What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2026-03-10 compared with 2025-03-20 · 257 added, 392 removed, 770 unchanged (46% of the section changed)

13 unchanged sentences

Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, with the supervision and participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2024, based on criteria for effective internal control over financial reporting set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework - 2013 (COSO 2013 Framework).

Our management, with the supervision and participation of our Chief Executive Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2025, based on criteria for effective internal control over financial reporting set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework - 2013 (COSO 2013 Framework).

Based on their assessment, our management concluded that, as of December 31, 2025, our internal control over financial reporting was effective.

3 unchanged sentences

Other Information.

2025 Annual Meeting of Stockholders

We currently intend to hold our 2025 annual meeting of stockholders (the “2025 Annual Meeting”) on June 6, 2025.

Our Amended and Restated Bylaws (“Bylaws”) provide notice procedures for stockholders to nominate a person as a director and to propose business to be considered by stockholders at an annual meeting of stockholders.

A stockholder’s notice must be delivered in writing to the Secretary of the Company at Skye Bioscience, Inc., 11250 El Camino Real, Suite 100, San Diego, CA 92130 and must set forth, as to each matter the stockholder proposes to bring before the annual meeting, the information required by our Bylaws.

In order to be timely, a stockholder’s notice must be delivered to the Secretary of the Company not later than the close of business on the 90th day nor earlier than the opening of business on the 120th day prior to the first anniversary of the date for the preceding year’s annual meeting of stockholders;

provided that in the event that the date of the annual meeting is more than 30 days before or more than 70 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or the 10th day following the day on which public announcement (as defined in the Bylaws) of the date of such annual meeting is first made by the Company.

Because we did not hold an annual meeting of stockholders in the year ended December 31, 2024 (“2024 Annual Meeting”), in order to be timely, a stockholder’s notice must be delivered, as set forth above, not earlier than the close of business on February 6, 2025 and not later than the close of business on March 30, 2025.

Stockholders who intend to solicit proxies in support of director nominees, other than the Company’s nominees, must also provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act.

In addition, because we did not hold a 2024 Annual Meeting, stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act and intended to be presented at the 2025 Annual Meeting must be delivered, as set forth above, a reasonable time before the Company begins to print and send its proxy materials for the 2025 Annual Meeting in order to be considered for inclusion in the Company’s proxy materials for that meeting.

For purposes of the foregoing, we have determined that March 30, 2025 is a reasonable time before the Company intends to begin printing and sending its proxy materials for the 2025 Annual Meeting.

Director and Officer Trading Arrangements

On December 17, 2024 , each of 5AM Partners VII, LLC (the general partner of 5AM Ventures VII, L.P.) and 5AM Partners II, LLC (the general partner of 5AM Ventures II, L.P.

and 5AM Co-Investors II, L.P.) entered into a Stock Sale Plan (the " 10b5-1 Plan ") with Piper Sandler & Co.

("Piper Sandler"), pursuant to which Piper Sandler is authorized to sell up to an aggregate of 2,000,000 shares of Common Stock on behalf of 5AM Partners VII, LLC and 5AM Partners II, LLC during the period beginning on the later of (i) March 17, 2025 and (ii) two business days after filing the Issuer's Form 10-K for the year ending December 31 (but no later than April 16, 2025), and ending December 17, 2025 , subject to earlier termination in accordance with the terms of the 10b5-1 Plan and applicable laws, rules and regulations.

Transactions under the 10b5-1 Plan will be subject to certain price restrictions and other restrictions under the terms of the 10b5-1 Plan.

The 10b5-1 Plan is intended to comply with the requirements of Rule 10b5-1(c) promulgated under the Act.

Andrew Schwab, a member of the Board of Directors of the Company, is a managing member of each of 5AM Partners VII, LLC and 5AM Partners II, LLC and may be deemed to share voting and investment power over the shares held by 5AM Partners VII, LLC and 5AM Partners II, LLC.

On December 12, 2025 , 5AM Partners II, LLC (the general partner of 5AM Ventures II, L.P.

and 5AM Co-Investors II, L.P.) adopted a Rule 10b5-1 trading plan with Piper Sandler & Co.

(“Piper Sandler”).

5AM Partners II, LLC’s Rule 10b5-1 trading plan (the “10b5-1 Plan”) is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) and provides for the potential sale by Piper Sandler of up to 1,514,557 shares of the Company’s common stock from the 10b5-1 Plan’s effective date of January 11, 2026 until its termination date of November 16, 2026 , subject to earlier termination in accordance with the terms of the 10b5-1 Plan and applicable laws, rules and regulations.

Andrew Schwab is a member of the Board of Directors of the Company and a managing member of 5AM Partners II, LLC, with shared voting and investment power over the shares in the 10b5-1 Plan.

Schwab disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein.

3 unchanged sentences

Directors, Executive Officers and Corporate Governance .

Information required by this item will be contained in our definitive Proxy Statement to be filed with the Securities and Exchange Commission on Schedule 14A in connection with our 2025 Annual Meeting (the "Proxy Statement"), which is expected to be filed not later than 120 days after the end of our fiscal year ended December 31, 2024, under the headings “Executive Officers,” “Election of Directors,” “Information Regarding the Board of Directors and Corporate Governance,” and “Delinquent Section 16(a) Reports,” and is incorporated herein by reference.

Information required by this item will be contained in our definitive Proxy Statement to be filed with the Securities and Exchange Commission on Schedule 14A in connection with our 2026 Annual General Meeting of shareholders (the "Proxy Statement"), which is expected to be filed not later than 120 days after the end of our fiscal year ended December 31, 2025, under the headings “Executive Officers,” “Election of Directors,” “Information Regarding the Board of Directors and Corporate Governance,” and “Delinquent Section 16(a) Reports,” and is incorporated herein by reference.

We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees, including our principal executive officer and principal financial officer.

A current copy of the code is posted on the Investor Relations——Corporate Governance section of our website, which is filed with this Annual Report as Exhibit 20.

We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of this Code of Business Conduct and Ethics by posting such information on our website, at the address and location specified above and, to the extent required by the listing standards of the Nasdaq Global Select Market, by filing a Current Report on Form 8-K with the SEC, disclosing such information.

We have adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of our securities by directors, officers, and employees that are designed to promote compliance with insider trading laws, rules, and regulations, and applicable Nasdaq listing standards, as well as procedures designed to further the foregoing purposes.

A copy of our insider trading policy is filed with this Annual Report as Exhibit 19.

Executive Compensation .

9 unchanged sentences

Financial Statements.

The following consolidated financial statements of Skye Bioscience, Inc., together with the report thereon of Marcum LLP, an independent registered public accounting firm (PCAOB Firm No.

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

199 ) and Marcum LLP, an independent registered public accounting firm (PCAOB Firm No.

688 ), are included in this Annual Report.

2 unchanged sentences

Reports of Independent Registered Public Accounting Firm (PCAOB ID 199)

Reports of Independent Registered Public Accounting Firm (PCAOB I D 688 )

Consolidated Balance Sheets as of December 31, 202 5 and 2024

1 unchanged sentence

Consolidated Statements of Cash Flows for the years ended December 31, 202 5 and 20 24

Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2024 and 2023

Notes to the C onsolidated F inancial S tatements

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 202 5 and 20 24

Notes to the Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

Opinion on the Financial Statements

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

and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, based on our audits, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

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

and Subsidiaries (the “Company”) as of December 31, 2025, the related consolidated statements of operations, stockholders’ equity and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”).

In our opinion, based on our audit, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, 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 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.

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 audits.

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

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 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.

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.

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.

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.

Accordingly, we express no such opinion.

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.

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.

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

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 provide a reasonable basis for our opinion.

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

2 unchanged sentences

We determined that there are no critical audit matters.

/s/ CBIZ CPAs P.C.

CBIZ CPAs P.C.

We have served as the Company's auditor since 2022 (such date takes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C.

effective November 1, 2024).

Morristown, New Jersey

March 10, 2026

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders 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.

and Subsidiaries (the “Company”) as of December 31, 2024 , the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the year ended December 31, 2024 , 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, 2024 , and the results of its operations and its cash flows for the year then ended, 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.

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.

/s/ Marcum LLP

We have served as the Company's auditor since 2022.

Morristown, NJ

We have served as the Company's auditor from 2022 to 2025.

Morristown, New Jersey

March 20, 2025

6 unchanged sentences

$ 5,882,498 $ 68,415,741

Restricted cash — 9,080,202

Short-term investments 19,854,723 —

Prepaid expenses 504,890 201,962

7 unchanged sentences

Total assets $ 28,313,633 $ 72,763,773

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable $ 2,033,431 $ 569,252

Accrued interest - related party — 126,027

Accrued interest - legal contingency

Accrued payroll liabilities 1,269,474 1,114,255

2 unchanged sentences

2,069,067 1,818,751

Convertible note - related party, net of discount

Operating lease liability, current portion 189,647 182,428

4 unchanged sentences

Commitments and contingencies (Note 12)

Stockholders’ equity (deficit)

Stockholders’ equity

Preferred stock, $ 0.001 par value;

7 unchanged sentences

Accumulated deficit ( 186,874,486 ) ( 130,949,672 )

Total stockholders’ equity (deficit)

Total stockholders’ equity

20,024,175 68,151,724

Total liabilities and stockholders’ equity (deficit)

Total liabilities and stockholders’ equity

$ 28,313,633 $ 72,763,773

6 unchanged sentences

Research and development $ 42,361,879 $ 18,701,694

Cost to acquire IPR&D asset

General and administrative 15,801,686 17,725,741

6 unchanged sentences

Interest income ( 1,883,903 ) ( 3,028,762 )

Wind-down costs — 409,347

(Gain) loss from asset sale ( 1,358,412 ) 307,086

Debt conversion inducement expense — 1,383,285

Other expense (income) 2,200 ( 3 )

Gain from asset sale ( 360,750 ) ( 1,358,412 )

Other expense 502 2,200

Total other (income) expense, net ( 2,244,151 ) ( 3,635,666 )

15 unchanged sentences

Net loss $ ( 55,924,814 ) $ ( 26,567,123 )

Adjustments to reconcile net loss to net cash, cash equivalents and restricted cash used in operating activities:

Adjustments to reconcile net loss to net cash, cash equivalents used in operating activities:

Write-down of vendor deposits

Depreciation and amortization 723,352 298,640

Net loss (gain) on disposal of asset

10,794 ( 4,080 )

Net loss on disposal of asset

Stock-based compensation expense 7,767,694 8,317,480

Change in fair value of derivative liability — ( 3 )

Amortization of debt discount

599,006 329,890

Change in estimate for legal contingencies

— ( 4,234,717 )

(Gain) loss from divestiture of asset

Gains from asset sales

( 360,750 ) ( 1,358,412 )

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

Accounts payable 1,395,428 ( 586,533 )

Accounts payable – related parties — ( 124,901 )

Accrued interest – related party — ( 126,027 )

3 unchanged sentences

Other current liabilities 2,308,706 ( 344,351 )

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

Operating lease liability ( 181,944 ) ( 94,442 )

Net cash, cash equivalents and restricted cash used in operating activities

Net cash, cash equivalents used in operating activities

( 43,062,529 ) ( 25,237,480 )

2 unchanged sentences

360,750 1,358,412

Purchase of short-term investment ( 19,854,723 ) —

Purchases of property and equipment ( 6,312 ) ( 1,604,027 )

Cash acquired in asset acquisition

Net cash cash equivalents and restricted cash (used in) provided by investing activities

Net cash, and cash equivalents used in investing activities

( 19,500,285 ) ( 245,615 )

Cash flows from financing activities:

Proceeds from PIPE financing, net of $ 6,434,447 and $ 265,053 issuance costs, respectively

83,556,563 11,734,947

Proceeds from convertible note - related party

Financing costs allocated to warrants issued with convertible debt

Proceeds from options exercises

Repayment of loan payable — ( 259,335 )

Net cash, and cash equivalents and restricted cash provided by financing activities

83,562,181 16,443,270

Net increase in cash and cash equivalent and restricted cash

Proceeds from PIPE financing, net of $ 6,434,447 of issuance costs

Purchase under employee stock purchase plan 29,571 —

Proceeds from option exercises — 5,618

Net cash, and cash equivalents provided by financing activities

29,571 83,562,181

Cash, cash equivalents and restricted cash , beginning of year

Net increase in cash and cash equivalents

( 62,533,243 ) 58,079,086

Cash, cash equivalents and restricted cash, end of year

Cash, cash equivalents , beginning of year

$ 68,415,741 $ 10,336,655

Supplemental disclosures of cash-flow information:

Reconciliation of cash and cash equivalent and restricted cash:

Cash and cash equivalent

Cash, cash equivalents, end of year

$ 5,882,498 $ 68,415,741

Restricted cash — 9,080,202

Total cash and cash equivalent and restricted cash shown in the consolidated statements of cash flows $ 68,415,741 $ 10,336,655

Cash paid during the year for:

2 unchanged sentences

Supplemental disclosures of non-cash financing activities:

Financing of insurance premium $ — $ 203,884

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 $ — $ 306,764

Stock issued for assets — 20,532,846

Conversion of convertible note - related party — 4,971,004

11 unchanged sentences

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

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

Exercise of common stock warrants 66,566 67 282,839 — 282,906

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 )

Issuance of Common Stock and Warrants, net of equity issuance costs $ 6,434,447

6 unchanged sentences

Balance, December 31, 2024 30,974,559 $ 30,975 $ 199,070,421 $ ( 130,949,672 ) $ 68,151,724

Stock-based compensation expense 10,625 11 7,767,683 — 7,767,694

Purchases under employee stock purchase plan 18,461 18 29,553 — 29,571

Exercise of pre-funded warrants 2,374,494 2,375 ( 2,375 ) — —

Net loss for the year ended December 31, 2025 — — — ( 55,924,814 ) ( 55,924,814 )

Balance, December 31, 2025 33,378,139 $ 33,379 $ 206,865,282 $ ( 186,874,486 ) $ 20,024,175

See accompanying notes to the 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, overweight and metabolic diseases.

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 (the "BRB Merger Agreement"), 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, Inc.

changed its name from Bird Rock Bio, Inc.

to Bird Rock Bio Sub, Inc.

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 (See Note 3 to the accompanying consolidated financial statements).

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 December 31, 2025, 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 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, 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.

Liquidity and Going Concern

The Company has incurred operating losses and negative cash flows from operations since inception and as of December 31, 2025, had a working capital of $ 18,888,688 and an accumulated deficit of 186,874,486 .

As of December 31, 2025, the Company had unrestricted cash, cash equivalents and short-term investments in the amount of $ 25,737,221 .

For the years ended December 31, 2025 and 2024, the Company incurred losses from operations of $ 58,163,565 and $ 30,192,718 , respectively.

For the years ended December 31, 2025 and 2024, the Company incurred net losses of $ 55,924,814 and $ 26,567,123 , respectively.

The Company expects to continue to incur significant losses and negative cash flows from operations through 2026 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 is continuing its clinical trials, it has increased research and development spending and increased cash used in operating activities.

This factor, among others, has resulted in an overall increase in cash used in operating activities for the year ended December 31, 2025.

As of the date that these financials are filed, management estimates that the Company has sufficient capital to continue its operations through the fourth quarter of 2026, excluding the anticipated clinical cost of a proposed Phase 2b study and additional anticipated drug manufacturing costs to supply any such Phase 2b study.

However, the Company's continued operations beyond the fourth quarter of 2026 will depend on its ability to successfully raise additional capital through various potential sources, such as equity and/or debt financings, or strategic relationships.

If adequate funds are not available to the Company when needed it will be required to curtail or perhaps cease operations which would, in turn, further raise substantial doubt about its ability to continue as a going concern.

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 these financial statements are issued.

It is possible that the Company may encounter 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 judgments and financial projections include travel bans, restrictions, government assistance and potential sources of replacement financing, financial health of service providers and the general economy.

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.

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 these financial statements are issued.

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

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 and other current assets on the Company's consolidated balance sheet, and consolidated statement of cash flows, the classification of legal costs and accruals as part of the estimate for accrual for legal contingencies and related expenses on the Company's consolidated balance sheet, and consolidated statement of cash flows and change in fair value of derivative liability and interest expense on the consolidated statement of operations.

Such reclassifications did not have a material impact on the consolidated financial statements.

Assets Held for Sale

On November 10, 2022, the Company completed the acquisition of Emerald Health Therapeutics ("EHT") (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 Verdélite Sciences, Inc.

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 to the accompanying consolidated financial statements).

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.

Due to the asset acquisition accounting on the date of the EHT Acquisition, Avalite Sciences, Inc.

("AVI") had no initial carrying value.

Refer to Note 3 of the accompanying consolidated financial statements for further information.

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.

Certain reclassifications have been made to the amounts in prior periods to conform to the current period’s presentation, including reclassifying discovery research and development expense amounts from external clinical development expenses into other research and development expenses, as described in Note 13, Segment Reporting.

Such reclassifications did not have a material impact on the accompanying unaudited condensed consolidated financial statements.

Principles of Consolidation

The accompanying consolidated financial statements as of December 31, 2024, include the accounts of the Company and its wholly owned subsidiaries SKYE Bioscience Australia, EHT, BRB, Ruiyi Acquisition Corporation, and Nemus Sub.

The accompanying consolidated financial statements as of December 31, 2025, include the accounts of the Company and its wholly owned subsidiaries SKYE Bioscience Australia, EHT, BRB and Nemus Sub.

All intercompany accounts and transactions have been eliminated in consolidation.

2 unchanged sentences

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 judgements used in determining stock based compensation expense, estimated legal contingencies 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.

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, estimated legal contingencies and estimates related to the vendors' percentage of completion under its research and development contracts, which are not readily apparent from other sources.

Risks and Uncertainties

The Company’s operations are subject to a number of risks and uncertainties, including but not limited to, changes in the general economy, the size and growth of the potential market for the Company’s product candidates, uncertainties related to the current global environment, including economic factors such as inflation, and risks related to the global supply chain disruptions (Note 1), risks related to operating in a virtual environment, results of research and development activities, uncertainties surrounding regulatory developments in the United States, Canada, the European Union, and Australia and the Company’s ability to attract new funding.

Cash, Cash Equivalents and Restricted Cash

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

2 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, 2024 there is no restricted cash on the balance sheet (refer to Note 11).

As of December 31, 2023, restricted cash on the balance sheet collateralized an irrevocable letter of credit.

Property and Equipment, net

23 unchanged sentences

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.

Convertible Instruments

The Company adopted ASU 2020-06.

Since the adoption of ASU 2020-06, the Company recorded its convertible debt at face value less unamortized issuance costs.

Issuance costs are amortized to Interest expense in its Consolidated Statements of Operations using the effective interest method over the expected term of the convertible debt.

The Company assesses the short-term and long-term classification of its convertible debt on each balance sheet date.

Whenever the holders have a contractual right to convert, the carrying amount of the convertible debt is reclassified to current liabilities.

Warrants Issued in Connection with Financings

1 unchanged sentence

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

Discounts related to bifurcated derivatives, freestanding instruments issued in bundled transactions, and issuance costs are recorded as a reduction to the carrying value of the debt and amortized over the life of the debt using the effective interest method.

The Company makes changes to the effective interest rate, as necessary, on a prospective basis.

Research and Development Expenses and Licensed Technology

7 unchanged sentences

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

13 unchanged sentences

Diluted loss per share of common stock is computed by giving effect to all potential common stock equivalents outstanding for the period determined using the treasury stock method.

For purposes of this calculation, options to purchase common stock, restricted stock subject to vesting, restricted stock units, warrants to purchase common stock and common shares underlying convertible debt instruments are considered to be common stock equivalents.

For purposes of this calculation, options to purchase common stock, restricted stock units and warrants to purchase common stock are considered to be common stock equivalents.

In periods with a reported net loss, such common stock equivalents are excluded from the calculation of diluted net loss per share of common stock if their effect is anti-dilutive.

9 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 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.

If the screen is met, the transaction is accounted for as an asset acquisition.

If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs which would meet the definition of a business.

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.

For asset acquisitions, a cost accumulation model is used to determine the cost of an asset acquisition.

Common stock, warrants and options issued as consideration in an asset acquisition are generally measured based on the acquisition date fair value of the equity interests issued.

The Company refers to ASC 718 and utilizes a Black-Scholes Model to value the options and warrants issued is an asset acquisition and includes the fair value of such awards in the purchase consideration.

Direct transaction costs are recognized as part of the cost of an asset acquisition.

The Company also evaluates which elements of a transaction should be accounted for as a part of an asset acquisition and which should be accounted for separately.

Consideration deposited into escrow accounts are evaluated to determine whether it should be included as part of the cost of an asset acquisition or accounted for as contingent consideration.

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.

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.

Any difference between the cost of an asset acquisition and the fair value of the net assets acquired is allocated to the non-monetary identifiable assets based on their relative fair values.

However, as of the date of acquisition, if certain assets are carried at fair value under other applicable GAAP the consideration is first allocated to those assets with the remainder allocated to the non-monetary identifiable assets based on a relative fair value basis.

Government Assistance

4 unchanged sentences

The total tax rebates received under the AusIndustry incentive program were $ 0 for the year ended December 31, 2025 related to incentives earned in the prior year and $ 493,362 for the year ended December 31, 2024.

As of December 31, 2024 and 2023, the Company has recognized $ 8,151 and $ 540,604 , respectively, in other current assets in its Consolidated Balance Sheets.

Foreign Currency Translation

The Company’s reporting currency and the functional currency of its foreign subsidiaries is the United States dollar.

The local currencies of its foreign subsidiaries are the Canadian Dollar (“CAD”) or Australian dollar (“AUD”).

The local currencies of its foreign subsidiaries are the Canadian Dollar (“CAD”) and Australian dollar (“AUD”).

Assets and liabilities are remeasured based on the exchange rates at the balance sheet date 0.7305 for the CAD, 0.6703 for the AUD as of December 31, 2025 and 0.6952 for the CAD and 0.623 for the AUD as of December 31, 2024, while expense accounts are remeasured at the weighted average exchange rate for the period 0.7249 for the CAD and 0.6645 for the AUD for the year ended December 31, 2025 and 0.7023 for the CAD and 0.6342 for the AUD as of December 31, 2024.

1 unchanged sentence

The resulting remeasurement adjustments are recognized in general and administrative expenses in the consolidated financial statements.

During the years ended December 31, 2024 and 2023, the Company recorded foreign currency remeasurements of $ 148,023 and $ 61,767 , respectively, which are reflected in general and administrative expenses in the accompanying Consolidated Statements of Operations.

During the years ended December 31, 2025 and 2024, the Company recorded foreign currency remeasurement gain of $ 96,190 and a loss of $ 148,023 , 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.

During the years ended December 31, 2024 and 2023, the Company recorded foreign currency transaction loss of $ 49,986 and gain of $ 9,143 , respectively, which is reflected in the general and administrative expenses in the accompanying consolidated statement of operations.

During the years ended December 31, 2025 and 2024, the Company recorded foreign currency transaction loss of $ 1,085,098 and gain of $ 49,984 , respectively, which is reflected in the loss from operations in the accompanying consolidated statement of operations.

Commitments and Contingencies

10 unchanged sentences

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.

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):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

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.

The adoption of this standard did not have an impact on the Company's consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, S egment Reporting (Topic 280) :

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, S egment Reporting (Topic 280) :

Improvements to Reportable Segment Disclosures.

9 unchanged sentences

See Segment Note 13.

Recent Accounting Pronouncements Not Yet Adopted

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

In December 2023, the 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 is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures.

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ("ASU") 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

The Company adopted this ASU as of January 1, 2025, and the related disclosure, a tabular reconciliation of the provision for income taxes to the amount computed, is described in Note 11.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued Accounting Standards Update ("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.

3 unchanged sentences

The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures.

Asset Acquisitions and Dispositions

BRB Acquisition

On August 18, 2023, the Company acquired BRB pursuant to the BRB Merger Agreement.

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

Pursuant to the BRB Acquisition, the Company issued 3,872,184 shares of 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 (as defined in Note 7).

Because the August 2023 PIPE Financing and the 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.

In December 2025, the FASB issued ASU 2025-11 – Interim Reporting (“ASU 2025-11”) which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies.

Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP.

ASU 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity.

ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted.

The Company is currently evaluating the impact the adoption of ASU 2025-11 may have on the Company’s consolidated financial statements and disclosures.

In December 2025, the FASB issued its final Accounting Standard Update ("ASU") which makes improvements to the Accounting Standards Codification ("ASC") in response to feedback from stakeholders.

This standard, issued as ASU 2025-12, specifically updates the ASC for a broad range of topics arising from technical corrections, unintended application of the ASC, clarifications, and other minor improvements.

This update is effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual reporting periods.

The Company is currently evaluating the effect of this guidance on its financial statements and related disclosures.

Fair Value Measurement

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:

Fair Value Measurement as of December 31, 2025

Hierarchy Total

Money market funds (included in cash and cash equivalents) Level 1 $ 1,461,609

treasury obligations (included in short-term investments) Level 1 19,854,723

Total cash equivalents and marketable securities $ 21,316,332

Assets Acquisitions and Dispositions

Acquisition of Emerald Health Therapeutics, Inc.

As of December 31, 2024 the Company has divested both of EHT's former operating entities, and the divestiture of substantially all of EHT's assets, including the real estate held by AVI, is complete.

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 “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 of December 31, 2024 the Company has divested both of EHT's former operating entities, and the divestiture of substantially all of EHT's assets, including the real estate held by AVI.

Sale of real estate

1 unchanged sentence

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 year ended December 31, 2024, the Company recorded a gain of $ 1,145,141 as a (Gain) Loss from Asset Sales within the Other Income and Expense section of the Company's Consolidated Statements of Operations.

As a result of the sale of the AVI building, for the year ended December 31, 2024, the Company recorded a gain of $ 1,145,141 as a Gain from Asset Sales within the Other Income and Expense section of the Company's Consolidated Statements of Operations.

Divestiture of VDL, Release and Discharge Agreement

On November 10, 2022, EHT and C3 Centre Holding Inc., a third-party, entered into a share purchase agreement, executed as of November 8, 2022, as amended (the " Verdélite SPA") 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 , with the remainder of the purchase price to be paid in accordance with an installment schedule as determined by 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.

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

On July 17, 2024, the Company entered into a transaction, release and discharge agreement with the purchaser of Verdelite Sciences, Inc.

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.

1 unchanged sentence

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

Upon signing the transaction, release and discharge agreement, the Company received the first ins tallment payment of $ 213,404 recorded as a (Gain) Loss from Asset Sales within the Other Income and Expense section of the Company's Consolidated Statement of Operations.

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

Property and equipment, net consists of the following:

As of December 31

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

Furniture and fixtures

Computer equipment 96,744 46,732

Leasehold improvements 23,918 13,954

Total property and equipment, gross 1,666,265 138,710

accumulated depreciation and amortization

( 233,513 ) ( 95,434 )

Total property and equipment, net $ 1,432,752 $ 43,276

Depreciation and amortization expense for the twelve months ended December 31, 2024 and twelve months ended December 31, 2023 was $ 203,757 and $ 49,909 , respectively.

Upon signing the transaction, release and discharge agreement, the Company recorded $ 360,750 and $ 213,404 as a Gain from Asset Sales within the Other Income and

Expense section of the Company's Consolidated Statement of Operations for twelve months ended December 31, 2025 and 2024, respectively.

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

Prepaid expenses consist of the following:

5 unchanged sentences

As of December 31

AusIndustry incentive $ 8,151 $ 540,604

Vendor deposits 827,781 1,997,274

3 unchanged sentences

$ 852,036 $ 2,209,544

Property and equipment, net consists of the following:

As of December 31

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

Furniture and fixtures

24,496 18,184

Computer equipment 96,744 96,744

Leasehold improvements 23,918 23,918

Total property and equipment, gross 1,672,577 1,666,265

accumulated depreciation and amortization

( 773,647 ) ( 233,513 )

Total property and equipment, net $ 898,930 $ 1,432,752

Depreciation and amortization expense for the twelve months ended December 31, 2025 and twelve months ended December 31, 2024 was $ 540,135 and $ 203,757 , respectively.

Other current liabilities consist of the following:

3 unchanged sentences

88,838 114,359

EHT Acquisition related liability — 180,897

Consulting and professional fees

9 unchanged sentences

Price Remaining Term

2015 Common Stock Warrants 1,250.00 0.31 400

2016 Common Stock Warrants to Service Providers 287.50 0.83 160

2020 Common Stock Warrants to Placement Agent 20.00 0.58 32,668

2021 Inducement Warrants 37.50 0.57 84,667

2 unchanged sentences

2021 Common Stock Warrants to Placement Agent 27.50 0.74 21,778

February 2020 EHT Common Stock Warrants* 37.25 0.11 80,694

August 2023 Convertible Note Common Stock Warrants 5.16 7.63 340,000

4 unchanged sentences

January 2024 Pre-Funded Warrants

In connection with the January 2024 PIPE Financing (as defined in Note 7), the Company issued the Pre-Funded Warrants (as defined in Note 7).

In connection with the January 2024 PIPE Financing (as defined in Note 8), the Company issued the Pre-Funded Warrants.

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

4 unchanged sentences

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

August 2023 PIPE Financing Common Stock Warrants

In connection with the August 2023 PIPE Financing (as defined in 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 August 2023 PIPE Financing were allocated to the common stock warrants on a relative fair value basis.

The warrants vested immediately upon issuance 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 (as defined in 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 upon issuance 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, the 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 outstanding borrowings under the Amended Credit Agreement (as defined in 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 (as defined in Note 7).

The Company’s convertible debt consists of the following:

As of December 31, 2023

Total principal value of convertible note - related party, net of debt discount

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 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") (Note 5).

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

4 unchanged sentences

Amortization of the debt discount was 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.

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

3 unchanged sentences

For the year ended December 31, 2024, the effective interest rate on the Convertible Note was 31.39 %.

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 (as defined in Note 7).

All interest and rights related to the Bridge Loan were concurrently cancelled.

Insurance Premium Loan Payable

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 was payable in equal monthly installments of $ 23,374 , matured on January 31, 2024, and bore interest at a rate 4.24 % per annum.

As of December 31, 2023 a total of $ 21,238 remained in prepaid expenses and the loan has been repaid.

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 was payable in equal monthly installments of $ 31,150 , matured on January 31, 2023 and bore interest at a rate 4.17 % per annum.

Interest Expense

The Company’s interest expense consists of the following:

There was no interest expense in 2025.

The Company’s interest expense for 2024 consists of the following:

Related party interest expense – stated rate $ 302,740

Insurance premium loan payable – stated rate — 6,485

Legal judgment estimated interest (income) expense

( 234,750 ) 234,750

59,929 59,929

Premium on irrevocable letter of credit

22,383 69,861

Other interest expense — 3,100

Non-cash interest expense:

1 unchanged sentence

Amortization of transaction costs 16,456

$ 749,308 $ 906,270

Stockholders’ Equity and Capitalization

1 unchanged sentence

Options issued and outstanding 4,528,555 3,036,603

Awards available for grant under the Amended and Restated Omnibus Incentive Plan 119,046 487,672

Shares available for issuance under ESPP Plan 192,016 112,000

Shares for issuance under our Inducement Plan 286,500 —

Shares available for issuance under the Amended and Restated Omnibus Incentive Plan 319,822 119,046

Shares available for issuance under ESPP 328,427 192,016

Shares available for issuance under our Inducement Plan 142,500 286,500

Restricted stock units issued and outstanding 492,488 503,113

Unreleased restricted stock awards issued to a service provider — 5,000

Common stock underlying the Convertible Note - Related Party — 968,973

Warrants issued and outstanding 9,390,042 11,880,110

15,201,834 16,017,388

Increase to Authorized Shares of Capital Stock

On November 6, 2023, the Company increased its authorized shares of common stock to 100,000,000 .

PIPE Financings

8 unchanged sentences

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 .

August 2023 PIPE Financing

Concurrently with the BRB Acquisition and the 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 August 2023 PIPE Financing were also former preferred shareholders of BRB.

As an incentive to participate in the August 2023 PIPE Financing, the BRB Merger Agreement 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 August 2023 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 August 2023 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 .

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 6).

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).

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).

Convertible Note - Related Party

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

This conversion resulted in the issuance of 968,973 shares of the Company's common stock and the payment of accrued interest in cash.

Stock Issued for Services

3 unchanged sentences

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.

Common Stock Warrant Exercises

During the year ended 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).

On October 7, 2025, 1,059,441 pre-funded warrants issued in the January 2024 PIPE Financing with an intrinsic value of $ 2,012,938 were exercised on a cashless basis, resulting in the issuance of 1,059,441 shares of Company's common stock.

On December 18, 2025, 1,289,861 pre-funded warrants issued in the January 2024 PIPE Financing with an intrinsic value of $ 1,360,803 were exercised on a cashless basis, resulting in the issuance of 1,289,861 shares of Company's common stock.

On December 23, 2025, 25,192 pre-funded warrants issued in the January 2024 PIPE Financing with an intrinsic value of $ 23,177 were exercised on a cashless basis, resulting in the issuance of 25,192 shares of Company's common stock.

Restricted Stock Units Released

During 2024 a total of 634,664 RSUs were vested and settled.

On December 14, 2023, the Company settled 5,333 RSUs that had vested to executives of the Company (Note 8).

A total of 10,625 and 634,664 RSUs were vested and settled in 2025 and 2024, respectively

Stock-Based Compensation

14 unchanged sentences

Share pool increase 1,548,728

Forfeited 169,690

RSU grants ( 275,000 )

Forfeited/Cancelled 324,248

Option grants ( 1,672,200 )

9 unchanged sentences

Available as of December 31, 2024 286,500

Share pool increase 600,000

Forfeited 40,000

RSU grants ( 15,000 )

Forfeited/Cancelled

Option grants ( 175,000 )

2 unchanged sentences

Options granted under the Company's equity incentive plans expire no later than ten years from the date of grant.

Options granted under the the Company's equity incentive plans may be either incentive or non-qualified stock options.

Options granted under the Company's equity incentive plans may be either incentive or non-qualified stock options.

For incentive and non-qualified stock option grants, the option price shall be at least 100 % of the fair value on the date of grants, as determined by the Company’s Board of Directors.

8 unchanged sentences

1,847,200 2.85

Exercised ( 1,605 ) 3.50

Forfeited ( 176,334 ) 4.34

34 unchanged sentences

Derived service periods (years) 2.11

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 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)

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

1 unchanged sentence

Unvested, December 31, 2024 503,113 $ 9.62

Granted 290,000 13.87

Released ( 10,625 ) 4.80

1 unchanged sentence

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.

Awards Granted Outside the 2014 Amended and Restated Plan

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 was issued on September 30, 2024.

The following is a summary of restricted stock activity outside of the 2014 Amended and Restated Plan during the year ended December 31, 2024:

Number of Shares Weighted Average Grant Date Fair Value

Unvested, December 31, 2023 5,000 $ 1.55

Released ( 5,000 ) —

*Unvested, December 31, 2024 — $ —

Stock-Based Compensation Expense

14 unchanged sentences

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

As of December 31, 2024, no shares were issued under the ESPP.

As of December 31, 2025, 18,461 shares were issued under the ESPP.

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

14 unchanged sentences

Unvested restricted stock units 492,488 503,113

Unvested restricted stock (service provider)

Common shares underlying convertible debt — 968,973

Warrants 3,089,182 3,202,944

3 unchanged sentences

Foreign 323,157 938,620

Pre-tax loss and comprehensive loss from operations $ ( 26,557,052 ) $ ( 37,641,184 )

Pre-tax loss from operations

$ ( 55,919,414 ) $ ( 26,557,052 )

The components of the income tax expense consisted of the following:

9 unchanged sentences

At December 31, 2025, the Company had federal and state NOLs aggregating $ 159,062,533 and $ 188,066,339 , respectively.

If not used, $ 46,622,953 of Federal NOLs and $ 140,454,552 of state NOLs will begin to expire in 2031, $ 76,741,967 of federal NOLs and $ — 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 $ 188,066,339 of state NOLs will begin to expire in 2031, $ 112,439,580 of federal NOLs will carry forward indefinitely subject to an 80% limitation against taxable income.

At December 31, 2025, the Company had Australia NOLs aggregating $ 453,074 which do not expire and $ 43,879,070 of Canadian NOLS which begin to expire in 2026.

12 unchanged sentences

However, due to the existence of the valuation allowance for deferred tax assets, any potential change in ownership will not impact the Company’s effective tax rate.

The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred income tax assets are as follows:

The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred income tax assets as of December 31, 2025 and December 31, 2024 are as follows:

As of December 31,

19 unchanged sentences

Net deferred tax assets $ — $ —

The provision for income taxes on earnings subject to income taxes differs from the statutory Federal rate at December 31, 2024 and 2023, due to the following:

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S.

federal income tax rate to income (loss) from continuing operations before income taxes after the adoption of ASU 2023-09 is as follows:

As of December 31, 2025

Tax at Statutory Rate ( 11,743,077 ) 21.00 %

State and local income tax, net of federal income tax effect [a] 4,265 ( 0.01 ) %

Tax credits ( 695,831 ) 1.24 %

Change in valuation allowance 11,477,094 ( 20.52 ) %

Nondeductible executive compensation under 162(m) 740,965 ( 1.33 ) %

Other 175,360 ( 0.31 ) %

Nontaxable or nondeductible items, Total 916,325 ( 1.64 ) %

Foreign tax effects

Change in valuation allowance ( 5,030,006 ) 9.00 %

Change in foreign currency valuation ( 1,057,734 ) 1.89 %

Capital loss carryforwards no longer available 6,089,631 ( 10.89 ) %

Other ( 78,645 ) 0.14 %

Other foreign jurisdictions 8,892 ( 0.02 ) %

Foreign tax effects, Total ( 67,862 ) 0.12 %

Other 114,486 ( 0.20 ) %

Total $ 5,400 ( 0.01 ) %

[a] The State of California comprises greater than 50 percent of the state tax expense for the period ended December 31, 2025.

The provision for income taxes on earnings subject to income taxes differs from the statutory Federal rate at December 31, 2024, due to the following:

As of December 31,

Expected income tax benefit at federal statutory tax rate $ ( 5,576,981 )

7 unchanged sentences

Foreign rate differential 2,396,433

Divestiture of VDL — 2,269,297

In process research and development — 4,455,195

162(m) officers compensation

460,853 27,942

Other 90,815 ( 45,234 )

Provision for income taxes $ 10,071

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.

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, 2024.

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, 2025.

During the year ended December 31, 2025, the valuation allowance increased by $ 6,591,212 .

The Tax Cuts and Jobs Act of 2017 subjects a U.S.

shareholder to tax on global intangible low-taxed income ("GILTI") earned by certain foreign subsidiaries.

The FASB Staff Q&A, Topic 740, No.

5, Accounting for Global Intangible Low-Taxed Income , states that an entity can make an accounting policy election to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only.

The Company elects to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only.

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.

3 unchanged sentences

As of December 31,

Unrecognized tax positions, beginning of the year $ 6,432,143 $ 2,872,020

Unrecognized tax benefits, beginning of the year

$ 9,498,441 $ 6,432,143

Gross increase – current period tax positions

Gross increase - prior period tax positions — 2,316,932

5,033,976 3,073,575

Gross decrease – prior period tax positions ( 397 ) ( 7,277 )

Unrecognized tax positions, end of year $ 9,498,441 $ 6,432,143

Unrecognized tax benefits, end of year

$ 14,532,020 $ 9,498,441

If recognized, none of the unrecognized tax positions would impact the Company’s income tax benefit or effective tax rate as long as the Company’s net deferred tax assets remain subject to a full valuation allowance.

The Company does not expect any significant increases or decreases to the Company’s unrecognized tax positions within the next twelve months.

The Company had no accrual for interest or penalties on the Company’s Consolidated Balance Sheets at December 31, 2025 and 2024 and has no t recognized interest and/or penalties in the Consolidated Statements of Operations for the years then ended .

44 unchanged sentences

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 District Court has set a scheduling conference for March 31, 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.

The District Court has tentatively set a new trial date in March 2026.

During the year ended December 31, 2024, management revised its assumptions related to its estimate of the legal contingency and 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 December 31, 2025, the estimated legal contingency, including accrued legal expenses is $ 2,069,067 .

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:

7 unchanged sentences

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

Securities Class Action and Derivative Lawsuit

A putative securities class action lawsuit was filed on November 17, 2025, in the United States District Court for the Southern District of California, captioned Stout v.

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 December 3, 2024, the Company entered into a settlement agreement with Partner Re for $ 2,000,000 in exchange for a full and final release of any future claims.

For the year ended December 31, 2024 the Company recognized the income from insurance recovery in its consolidated statements of operations.

, et al., Case No.

3:25-cv-03177-WQH.

The complaint asserts that the Company and certain of the Company's executives violated Section 10(b) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and SEC Rule 10b-5, by making materially false or misleading statements related to the efficacy of and prospects for nimacimab between November 4, 2024 and October 3, 2025.

The plaintiff also alleges that the Company's executives, whom they named as defendants, violated Section 20(a) of the Exchange Act.

The plaintiff seeks class certification, an award of unspecified damages, an award of costs and expenses, including attorneys’ fees and expert fees, and further relief as the Court may deem just and proper.

On January 16, 2026, two stockholders moved to be appointed lead plaintiff.

A putative derivative lawsuit was filed on January 29, 2026, in the United States District Court for the Southern District of California, captioned Domulot v.

Dhillon et al.

3:26-cv-00600-WQH.

The lawsuit asserts claims, purportedly on behalf of the Company, against certain officers and directors of the Company for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, violations of Sections 14(a) of the Exchange Act, and for contribution under Sections 10(b) and 21D of the Exchange Act based on the dissemination of allegedly false and misleading statements related to nimacimab.

The plaintiff seeks unspecified damages, an award of costs and expenses, including attorneys’ fees and expert fees, and other relief, including corporate governance reforms.

License Agreement with Halozyme

On December 18, 2025, the Company entered into a Non-exclusive Collaboration and License Agreement (the “Halozyme License Agreement”) with Halozyme, Inc.

(“Halozyme”).

Under the terms of the Halozyme License Agreement, Halozyme granted the Company a non-exclusive license to Halozyme’s ENHANZE® drug delivery technology for the development of a subcutaneous formulation of nimacimab (such combination, the “Product”).

Halozyme will also be the Company’s exclusive supplier of clinical and commercial supplies of the API for Halozyme’s rHuPH20 bulk drug product.

Among other considerations, the Company will make milestone payments to Halozyme tied to achievement of certain development and commercialization milestone events with respect to the Product, as well as milestone payments based on achievement of certain net sales levels of the Product.

The Company will also make mid-single digit royalty payments based on worldwide net sales of the Product.

To date, none of such milestones has been achieved.

The Halozyme License Agreement became effective in December 2025 and, unless earlier terminated, will continue until the expiration of the royalty term for the applicable product in each country, which begins upon the first commercial sale of the product in such country and continues until the last valid patient claim covering the product in that country or the length of time specified in the Halozyme License Agreement.

The Halozyme License Agreement also includes customary termination rights, representations and warranties, covenants and indemnification obligations for a transaction of this nature.

Segment Reporting

7 unchanged sentences

nimacimab 32,305,827 10,801,849

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

Total external clinical development expenses 32,316,338 13,018,058

Personnel related and stock-based compensation 5,928,398 3,995,558

7 unchanged sentences

14 Subsequent Events

Stock Option Grants

Subsequent to December 31, 2024, the Company granted an aggregate of 1,160,000 and 56,000 common stock options to members of management, employees and directors under the Amended and Restated Plan and Inducement Plan, respectively .

Subsequent to December 31, 2025, the Company granted an aggregate of 1,367,800 common stock options to members of management, employees and directors under the Amended and Restated Plan.

Concurrently, with the separation of the Company's Chief Financial Officer, on February 20, 2026 (the "Separation Date"), the Board approved a modification to the option awards granted Ms Arsenault, which extended the post-termination exercise period to the later of February 20, 2027, or ninety ( 90 ) days after the expiration of her Advisor Agreement.

In addition, in the event of a change in control within one year from the Separation Date, 100 % of Ms.

Arsenault's equity will vest immediately prior to the consummation of such change in control.

On February 18, 2026, the Company formally requested to terminate its lease for the San Francisco office effective 60 days after the notice.

As a result of this termination, the Company will derecognize a right-of-use asset and lease liability of approximately $ 170,000 in the first quarter of 2026.

The Company has also initiated a claim for the full refund of its security deposit related to this termination.

The following exhibits are filed with this Annual Report on Form 10-K.

20 unchanged sentences

2.9 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.

( incorporated by reference to Exhibit 2.9 to o ur Annua l Report on Form 10-K filed on March 22, 2024)

(incorporated by reference to Exhibit 2.9 to our Annual Report on Form 10-K filed on March 22, 2024)

3.1 Articles of Incorporation of Registrant, as amended (incorporated by reference to Exhibit 3.1 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 22, 2024)

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)

4.1 Pre 2015 Common Stock Warrants (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on November 3, 2014)

4.2 2015, 2016 and 2017 Form of Common Stock Warrant (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed August 20, 2015)

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)

4.5 2020 Common Stock Warrants (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on August 5, 2020)

4.1 2016 Form of Common Stock Warrant (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed August 20, 2015)

4.2 2021 Inducement Warrants (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q filed November 10, 2021)

4.3 2021 Common Stock Warrants (incorporated by reference to Exhibit 4.1 to our Quarterly Report on Form 10-Q filed November 10, 2021)

4.8 2021 Pre-Funded Warrants (incorporated by reference to Exhibit 4.2 to our Quarterly Report on Form 10-Q filed November 10, 2021)

4.4 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)

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)

3 unchanged sentences

Amendment to Common Stock Purchase Warrants (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on March 13, 2024)

Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

4.9 Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to our Annual Report on Form 10-K filed on March 20, 2025)

Skye Bioscience, Inc.

Amended and Restated Omnibus Incentive Plan and form of stock option agreements and form of restricted stock agreements thereunder

Amended and Restated Omnibus Incentive Plan and form of stock option agreements and form of restricted stock agreements thereunder (incorporated by reference to Exhibit 10.1 to our Annual Report on Form 10-K filed on March 20, 2025)

Skye Bioscience, Inc.

Amended and Restated 2024 Inducement Equity Incentive Plan and form of stock option agreement and form of restricted stock agreement thereunder

Amended and Restated 2024 Inducement Equity Incentive Plan and form of stock option agreement and form of restricted stock agreement thereunder (incorporated by reference to Exhibit 10.2 to our Annual Report on Form 10-K filed on March 20, 2025)

Skye Bioscience, Inc.

5 unchanged sentences

Employment Agreement, dated October 5, 2020, by and between Skye Bioscience, Inc.

and Kaitlyn Arsenault (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on October 6, 2021)

A mendment to Executive Employment Agreement, dated May 11, 2023, by and between Skye Bioscience, Inc.

and Kaitlyn Arsenault (incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q filed on May 12, 2023)

Employment Agreement, dated August 30, 2024, by and between Skye Bioscience, Inc.

and Puneet Arora (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on September 4, 2024 )

Employment Agreement, dated October 5, 2020 , by and between Skye Bioscience, Inc.

and Tu Diep (incorporated by reference to Exhibit 10.10 to our Annual Report on Form 10-K filed on March 20, 2025)

Employment Agreement, dated November 11, 2022 by and between Skye Bioscience, Inc.

and Chris Twitty

and Chris Twitty (incorporated by reference to Exhibit 10.11 to our Annual Report on Form 10-K filed on March 20, 2025)

Securities Purchase Agreement, dated as of August 15, 2023, by and among Skye Bioscience, Inc.

3 unchanged sentences

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.

3 to our Current Report on Form 8-K filed on August 21, 2023)

and MFDI, LLC (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed on August 21, 2023)

Form of Securities Purchase Agreement, dated as of January 29, 2024, by and among Skye Bioscience, Inc.

8 unchanged sentences

10.19 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)

Non-Exclusive Collaboration and License Agreement, dated December 18, 2025, by and between the Company and Halozyme, Inc.

19 Skye Bioscience, Inc.

Insider Trading Policy

Insider Trading Policy (incorporated by reference to Exhibit 19 to our Annual Report on Form 10-K filed on March 20, 2025)

S kye B ioscience , I nc .

C ode of B usiness C onduct and E thics

Subsidiaries of the Registrant

Consent of Marcum LLP

Consent of CBIZ CPAs PC

Consent of M arcum LLP

Certification of Principal Executive Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934

18 unchanged sentences

Director, Chief Executive Officer

(Principal Executive Officer)

March 20, 2025 By:

/s/ Kaitlyn Arsenault

Kaitlyn Arsenault

Chief Financial Officer

(Principal Financial and Accounting Officer)

(Principal Executive Officer & Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

3 unchanged sentences

(Principal Executive Officer &

/s/ Kaitlyn Arsenault March 20, 2025

Kaitlyn Arsenault

Chief Financial Officer

Principal Financial and Accounting Officer)

11 unchanged sentences

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