Skye Bioscience, Inc. 10-K

Item 9A. Controls and Procedures . Evaluation of Disclosure Controls and Procedures We maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") and includes those policies and procedures that: • pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of the Company; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 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, 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. As we are a smaller reporting company, our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting. Changes in Internal Control over Financial Reporting There was no change in our internal control over financial reporting during the fourth quarter ended December 31, 2025 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 82 Item 9B. Other Information. Director and Officer Trading Arrangements 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. Mr. Schwab disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein. Except as set forth above, none of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the fourth quarter of 2024. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 83 PART III Item 10. 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 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. Item 11. Executive Compensation . The information required by this item regarding executive compensation is incorporated by reference to the information set forth in the section titled “Executive Compensation” in our Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this item regarding security ownership of certain beneficial owners and management is incorporated by reference to the information set forth in the section titled “Security Ownership of Certain Beneficial Owners and Management” in our Proxy Statement. The information required by Item 201(d) of Regulation S-K is incorporated by reference to the information set forth in the section titled “Executive Compensation” in our Proxy Statement. Item 13. Certain Relationships and Related Transactions, and Director Independence . The information required by this item regarding certain relationships and related transactions and director independence is incorporated by reference to the information set forth in the sections titled “Transactions with Related Parties” and “Election of Directors – Independence of the Board of Directors,” respectively, in our Proxy Statement. Item 14. Principal Accounting Fees and Services . The information required by this item regarding principal accountant fees and services is incorporated by reference to the information set forth in the section titled “Principal Accountant Fees and Services” in our Proxy Statement. 84 PART IV Item 15. Exhibits, Financial Statement Schedules . Financial Statements. 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. 85 SKYE BIOSCIENCE, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page No. Reports of Independent Registered Public Accounting Firm (PCAOB ID 199) F- 2 Reports of Independent Registered Public Accounting Firm (PCAOB I D 688 ) F- 2 Consolidated Balance Sheets as of December 31, 202 5 and 2024 F- 4 Consolidated Statements of Operations for the years ended December 31, 202 5 and 20 24 F- 5 Consolidated Statements of Cash Flows for the years ended December 31, 202 5 and 20 24 F- 6 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 202 5 and 20 24 F- 7 Notes to the Consolidated Financial Statements F- 8 F-1 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, 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 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 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 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 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 audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there 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 F-2 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. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. 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 from 2022 to 2025. Morristown, New Jersey March 20, 2025 F-3 SKYE BIOSCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31 ASSETS 2025 2024 Current assets Cash and cash equivalents $ 5,882,498 $ 68,415,741 Short-term investments 19,854,723 — Prepaid expenses 504,890 201,962 Other current assets 852,036 2,209,544 Total current assets 27,094,147 70,827,247 Property and equipment, net 898,930 1,432,752 Operating lease right-of-use asset 266,646 449,864 Other assets 53,910 53,910 Total assets $ 28,313,633 $ 72,763,773 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 2,033,431 $ 569,252 Accrued payroll liabilities 1,269,474 1,114,255 Other current liabilities 2,643,840 654,201 Estimate for accrued legal contingencies and related expenses 2,069,067 1,818,751 Operating lease liability, current portion 189,647 182,428 Total current liabilities 8,205,459 4,338,887 Non-current liabilities Operating lease liability, net of current portion 83,999 273,162 Total liabilities 8,289,458 4,612,049 Commitments and contingencies (Note 12) Stockholders’ equity Preferred stock, $ 0.001 par value; 200,000 shares authorized at December 31, 2025 and 2024; no shares issued and outstanding at December 31, 2025 and 2024 — — Common stock, $ 0.001 par value; 100,000,000 shares authorized at December 31, 2025 and 2024, respectively; 33,378,139 and 30,974,559 shares issued and outstanding at December 31, 2025 and 2024, respectively 33,379 30,975 Additional paid-in-capital 206,865,282 199,070,421 Accumulated deficit ( 186,874,486 ) ( 130,949,672 ) Total stockholders’ equity 20,024,175 68,151,724 Total liabilities and stockholders’ equity $ 28,313,633 $ 72,763,773 See accompanying notes to the consolidated financial statements. F-4 SKYE BIOSCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31 2025 2024 Operating expenses Research and development $ 42,361,879 $ 18,701,694 General and administrative 15,801,686 17,725,741 Change in estimate for legal contingency — ( 4,234,717 ) Income from insurance recovery — ( 2,000,000 ) Total operating expenses 58,163,565 30,192,718 Operating loss ( 58,163,565 ) ( 30,192,718 ) Other (income) expense Interest expense — 749,308 Interest income ( 1,883,903 ) ( 3,028,762 ) 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 ) Loss before income taxes ( 55,919,414 ) ( 26,557,052 ) Provision for income taxes 5,400 10,071 Net loss $ ( 55,924,814 ) $ ( 26,567,123 ) Loss per common share Basic $ ( 1.41 ) $ ( 0.73 ) Diluted $ ( 1.41 ) $ ( 0.73 ) Weighted average shares of common stock outstanding used to compute loss per share: Basic 39,662,664 36,486,519 Diluted 39,662,664 36,486,519 See accompanying notes to the consolidated financial statements. F-5 SKYE BIOSCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31 2025 2024 Cash flows from operating activities: Net loss $ ( 55,924,814 ) $ ( 26,567,123 ) Adjustments to reconcile net loss to net cash, cash equivalents used in operating activities: Write-down of vendor deposits — 325,610 Depreciation and amortization 723,352 298,640 Net loss on disposal of asset — 10,794 Stock-based compensation expense 7,767,694 8,317,480 Amortization of debt discount — 599,006 Change in estimate for legal contingencies — ( 4,234,717 ) Gains from asset sales ( 360,750 ) ( 1,358,412 ) Changes in assets and liabilities: Prepaid expenses ( 302,928 ) ( 7,703 ) Other current assets 1,357,508 ( 1,415,225 ) Other assets — ( 45,601 ) Accounts payable 1,395,428 ( 586,533 ) Accrued interest – related party — ( 126,027 ) Accrued interest – legal contingency — ( 234,750 ) Accrued payroll liabilities 155,219 225,874 Other current liabilities 2,308,706 ( 344,351 ) Operating lease liability ( 181,944 ) ( 94,442 ) Net cash, cash equivalents used in operating activities ( 43,062,529 ) ( 25,237,480 ) Cash flows from investing activities: Proceeds from asset sales, net of legal expenses 360,750 1,358,412 Purchase of short-term investment ( 19,854,723 ) — Purchases of property and equipment ( 6,312 ) ( 1,604,027 ) 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 of issuance costs — 83,556,563 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 Net increase in cash and cash equivalents ( 62,533,243 ) 58,079,086 Cash, cash equivalents , beginning of year $ 68,415,741 $ 10,336,655 Cash, cash equivalents, end of year $ 5,882,498 $ 68,415,741 Cash paid during the year for: Interest $ — $ 433,336 Income taxes 5,400 5,200 Supplemental disclosures of non-cash financing activities: Right of use asset obtained in exchange for operating lease liabilities $ — $ 306,764 Conversion of convertible note - related party — 4,971,004 See accompanying notes to the consolidated financial statements. F-6 SKYE BIOSCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY Stockholders' Deficit Common Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders' (Deficit) Equity Shares Amounts 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 15,713,664 15,714 83,540,849 — 83,556,563 Stock-based compensation expense 639,664 640 8,316,840 — 8,317,480 Exercise of stock options 1,605 2 5,616 — 5,618 Exercise of pre-funded warrants 1,301,410 1,301 ( 1,301 ) — — Conversion of convertible note - related Party 968,973 969 4,970,035 — 4,971,004 Net loss for the year ended December 31, 2024 — — — ( 26,567,123 ) ( 26,567,123 ) 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. F-7 SKYE BIOSCIENCE, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Nature of Operations and Business Activities Nature of Operations Skye Bioscience, Inc. (the “Company” or “Skye”) was incorporated in Nevada on March 16, 2011. 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. 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. 2. Summary of Significant Accounting Policies Basis of Presentation The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. F-8 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, 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. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expense during the reporting period. 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 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 and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The carrying values of those investments approximate their fair value due to their short maturity and liquidity. Cash and cash equivalents includes cash on hand and amounts on deposit with financial institutions, which amounts may at times exceed federally insured limits. The Company has not experienced any losses on such accounts and does not believe it is exposed to any significant credit risk. Property and Equipment, net Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, generally three to five years . Leasehold improvements are amortized over the shorter of the estimated useful life of the improvements or the remaining lease term. Expenditures for repairs and maintenance, which do not extend the useful life of the property and equipment, are expensed as incurred. Upon retirement, the asset cost and related accumulated depreciation are relieved from the accompanying Consolidated Balance Sheets. Fair Value Measurements Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (the “exit price”) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable, and the last is considered unobservable, is used to measure fair value: Level 1: Valuations for assets and liabilities traded in active markets from readily available pricing sources such as quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs (other than Level 1 quoted prices) such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. F-9 Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The carrying values of the Company’s financial instruments approximate their fair value due to their short maturities. Income Taxes The Company accounts for deferred income tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities, net operating loss carryforwards (the “NOLs”) and other tax credit carryforwards. These items are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date. Any interest or penalties would be recorded in the Company’s Consolidated Statements of Operations in the period incurred. When necessary, the Company recognizes interest and penalties related to income tax matters in income tax expense. 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. In making such determinations, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. 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 and 2024. As a result of this valuation allowance, there are no income tax benefits reflected in the accompanying Consolidated Statements of Operations to offset pre-tax losses. The Company recognizes a tax benefit from uncertain tax positions when it is more likely than not (50%) that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. Warrants Issued in Connection with Financings The Company generally accounts for warrants issued in connection with debt and equity financings as a component of equity, unless the warrants include a conditional obligation to issue a variable number of shares or there is a deemed possibility that the Company may need to settle the warrants in cash. For warrants issued with a conditional obligation to issue a variable number of shares or the deemed possibility of a cash settlement, the Company records the fair value of the warrants as a liability at each balance sheet date and records changes in fair value in other expense, net in the Consolidated Statements of Operations. Research and Development Expenses and Licensed Technology Research and development costs are expensed when incurred. These costs may consist of external research and development expenses incurred under agreements with third party contract research organizations and investigative sites; third party manufacturing organizations and consultants; license fees; employee-related expenses, which include salaries and benefits for the personnel involved in the Company’s preclinical; and clinical drug development activities, other expenses and equipment and laboratory supplies. Costs incurred for the rights to use licensed technologies in the research and development process, including licensing fees and milestone payments, are charged to research and development expense as incurred in situations where the Company has not identified an alternative future use for the acquired rights, and are capitalized in situations where there is an identified alternative future use. None of the costs associated with the use of licensed technologies has been capitalized to date. Stock-Based Compensation Expense Stock-based compensation expense is estimated at the grant date based on the fair value of the award, and the fair value is recognized as expense ratably over the vesting period with forfeitures accounted for as they occur. Upon the exercise of stock option awards, the Company's policy is to issue new shares of its common stock. The Company uses the Black-Scholes valuation method for estimating the grant date fair value of stock options using the following assumptions: • Volatility - Stock price volatility is estimated over the expected term based on a blended daily rate of industry peers stock volatility. • Expected term - The expected term is based on a simplified method which defines the life as the weighted average of the contractual term of the options and the vesting period for each award. • Risk-free rate - The risk-free interest rate for the expected term of the option is based on the average market rate on U.S. Treasury securities in effect during the period in which the awards were granted. F-10 • Dividends - The dividend yield assumption is based on the Company’s history and expectation of paying no dividends in the foreseeable future. Additionally, the Company uses the Monte Carlo Simulation model to evaluate the derived service period and fair value of awards with market conditions, including assumptions of historical volatility and risk-free interest rate commensurate with the vesting term. Loss Per Common Share The Company applies ASC No. 260, Earnings per Share in calculating its basic and diluted loss per common share. Basic loss per common share is computed by dividing net loss available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. 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 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. For additional information regarding the loss per share (see Note 10). Leases The Company applies ASU, No. 2016-02, Leases (Topic 842), in accounting for operating lease arrangements. At the inception of an arrangement, the Company determines whether the arrangement is, or contains, a lease based on the unique facts and circumstances present. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in the lease contract is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. Lease expense is recognized over the expected term on a straight-line basis. 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. Government Assistance The Company adopted ASU 2021-10 Government Assistance on January 1, 2022. The Company accounts for the tax rebates received from the Australian Taxation Office ("ATO") under such guidance. The Company accounts for the rebates that it receives under the AusIndustry research and development tax incentive program under the income recognition model of IAS 20. Under this model, when there is reasonable assurance that the rebate will be received, the Company recognizes the income from the tax rebate as an offset to research and development expense during the period which the benefit applies to the research and development costs incurred. 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. 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”) 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. Equity accounts are remeasured at historical exchange rates. The resulting remeasurement adjustments are recognized in general and administrative expenses in the consolidated financial statements. During the years ended December 31, 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, 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. F-11 Commitments and Contingencies The Company follows ASC 440, Commitments and ASC 450, Contingencies , subtopic 450-20 to report accounting for contingencies and commitments respectively. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Refer to Note 12 for additional information. In accordance with ASC 450, Contingencies, subtopic 450-20, the Company does not reflect a contingency that may result in a gain until it is realized. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, S egment Reporting (Topic 280) : Improvements to Reportable Segment Disclosures. The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. This ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The amendments in this ASU should be applied retrospectively to all prior periods presented in the financial statements. The Company adopted the ASU and determined that its adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures. As defined in the ASU, operating segments are components of an enterprise about which discrete financial information is regularly provided to the CODM in making decisions on how to allocate resources and assess performance for the organization. The Company operates and manages its business as one reportable and operating segment — pharmaceutical development. The Company’s CODM is the Chief Executive Officer. The Company’s CODM reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire Company. See Segment Note 13. 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. This ASU applies to all entities subject to income taxes and is intended to help investors better understand an entity’s exposure to potential changes in jurisdictional tax legislation and assess income tax information that affects cash flow forecasts and capital allocation decisions. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. This ASU should be applied on a prospective basis although retrospective application is permitted. The Company 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. The standard requires disclosures about specific types of expenses included in the expense captions presented in the income statement as well as disclosures about selling expenses. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The requirements should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures. F-12 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. 3. 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 Valuation Hierarchy Total Assets: Money market funds (included in cash and cash equivalents) Level 1 $ 1,461,609 U.S. treasury obligations (included in short-term investments) Level 1 19,854,723 Total cash equivalents and marketable securities $ 21,316,332 4. Assets Acquisitions and Dispositions Acquisition of Emerald Health Therapeutics, Inc. 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 The wind down of EHT's operations included the disposition of real estate held by AVI (the "AVI building"). At the time of the Company’s acquisition of EHT on November 10, 2022 (the “EHT Acquisition”), none of the purchase consideration was allocated to the fair value of the AVI building. As a result of the sale of the AVI building, for the 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 July 17, 2024, the Company entered into a transaction, release and discharge agreement with the purchaser of Verdelite Sciences, Inc. ("VDL"). Under the transaction, release and discharge agreement, the purchase price of VDL was adjusted in exchange for a full release of any future claims by VDL against the Company. As part of the agreement, the parties agreed to a reduced installment payment schedule for the remaining aggregate balance of the purchase price of $ 2,047,080 through December 2027. The remainder of the purchase price receivable bears interest at 8 %. Upon signing the transaction, release and discharge agreement, the Company recorded $ 360,750 and $ 213,404 as a Gain from Asset Sales within the Other Income and F-13 Expense section of the Company's Consolidated Statement of Operations for twelve months ended December 31, 2025 and 2024, respectively. 5. Prepaid Expenses, Other Current Assets, Property and Equipment and Other Current Liabilities Prepaid expenses consist of the following: As of December 31 2025 2024 Prepaid clinical expenses $ 231,493 $ 13,078 Total other prepaid expenses 273,397 188,884 $ 504,890 $ 201,962 Other current assets consist of the following: As of December 31 2025 2024 Vendor deposits 827,781 1,997,274 Other tax receivables 10,474 5,065 Other current assets 13,781 207,205 $ 852,036 $ 2,209,544 Property and equipment, net consists of the following: As of December 31 2025 2024 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 Less: 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: As of December 31 2025 2024 Research and development costs $ 2,518,724 $ 325,415 Legal expenses 88,838 114,359 Consulting and professional fees 26,356 109,375 Other accrued liabilities 9,922 105,052 $ 2,643,840 $ 654,201 6. Warrants There are significant judgements and estimates inherent in the determination of the fair value of the Company’s warrants. These judgements and estimates include assumptions regarding the Company’s future operating performance and the determination of the appropriate valuation methods. If the Company had made different assumptions, the fair value of the warrants could have been significantly different (See Note 2). F-14 Warrants Warrants vested and outstanding as of December 31, 2025 are summarized as follows: Source Exercise Price Remaining Term (Years) Number of Warrants Outstanding 2016 Common Stock Warrants to Service Providers 287.50 0.83 160 2021 Inducement Warrants 37.50 0.57 84,667 2021 Inducement Warrants to Placement Agent 47.00 0.57 5,927 2021 Common Stock Warrants 22.50 0.74 311,113 2021 Common Stock Warrants to Placement Agent 27.50 0.74 21,778 August 2023 Convertible Note Common Stock Warrants 5.16 7.63 340,000 August 2023 PIPE Financing Common Stock Warrants 5.16 7.63 2,325,537 January 2024 Pre-Funded Warrants Common Stock 0.001 Indefinite 6,300,860 Total warrants outstanding as of December 31, 2025 9,390,042 As of December 31, 2025, all of the Company's warrants are fully vested. January 2024 Pre-Funded Warrants 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. The gross proceeds from the issuance of these Pre-Funded Warrants was $ 22,991,015 . The Company determined that the Pre-Funded Warrants are freestanding instruments that do not meet the definition of a liability or derivative. The Pre-Funded Warrants are indexed to the Company’s common stock and meet all other conditions for equity classification. Accordingly, the Pre-Funded Warrants are classified as equity and are accounted for as a component of additional paid-in capital at the time issued. The Company also determined that the Pre-Funded Warrants should be included in the determination of basic and diluted earnings per share. 7. Debt 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 accrued interest at a rate of 10 % per annum and had a fixed conversion price at $ 5.16 . 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. In the original accounting for the Convertible Note, the Company allocated $ 4,068,424 in proceeds to the debt host and $ 931,576 in proceeds to the freestanding warrants based on relative fair value. The debt discounts of $ 931,576 and $ 26,316 related to the warrants, and debt issuance costs, respectively, were amortized over the term of the Convertible Note using the effective interest rate method. Amortization of the debt discount was recognized as non-cash interest expense in Other expense within the Consolidated Statements of Operations. Accrued interest on the Convertible Note was payable quarterly within 30 days of the last day of each calendar quarter. The debt discounts related to the warrants, and debt issuance costs, were amortized over the term of the Convertible Note using the effective interest rate method. Amortization of the debt discount is recognized as non-cash interest expense in Other (income) expense within the Consolidated Statements of Operations. Through the date of conversion, the Convertible Note is classified as Level 2 of the fair value hierarchy model based on market prices that can be corroborated with observable market data for the Company's common stock. For the year ended December 31, 2024, the effective interest rate on the Convertible Note was 31.39 %. F-15 Interest Expense There was no interest expense in 2025. The Company’s interest expense for 2024 consists of the following: Year Ended December 31, 2024 Related party interest expense – stated rate $ 302,740 Legal judgment estimated interest (income) expense ( 234,750 ) Bond premium 59,929 Premium on irrevocable letter of credit 22,383 Non-cash interest expense: Amortization of debt discount 582,550 Amortization of transaction costs 16,456 $ 749,308 8. Stockholders’ Equity and Capitalization The Company reserved shares of common stock, on an as-if converted basis, for issuance as follows: Year Ended December 31, 2025 2024 Options issued and outstanding 4,528,555 3,036,603 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 Warrants issued and outstanding 9,390,042 11,880,110 15,201,834 16,017,388 PIPE Financings January 2024 PIPE Financing On January 29, 2024, the Company entered into a Securities Purchase Agreement with certain institutional investors, pursuant to which on January 31, 2024, the Company issued an aggregate of 11,713,664 shares of common stock and 9,978,739 pre-funded warrants (the "Pre-Funded Warrants") to purchase up to 9,978,739 shares of common stock (the "January 2024 PIPE Financing") for an aggregate purchase price of $ 49,991,010 . The January 2024 PIPE Financing was priced at $ 2.31 per common share and $ 2.30 per Pre-Funded Warrant based on the 5-day average share price preceding January 29, 2024. The Pre-Funded Warrants are exercisable at any time for an exercise price of $ 0.001 . In connection with the January 2024 PIPE Financing, the Company incurred $ 3,823,752 in direct equity issuance costs for net proceeds of $ 46,167,258 . March 2024 PIPE Financing On March 11, 2024, the Company entered into a Securities Purchase Agreement with certain institutional investors, pursuant to which on March 13, 2024, the Company issued an aggregate of 4,000,000 shares of common stock (the "March 2024 PIPE Financing") for an aggregate purchase price of $ 40,000,000 . The March 2024 PIPE Financing was priced at $ 10.00 per common share. F-16 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 . 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 For the twelve months ended December 31, 2025 and 2024, the Company released 0 and 5,000 shares, respectively, of common stock to a service provider (Note 9). Warrant Exercises Prefunded Warrant Exercise On July 1, 2024, 1,301,573 pre-funded warrants issued in the January 2024 PIPE Financing with an intrinsic value of $ 10,424,294 were exercised on a cashless basis, resulting in the issuance of 1,301,410 shares of Company's common stock. 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 A total of 10,625 and 634,664 RSUs were vested and settled in 2025 and 2024, respectively 9. Stock-Based Compensation Stock Incentive Plan On October 31, 2014, the Board approved the Company’s 2014 Omnibus Incentive Plan (the “2014 Plan”). The 2014 Plan authorizes the issuance of awards including stock options, stock appreciation rights, restricted stock, stock units and performance units to employees, directors, and consultants of the Company. On June 14, 2022, the Board approved the 2014 Amended and Restated Omnibus Incentive Plan (the “2014 Amended and Restated Plan”) which replaced the 2014 Plan in its entirety. On September 29, 2023, the Board and Majority Stockholders adopted and approved Amendment No. 1 to the 2014 Amended and Restated Plan. Amendment No. 1 to the 2014 Amended and Restated Plan became effective on November 6, 2023. On October 22, 2024, the second amendment and restatement of the Company's 2014 Amended and Restated Plan was approved to increase the number of shares of the Company's common stock issuable thereunder by 1,535,655 to increase the number of incentive stock options that may be granted thereunder to 4,000,000 , extend the expiration date of the plan to September 10, 2034, update the name of the plan to the “Skye Bioscience, Inc. Amended and Restated Omnibus Incentive Plan” and make certain administrative amendments (as so amended and restated, the "Amended and Restated Plan"). The Amended and Restated Plan, among other things, provides that each January 1 beginning in 2023 and ending on (and including) January 1, 2032 the number of shares will increase by 5 % of the outstanding shares of common stock as of the prior December 31, unless the Board of Directors of the Company decides to a lesser increase. F-17 As of December 31, 2025, the shares available for future grant under the Amended and Restated Plan are as follows: Shares Available for Grant Available as of December 31, 2024 119,046 Share pool increase 1,548,728 Forfeited/Cancelled 324,248 Option grants ( 1,672,200 ) Available as of December 31, 2025 319,822 2024 Inducement Equity Incentive Plan On July 2, 2024, the Board adopted the Skye Bioscience, Inc. 2024 Inducement Equity Incentive Plan (as amended and restated, the "Inducement Plan"). The Inducement Plan was adopted in order to grant share-based awards to newly hired employees as an inducement to join the Company. The terms of the Inducement Plan are substantially similar to the terms of the Company’s 2014 Amended and Restated Plan with the exception that awards may only be made to an employee who has not previously been an employee or member of the Board of Directors of the Company if the award is in connection with commencement of employment. The Company has reserved 600,000 shares of the Company’s common stock for issuance pursuant to awards granted under the Inducement Plan. As of December 31, 2025, the shares available for future grant under the Amended and Restated Plan are as follows: Shares Available for Grant Available as of December 31, 2024 286,500 Forfeited/Cancelled 31,000 Option grants ( 175,000 ) Available as of December 31, 2025 142,500 Stock Options Options granted under the Company's equity incentive plans expire no later than ten years from the date of grant. 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. If at any time the Company grants an option, and the optionee directly or by attribution owns stock possessing more than 10 % of the total combined voting power of all classes of stock of the Company, the option price shall be at least 110 % of the fair value and shall not be exercisable more than five years after the date of grant. The shares issued generally vest over a period of one to four years from the date of grant. F-18 The following is a summary of option activities under the Company’s Amended and Restated Plan and the Inducement Plan for the year ended December 31, 2025: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value* Outstanding, December 31, 2024 3,036,603 $ 7.72 8.91 $ 22,624 Granted 1,847,200 2.85 Forfeited ( 176,334 ) 4.34 Cancelled ( 178,914 ) 10.99 Outstanding, December 31, 2025 4,528,555 $ 5.74 8.73 $ — Exercisable, December 31, 2025 1,863,551 $ 7.03 8.38 $ — Vested and expected to vest, December 31, 2025 4,528,555 $ 5.74 8.73 $ — *The aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company’s stock exceeded the exercise price of the stock options at December 31, 2025 for those stock options for which the quoted market price was in excess of the exercise price ("in-the-money options"). The weighted-average grant-date fair value of stock options granted for the years ended December 31, 2025 and 2024, was $ 2.09 and $ 6.04 , respectively. The total fair value of the stock options that vested during the years ended December 31, 2025 and 2024 was $ 5,655,038 and $ 4,034,671 , respectively. The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model under the following assumptions: Year Ended December 31, 2025 2024 Dividend yield 0.00 % 0.00 % Risk-free interest rate 3.79 - 4.27 % 3.69 - 4.48 % Expected term (years) 5.27 - 6.08 5.27 - 6.08 Volatility 83.86 - 86.09 % 81.73 - 99.96 % Restricted Stock Units On February 29, 2024, the Company granted restricted stock units ("RSUs") to its executive management team and to certain members of the Board with market-based vesting conditions. The RSUs are eligible to vest subject to the achievement and attainment of certain market capitalization target goals and share price targets (market-based vesting conditions). The Company used the Monte Carlo Simulation model to evaluate the derived service period and fair value of awards with market and performance conditions, including assumptions of historical volatility and risk-free interest rate commensurate with the vesting term. The fair value of the Company's market-based RSUs were estimated on the date of grant under the following assumptions: Year Ended December 31, 2024 Dividend yield 0.00 % Volatility factor 93.71 % Risk-free interest rate 4.16 % Derived service periods (years) 1.27 - 2.48 F-19 On August 22, 2024, the Board approved a modification to the terms of the RSUs issued on August 25, 2023, and September 29, 2023 to its executive management team and to a member of the Board. The vesting condition was modified from a performance-based condition to a market-based condition. Since the performance condition under the original award was improbable of being met at the time of the modification, no expense was previously recognized. Therefore, on the modification date, the Company established a new fair value and will recognize the expense over the derived service period. The Company used the Monte Carlo Simulation model to evaluate the derived service period and fair value of the awards. The fair value of the Company's market-based RSUs were estimated on the modification date under the following assumptions: August 22, 2024 Dividend yield 0.00 % Volatility factor 94.3 % Risk-free interest rate 3.76 % Derived service periods (years) 2.11 The following is a summary of restricted stock unit activity during the year ended December 31, 2025: Number of Shares Weighted Average Grant Date Fair Value Unvested, December 31, 2024 503,113 $ 9.62 Granted — — Released ( 10,625 ) 4.80 Unvested, December 31, 2025 492,488 $ 9.72 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. Stock-Based Compensation Expense Stock Compensation Adjustments Related to Board Member Resignations On July 2, 2024, the Board accepted the resignations of several Board members effective August 1, 2024. Concurrently, the Board approved a modification to the option awards granted such Board members, which modification accelerated the vesting of all unvested options as of the resignation date and extended the post-termination exercise period to December 31, 2025. As a result of the modification, the Company recognized $ 274,019 in incremental stock compensation expense during the year ended December 31, 2024. The Company recognizes stock-based compensation expense using the straight-line method over the requisite service period. The Company recognized stock-based compensation expense, including compensation expense for warrants with vesting provisions issued to a service provider (Note 6), and the RSUs discussed above, in its Consolidated Statements of Operations as follows: Year Ended December 31, 2025 2024 Research and development $ 2,061,154 $ 1,514,921 General and administrative 5,706,540 6,802,559 $ 7,767,694 $ 8,317,480 The total amount of unrecognized compensation cost was $ 10,276,636 as of December 31, 2025. This amount will be recognized over a weighted-average period of 2.5 years. F-20 2022 Employee Stock Purchase Plan In June 2022, the Board approved the 2022 Employee Stock Purchase Plan (the "ESPP"), under which the Company may offer eligible employees the option to purchase common stock at a 15 % discount to the lower of the market value of the stock at the beginning or end of each participation period under the terms of the ESPP. Total individual purchases in any year are limited to 15 % of compensation. The ESPP was approved by the Company's stockholders on September 30, 2022. As of December 31, 2025, 18,461 shares were issued under the ESPP. The compensation expense, computed using the Black-Scholes model was immaterial. 10. Loss Per Share of Common Stock The following tables are a reconciliation of the numerators and denominators used in the calculation of basic and diluted net loss per share computations: For the Year Ended December 31, 2025 Loss (Numerator) Shares (Denominator) Per-Share Amount Net loss $ ( 55,924,814 ) Basic EPS and diluted EPS Net loss available to common stockholders ( 55,924,814 ) 39,662,664 $ ( 1.41 ) For the Year Ended December 31, 2024 Income (Numerator) Shares (Denominator) Per-Share Amount Net loss $ ( 26,567,123 ) Basic EPS and diluted EPS Net loss available to common stockholders ( 26,567,123 ) 36,486,519 $ ( 0.73 ) The following outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share of common stock for the periods presented because including them would have been anti-dilutive: Year Ended December 31, 2025 2024 Stock options 4,528,555 3,036,603 Unvested restricted stock units 492,488 503,113 Warrants 3,089,182 3,202,944 Total 8,110,225 6,742,660 11. Income Taxes The components of loss before the income tax provision consist of the following: Year Ended December 31, 2025 2024 United States $ ( 56,242,571 ) $ ( 27,495,672 ) Foreign 323,157 938,620 Pre-tax loss from operations $ ( 55,919,414 ) $ ( 26,557,052 ) F-21 The components of the income tax expense consisted of the following: Year Ended December 31, Current income tax expense 2025 2024 Federal $ — $ — State 5,400 10,071 Foreign — — Total current income tax expense $ 5,400 $ 10,071 The Company is subject to taxation in the United States, various states, Australia, and Canada. The Company’s tax years for 2022 (federal), 2021 (States), 2021 (Australia) and 2021 (Canada) and forward are subject to examination by the United States, state, Australian, and Canadian tax authorities. However, to the extent allowed by law, the taxing authorities may have the right to examine periods where NOLs and credits were generated and carried forward and make adjustments up to the amount of the NOL and credit carryforwards. The Company is not currently under examination by any jurisdiction. 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 $ 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. At December 31, 2025, the Company had Canadian capital loss carryforwards of approximately $ 35,277,475 which may be carried forward indefinitely. At December 31, 2025, the Company had federal and California research credit carryforwards of $ 6,156,218 and $ 2,445,548 , respectively. The federal research credit carry forwards will begin to expire in 2027, unless previously utilized. The California research credits will carry forward indefinitely. The Company’s NOLs and research credit carryforwards are subject to a reserve. Additionally, the Company had Canadian SR&ED credits as of December 31, 2025 of $ 909,791 which may be carried forward indefinitely. Utilization of the domestic NOL's and research credits could be subject to a substantial annual limitation due to ownership change limitations that may have occurred, or that could occur in the future, as required by Section 382 and 383 of the Internal Revenue Code of 1986, as amended (the Code), as well as similar state provisions. These ownership changes may limit the amount of NOLs and credits that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders. Upon the occurrence of an ownership change under Section 382 as outlined above, utilization of the NOLs and credits are subject to an annual limitation under Section 382 of the Code, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the NOLs and credits before utilization. While the Company has not performed a Section 382 study, multiple ownership changes may have already occurred as the Company raised capital through the issuance of stock. 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. F-22 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, Current deferred tax assets and (liabilities): 2025 2024 Net operating loss $ 50,218,210 $ 41,627,022 Capital loss carryforwards 9,348,531 14,986,412 Contingent legal accrual 434,504 381,938 Depreciation 42,221 477,024 Amortization 2,298 2,606 Research and development credits 4,953,892 4,112,293 Capitalized research and development costs 7,101,851 4,708,931 Lease liability 57,466 95,674 State taxes 714 1,092 Stock-based compensation 1,899,512 1,174,967 Other 331,584 270,088 Gross deferred tax assets 74,390,783 67,838,047 Valuation allowance ( 74,334,787 ) ( 67,743,575 ) Net deferred tax assets $ 55,996 $ 94,472 Deferred tax liabilities Right-of-use asset $ ( 55,996 ) $ ( 94,472 ) Total deferred tax liabilities ( 55,996 ) ( 94,472 ) Net deferred tax assets $ — $ — F-23 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 Canada 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, 2024 Expected income tax benefit at federal statutory tax rate $ ( 5,576,981 ) State income taxes, net of federal benefit ( 1,871,588 ) Change in valuation allowance 2,522,618 Uncertain tax positions 2,562,991 Reduction in deferreds upon divestiture 839,873 Stock compensation ( 46,422 ) Research and development credits ( 1,374,591 ) Rate adjustment 6,070 Foreign rate differential 2,396,433 162(m) officers compensation 460,853 Other 90,815 Provision for income taxes $ 10,071 F-24 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 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 . 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. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, the guidance provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. A reconciliation of the beginning and ending amounts of unrecognized tax positions are as follows: As of December 31, 2025 2024 Unrecognized tax benefits, beginning of the year $ 9,498,441 $ 6,432,143 Gross increase – current period tax positions 5,033,976 3,073,575 Gross decrease – prior period tax positions ( 397 ) ( 7,277 ) 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 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 . 12. Commitments and Contingencies Office Leases The Company leases office space for its corporate headquarters, located at 11250 El Camino Real, Suite 100 San Diego, California 92130. The original lease term was effective from September 1, 2021 through October 31, 2023 and contained a renewal option for a two-year extension after the current expiration date. At the commencement date, the Company did not expect to exercise the renewal option, and has therefore excluded the option from the calculation of the right of use asset and lease liability. The lease provides for two months of rent abatement and the initial monthly rent is $ 8,067 per month with annual increases of 3 % commencing on November 1, 2022. The lease included non-lease components (i.e., property management costs) that are paid separately from rent, based on actual costs incurred, and therefore were not included in the right-of-use asset and lease liability but are reflected as an expense in the period incurred. In calculating the present value of the lease payments, the Company has elected to utilize its incremental borrowing rate based on the lease term. The Company entered into an amended and restated lease agreement on June 27, 2023 for its corporate headquarters, extending the lease term to 36 months, retroactive to September 1, 2021 through October 31, 2026. The Company treated the amended and restated lease agreement as a single modified lease. On September 25, 2024, the Company entered into a new lease agreement for approximately 2,077 square feet of office space located at 632 Commercial Street, 5th Floor, San Francisco, California 94111. The lease has a term of three years and two months , beginning on October 01, 2024, with a monthly rent of $ 9,000 and annual increases of 3 %. This office space will support the Company's continued growth and operational needs as the Company expands its development activities. In calculating the present value of the lease payments, the Company has elected to utilize its incremental borrowing rate based on the lease term. For the years ended December 31, 2025 and 2024, lease expense comprised of $ 207,400 and $ 130,658 , respectively in lease cost from the Company's non-cancellable operating leases. The remaining lease term and discount rate related to the operating lease are presented in the following table: December 31, 2025 Weighted-average remaining term – operating lease (in years) 1.74 Weighted-average discount rate – operating lease 10.75 % F-25 Future minimum lease payments as of December 31, 2025 are presented in the following table: Year: 2026 202,876 2027 85,936 Total future minimum lease payments: 288,812 Less imputed interest 15,166 Total $ 273,646 Reported as: December 31, 2025 December 31, 2024 Operating lease liability $ 189,647 $ 182,428 Operating lease liability, net of current portion 83,999 273,162 Total lease liability $ 273,646 $ 455,590 General Litigation and Disputes From time to time, in the normal course of operations, the Company may be a party to litigation and other dispute matters and claims. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. An unfavorable outcome to any legal matter, if material, could have a materially adverse effect on the Company’s operations or financial position, liquidity or results of operations. Wendy Cunning vs Skye Bioscience, Inc. The Company is a party to a legal proceeding with a former employee alleging, among other things, wrongful termination, violation of whistleblower protections under the Sarbanes-Oxley Act of 2002, and retaliation under California law against the Company relating to certain actions and events that occurred with the Company's former management during the employee's employment term from March 2018 to July 2019. The case, entitled Wendy Cunning vs Skye Bioscience, Inc. , was filed in U.S. District Court (the "District Court") for the Central District of California (the “Cunning Lawsuit”). On January 18, 2023, a jury rendered a verdict in favor of Ms. Cunning and awarded her $ 512,500 in economic damages (e.g., lost earnings, future earnings and interest), $ 840,960 in non-economic damages (e.g., emotional distress) and $ 3,500,000 in punitive damages. On August 2, 2023, the District Court ruled on the plaintiff's motion for attorney fees and awarded the plaintiff $ 1,200,008 . Based on this order, the Company reduced the aggregate estimate for the legal contingency by $ 151,842 , the difference between the attorney fees awarded by the District Court and the Company's previous estimate. On August 17, 2023, the Company obtained a stay on enforcement of the judgment in the Cunning Lawsuit by posting an appeal bond in the amount of $ 9,080,202 . In March of 2023, the Company appealed the judgment in the Cunning Lawsuit to the United States Court of Appeals for the Ninth District (the "Ninth Circuit"). Subsequent to quarter end, on October 22, 2024, the Ninth Circuit issued its decision in the Company's favor which vacated the judgment and remanded the case back to the District Court for a new trial. As a result, the Company recovered the $ 9,080,202 restriction on its cash related to the bond during the year ended December 31, 2024. 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: • Advice from external advisors including its technical accounting advisors regarding the appropriate application of GAAP and legal counsel’s advice with regard to prior experience with similar cases, • the damages and potential attorney fee awards if the case were to be retried, including the likelihood of a subsequent loss if the Company were to be unsuccessful while giving consideration to the facts and circumstances that would be inadmissible due to the Ninth Circuit’s decision, • the likelihood of settlement and information obtained during settlement discussions prior to the first trial, • the Company’s possible defenses and counterclaims, and F-26 • the case history and the amount of the prior judgment. The final amount of the loss and loss recoveries remain uncertain. The ultimate amount of the potential loss may be significantly less than the amount of the revised legal contingency and there is no guarantee that the Company will be successful in its efforts to recover additional losses. 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. , 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. , Case No. 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. F-27 13. Segment Reporting The Company operates in one business segment, which includes the business of research and development activities related to developing medicine for obesity and metabolic diseases. The determination of a single business segment is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (“CODM”). The Company’s CODM is its Chief Executive Officer, who reviews and evaluates consolidated net loss for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods. In addition to the significant expense categories included within consolidated net loss presented on the Company's Consolidated Statements of Operations, see below for disaggregated amounts that comprise research and development expenses which are presented to the Company's CODM for review: Year Ended December 31, 2025 2024 External clinical development expenses (1) SBI-100 $ 10,511 $ 2,216,209 nimacimab 32,305,827 10,801,849 Total external clinical development expenses 32,316,338 13,018,058 Personnel related and stock-based compensation 5,928,398 3,995,558 Other research and development expenses (2) 4,117,143 1,688,078 Total research and development expenses $ 42,361,879 $ 18,701,694 (1) External clinical development expenses include expenses for clinical trial costs and clinical manufacturing, as well as costs for discovery in research and development studies. (2) Other research and development expenses include expenses for travel and entertainment, consulting and advisory and general business expenses. The amount of property and equipment in the US was equal to $ 55,488 , and $ 83,276 for December 31, 2025 and December 31, 2024 , respectively. The amount of property and equipment outside of the US was equal to $ 843,442 , and $ 1,349,476 for December 31, 2025 and December 31, 2024 , respectively. 14 Subsequent Events 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. F-28 The following exhibits are filed with this Annual Report on Form 10-K. Exhibit Number Description of Exhibit 2.1 Arrangement Agreement, dated May 11, 2022, by and between the Company and EHT (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on May 11, 2022) 2.2 Amendment No. 1 to the Arrangement Agreement, dated June 14, 2022, by and between the Company and EHT (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on June 17, 2022) 2.3 Amendment No. 2 to the Arrangement Agreement, dated July 15, 2022, by and between the Company and EHT (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on July 21, 2022) 2.4 Amendment No. 3 to the Arrangement Agreement, dated October 18, 2022, by and between the Company and EHT (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on October 19, 2022) 2.6 Share Purchase Agreement, dated November 8, 2022, by and between Emerald Health Therapeutics, Inc., 14428773 Canada Inc., Verdelite Sciences, Inc., Verdelite Property Holdings, Inc. and C3 Centre Holding Inc. (incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q filed on November 14, 2022) 2.7 Amendment No. 1 to the Share Purchase Agreement, dated January 26, 2023, by and between Emerald Health Therapeutics, Inc., 14428773 Canada Inc., Verdelite Sciences, Inc., Verdelite Property Holdings, Inc. and C3 Centre Holding Inc. (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on January 27, 2023) 2.8 Amendment No. 2 to the Share Purchase Agreement, dated February 9, 2023, by and between Emerald Health Therapeutics, Inc., 14428773 Canada Inc., Verdelite Sciences, Inc., Verdelite Property Holdings, Inc. and C3 Centre Holding Inc. (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on February 15, 2023) 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 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 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) 4.4 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) 4.5 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) 4.6 2023 Common Stock Purchase Warrant issued by Skye Bioscience, Inc. to MFDI, LLC (incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K filed on August 21, 2023) 4.7 Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on January 29, 2024) 4.8 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) 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) 10.1† Skye Bioscience, Inc. 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) 80 10.2† Skye Bioscience, Inc. 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) 10.3† Skye Bioscience, Inc. 2022 Employee Stock Purchase Plan (incorporated by reference to Appendix C to our definitive proxy statement filed on August 31, 2022) 10.4† Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on January 12, 2015) 10.5† Form of Indemnification Agreement (incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed on August 21, 2023) 10.6† Employment Agreement, dated August 10, 2020, by and between Skye Bioscience, Inc. and Punit Dhillon (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on August 12, 2020) 10.10† 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) 10.11† Employment Agreement, dated November 11, 2022 by and between Skye Bioscience, Inc. and Chris Twitty (incorporated by reference to Exhibit 10.11 to our Annual Report on Form 10-K filed on March 20, 2025) 10.12** Securities Purchase Agreement, dated as of August 15, 2023, by and among Skye Bioscience, Inc. and the Investors named therein (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on August 21, 2023) 10.13** Registration Rights Agreement, dated as of August 15, 2023, by and among Skye Bioscience, Inc. and the Investors named therein (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on August 21, 2023) 10.14** 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) 10.15** Form of Securities Purchase Agreement, dated as of January 29, 2024, by and among Skye Bioscience, Inc. and the Investors named therein (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on May 10, 2024) 10.16** Form of Securities Purchase Agreement, dated as of March 11, 2024, by and among Skye Bioscience, Inc. and the Investors named therein (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on March 13, 2024) 10.17** Form of Registration Rights Agreement, dated as of March 11, 2024, by and among Skye Bioscience, Inc. and the Investors named therein (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on March 13, 2024) 10.18 Equity Distribution Agreement, dated as of May 10, 2024, by and between Skye Bioscience, Inc. and Piper Sandler & Co. (incorporated by reference to Exhibit 1.2 to our Registration Statement on Form S-3 filed on May 10, 2024) 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) 10.20# 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 (incorporated by reference to Exhibit 19 to our Annual Report on Form 10-K filed on March 20, 2025) 20# S kye B ioscience , I nc . C ode of B usiness C onduct and E thics 21.1# Subsidiaries of the Registrant 23.1# Consent of CBIZ CPAs PC 23.2# Consent of M arcum LLP 31.1# Certification of Principal Executive Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934 31.2# Certification of Principal Financial and Accounting Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934 81 32.1# Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2# Certification of Principal Financial and Accounting Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97.1† Policy relating to recovery of erroneously awarded compensation, as required by applicable listing standards adopted pursuant to 17 CFR 240.10D-1 (incorporated by reference to Exhibit 97.1 to our Annual Report on Form 10-K filed on March 22, 2024) 101# Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) _________ # Filed Herewith ** Portions of this exhibit have been omitted in compliance with Regulation S-K Item 601(b)(10)(iv). † Management contract or compensatory plan or arrangement. Item 16. Form 10-K Summary . None. 82 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Skye Bioscience, Inc. a Nevada corporation March 10, 2026 By: /s/ Punit Dhillon Punit Dhillon Its: Director, Chief Executive 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. By: /s/ Punit Dhillon March 10, 2026 Punit Dhillon Its: Director, Chief Executive Officer (Principal Executive Officer & Principal Financial and Accounting Officer) By: /s/ Paul Grayson March 10, 2026 Paul Grayson Its: Director, Chairman By: /s/ Deborah Charych March 10, 2026 Deborah Charych Its: Director By: /s/ Andrew J. Schwab March 10, 2026 Andrew J. Schwab Its: Director By: /s/ Karen Smith March 10, 2026 Karen Smith Its: Director By: /s/ Annalisa Jenkins March 10, 2026 Annalisa Jenkins Its: Director 83