4,970,035 — 4,971,004

Exercise of pre-funded warrants 1,301,410 1,301 ( 1,301 ) — —

— — — ( 3,898,297 ) ( 3,898,297 )

Balance, September 30, 2024 30,338,290 $ 30,338 $ 196,976,230 $ ( 121,203,193 ) $ 75,803,375

Common Stock Additional

2 unchanged sentences

Stockholders’

Equity/(Deficit)

Shares Amounts

1 unchanged sentence

Stock-based compensation expense — — 2,478,179 — 2,478,179

Exercise of common stock warrants 66,566 66 282,839 — 282,905

Conversion of multi-draw credit agreement - related party and accrued interest 165,517 166 2,980,355 — 2,980,521

Net loss — — — ( 5,167,520 ) ( 5,167,520 )

Balance, March 31, 2023 3,886,202 $ 3,886 $ 67,120,830 $ ( 71,905,285 ) $ ( 4,780,569 )

Stock-based compensation expense — — 102,871 — 102,871

Net loss — — — ( 3,111,500 ) ( 3,111,500 )

Balance, June 30, 2023 3,886,202 $ 3,886 $ 67,223,701 $ ( 75,016,785 ) $ ( 7,789,198 )

Stock-based compensation expense — — 160,207 — 160,207

PIPE financing, net of equity issuance costs of 265,053

Issuance of common stock and warrants, net of issuance costs of $ 6,434,447

15,713,664 15,714 83,540,849 — 83,556,563

Common stock issued in acquisition of IPR&D asset 5,436,378 5,436 21,604,150 — 21,609,586

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 — — — ( 24,945,834 ) ( 24,945,834 )

Balance, September 30, 2023 12,338,910 $ 12,338 $ 101,645,539 $ ( 99,962,619 ) $ 1,695,258

Net loss for the three months ended March 31, 2024 — — — ( 5,019,531 ) ( 5,019,531 )

Balance, March 31, 2024 28,062,907 $ 28,063 $ 188,257,410 $ ( 109,402,080 ) $ 78,883,393

See accompanying notes to the unaudited condensed consolidated financial statements.

6 unchanged sentences

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

The Company is a clinical stage biopharmaceutical company developing next-generation molecules that modulate G protein-coupled receptors to treat obesity and metabolic diseases.

As of September 30, 2024, the Company has devoted substantially all its efforts to securing its product pipeline, carrying out its own research and development, preparing for and conducting clinical trials, building infrastructure and raising capital.

The Company is a clinical stage biotechnology company developing next-generation molecules that modulate G-protein-coupled receptors ("GPCRs") to treat obesity, overweight, and related conditions.

As of March 31, 2025, the Company has devoted substantially all its efforts to securing its product pipeline, carrying out research and development, preparing for and conducting clinical trials, 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.

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, tariffs, inflation, supply chain issues, fluctuating interest rates, future bank failures and increased geopolitical tensions between the U.S.

and its international trade partners, including China.

Basis of Presentation

3 unchanged sentences

Interim financial results are not necessarily indicative of results anticipated for the full year, or any future periods.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and the accompanying notes.

Actual results could differ from those estimates

The unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, from which the prior year balance sheet information herein was derived.

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 and other current assets on the Company's condensed balance sheet, and condensed statement of cash flows and change in fair value of derivative liability and interest expense on the condensed statement of operations.

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

During the nine months ended September 30, 2024 , there were no changes to the Company's significant accounting policies as described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

During the three months ended March 31, 2025 , there were no changes to the Company's significant accounting policies as described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 .

Pronouncements Implemented

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) .

The new standard reduces the number of accounting models for convertible debt instruments, amends the accounting for certain contracts in an entity’s own equity, and modifies how certain convertible instruments and contracts that may be settled in cash or shares impact the calculation of diluted earnings per share.

Specifically, the guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments and requires the use of the if-converted method to calculate diluted earnings per share.

This standard was effective for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years.

The Company adopted this standard as of January 1, 2024 and the adoption of this standard did not have an impact on the Company's Unaudited Condensed Consolidated Financial Statements or related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures.

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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.

2 unchanged sentences

This ASU should be applied on a prospective basis although retrospective application is permitted.

The Company does not expect the impact of adopting ASU 2023-09 to be material on its consolidated financial statements .

In November 2023, the Financial Account Standards Board ("FASB") issued Accounting Standards Update ("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.

ASU 2023-07 is to be applied retrospectively to all prior periods presented in the financial statements with an effective date for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company does not expect the impact of adopting ASU 2023-07 to be material on its consolidated financial statements.

Asset Acquisitions and Dispositions

Sale of real estate

The wind down of Emerald Health Therapeutics, Inc.

("EHT's") operations included the disposition of real estate held by Avalite Sciences, Inc.

("AVI") (the "AVI building").

At the time of the Company’s acquisition of EHT on November 10, 2022 (the “EHT Acquisition”) , none of the purchase consideration was allocated to the fair value of the AVI building.

As a result of the sale of the AVI building, for the nine months ended September 30, 2024, the Company recorded a gain of $ 1,145,141 recorded as a (Gain) Loss from Asset Sales within the Other Income and Expense section of the Company's Unaudited Condensed Consolidated Statements of Operations.

Divestiture of VDL, Release and Discharge Agreement

On February 9, 2023, the Company sold Verdélite Sciences, Inc.

For the nine months ended September 30, 2023, the Company has recorded a loss on sale of asset of $ 307,086 in other (income) expense based on the difference between the carrying amount of the assets sold and the net cash proceeds.

On July 17, 2024, the Company reached a transaction, release and discharge agreement with the purchaser of VDL.

Under the transaction, release and discharge agreement, the purchase price of VDL was adjusted in exchange for a full release of any future claims by VDL against the Company.

As part of the agreement, the parties agreed to an installment payment schedule for the remaining aggregate balance of the purchase price of $ 2,047,080 through December 2027.

The remainder of the purchase price receivable bears interest at 8 %.

Upon signing the transaction, release and discharge agreement, the Company received the first installment payment of $ 72,837 recorded as a (Gain) Loss from Asset Sales within the Other Income and Expense section of the Company's Unaudited Condensed Consolidated Statements of Operations.

BRB Acquisition

On August 18, 2023, the Company acquired 100 % of the equity interests in Bird Rock Bio Sub, Inc.

("BRB") pursuant to an Agreement and Plan of Merger and Reorganization, dated August 15, 2023 (the "BRB Acquisition").

The purpose of the acquisition was to acquire BRB's clinical asset, nimacimab, an antibody targeting the CB1 receptor, for development to treat metabolic conditions.

Pursuant to the BRB Acquisition, the Company issued 3,872,184 shares of Company common stock to the former preferred stockholders of BRB equal to $ 20,000,000 in base merger consideration priced at $ 5.16 .

In addition, the former preferred stockholders of BRB were entitled to additional merger consideration for each dollar invested in a concurrent private investment in public equity transaction (the "2023 PIPE Financing").

Because the 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 2023 PIPE Financing using a residual allocation method, whereby the fair value of the consideration transferred was first allocated to the monetary assets and 2023 PIPE Financing proceeds with the remainder allocated to the in-process research and development (" IPR&D") asset, nimacimab.

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

Accounts payable ( 73,473 )

Other current liabilities

Total net assets acquired $ 21,609,586

(a) Equal to the aggregate of 5,436,378 shares of common stock issued, multiplied by the Company's closing stock price of $ 3.98 as of August 18, 2023.

The cost to acquire the IPR&D asset, 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.

Property and Equipment, Prepaid Expenses, Other Current Assets and Liabilities

Property and equipment, net consists of the following:

As of September 30, 2024 As of December 31, 2023

Machinery and equipment $ 1,527,419 $ 78,024

Computer equipment 74,868 46,732

Leasehold improvements 13,954 13,954

Total property and equipment, gross

1,616,241 138,710

accumulated depreciation ( 99,629 ) ( 95,434 )

Total property and equipment, net $ 1,516,612 $ 43,276

Depreciation expense for the three and nine months ended September 30, 2024 was $ 47,519 and $ 69,873 , respectively.

Depreciation expense for the three and nine months ended Sepember 30, 2023 was $ 12,788 and $ 38,107 , respectively.

The Company adopted this ASU as of January 1, 2025.

The Company's adoption of this ASU did not have a significant impact on the Company's condensed consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires additional disclosure of the nature of expenses included in the income statement.

The standard requires disclosures about specific types of expenses included in the expense captions presented in the income statement as well as disclosures about selling expenses.

This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

The requirements should be applied on a prospective basis while 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.

Fair Value Measurement

The Company’s financial instruments measured at fair value on a recurring basis consist of Level 1 financial instruments.

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

Fair Value Measurement as of March 31, 2025

Total Level 1

Money Market Funds (included in cash and cash equivalents) $ 31,963,993 $ 31,963,993

Treasury Obligations (included in cash and cash equivalents) 11,940,160 11,940,160

Total fair value of assets in cash and cash equivalents $ 43,904,153 $ 43,904,153

Treasury Obligations (included in short-term investments) 12,802,650 12,802,650

Total fair value of assets included in short-term investments $ 12,802,650 $ 12,802,650

The amount of unrealized gain (losses) was immaterial for the three months ended March 31, 2025.

Prepaid Expenses, Other Current Assets and Liabilities

Prepaid expenses consist of the following:

As of September 30, 2024 As of December 31, 2023

Clinical expenses

$ 64,878 $ 61,352

Financial advisory service agreement

Other prepaid expenses

315,556 132,907

March 31, 2025 December 31, 2024

Prepaid clinical expenses $ 4,085 $ 13,078

Total other prepaid expenses 571,297 188,884

$ 575,382 $ 201,962

Other current assets consist of the following:

As of September 30, 2024 As of December 31, 2023

March 31, 2025 December 31, 2024

AusIndustry incentive $ 8,228 $ 8,151

4 unchanged sentences

Other current liabilities consist of the following:

As of September 30, 2024 As of December 31, 2023

March 31, 2025 December 31, 2024

Research and development costs $ 542,056 $ 325,415

Legal fees 370,359 258,213

EHT Acquisition related liabilities

Professional and consulting fees 410,512 69,468

Legal expenses 141,050 114,359

Consulting and professional fees 113,627 109,375

Other accrued liabilities 51,116 105,052

2 unchanged sentences

These judgements and estimates include assumptions regarding the Company’s future operating performance and the determination of the appropriate valuation methods.

Warrants vested and outstanding as of September 30, 2024 are summarized as follows:

Warrants vested and outstanding as of March 31, 2025, are summarized as follows:

Source Exercise

3 unchanged sentences

2016 Common Stock Warrants to Service Providers 287.50 1.58 160

2019 Common Stock Warrants 87.50 0.14 32,000

2020 Common Stock Warrants to Placement Agent 20.00 0.33 32,668

3 unchanged sentences

2021 Common Stock Warrants to Placement Agent 27.50 1.49 21,778

November 2019 EHT Common Stock Warrants 72.25 0.16 34,213

December 2019 EHT Common Stock Warrants 37.25 0.24 3,783

February 2020 EHT Common Stock Warrants 37.25 0.35 80,694

August 2023 Convertible Note Common Stock Warrants 5.16 8.38 340,000

1 unchanged sentence

January 2024 Pre-Funded Warrants Common Stock 0.001 Indefinite 8,677,166

Total warrants outstanding as of September 30, 2024 11,950,106

As of September 30, 2024, all of the Company's warrants are fully vested .

January 2024 Pre-Funded Warrants

In connection with the January 2024 PIPE Financing (as defined below), the Company issued the Pre-Funded Warrants (as defined below) (See Note 6).

The Pre-Funded Warrants have an exercise price of $ 0.001 per share, and were exercisable immediately upon issuance until exercised in full.

The gross proceeds from the issuance of these Pre-Funded Warrants was $ 22,991,015 .

The Company determined that the Pre-Funded Warrants are freestanding instruments that do not meet the definition of a liability or derivative.

The Pre-Funded Warrants are indexed to the Company’s common stock and meets all other conditions for equity classification.

Accordingly, the Pre-Funded Warrants are classified as equity and are accounted for as a component of additional paid-in capital at the time issued.

The Company also determined that the Pre-Funded Warrants should be included in the determination of basic and diluted earnings per share.

The Company’s convertible debt consists of the following:

As of December 31, 2023

Total principal value of convertible note - related party, net of discount $ 5,000,000

Unamortized debt discount ( 610,749 )

Unamortized debt issuance costs ( 17,253 )

Carrying value of total convertible debt - related party $ 4,371,998

Convertible Note - Related Party

On August 15, 2023, the Company entered into a secured note and warrant purchase agreement (the "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") (See Note 4).

The Convertible Note had an interest rate of 10 % per annum and had a fixed conversion rate of $ 5.16 .

On August 8, 2024, MFDI exercised the conversion option under the Convertible Note and converted the full principal balance of $ 5,000,000 under the Convertible Note.

This conversion resulted in the issuance of 968,973 shares of the Company's common stock and the payment of accrued interest in cash, thereby fully satisfying the Company's debt obligations to MFDI.

Accrued interest was payable quarterly within 30 days of the last day of each calendar quarter.

The debt discounts related to the warrants, and debt issuance costs, were 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 (income) expense within the Consolidated Statements of Operations.

Through the date of conversion, the Convertible Note is classified as Level 2 of the fair value hierarchy model based on market prices that can be corroborated with observable market data for the Company's common stock.

For the three and nine months ended September 30, 2024, the effective interest rate on the Convertible Note was 31.39 %.

Interest Expense (Income)

The Company’s interest expense consists of the following:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Related party interest expense – stated rate $ 53,425 $ 60,274 $ 302,741 $ 76,227

Insurance premium loan payable – stated rate — 2,162 — 5,764

Legal judgment interest (income) expense ( 384,897 ) ( 23,320 ) ( 234,751 ) 158,851

Bond premium 59,929 59,930 59,929 59,930

Premium on irrevocable letter of credit 69,297 69,861 69,297 69,861

Other interest expense — — — 3,102

Non-cash interest expense:

Amortization of debt discount 108,417 99,587 582,550 99,587

Amortization of transaction costs 3,063 2,813 16,456 2,813

$ ( 90,766 ) $ 271,307 $ 796,222 $ 476,135

Stockholders’ Equity and Capitalization

PIPE Financings

January 2024 PIPE Financing

On January 29, 2024 , the Company entered into a Securities Purchase Agreement with certain institutional investors, pursuant to which on January 31, 2024 , the Company issued an aggregate of 11,713,664 shares of common stock and 9,978,739 pre-funded warrants (the "Pre-Funded 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 $ 2.30 per 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 an exercise price of $ 0.001 .

In connection with the January 2024 PIPE Financing, the Company incurred $ 3,823,752 in direct equity issuance costs for net proceeds of $ 46,167,258 .

March 2024 PIPE Financing

On March 11, 2024, the Company entered into a Securities Purchase Agreement with certain institutional investors , 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 March 2024 PIPE Financing, the Company incurred $ 2,610,695 in direct equity issuance costs for net proceeds of approximately $ 37,389,305 .

Prefunded Warrant Exercise

On July 1, 2024, 1,301,573 pre-funded warrants issued in the January 2024 PIPE Financing with an intrinsic value of $ 10,424,294 were exercised on a cashless basis, resulting in the issuance of 1,301,410 shares of Company's common stock.

Conversion of Debt

On August 8, 2024, the Company issued 968,973 shares of common stock to MFDI upon conversion in full of the Convertible Note (see Note 5).

Total warrants outstanding as of March 31, 2025 11,799,416

As of March 31, 2025, all of the Company's warrants are fully vested .

Stock-Based Compensation

Stock Incentive Plan

On October 31, 2014, the Board of Directors of the Company ("Board") approved the Company’s 2014 Omnibus Incentive Plan.

On June 14, 2022, the Board approved the 2014 Amended and Restated Omnibus Incentive Plan (as amended, the “2014 Amended and Restated Plan”) which replaced the 2014 Omnibus Incentive Plan in its entirety.

On September 29, 2023, the Board and holders of the voting power of the outstanding capital stock of the Company adopted and approved Amendment No.

On October 31, 2014, the Board of Directors of the Company (the "Board") approved the Company’s 2014 Omnibus Incentive Plan (the "2014 Omnibus Incentive Plan").

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 Omnibus Incentive Plan in its entirety.

On September 29, 2023, the Board and holders of a majority of the voting power of the outstanding capital stock of the Company adopted and approved Amendment No.

1 to the 2014 Amended and Restated Plan.

Amendment No.

1 to the 2014 Amended and the Restated Plan became effective on November 6, 2023.

As of September 30, 2024, 2,464,345 shares were authorized for the issuance under the 2014 Amended and Restated Plan.

As of September 30, 2024, the Company had 27,578 shares available for future grant under the 2014 Amended and Restated Plan.

1 to the 2014 Amended and Restated Plan became effective on November 6, 2023.

On October 22, 2024, the second amendment and restatement of the Company's 2014 Amended and Restated Plan was approved to increase the number of shares of the Company's common stock issuable to 4,000,000 , extend the expiration date of the plan to September 10, 2034, update the name of the plan to the “Skye Bioscience, Inc.

Amended and Restated Omnibus Incentive Plan” and make certain administrative amendments (as so amended and restated, the "Amended and Restated Plan").

As of March 31, 2025, the Company had 1,170,197 shares available for future grant under the Amended and Restated Plan.

2024 Inducement Equity Incentive Plan

1 unchanged sentence

2024 Inducement Equity Incentive Plan (the "Inducement Plan").

The Inducement Plan was adopted in order to grant share-based awards to newly hired employees as an inducement to join the Company.

The terms of the Inducement Plan are substantially similar to the terms of the Company’s 2014 Amended and Restated Plan with the exception that awards may only be made to an employee who has not previously been an employee or member of the Board of Directors of the Company if the award is in connection with commencement of employment.

The Company has reserved 600,000 shares of the Company’s common stock for issuance pursuant to awards granted under the Inducement Plan.

As of September 30, 2024, the Company had 246,500 shares available for future grant under the Inducement Plan.

As of March 31, 2025, the Company had 230,500 shares available for future grant under the Inducement Plan.

Stock Options

The following is a summary of option activity under the Company’s 2014 Amended and Restated Plan and the Inducement Plan, for the nine months ended September 30, 2024:

The following is a summary of option activity under the Company’s Amended and Restated Plan and the Inducement Plan, for the three months ended March 31, 2025:

Shares Weighted

5 unchanged sentences

Forfeited ( 13,000 ) 7.56

Outstanding, September 30, 2024 1,639,354 $ 10.05 8.33 $ 158,794

Exercisable, September 30, 2024 519,839 $ 11.36 5.76 $ 71,783

*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 September 30, 2024 for those stock options for which the quoted market price was in excess of the exercise price ("in-the-money options").

The weighted-average grant-date fair value of stock options granted during the nine months ended September 30, 2024, was $ 8.82 .

The fair value of the Company's stock option grants were estimated on the date of grant using the Black-Scholes option-pricing model under the following assumptions:

Nine Months Ended

September 30, 2024

Outstanding, March 31, 2025 4,235,512 $ 6.32 9.03 $ —

Exercisable, March 31, 2025 979,924 $ 9.42 7.26 $ —

*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 March 31, 2025 for those stock options for which the quoted market price was in excess of the exercise price ("in-the-money options").

The weighted-average grant-date fair value of stock options granted during the three months ended March 31, 2025, was $ 2.11 .

The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model under the following assumptions:

Three Months Ended

March 31, 2025

Dividend yield 0.00 %

3 unchanged sentences

Restricted Stock Units

On February 29, 2024, the Company granted restricted stock units ("RSUs") to its executive management team and to certain members of the Board with market-based vesting conditions.

The RSUs are eligible to vest subject to the achievement and attainment of certain market capitalization target goals and share price targets (market-based vesting conditions).

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 market-based RSUs were estimated on the date of grant under the following assumptions:

Nine Months Ended

September 30, 2024

Dividend yield 0.00 %

Volatility factor 93.71 %

Risk-free interest rate 4.16 %

Derived service periods (years)

On August 22, 2024, the Board approved a modification to the terms of the RSUs issued on August 25, 2023, and September 29, 2023 to its executive management team and to a member of the Board.

The vesting condition was modified from a performance-based condition to a market-based condition.

Since the performance condition under the original award was improbable of being met at the time of the modification, no expense was previously recognized.

Therefore, on the modification date, the Company established a new fair value and will recognize the expense over the derived service period.

The Company used the Monte Carlo Simulation model to evaluate the derived service period and fair value of the awards.

The fair value of the Company's market-based RSUs were estimated on the modification date under the following assumptions:

Nine Months Ended

September 30, 2024

Dividend yield 0.00 %

Volatility factor 94.3 %

Risk-free interest rate 3.76 %

Derived service periods (years) 2.11

The following is a summary of RSU activity during the period ended September 30, 2024 :

Shares Weighted Average Grant Date Fair Value

The following is a summary of restricted stock unit activity during the year ended March 31, 2025:

Shares Weighted

Exercise Price

Unvested, December 31, 2024 503,113 $ 9.62

Granted 290,000 13.87

Unvested, September 30, 2024 1,137,777 $ 6.26

Common Stock Issued for Services

Additionally, during the nine months ended September 30, 2024, the Company issued 5,000 shares of common stock to a service provider as compensation for services provided.

Such shares were issued in a private placement outside of the Company's equity incentive plans.

Unvested, March 31, 2025 503,113 $ 9.62

Stock-Based Compensation Expense

The Company recognizes stock-based compensation expense using the straight-line method over the requisite service period or derived service period.

The Company recognized stock-based compensation expense for the stock options and the RSUs discussed above, in its Unaudited Condensed Consolidated Statements of Operations as follows:

The Company recognized stock-based compensation expense for the stock options and the restricted stock units ("RSUs") discussed above, in its Unaudited Condensed Consolidated Statements of Operations as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Research and development $ 489,588 $ 391,611

1 unchanged sentence

$ 2,201,909 $ 2,478,179

During the nine months ended September 30, 2024, the first three market-based vesting conditions of the RSUs granted in August and September 2023 were met.

Stock Compensation Adjustments Related to Board Member Resignations

On July 2, 2024, the Board accepted the resignations of several Board members effective August 1, 2024.

Concurrently, the Board approved a modification to the option awards granted such Board members, which modification accelerated the vesting of all unvested options as of the resignation date and extended the post-termination exercise period to December 31, 2025.

As a result of the modification, the Company recognized $ 274,019 in incremental stock compensation expense during the three and nine months ended September 30, 2024.

The total amount of unrecognized compensation cost was $ 11,758,346 as of September 30, 2024.

The total amount of unrecognized compensation cost was $ 15,034,895 as of March 31, 2025.

This amount will be recognized over a weighted average period of 2.75 years.

2022 Employee Stock Purchase Plan

In June 2022, the Board approved the 2022 Employee Stock Purchase Plan (the "ESPP"), under which the Company may offer eligible employees the option to purchase common stock at a 15 % discount to the lower of the market value of the stock at the beginning or end of each participation period under the terms of the ESPP.

Total individual purchases in any year are limited to 15 % of compensation.

The ESPP was approved by the Company's stockholders on September 30, 2022.

As of March 31, 2025, no shares were issued under the ESPP.

The compensation expense, computed using the Black-Scholes model was immaterial.

Loss Per Share of Common Stock

1 unchanged sentence

Three Months Ended

September 30, (Unaudited) Nine Months Ended

September 30, (Unaudited)

2024 2023 2024 2023

Basic EPS and diluted EPS:

2 unchanged sentences

Shares (Denominator)

Weighted average common shares outstanding, including shares issuable upon the exercise of pre-funded warrants

38,819,387 7,880,546 35,317,352 5,207,411

Weighted average common shares outstanding 39,651,888 27,999,901

Per-Share Amount $ ( 0.28 ) $ ( 0.18 )

1 unchanged sentence

Three Months Ended

September 30, (Unaudited) Nine Months Ended

September 30, (Unaudited)

2024 2023 2024 2023

Stock options 4,235,512 1,201,398

1 unchanged sentence

Unvested restricted stock units 503,113 503,444

513,446 843,110 513,446 843,110

Common shares underlying convertible debt

— 980,673 — 980,673

Unvested restricted stock — 5,000

Convertible debt — 968,922

Contingencies

15 unchanged sentences

In March of 2023, the Company appealed the judgment in the Cunning Lawsuit to the United States Court of Appeals for the Ninth District (the "Ninth Circuit").

Subsequent to quarter end, on October 22, 2024, the Ninth Circuit issued its decision in the Company's favor which vacated the judgment and remanded the case back to the District Court for a new trial.

As a result, the Company will be able to recover the $ 9,080,202 restriction on its cash related to the bond.

Skye Bioscience, Inc.

vs Partner Re Ireland Insurance

In February 2023, the Company brought a suit against the Company's D&O insurance 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 "Partner Re 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.

On June 20, 2023, the court issued a ruling in favor of the Company and denied Partner Re's motion to dismiss the Company's lawsuit.

In April 2024, the Company filed a motion for judgment on the pleadings.

In June of 2024, the court granted in part and denied in part the Company's motion for judgment on the pleadings.

The court granted the Company's motion for judgment on the pleadings with respect to Partner Re's affirmative defense related to whether the Cunning Lawsuit constituted a “Securities Claim” as defined in the Partner Re policy, rejecting what had been Partner Re's primary basis for denying coverage.

The Company is pursuing up to $ 5,000,000 in coverage less the deductible to cover legal expenses incurred and any potential loss incurred from the Cunning Lawsuit.

Estimate for accrued legal contingencies and related expenses

Following the Ninth Circuit's favorable decision and the Company's mediation efforts with PartnerRe, a change in estimate for legal contingencies was recorded.

As of September 30, 2024, the Company has reversed the accrued interest on the original judgment and adjusted its potential loss for accrued legal contingencies and related expenses, which includes legal accruals and all other costs related to its ongoing litigation matters.

Management uses significant judgment in developing its estimates related to legal contingencies and loss recoveries.

These adjustments are based on the evaluation of case history, mediation efforts, the facts of the cases and take into consideration both future potential judgment amounts, damages and potential attorney fee awards if the cases were to be retried.

On October 22, 2024, the Ninth Circuit issued its decision in the Company's favor which vacated the judgment and remanded the case back to the District Court for a new trial.

As a result, the Company recovered the $ 9,080,202 restriction on its cash related to the bond during the year ended December 31, 2024.

The new trial is currently scheduled to be held in September 2025.

During the year ended December 31, 2024, management revised its assumptions related to its estimate of the legal contingency and the the Company reversed the accrued interest on the original judgment and recognized a gain of $ 4,234,717 in change in estimate for legal contingencies.

As of March 31, 2025, the estimated legal contingency, including accrued legal expenses, is $ 1,913,003 .

In arriving at the conclusion that a significant portion of the estimated legal contingency should be reversed, the Company considered the following in revising its assumptions:

• advice from external advisors including its technical accounting advisors regarding the appropriate application of GAAP and legal counsel’s advice with regard to prior experience with similar cases,

• the damages and potential attorney fee awards if the case were to be retried, including the likelihood of a subsequent loss if the Company were to be unsuccessful, while giving consideration to the facts and circumstances that would be inadmissible due to the Ninth Circuit’s decision,

• the likelihood of settlement and information obtained during settlement discussions prior to the first trial,

• the Company’s possible defenses and counterclaims, and

• the case history and the amount of the prior judgment.

The final amount of the loss and loss recoveries remain uncertain.

1 unchanged sentence

The Company believes that it is at least reasonably possible that the estimated amount of the potential loss may change in the near term.

Segment Reporting

The Company operates in one business segment, which includes the business of research and development activities related to developing medicine for obesity and other metabolic diseases.

The determination of a single business segment is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (“CODM”).

The Company’s CODM is its Chief Executive Officer, who reviews and evaluates consolidated net loss for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods.

In addition to the significant expense categories included within consolidated net loss presented on the Company's Consolidated Statements of Operations, see below for disaggregated amounts that comprise research and development expenses which are presented to the Company's CODM for review:

Three Months Ended

External clinical development expenses (1)

SBI-100 $ 5,408 $ 860,694

nimacimab 5,184,865 129,120

Personnel related and stock-based compensation 1,337,958 811,789

Other research and development expenses (2)

669,026 144,847

Total research and development expenses $ 7,197,257 $ 1,946,450

(1) External clinical development expenses include expenses for clinical trial costs and clinical manufacturing, as well as costs for discovery in research and development studies.

(2) Other research and development expenses include expenses for travel and entertainment, consulting and advisory and general business expenses.

The amount of property and equipment in the US was equal to $ 81,180 and $ 144,006 for March 31, 2025, and December 31, 2024 , respectively.

The amount of property and equipment outside of the US was equal to $ 1,222,967 , and $ 1,522,258 for March 31, 2025, and December 31, 2024 , respectively.

Subsequent Events

Approval of Amended and Restated Omnibus Incentive Plan

On October 22, 2024, the Company's stockholders voted to approve the second amendment and restatement of the Company's Amended and Restated 2014 Omnibus Incentive Plan to increase the number of shares of the Company's common stock issuable thereunder by 1,535,655 to increase the number of incentive stock options that may be granted thereunder to 4,000,000 , extend the expiration date of the plan to September 10, 2034, update the name of the plan to the “Skye Bioscience, Inc.

Amended and Restated Omnibus Incentive Plan” and make certain administrative amendments (as so amended and restated, the "Amended and Restated Plan").

Stock Option Grants

Subsequent to September 30, 2024, the Company granted an aggregate of 1,456,400 common stock options to members of management, employees and directors under the Amended and Restated Plan.

San Francisco Office Lease

On September 25, 2024, the Company entered into a new lease agreement for approximately 2,077 square feet of office space located at 632 Commercial Street, 5th Floor, San Francisco, California 94111.

The lease has a term of three years and two months , beginning on October 1, 2024, with a monthly rent of $ 9,000 and annual increases of 3 %.

This office space will support our continued growth and operational needs as we expand our development activities.

No material changes to our financial position are anticipated as a result of this lease.

Legal Contingencies

See Note 9 for disclosure of the recognized subsequent event related to our estimate for legal contingencies.

Subsequent to March 31, 2025 , the Company granted an aggr egate of 119,000 optio ns to purchase common stock to its employees under the Inducement Plan.

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-Q

Item 1. Financial Statements