Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements for the years ended December 31, 2025 and 2024 together with notes thereto. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited, to those set forth under “Risk Factors” and elsewhere in this Annual Report.

Unless otherwise provided in this Annual Report, references to “we,” “us,” “our” and “Skye” in this discussion and analysis refer to Skye Bioscience, Inc., a Nevada corporation, together with its wholly owned subsidiaries, Nemus, a California corporation, SKYE Bioscience Pty Ltd ("SKYE Bioscience Australia"), an Australian proprietary limited company, Emerald Health Therapeutics, Inc. (EHT) a corporation governed by the Business Corporations Act (British Columbia), and Bird Rock Bio Sub, Inc. ("BRB"), a Delaware corporation.

Overview

We are a clinical stage biotechnology company pioneering next-generation molecules that modulate G-protein-coupled receptors ("GPCRs") to treat obesity, overweight, and related conditions. Our lead candidate, nimacimab, is a peripherally restricted negative allosteric modulating antibody targeting cannabinoid receptor 1 ("CB1")—a key GPCR involved in metabolic regulation that is administered as a subcutaneous injectable initially for the treatment of obesity and overweight.

In October of 2025, we reported topline data from our Phase 2a clinical trial, CBeyondTM, for nimacimab and in February 2026 we reported interim results from the combination cohort of the 26 week extension study. In response to the trial results, we have shifted focus to a combination therapy strategy while continuing to evaluate the monotherapy as a potential standalone or second-line therapy if efficacy can be achieved with higher doses. In March 2026, we initiated an expansion study (Part C) of the CBeyond Phase 2a trial to assess preliminary safety and pharmacokinetic (PK) profile of nimacimab administered intravenously (IV). The expansion study will comprise two cohorts of nimacimab monotherapy (400 mg IV and 600 mg IV) compared to placebo administered weekly over 15 weeks (16 doses), with a 12 week follow up period.

On August 18, 2023, we completed a strategic transaction to acquire a clinical asset pursuant to an Agreement and Plan of Merger and Reorganization, dated as of August 15, 2023, by and among the Company, Bird Rock Bio, Inc. and Aquila Merger Sub, Inc., pursuant to which Aquila Merger Sub, Inc. merged with and into Bird Rock Bio, Inc. with Bird Rock Bio, Inc. surviving as a wholly owned subsidiary of the Company (the “BRB Acquisition”). The purpose of the BRB Acquisition was to acquire BRB's clinical asset, nimacimab, an antibody targeting the CB1 receptor, for development to treat metabolic, inflammatory, and fibrotic conditions.

In January 2024 and March 2024, we completed two private placement equity transactions (the "January and March PIPE Financings") with institutional accredited investors, in which we raised combined net aggregate proceeds of $83,556,563. The net proceeds raised from the January and March PIPE Financings, along with the reallocation of funds from the elimination of our ocular program (as described below) have allowed us to fund our clinical trial of nimacimab for obesity through top-line Phase 2a data, complete process intensification manufacturing activities along with drug substance and product manufacturing work needed for our Phase 2b study and enable us to expand upon our metabolic program with our other research and development efforts. Our cash runway currently excludes the Phase 2b clinical study, additional manufacturing activities expected to complete the Phase 2b resupply and costs related to future registrational studies.

In April 2024, Skye uplisted to the Nasdaq Global Market® stock exchange from the OTCQB.

On May 10, 2024, we entered into an Equity Distribution Agreement (the “ATM Agreement”) with Piper Sandler & Co, as the sales agent (the “Sales Agent”), under which we may, from time to time, sell up to $100,000,000 of shares of our common stock through the Sales Agent (the “ATM Offering”). We are not obligated to, and we cannot provide any assurances that we will, make any sales of the shares under the ATM Agreement. We will pay the Sales Agent a commission for their services in acting as agent in the sale of common stock in an amount up to 3% of the gross sales price per share sold. We have not issued any shares under the ATM Offering.

In June 2024, we completed our Phase 2a double-masked randomized, placebo-controlled trial of SBI-100 Ophthalmic Emulsion (“SBI-100 OE”) in 56 patients with elevated intraocular pressure ("IOP") diagnosed with primary open-angle glaucoma or ocular hypertension. The primary endpoint evaluated the change in diurnal IOP in the treated arm vs. placebo over 2 weeks. The study did not achieve a statistically significant improvement in IOP over placebo. As a result, we eliminated our ocular program and strategically redirected our efforts and capital resources to our metabolic program. We have also terminated our license agreement with the University of Mississippi and other vendor contracts related to the manufacture, development, and sublicense of SBI-100 OE.

In August of 2024, the Convertible Note (as defined in Note 6 to the accompanying consolidated financial statements) with a principal value of $5,000,000, was converted into 968,973 shares of our common stock.

During the fourth quarter of 2024, we were successful in our appeal in the Ninth Circuit Court of Appeals (the "Ninth Circuit") of the judgment of a material litigation matter, which has been remanded to the District Court for a new trial, and the bond related to the judgement was exonerated, allowing us to recover $9,000,000 in restricted cash. Additionally, in a related case with our insurance carrier, we collected $2,000,000 during the fourth quarter of 2024. The recovered funds were reallocated to further our clinical pipeline and extended our cash runway.

We were incorporated under the laws of the State of Nevada on March 16, 2011, and our headquarters are based in San Diego, CA. Since our incorporation, we have devoted substantially all of our efforts to building our product portfolio through the acquisition of clinical assets and licensing agreements, carrying out research and development, building infrastructure and raising capital.

Financial Overview

Revenues

To date, we have not generated any revenue. We do not expect to receive any revenue from our lead drug candidate, nimacimab, or any future drug candidates that we develop unless and until we obtain regulatory approval for, and commercialize, our drug candidates or generate revenue from collaborative agreements with third parties.

Research and DevelopmentExpenses

During the year ended December 31, 2025, we incurred $42,361,879 in research and development expenses primarily related to our efforts in conducting the Phase 2a clinical trial of nimacimab for obesity and manufacturing costs in preparation of our Phase 2b trial. During the year ended December 31, 2024, we incurred $18,701,694 in research and development expenses primarily related to our efforts in conducting the Phase 2a clinical trial of nimacimab for obesity, manufacturing and residual costs from our legacy Phase 2a SBI-100 OE clinical trial.

We expect that our ongoing research and development expenses will consist of costs incurred for the development of our drug candidate, nimacimab, or any future drug candidates, including, but not limited to:

• payments to third party manufacturing organizations and consultants; and

We expect to incur future research and development expenditures to support our preclinical, nonclinical, and clinical studies. Preclinical and nonclinical activities include early discovery efforts with novel molecules, laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess safety and efficacy.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time consuming and the successful development of our drug candidate, nimacimab, and any future drug candidate is highly uncertain. Our future research and development expenses will depend on the clinical success of nimacimab and any future drug candidates as well as ongoing assessments of the commercial potential of such drug candidates. In addition, we cannot forecast with any degree of certainty whether nimacimab or any future drug candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements. We expect to incur increased research and development expenses in the future as we continue our efforts towards advancing our lead program for nimacimab.

General and Administrative Expenses

Our general and administrative expenses have fluctuated year-over-year as we have entered into various strategic acquisitions to restructure and reposition our company. Additionally, as a business in the early stages of drug development we are in the process of scaling our operations by hiring additional employees and building the infrastructure necessary to increase efficiencies. These initiatives have resulted in additional costs related to the implementation of certain systems, insurance, facilities, legal, tax and accounting costs. As a public company, we expect to incur additional expenses related to insurance, investor relations activities, legal and other administration and professional services to comply with the rules and regulations of the SEC, the Financial Industry Regulatory Authority ("FINRA") and Nasdaq. Other significant costs are expected to include legal fees relating to patent and corporate matters, business development costs and fees for consulting services. To incentivize our employees and be competitive to retain strong talent we issued additional equity awards in 2024, which have resulted in increased stock-based compensation expense. We also expect that certain general and administrative expenses which are commensurate with headcount, will continue to increase in the future in order to support our expected increase in research and development activities, including increased salaries, technology, facilities and other related costs.

Estimated Legal Contingency and Income from Insurance Recovery

The estimated legal contingency relates to a material litigation matter that was related to our former management team. As of December 31, 2023, we had posted an appellate bond that was collateralized by an irrevocable letter of credit equal to, $9,080,202, approximately 150% of the liability recorded on our balance sheet. During 2024, we were successful in our appeal of the judgment in the Ninth Circuit Court of Appeals and the case was remanded back to the District Court for a new trial, as a result of which we reduced the estimated legal contingency based on new key assumptions. The final amount of the loss and loss recoveries remains uncertain. We believe that it is at least reasonably possible that the estimated amount of the potential loss may change in the near term. As of December 31, 2025, the estimated legal contingency, including accrued legal expenses, is $2,069,067. See Note 12 to the accompanying consolidated financial statements for more information.

Additionally, in a related case with our insurance carrier, we collected $2,000,000 during the fourth quarter of 2024. The recovered funds were reallocated to further our general operations.

Other Expense

Other (income) expense primarily includes gains from installment payments related to the sale of Verdelite Sciences, Inc. ("VDL") and the sale of the Avalite Sciences, Inc. ("AVI") building (the "AVI building") in the first quarter of 2024, and interest expense. These expenses are offset by interest income earned on our cash and cash equivalent balances and short term investments.

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to accrued expenses, the percentage of completion as it relates to our clinical accruals, financing operations, contingencies, the fair value of assets acquired in the acquisitions, and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our consolidated financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. These accounting estimates are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements included in this Annual Report. We believe that the following accounting estimates are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we use in the preparation of our consolidated financial statements.

Accrued Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing contracts and vendor agreements, communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual cost. We make estimates of our accrued and prepaid clinical expenses on a quarterly basis in our consolidated financial statements based on facts and circumstances known to us at that time. Examples of estimated accrued research and development expenses include fees paid to contract research organizations ("CROs"), investigative sites in connection with clinical studies and to vendors related to product manufacturing and development of clinical supplies.

We base our expenses related to clinical study and trial costs on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical studies on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows and expense recognition. Payments under some of these contracts depend on factors out of our control, such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, we may report amounts that are too high or too low in any particular period. There have been no material changes in estimates for the periods presented.

Stock-Based Compensation Expense

We have stock-based compensation programs, which include restricted stock units ("RSUs"); stock options and an employee stock purchase plan. We account for stock-based compensation expense, including the expense for grants of stock options and RSUs that may be settled in shares of our common stock, based on the fair values of the equity instruments issued. The fair value is determined on the measurement date, which is generally the date of grant. The fair value of our RSUs is generally measured at the market price of our common stock on the measurement date. Additionally, we use the Monte Carlo Simulation model to evaluate the derived service period and fair value of awards with market conditions, including assumptions of historical volatility, time to the next capital raise and risk-free interest rate commensurate with the vesting term. The fair value for our stock option awards is determined at the grant date using the Black-Scholes valuation model.

Assumptions for the Black-Scholes valuation model used for employee stock awards include:

•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.

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

We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine stock-based compensation expense. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to changes in stock-based compensation expense that could be material or the stock-based compensation expense reported in our financial statements may not be representative of the actual economic cost of the stock-based compensation.

Accrued Legal Contingencies and Related Expenses

We follow Accounting Standards Codification ("ASC") 450, subtopic 450-20 to report accounting for loss contingencies and recoveries. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to us, but which will only be resolved when one or more future events occur or fail to occur.

We assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies and recoveries related to legal proceedings that are pending or un-asserted claims that may result in such proceedings, we evaluate 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 or loss recovery indicates that it is probable that a material loss has been incurred or a loss recovery is realizable and the amount of the asset or liability can be estimated, then the estimated asset or liability would be recorded in our 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.

Recently Issued and Adopted Accounting Pronouncements

See Note 2 to the accompanying consolidated financial statements for information on recently issued accounting pronouncements and recently adopted accounting pronouncements. The adoption of recently adopted accounting pronouncements did not have a material impact on our consolidated financial statements.

Results of Operations

Comparison of the years ended December 31, 2025 and 2024

Research and DevelopmentExpenses

Below is a summary of our research and development expenses during the years ended December 31, 2025 and 2024:

Year ended December 31,

Research and development expenses for the year ended December 31, 2025 increased by $23,660,185 when compared to the year ended December 31, 2024. The increase in research and development expenses was primarily due to the following increases:

•Clinical study costs decreased by $1,497,323 due to the planning and launch of the CBeyondTM study in August of 2024, which achieved 50% enrollment by the end of 2024 and topline data in October 2025. During the first half of 2024, we also completed our Phase 2a SBI-100 trial for glaucoma which was the driver for the decrease as this program was eliminated in the first half of 2024.

•Contract manufacturing costs increased by $20,689,916 due to nimacimab drug product and drug substance runs to resupply the Phase 2a study and prepare for the Phase 2b study. Additional costs related to process intensification and dose concentration activities which are intended to allow us to seamlessly transition to a Phase 2b and build a scalable manufacturing process for future studies.

•Discovery research and development costs increased by $1,857,009 primarily from studies related to the development of a diet induced obesity model to demonstrate proof of concept and mechanism of action studies related to nimacimab.

•Quality assurance costs increased by $108,747 from the use of consultants.

•Salaries and stock-based compensation increased by $1,932,840 due to increased headcount to support our metabolic pipeline and organizational expertise.

•Consulting and advisory fees increased by $724,360 to support our nimacimab program.

•General business expenses decreased by $350,061 due to the non-recurrence of fees associated with eliminating our glaucoma program.

•Depreciation and amortization expense increased by $223,456.

General and Administrative Expenses

Below is a summary of general and administrative expenses during the years ended December 31, 2025 and 2024:

Year ended December 31,

General and administrative expenses for the year ended December 31, 2025 decreased by $1,924,055 as compared to the year ended December 31, 2024. The decrease in general and administrative expenses was primarily due to the following:

•Salaries, benefits and other direct employee related costs decreased by $742,057 primarily due to lower of stock based compensation expense in the current period due to the achievement of certain performance based milestones related to RSUs granted to members of management and members of the board of directors of the Company in 2024, the decrease was offset by increased headcount.

•Investor relations, marketing and communications expenses increased by $580,995 due primarily to a market evaluation study for nimacimab and increased investor communications and marketing activities.

•Professional, fees decreased by $1,408,506 primarily due to the decrease in professional fees from tax and financial advisory services.

•Consulting and advisory fees increased by $499,909 primarily due to the increase in finance accounting and human resource consultants and the cost of the company's annual general meeting of shareholders.

•Recruiting fees expenses decreased by $176,176 due to the one time cost to hire an executive in the prior period.

•General business expenses decreased by $314,569 primarily due to the one time Nasdaq listing fee and filing fees in the prior period and lower insurance premiums in 2025, these decreases were offset by an increase in software costs.

•Legal fees decreased by $137,852 due to decreases in litigation related activities, one-time fees related to SEC filings in the prior period, decreases in external legal costs.

•General and administrative foreign exchange expenses decreased by $244,212 due to exchange rate fluctuation of the operation of our foreign subsidiaries.

Change in Estimate for Legal Contingencies

Below is a summary of the estimated legal contingencies during the years ended December 31, 2025 and 2024:

Year ended December 31,

There was no change in estimate for legal contingency for the year ended December 31, 2025, as compared to the gain during the year ended December 31, 2024. The adjustment for the year ended December 31, 2024 was due to a change in managements estimate related to the total liability due in the Cunning Lawsuit. For additional information regarding the adjustment to the legal contingency, see Note 12 to the accompanying consolidated financial statements.

Income from Insurance Recovery

Below is a summary of the income from insurance recovery during the years ended December 31, 2025 and 2024:

Year ended December 31,

There was no income from insurance recovery for the year ended December 31, 2025, as compared to the income during the year ended December 31, 2024. The income for the year ended December 31, 2024 is due to the Company reaching a settlement with its former D&O carrier for coverage related to the Cunning Lawsuit.

Other Expense (Income)

Below is a summary of other expense (income) during the years ended December 31, 2025 and 2024:

Year ended December 31,

For the year ended December 31, 2025, we had a decrease in other income, net of $1,391,515 as compared to the same period in 2024 primarily due to:

•Gain on sale of asset decreased by $997,662, due to the one-time sale of the AVL real estate during the year ended December 31, 2024. During the year ended December 31, 2025, the Company continued to collect installment payments from the sale of VDL totaling $360,750.

•Decreased interest expense of $749,308 due to the reduction of debt.

•Decreased interest income of $1,144,859 due to the decreased interest from our cash and cash equivalents and short-term investments yields as a result of the decrease in cash equivalents and short-term investments on hand.

Liquidity, Going Concern and Capital Resources

We have incurred operating losses and negative cash flows from operations since our inception. We expect to continue to incur significant losses and negative cash flows from operations through 2026 and into the foreseeable future. We anticipate that we will continue to incur net losses in order to advance and develop potential drug candidates into preclinical and clinical development activities and support our corporate infrastructure, which includes the costs associated with being a public company. Historically, we have funded our operations primarily through issuance of equity securities, borrowings from a related party and strategic transactions.

As of December 31, 2025, had working capital of $18,888,688 and an accumulated deficit of $186,874,486. As of December 31, 2025, the Company had cash and cash equivalents 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.

In January 2024 and March 2024, we completed the January and March PIPE Financings with institutional accredited investors, in which we raised combined net aggregate proceeds of $83,556,563.

In May 2024 we entered into the ATM Agreement under which the Company may sell up to $100,000,000 of shares of common stock through the Sales Agent. The Company has not sold any shares under the ATM Agreement as of the date hereof and is not obligated to, and cannot provide any assurances that the Company will make any sales of the shares under the ATM Agreement.

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 1,301,410 shares of Company's common stock (see Note 8 to the accompanying consolidated financial statements).

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.

In August 2024, the holder of the Convertible Note exercised their conversion option and converted the principal balance of $5,000,000 into 968,973 shares of our common stock.

During the fourth quarter of 2024, we were successful in our appeal in the Ninth Circuit of the judgment of a material litigation matter, which has been remanded to the District Court for a new trial, and the bond related to the judgement was exonerated, allowing us to recover $9,000,000 in restricted cash. Additionally, in a related case with our insurance carrier, we collected $2,000,000 during the fourth quarter of 2024. The recovered funds have been reallocated to further our clinical pipeline and extend our cash runway.

Going Concern

Our independent registered public accounting firm has issued a report on our audited consolidated financial statements as of and for the year ended December 31, 2025 that included an explanatory paragraph referring to our recurring operating losses and expressing substantial doubt in our ability to continue as a going concern. Our consolidated financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our consolidated financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

As of December 31, 2025, management estimates that we have sufficient capital to continue our 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, our continued operations beyond the fourth quarter of 2026

will depend on our ability to successfully raise additional capital through various potential sources, such as equity and/or debt financings, or strategic relationships. Our ability to access the capital markets is expected to be extremely limited. If we seek additional financing to fund our operations and there remains substantial doubt about our ability to continue as a going concern, our financing sources may be unwilling to provide additional funding to us on commercially reasonable terms or at all. In addition, the uncertainty as to the resolution of the Cunning Lawsuit could limit our ability to raise new capital from investors to operate our business. If adequate funds are not available to us when needed we will be required to curtail or perhaps cease our operations which would, in turn, further raise substantial doubt about our ability to continue as a going concern. Refer to "Risks Related to Our Limited Operating History, Financial Position and Capital Requirements — Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern, and if we are unable to continue, you may lose your entire investment" for additional information.

Our future capital requirements will depend on many factors, including:

•the scope, rate of progress, results and costs of our clinical trials, preclinical studies and other related activities;

•our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such agreements;

•the timing of, and the costs involved in, obtaining regulatory approvals for nimacimab or any future drug candidates;

•the number and characteristics of the drug candidates we seek to develop or commercialize;

•the cost of manufacturing clinical supplies, and establishing commercial supplies of our drug candidates;

•the cost of commercialization activities if our current or future drug candidates are approved for sale, including marketing, sales and distribution costs;

•the expenses needed to attract and retain skilled personnel;

•the costs associated with being a public company;

•the amount of revenue, if any, received from commercial sales of our drug candidates, should any of our drug candidates receive marketing approval; and

•the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing possible patent claims, including litigation costs and the outcome of any such litigation.

Cash Flows

The following is a summary of our cash flows for the periods indicated and has been derived from our consolidated financial statements which are included elsewhere in this Annual Report:

Year ended December 31,

Net cash and cash equivalents provided by (used in):

Cash Flows from Operating Activities

The primary use of cash and cash equivalents for our operating activities during the years ended December 31, 2025 and 2024 was to fund research and development activities for our clinical product candidates, nimacimab and our prior drug candidate, SBI-100 OE, along with general and administrative activities. Our cash and cash equivalents used in operating activities also reflected changes in our working capital, net of adjustments for non-cash charges.

Cash and cash equivalents used in operating activities of $43,062,529 during the year ended December 31, 2025, reflected a net loss of $55,924,814, the loss was adjusted by aggregate non-cash charges of $8,130,296 and included a $4,731,989 decrease in our operating assets and liabilities. Non-cash charges included $723,352 of depreciation and amortization, $7,767,694 for stock-based compensation expense, $360,750 for a non-cash gain on the sale of an asset. The net change in our operating assets and liabilities included a $1,054,580 increase in our prepaid expenses and other current assets, a decrease in accounts payable of $1,395,428, and a $2,281,981 decrease in our accrued expenses and other current liabilities.

Cash and cash equivalents used in operating activities of $25,237,480 during the year ended December 31, 2024, reflected a net loss of $26,567,123, the loss was adjusted by aggregate non-cash charges of $3,958,401 and included a $2,628,758 decrease in our operating assets and liabilities. Non-cash charges included $298,640 of depreciation and amortization, $325,610 in vendor deposit write offs, $8,317,480 for stock-based compensation expense, $599,006 in non-cash interest expense from the amortization of the debt discount on our convertible debt, a gain of $4,234,717 from our change in estimate related to our legal contingency for the Cunning Lawsuit, $1,358,412 for a non-cash gain on the sale of an asset. The net change in our operating assets and liabilities included a $1,422,928 increase in our prepaid expenses and other current assets, a decrease in accounts payable of $586,533, and a $573,696 decrease in our accrued expense and other current liabilities.

Cash Flows from Investing Activities

Cash and cash equivalents used in investing activities of $19,500,285 during the year ended December 31, 2025 consisted of proceeds from the sale of VDL of $360,750 and purchase of short-term investments of $19,854,723, offset by capital expenditures from the purchase of property and equipment of $6,312.

Cash and cash equivalents used in investing activities of $245,615 during the year ended December 31, 2024 consisted of our capital expenditures from the purchase of property and equipment of $1,604,027 offset by the proceeds from the sale of the AVI building of $1,358,412.

Cash Flows from Financing Activities

During the year ended December 31, 2025, cash and cash equivalents provided by financing activities was composed of $29,571 in proceeds received from the purchase of shares of our common stock pursuant to our employee stock purchase plan.

During the year ended December 31, 2024, cash and cash equivalents provided by financing activities included $83,556,563 in net proceeds received from the January and March 2024 PIPE Financings.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item8. Financial Statements and Supplementary Data.

Our consolidated financial statements and the report of our independent registered public accounting firm are included in this report on pages F-1 through F-28.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

Item9A. 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.

Item9B. 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.

PARTIII

Item10. 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.

Item11. 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.

Item12. 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.

Item13. 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.

Item14. 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.

PARTIV

Item15. 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.

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 ID 688) F-2

Consolidated Balance Sheets as of December 31, 2025 and 2024 F-4

Notes to the Consolidated Financial Statements F-8

F-1

REPORTOF 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

REPORTOF 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

/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

CONSOLIDATEDBALANCE SHEETS

December 31

Current assets

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Non-current liabilities

Operating lease liability, net of current portion 83,999 273,162

Commitments and contingencies (Note 12)

Stockholders’ equity

See accompanying notes to the consolidated financial statements.

F-4

SKYE BIOSCIENCE, INC. AND SUBSIDIARIES

CONSOLIDATEDSTATEMENTS OF OPERATIONS

Year Ended December 31

Operating expenses

Change in estimate for legal contingency — (4,234,717)

Income from insurance recovery — (2,000,000)

Other (income) expense

Loss per common share

See accompanying notes to the consolidated financial statements.

F-5

SKYE BIOSCIENCE, INC. AND SUBSIDIARIES

CONSOLIDATEDSTATEMENTS OF CASH FLOWS

Year Ended December 31

Cash flows from operating activities:

Write-down of vendor deposits — 325,610

Net loss on disposal of asset — 10,794

Amortization of debt discount — 599,006

Change in estimate for legal contingencies — (4,234,717)

Changes in assets and liabilities:

Accrued interest – related party — (126,027)

Accrued interest – legal contingency — (234,750)

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) —

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

Cash paid during the year for:

Supplemental disclosures of non-cash financing activities:

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

See accompanying notes to the consolidated financial statements.

F-6

SKYE BIOSCIENCE, INC. AND SUBSIDIARIES

CONSOLIDATEDSTATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

Stockholders' Deficit

Shares Amounts

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.

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, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. This ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. 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

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

Other current assets consist of the following:

As of December 31

Property and equipment, net consists of the following:

As of December 31

Less: accumulated depreciation and amortization (773,647) (233,513)

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

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 ExercisePrice Remaining Term(Years) Number ofWarrantsOutstanding

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 EndedDecember 31,

Related party interest expense – stated rate $ 302,740

Legal judgment estimated interest (income) expense (234,750)

Premium on irrevocable letter of credit 22,383

Non-cash interest expense:

Amortization of debt discount 582,550

Amortization of transaction costs 16,456

8. Stockholders’ Equity and Capitalization

The Company reserved shares of common stock, on an as-if converted basis, for issuance as follows:

Year EndedDecember 31,

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

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

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

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.

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

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

Forfeited/Cancelled 31,000

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:

*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,

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,

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:

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 ofShares Weighted Average Grant Date Fair Value

Granted — —

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 EndedDecember 31,

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

Basic EPS and diluted EPS

For the Year Ended December 31, 2024

Income (Numerator) Shares (Denominator) Per-Share Amount

Basic EPS and diluted EPS

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 EndedDecember 31,

11. Income Taxes

The components of loss before the income tax provision consist of the following:

Year EndedDecember 31,

F-21

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

Year Ended December 31,

Federal $ — $ —

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

Deferred tax liabilities

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:

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

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

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

Foreign tax effects

Canada

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

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

Other foreign jurisdictions 8,892 (0.02) %

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

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

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

As of December 31,

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

State income taxes, net of federal benefit (1,871,588)

Change in valuation allowance 2,522,618

Reduction in deferreds upon divestiture 839,873

Stock compensation (46,422)

Research and development credits (1,374,591)

Rate adjustment 6,070

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,

Unrecognized tax benefits, beginning of the year $ 9,498,441 $ 6,432,143

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

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 not 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:

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:

Total future minimum lease payments: 288,812

Less imputed interest 15,166

Reported as:

Operating lease liability, net of current portion 83,999 273,162

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.

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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,

External clinical development expenses (1)

(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.

14Subsequent 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.

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

Exhibit Number Description of Exhibit

SKYE US Equity

SKYE · 10-K · period ended 2025-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

Item7A. Quantitative and Qualitative Disclosures About Market Risk.

Item8. Financial Statements and Supplementary Data.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Item9A. Controls and Procedures.

Item9B. Other Information.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Item10. Directors, Executive Officers and Corporate Governance.

Item11. Executive Compensation.

Item12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item13. Certain Relationships and Related Transactions, and Director Independence.

Item14. Principal Accounting Fees and Services.

Item15. Exhibits, Financial Statement Schedules.

SKYE US Equity☆

SKYE · 10-K · period ended 2025-12-31

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

Item7A. Quantitative and Qualitative Disclosures About Market Risk.

Item8. Financial Statements and Supplementary Data.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Item9A. Controls and Procedures.

Item9B. Other Information.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Item10. Directors, Executive Officers and Corporate Governance.

Item11. Executive Compensation.

Item12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item13. Certain Relationships and Related Transactions, and Director Independence.

Item14. Principal Accounting Fees and Services.

Item15. Exhibits, Financial Statement Schedules.

SKYE US Equity