SEC Form 10-Q filed by Skye Bioscience Inc.

5/11/26 4:00:38 PM ET

Biotechnology: Pharmaceutical Preparations

Health Care

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skye-20260331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 000-55136

Skye Bioscience, Inc.

_____________________________________________________________

(Exact name of registrant as specified in its charter)


Nevada						45-0692882
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

11250 El Camino Real, Suite 100, San Diego, CA 92130

(Address of principal executive offices) (Zip Code)

(858) 410-0266

(Registrant’s telephone number, including area code)

__________________________N/A_______________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange
on which registered

Common Stock, par value $0.001

SKYE

Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of May 8, 2026, there were 35,143,722 shares of the registrant's common stock, $0.001 par value, issued and outstanding.

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements:	4
	Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025	5
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (Unaudited)	7
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2026 and 2025 (Unaudited)	8
	Notes to the Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25
Item 4.	Controls and Procedures	25

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this Quarterly Report are forward-looking statements, including without limitation, statements regarding:

•the period over which we estimate our existing cash, cash equivalents and short-term investments will be sufficient to fund our future operating expenses and capital expenditure requirements, including that our existing cash, cash equivalent, and marketable securities will be sufficient to fund our obligations for at least 12 months after the issuance of the condensed consolidated financial statements included in this report;

•the timing, progress and results of preclinical studies and clinical studies for nimacimab (such as the extension arm of our Phase 2a CBeyondTM clinical trial), including any future studies or plans to evaluate combinations of nimacimab and incretin-based therapies;

•the timing, scope and likelihood of regulatory filings and approvals;

•expectations regarding the size, scope and design of future clinical studies;

•our manufacturing, commercialization, and marketing plans and strategies;

•our expectations regarding the approval and use of our product candidates;

•our competitive position and the development and impact of competing therapies that are or may become available;

•the rate and degree of market acceptance and clinical utility of product candidates we may develop;

•our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•our future financial performance;

•the impact of laws and regulations;

•our ability to raise capital on favorable terms, or at all, to fund operations and to continue as a going concern;

•statements relating to any pending litigation matters, including the Cunning Lawsuit; and

• the expected timing for reporting data from the Phase 2a extension study;

When used herein, words including “anticipate,” “believe,” “can,” “continue,” “could,” “designed,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “might,” “plan,” “planning,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, though not all forward-looking statements use these words or expressions.

All forward-looking statements are based upon the Company’s current expectations and various assumptions. The Company believes there is a reasonable basis for its expectations and beliefs, but they are inherently uncertain. The Company may not realize its expectations, and its beliefs may not prove correct. Actual results could differ materially from those described or implied by such forward-looking statements as a result of various important risks and uncertainties, including, without limitation: the initiation and design of any future clinical trials of nimacimab will be impacted by the Company’s capital resources, the Company’s ability to obtain additional sources of capital needed to run an additional Phase 2 clinical trial, program considerations and potentially other factors outside the Company’s control; the potential for additional weight loss after 26 weeks may not ultimately be observed; there is no guarantee that higher dosing of nimacimab will achieve increased efficacy, and likewise it is possible that higher dosing will produce adversely different safety and tolerability results than those observed to date; the Company’s dependence on third parties in connection with product manufacturing; research and preclinical and clinical testing; the Company’s ability to advance, obtain regulatory approval of and ultimately commercialize nimacimab, competitive products or approaches limiting the commercial value of nimacimab; the timing and results of preclinical and clinical trials; the impact of any global pandemics, inflation, supply chain issues, government shutdowns, high interest rates, adverse regulatory changes; the Company’s ability to protect its intellectual property; risks associated with the Company’s common stock; risks and uncertainties associated with the Cunning Litigation, and the other important factors discussed under the caption “Risk Factors” in the Company’s filings with the Securities and Exchange Commission, including in its Annual Report on Form 10-K for the year ended December 31, 2025, which are accessible on the SEC’s website at www.sec.gov and the Investors section of the Company’s website.

Any such forward-looking statements represent management’s estimates as of the date of this Quarterly Report. While the Company may elect to update such forward-looking statements at some point in the future, except as required by law, it disclaims any obligation to do so, even if subsequent events cause the Company’s views to change. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this Quarterly Report.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

SKYE BIOSCIENCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


	March 31, 2026		December 31, 2025
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	8,149,015	$	5,882,498
Short-term investments	8,959,614		19,854,723
Prepaid expenses	1,223,534		504,890
Other current assets	234,806		852,036
Total current assets	18,566,969		27,094,147

Property and equipment, net	756,077		898,930
Operating lease right-of-use asset	57,781		266,646
Other assets	35,909		53,910
Total assets	$	19,416,736	$	28,313,633

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	3,936,948	$	2,033,431
Accrued payroll liabilities	234,392		1,269,474
Other current liabilities	3,347,515		2,643,840
Estimate for accrued legal contingencies and related expenses	2,574,759		2,069,067
Insurance premium loan payable	250,338		—
Operating lease liability, current portion	60,980		189,647
Total current liabilities	10,404,932		8,205,459

Non-current liabilities
Operating lease liability, net of current portion	—		83,999
Total liabilities	10,404,932		8,289,458

Commitments and contingencies (Note 8)

Stockholders’ equity
Preferred stock, $0.001 par value; 200,000 shares authorized at March 31, 2026 and December 31, 2025; no shares issued and outstanding at March 31, 2026 and December 31, 2025	—		—
Common stock, $0.001 par value; 100,000,000 shares authorized at March 31, 2026 and December 31, 2025; 35,126,884 and 33,378,139 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively	35,128		33,379
Additional paid-in-capital	208,360,523		206,865,282
Accumulated deficit	(199,383,847)		(186,874,486)
Total stockholders’ equity	9,011,804		20,024,175
Total liabilities and stockholders’ equity	$	19,416,736	$	28,313,633

See accompanying notes to the unaudited condensed consolidated financial statements.

SKYE BIOSCIENCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	For the Three Months Ended March 31,
	2026		2025
Operating expenses
Research and development	$	7,935,680	$	7,197,257
General and administrative	4,738,686		4,562,305

Total operating expenses	12,674,366		11,759,562

Operating loss	(12,674,366)		(11,759,562)

Other (income) expense
Interest expense	2,199		1,452
Interest and other income, net	(169,615)		(619,054)

Other (income) expense	2,411		(40,641)
Total other (income) expense, net	(165,005)		(658,243)

Loss before income taxes	(12,509,361)		(11,101,319)
Provision for income taxes	—		2,000

Net loss	$	(12,509,361)	$	(11,103,319)

Loss per common share:
Basic	$	(0.32)	$	(0.28)
Diluted	$	(0.32)	$	(0.28)

Weighted average shares of common stock outstanding used to compute loss per share:
Basic	39,681,465		39,651,888
Diluted	39,681,465		39,651,888

See accompanying notes to the unaudited condensed consolidated financial statements.

SKYE BIOSCIENCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	For the Three Months Ended March 31,
	2026		2025
Cash flows from operating activities:
Net Loss	$	(12,509,361)	$	(11,103,319)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	172,886		177,379
Stock-based compensation expense	1,496,989		2,201,909


Loss from disposal of assets	7,615		—

Changes in assets and liabilities:
Prepaid expenses	(396,781)		(373,420)
Right-of-use assets	170,367		—
Other current assets	617,231		(1,018,906)
Other assets	18,001		—
Accounts payable	1,903,517		1,215,779

Accrued payroll liabilities	(1,035,082)		(458,124)
Operating lease liability	(212,666)		(43,479)
Other current liabilities	1,209,367		216,701
Net cash used in operating activities	(8,557,917)		(9,185,480)

Cash flows from investing activities:

Maturities/(purchase) of short-term investments, net of maturities	10,895,109		(12,802,650)
Purchase of property and equipment	—		(6,312)
Cash from asset disposition	850		—
Net cash provided by (used in) investing activities	10,895,959		(12,808,962)

Cash flows from financing activities:

Repayment of insurance premium loan payable	(71,525)		—
Net cash used in financing activities	(71,525)		—

Net increase (decrease) in cash and cash equivalents	2,266,517		(21,994,442)

Cash and cash equivalents, beginning of period	$	5,882,498	$	68,415,741

Cash and cash equivalents, end of period	$	8,149,015	$	46,421,299

Cash paid during the year for:
Interest	$	2,199	$	—
Income taxes	—		2,000

Supplemental disclosures of non-cash financing activities:
Financing of D&O insurance premium	$	321,863	$	—

See accompanying notes to the unaudited condensed consolidated financial statements.

SKYE BIOSCIENCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amounts
Balance, January 1, 2026	33,378,139	$	33,379	$	206,865,282	$	(186,874,486)	$	20,024,175

Stock-based compensation expense	937	1		1,496,989		—		1,496,990

Exercise of pre-funded warrants	1,747,808	1,748		(1,748)		—		—

Net loss for the three months ended March 31, 2026	—	—		—		(12,509,361)		(12,509,361)

Balance, March 31, 2026	35,126,884	$	35,128	$	208,360,523	$	(199,383,847)	$	9,011,804


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amounts
Balance, January 1, 2025	30,974,559	$	30,975	$	199,070,421	$	(130,949,672)	$	68,151,724

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

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

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

See accompanying notes to the unaudited condensed consolidated financial statements.

SKYE BIOSCIENCE, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization, Basis of Presentation and Significant Accounting Policies

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 March 31, 2026, the Company has devoted substantially all its efforts to securing its product pipeline, carrying out research and development, preparing for and conducting clinical trials, building infrastructure and raising capital. The Company has not yet realized revenue from its planned principal operations and is a number of years away from potentially being able to do so.

Impact of Geopolitical and Macroeconomic Factors

It is possible that the Company may encounter supply chain issues related to global economic and political conditions such as a lack of production or laboratory resources, pandemics or cyberattacks that could cause business disruptions and clinical trial delays which will need to be managed in the future. There may also be significant uncertainty resulting from the impact of other geopolitical and macroeconomic factors, including global pandemics, tariffs, inflation, supply chain issues, fluctuating interest rates, future bank failures and disruptions to the supply chain as a result of increased geopolitical tensions between the U.S. and its international trade partners, including China and Iran.

Liquidity

The Company has incurred operating losses and negative cash flows from operations since inception and as of March 31, 2026, had working capital of $8,162,037 and an accumulated deficit of $199,383,847. As of March 31, 2026, the Company had unrestricted cash and cash equivalents and short-term investments in the amount of $17,108,629. For the three months ended March 31, 2026 and 2025, the Company incurred losses from operations of $12,674,366 and $11,759,562, respectively. For the three months ended March 31, 2026 and 2025, the Company incurred net losses of $12,509,361 and $11,103,319, respectively. The Company expects to continue to incur significant losses through the end of 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 and the three months ended March 31, 2026. 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.

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

The Company is a party to a legal proceeding with a former employee (see note 8). As of March 31, 2026, the estimated legal contingency, including accrued legal expenses, is $2,574,759.

The Company does not believe that inflation has had a material impact on its operating results during the periods presented. However, inflation has had, and may continue to have, an impact on general and administrative costs such as professional fees, employee costs and travel costs, and may in the future adversely affect the Company's operating results. In addition, increased inflation has had and may continue to have an effect on interest rates. Increased interest rates may adversely affect the terms under which the Company can obtain any potential additional funding.

Notably, the Company relies on third party manufacturers to produce its product candidates. The manufacturing of nimacimab is conducted in Europe. Formulation for clinical trial use relies on regulatory-accepted excipients that can be sourced from countries outside the United States.

Nasdaq Communications

As previously disclosed by the Company in its Current Report on Form 8-K filed with the SEC on March 19, 2026, on March 17, 2026, the Company received a notification letter (the “Deficiency Notice”) from the Nasdaq Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, for the last 30 consecutive business days, the closing bid price for the Company’s common stock has been below the minimum $1.00 per share required for continued listing on The Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(a)(1) (Rule “5450(a)(1)”). The Deficiency Notice is a notice of deficiency, not delisting, and does not currently affect the listing or trading of the Company’s common stock on the Nasdaq Global Market. The Company's common stock continues to trade on the Nasdaq Global Market under the symbol “SKYE” at this time. The Company intends to actively monitor the closing bid price of its common stock and to consider plans for regaining compliance with Rule 5450(a)(1). While the Company plans to review all available options, there can be no assurance that it will be able to regain compliance with the applicable rules during the 180-day compliance period ending on September 14, 2026, any additional compliance period, or at all. Additional information regarding the Deficiency Notice can be found in the Company’s Current Report on Form 8-K filed with the SEC on March 19, 2026.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Interim financial results are not necessarily indicative of results anticipated for the full year, or any future periods.

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

The unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, from which the prior year balance sheet information herein was derived.

Certain reclassifications have been made to the amounts in prior periods to conform to the current period’s presentation, including reclassifying discovery research and development expense amounts from external clinical development expenses into other research and development expenses, as described in Note 9, Segment Reporting. Such reclassifications did not have a material impact on the accompanying unaudited condensed consolidated financial statements.

During the three months ended March 31, 2026, there were no changes to the Company's significant accounting policies as described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Recent Accounting Pronouncements Not Yet Adopted

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

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 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.

2. 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 March 31, 2026
	Valuation
	Hierarchy	Total
Assets:
Money market funds (included in cash and cash equivalents)	Level 1	$	4,222,989
U.S. treasury obligations (included in short-term investments)	Level 1	8,959,614
Total cash equivalents and marketable securities		$	13,182,603

3. Prepaid Expenses, Other Current Assets and Liabilities

Prepaid expenses consist of the following:


	March 31 2026		December 31, 2025
Prepaid clinical expenses	$	631,723	$	231,493
Prepaid insurance	339,462		90,807
Other prepaid expenses	252,349		182,590
	$	1,223,534	$	504,890

Other current assets consist of the following:


	March 31 2026		December 31, 2025
Vendor deposits	201,580		827,781
Other tax receivables	9,525		10,474
Other current assets	23,701		13,781
	$	234,806	$	852,036

Other current liabilities consist of the following:


	March 31, 2026		December 31, 2025
Research and development costs	$	3,174,904	$	2,518,724
Legal expenses	129,198		88,838
Consulting and professional fees	33,491		26,356
Other accrued liabilities	9,922		9,922
	$	3,347,515	$	2,643,840

4. Warrants

There are significant judgments and estimates inherent in the determination of the fair value of the Company’s warrants. These judgments and estimates include assumptions regarding the Company’s future operating performance and the determination of the appropriate valuation methods.

Warrants

Warrants vested and outstanding as of March 31, 2026, are summarized as follows:


Source	Exercise Price	Weighted Average Remaining Contractual Term (Years)	Number of Warrants Outstanding
2016 Common Stock Warrants to Service Providers	287.50	0.58	160
2021 Inducement Warrants	37.50	0.32	84,667
2021 Inducement Warrants to Placement Agent	47.00	0.32	5,927
2021 Common Stock Warrants	22.50	0.49	311,113
2021 Common Stock Warrants to Placement Agent	27.50	0.49	21,778
August 2023 Convertible Note Common Stock Warrants	5.16	7.38	340,000
August 2023 PIPE Financing Common Stock Warrants	5.16	7.38	2,325,537
January 2024 Pre-Funded Warrants Common Stock	0.001	Indefinite	4,550,860
Total warrants outstanding as of March 31, 2026			7,640,042

As of March 31, 2026, all of the Company's warrants are fully vested.

Warrant Exercises

Prefunded Warrant Exercise

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. On March 11, 2026, 1,750,000 Pre-Funded Warrants issued in the January 2024 PIPE Financing with an intrinsic value of $1,396,149 were exercised on a cashless basis, resulting in the issuance of 1,747,808 shares of Company's common stock.

5. Stock-Based Compensation

Stock Incentive Plan

On October 31, 2014, the Board of Directors of the Company (the "Board") approved the Company’s 2014 Omnibus Incentive Plan (the "2014 Omnibus Incentive Plan"). On June 14, 2022, the Board approved the 2014 Amended and Restated Omnibus Incentive Plan (the “2014 Amended and Restated Plan”) which replaced the 2014 Omnibus Incentive Plan in its entirety.

On September 29, 2023, the Board and holders of a majority of the voting power of the outstanding capital stock of the Company adopted and approved Amendment No. 1 to the 2014 Amended and Restated Plan. Amendment No. 1 to the 2014 Amended and Restated Plan became effective on November 6, 2023.

On October 22, 2024, the second amendment and restatement of the Company's 2014 Amended and Restated Plan was approved to increase the number of shares of the Company's common stock issuable to 1,535,655, extend the expiration date of the plan to September 10, 2034, update the name of the plan to the “Skye Bioscience, Inc. Amended and Restated Omnibus Incentive Plan” and make certain administrative amendments (as so amended and restated, the "Amended and Restated Plan").

As of March 31, 2026, the Company had 765,449 shares available for future grant under the Amended and Restated Plan.

2024 Inducement Equity Incentive Plan

On July 2, 2024, the Board adopted the Skye Bioscience, Inc. 2024 Inducement Equity Incentive Plan (the "Inducement Plan"). 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 March 31, 2026, the Company had 261,250 shares available for future grant under the Inducement Plan.

Stock Options

The following is a summary of option activity under the Company’s Amended and Restated Plan and the Inducement Plan, for the three months ended March 31, 2026:


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value*
Outstanding, December 31, 2025	4,528,555	$	5.74	8.73	$	—

Granted	1,407,800	0.99

Cancelled	(6,866)	7.67
Forfeited	(296,404)	2.53
Outstanding, March 31, 2026	5,633,085	$	4.72	8.74	$	—
Exercisable, March 31, 2026	2,207,015	$	6.56	8.15	$	—

*The aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company’s stock exceeded the exercise price of the stock options at March 31, 2026 for those stock options for which the quoted market price was in excess of the exercise price ("in-the-money options").

The weighted-average grant-date fair value of stock options granted during the three months ended March 31, 2026, was $0.73.

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


	Three Months Ended March 31,
	2026	2025
Dividend yield	0.00%	0.00%
Volatility	84.61 - 86.16%	83.87 - 85.93%
Risk-free interest rate	3.84- 4.00%	4.24 - 4.27%
Expected term (years)	5.27- 6.08	5.27 - 6.08

On March 31, 2026, the Company effected a stock option repricing (the “Option Repricing”) of all outstanding stock options held by current full-time employees, including the Company's executive officers, that were granted prior to December 31, 2025 under either the Amended and Restated Plan or the Inducement Plan. Pursuant to the Option Repricing, the exercise price of each repriced option was reduced to $0.6146 per share, the closing price per share of the Company’s common stock on the repricing date. No additional changes were made to the repriced options other than a reduction in the applicable exercise price. This was deemed a type I modification (probable to probable). The total incremental expense was $339,063, of which $126,959 related to vested awards and recognized during the three months ended March 31, 2026 and $212,104 related to unvested awards with the expense to be recognized over the remaining service period.

Restricted Stock Units

The following is a summary of restricted stock unit ("RSU") activity during the three months ended March 31, 2026:


	Number of Shares	Weighted Average Grant Date Fair Value
Unvested, December 31, 2025	492,488	$	9.72

Vested	(937)	7.56

Unvested, March 31, 2026	491,551	$	9.72

2022 Employee Stock Purchase Plan

In June 2022, the Board approved the 2022 Employee Stock Purchase Plan (the "ESPP"), under which the Company may offer eligible employees the option to purchase common stock at a 15% discount to the lower of the market value of the stock at the beginning or end of each participation period under the terms of the ESPP. Total individual purchases in any year are limited to 15% of compensation. The ESPP was approved by the Company's stockholders on September 30, 2022. As of March 31, 2026, 18,461 shares were issued under the ESPP.

Stock-Based Compensation Expense

The Company recognizes stock-based compensation expense using the straight-line method over the requisite service period or derived service period. The Company recognized stock-based compensation expense for the stock options, ESPP, and the RSUs discussed above, in its unaudited condensed consolidated statements of operations as follows:


	Three Months Ended March 31,
	2026		2025
Research and development	$	559,453	$	489,588
General and administrative	937,536		1,712,321
	$	1,496,989	$	2,201,909

The total amount of unrecognized compensation cost was $9,620,002 as of March 31, 2026. This amount will be recognized over a weighted average period of 2.44 years.

6. Debt

Insurance premium loan payable

On February 1, 2026, the Company entered into an annual financing arrangement for a portion of its Directors and Officers Insurance Policy (the “D&O Insurance”) with First Insurance Funding whereby the Company borrowed $321,863. The loan is payable in equal monthly installments of $35,763, matures on October 13, 2026, and bears interest at a rate 4.10% per annum. As of March 31, 2026, a total of $300,027 and $250,338, remains financed in prepaid expenses and insurance premium loan payable, respectively.

7. 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:


	Three Months Ended March 31,
	2026		2025
Basic EPS and diluted EPS:

Loss (Numerator)
Net loss	$	(12,509,361)	$	(11,103,319)

Shares (Denominator)
Weighted average common shares outstanding **	39,681,465		39,651,888
Per-Share Amount	$	(0.32)	$	(0.28)

** The denominator considers the outstanding pre-funded warrants as common stock equivalents in calculating weighted average common shares outstanding.

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:


	Three Months Ended March 31,
	2026	2025
Stock options	5,633,085	4,235,512
Warrants	3,089,182	3,122,250
Unvested restricted stock units	491,551	503,113

8. Commitments and Contingencies

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 complaint seeks unspecified economic and non-economic losses, as well as attorneys’ fees. 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 the plaintiff 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"). On October 22, 2024, the Ninth Circuit issued its decision in the Company's favor which vacated the judgment and remanded the case back to the District Court for a new trial. As a result, the Company recovered the $9,080,202 restriction on its cash related to the bond during the year ended December 31, 2024. The new trial is currently scheduled to be held in May 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 March 31, 2026, the estimated legal contingency, including accrued legal expenses, is $2,574,759.

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

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

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

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

•the Company’s possible defenses and counterclaims, and

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

The final amount of the loss and loss recoveries remain uncertain. The ultimate amount of the potential loss may be significantly more or 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. A substantially similar derivative lawsuit was subsequently filed on May 1, 2026, in the United States District Court for the Southern District of California, captioned White v. Dhillon et al., Case No. 3:26-cv-02776-H-MSB, asserting substantially the same claims against substantially the same defendants and seeking substantially the same relief.

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.

9. Segment Reporting

The Company operates in one business segment, which includes the business of research and development activities related to developing medicine for obesity and other metabolic diseases. The determination of a single business segment is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (“CODM”). The Company’s CODM is its Chief Executive Officer, who reviews and evaluates consolidated net loss for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods.

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


	Three Months Ended March 31,
	2026		2025
External clinical development expenses (1)
SBI-100	$	—	$	2,241
nimacimab	5,329,238		4,915,030
Total External clinical development expenses	5,329,238		4,917,271
Personnel related and stock-based compensation	1,712,798		1,337,750
Other research and development expenses (2)	893,644		942,236
Total research and development expenses	$	7,935,680	$	7,197,257

(1) External clinical development expenses include expenses for clinical trial costs and clinical manufacturing.

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

The net book value of property and equipment in the US was equal to $39,143 and $55,488 for March 31, 2026, and December 31, 2025, respectively. The net book value of property and equipment outside of the US was equal to $716,934, and $843,442 for March 31, 2026, and December 31, 2025, respectively.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements (unaudited) for the three months ended March 31, 2026 and 2025, together with the notes thereto and the consolidated financial statements and the related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the Securities and Exchange Commission (SEC) on March 10, 2026.

Solely for convenience, certain trademark and service marks (the “marks”) referred to in this Quarterly Report on Form 10-Q

appear without the ® or ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to

the fullest extent under applicable law, our rights to these marks.

Unless otherwise provided in this Quarterly Report on Form 10-Q, references to “we,” “us,” “our” and “Skye” in this discussion and analysis refer to Skye Bioscience, Inc., a Nevada corporation, together with its consolidated subsidiaries.

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.

We are conducting CBeyondTM, a Phase 2a proof-of-concept clinical trial of nimacimab administered as a subcutaneous injectable for the treatment of obesity and overweight in the United States. The randomized, placebo- and active-controlled, double-blind CBeyond Phase 2a trial enrolled 136 adults with obesity or overweight, including individuals with a BMI ≥27 kg/m² with at least one comorbidity. Patients were randomized across four arms, 2:2:1:1 to arms with weekly nimacimab 200 mg subcutaneously, placebo, nimacimab 200 mg plus semaglutide (Wegovy®), or placebo plus semaglutide, and were dosed weekly for 26 weeks. Patients not participating in a 26-week extension were monitored for 13 weeks post-treatment.

In October 2025, we announced topline results from our CBeyond Phase 2a proof-of-concept clinical trial of nimacimab administered as a subcutaneous injectable for the treatment of obesity and overweight in the United States. We reported the following 26 week data from the CBeyond Phase 2a study:

•The nimacimab monotherapy arm did not achieve the primary endpoint of weight loss compared to placebo (-1.52% vs. -0.26 for placebo, mITT). Preliminary pharmacokinetic analysis suggested an association between exposure and response, indicating that the 200 mg, subcutaneous weekly dose was suboptimal as a monotherapy.

•At the tested dose and exposure levels, nimacimab 200 mg demonstrated a favorable safety profile with placebo-like tolerability. In combination with semaglutide, there was no increase in gastrointestinal (GI) adverse events. Importantly, there were no increases in neuropsychiatric adverse events reported resulting from treatment with nimacimab.

•In the combination arm, nimacimab 200 mg, subcutaneous weekly dose plus semaglutide demonstrated a clinically meaningful magnitude of weight loss compared to semaglutide alone (-13.2% vs -10.25%, p=0.0372, mITT), with no plateau being observed through Week 26. In the combination arm, 100% of patients achieved greater than 5% weight loss (vs. 85% with semaglutide alone) and 67% achieved greater than 10% weight loss (vs. 50% with semaglutide alone) based on the per protocol analysis. This finding supports potential further studies to evaluate combinations of nimacimab and incretin-based therapies, like semaglutide or tirzepatide. Other findings in the combination arm included:

◦Nimacimab plus semaglutide showed a change of -11.26cm (1.16cm) in waist circumference versus -8.09cm (1.2cm) for semaglutide alone, resulting in a difference of -3.17cm (1.59cm) (p=0.0492, using least-squares mean (LSM)).

◦An improvement in lean mass to fat mass ratio was observed at week 26 when comparing the nimacimab plus semaglutide combination arm to the placebo arm (0.26 vs. 0.02, p <0.0001), and the combination arm compared to semaglutide alone (0.26 vs. 0.13, p = 0.0126).

◦A decrease in rebound weight gain in an analysis of participants 12 weeks post-treatment when nimacimab 200 mg (subcutaneous, weekly) was combined with semaglutide when compared to semaglutide alone (17.8% versus 37.3% weight rebound). Moreover, at 12 weeks post-treatment, the nimacimab plus semaglutide group maintained significant weight loss compared to the placebo group (p=0.006), while the semaglutide alone group lost significance over the placebo group (p=0.12) and followed a trajectory of rebound weight gain

consistent with previously reported data (Wilding et al., 2022, STEP-1 Trial Extension), which demonstrated that patients will gain a majority of weight back within 1-year of stopping treatment with semaglutide.

Topline data from our CBeyond Phase 2a study was presented at ObesityWeek medical conference in November 2025.

Summary of Phase 2a Extension Study

Patients who completed 26 weeks of treatment in the Phase 2a study were eligible to enroll in a 26-week extension for a potential full treatment duration of 52 weeks with a 13-week follow-up period. A total of 43 patients were enrolled, with 19 and 24 patients in the combination and monotherapy cohorts, respectively. In the combination arms, continued with blinded treatment with nimacimab or placebo and continued receiving semaglutide (Wegovy®). Patients in the monotherapy arm received nimacimab 300 mg during the extension.

In February 2026, we reported the following interim results from the combination cohort of our Phase 2a extension study:

•19 participants in the combination cohorts completed week 26 were eligible for, and enrolled in the extension study, which continued in a blinded manner for 26 weeks, maintaining their original treatment assignment (10 nimacimab plus semaglutide; 9 placebo plus semaglutide). An additional 22 participants completed week 26 and were either ineligible for the extension or chose not to join the extension study and continued on post-treatment follow-up (11 nimacimab plus semaglutide; 11 placebo plus semaglutide).

•Of the 10 participants in the nimacimab plus semaglutide arm who joined the extension study, the mean weight loss at 26 weeks was 14.4%. 7 participants completed the additional 26 weeks of treatment and lost an additional 7.9% of weight, resulting in a mean weight loss of 22.3% after 52 weeks of treatment. According to initial results in this limited cohort, the combination therapy remained safe and well tolerated. No SAEs or AESIs were reported during the extension period.

•Of the 9 participants in the placebo plus semaglutide arm that joined the extension study, mean weight loss at 26 weeks was -13.9%. 7 participants completed treatment of the additional 26 weeks and lost an additional -5.8% of weight during the extension period, resulting in a mean weight loss of -19.7% after 52 weeks of treatment.

Full topline reporting of the CBeyond Phase 2a extension data including nimacimab monotherapy data and 13-week off-therapy follow-up is expected to take place in the third quarter of 2026.

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, to generate preliminary monotherapy safety, PK, and exploratory efficacy data. Within each dose cohort, 8 participants will be randomized in a 3:1 ratio to nimacimab (n=6) or placebo (n=2). We expect to report topline data from the expansion study in the fourth quarter of 2026.

We believe multiple factors support evaluation of nimacimab at higher doses, including the combination of preclinical toxicology safety margins and modeling; preclinical pharmacology data showing dose-dependent increases in weight loss with nimacimab monotherapy and GLP-1 combinations; and the notable safety profile in the Phase 2a study. However, there can be no assurance that nimacimab at higher doses will result in the desired end points.

We have received comments from the agency regarding our Type C meeting request in which they responded to our proposed Phase 2b clinical trial design, we intend to use data from the CBeyond trial, including the CBeyond expansion study (Part C), to inform the design of a potential Phase 2b study and potential registration path for nimacimab as a combination therapy with GLP-1s. Key design elements under evaluation include patient selection, dose selection, treatment duration, and endpoints. Final trial design and timing remain subject to ongoing data analysis, regulatory feedback and capital considerations.

We were incorporated under the laws of the State of Nevada on March 16, 2011. 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 drug candidate, nimacimab, or any future drug candidates that we develop unless and until we obtain regulatory approval for, and commercialize, nimacimab or future drug candidates or generate revenue from collaborative agreements with third parties.

Research and Development Expenses

During the three months ended March 31, 2026, we incurred $7,935,680 in research and development expenses primarily related to our Phase 2a clinical trial of nimacimab for obesity and the manufacturing costs associated with future trials. During the three months ended March 31, 2025, we incurred $7,197,257 in research and development expense primarily related to our efforts in conducting our Phase 2a clinical trial related to our Phase 2a clinical trial for nimacimab for obesity.

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:

• employee-related expenses, which include salaries, benefits and stock-based compensation;

• payments to third party contract research organizations and investigative sites;

• payments to third party manufacturing organizations and consultants; and

• payments to third parties related to our discovery research and development efforts to build our pipeline.

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 continually evaluating our operations and infrastructure to identify areas where we can increase efficiencies. 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 2026 and 2025 and we repriced certain options in the first quarter of 2026, 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.

Estimate for Legal Contingencies and Related Expenses

The estimate for legal contingencies and related expenses relates to a litigation matter that related to a former employee of the Company. 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. As of December 31, 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 recovered the appellate bond and 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 March 31, 2026, the estimated legal contingency, including accrued legal expenses, is $2,574,759, an increase of $505,692 from December 31, 2025, due to accrual adjustments for services by legal firms in relation to the ongoing Cunning litigation.

Other (Income) Expense

Other (income) expense primarily includes interest income earned on our cash and cash equivalent balances and short term investments.

Critical Accounting Estimates

There have been no material changes in our Critical Accounting Estimates from the information provided in the "Critical Accounting Estimates" section of "Item 7- Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Recently Issued and Adopted Accounting Pronouncements

See Note 1 to the accompanying unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for information on recently issued accounting pronouncements and recently adopted accounting pronouncements. While we expect certain recently adopted accounting pronouncements to impact our disclosures in future periods, the impact upon adoption was not significant to our current estimates and operations.

Results of Operations

For the three months ended March 31, 2026 and 2025

Research and Development Expenses

Below is a summary of our research and development expenses during the three months ended March 31, 2026 and for the same period in 2025:


	Three Months Ended March 31,
	2026		2025		$ Change 2026 vs. 2025		% Change 2026 vs. 2025
Research and development expenses	$	7,935,680	$	7,197,257	$	738,423	10	%

Research and development expenses for the three months ended March 31, 2026, increased by $738,423 as compared to the same period in 2025. The net increase in research and development expenses was primarily due to:

•Clinical trial costs increased by $190,765 due to increased site and patient costs related to our Phase 2a clinical study for nimacimab.

•Contract manufacturing costs increased by $203,916 from drug substance, product, labeling and packaging costs related to resupplying our extended Phase 2a clinical study for nimacimab, manufacturing in anticipation for our expansion study of nimacimab, and process intensification and dose optimization work.

•Discovery research and development costs decreased $168,387 primarily due to a reduction in work for life cycle management partially offset by increased work to interrogate nimacimab's mechanism of action.

•Quality assurance costs decreased by $64,896 from routine vendor site audits.

•Salaries and stock-based compensation increased by $375,048 primarily due to severance for one employee and incremental expenses form the stock option repricing.

•Consulting, advisory and professional fees increased by $216,413 to support our nimacimab program.

General and Administrative Expenses

Below is a summary of our general and administrative expenses during the three months ended March 31, 2026, and for the same period in 2025:


	Three Months Ended March 31,
	2026		2025		$ Change 2026 vs. 2025		% Change 2026 vs. 2025
General and administrative expenses	$	4,738,686	$	4,562,305	$	176,381	4	%

General and administrative expenses for the three months ended March 31, 2026, increased by $176,381 as compared to the same period in 2025. The decrease in general and administrative expenses was primarily due to:

•Salaries, benefits and other direct employee related costs decreased by $275,661 primarily due to lower headcount and timing of new hires.

•Consulting, advisory and professional fees decreased by $28,245 primarily due to the timing of tax accounting services and financial advisory services.

•Investor relations, marketing and communications expenses decreased by $335,032 primarily due to reductions in content creation and digital marketing expenses.

•Recruiting fees decreased by $33,750 primarily due to the one time cost to hire an executive in the prior period.

•Legal fees increased by $988,624 due to increased patent prosecution activity and litigation defense costs.

•General business expenses decreased $139,555 primarily due to headcount reductions and associated travel and entertainment expenses, as compared to the same period in the prior year.

Other (Income) Expense

Below is a summary of our other (income) expense for the three months ended March 31, 2026 and for the same period in 2025:


	Three Months Ended March 31,
	2026		2025		$ Change 2026 vs. 2025		% Change 2026 vs. 2025
Interest expense	$	2,199	$	1,452	$	747	51	%
Interest and other income, net	(169,615)		(619,054)		449,439		(73)	%


Other (income) expense	2,411		(40,641)		43,052		(106)	%
Total other income	$	(165,005)	$	(658,243)	$	493,238	(75)	%

For the three months ended March 31, 2026, other income decreased $493,238 as compared to the same period in 2025 primarily due to:

•Decreases in interest income and other income, net of $449,439 due to decreased interest from our 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

Liquidity

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 March 31, 2026, we had working capital of $8,162,037, an accumulated deficit of $199,383,847, and stockholders’ equity of $9,011,804. We had unrestricted cash and cash equivalents and short-term investments in the amount of $17,108,629 as of March 31, 2026, as compared to $25,737,221 as of December 31, 2025. For the three months ended March 31, 2026 and 2025, the Company incurred losses from operations of $12,674,366 and $11,759,562, respectively. For the three months ended March 31, 2026 and 2025, the Company incurred net losses of $12,509,361 and $11,103,319, respectively.

Going Concern

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

As of March 31, 2026, 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" in our Annual Report on Form 10-K 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;

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

•the results of the new trial in the litigation matter discussed above under "--General Litigation and Disputes — Wendy Cunning vs. Skye Bioscience, Inc." and "--Financial Overview — Estimated Legal Contingency"; and

•the impact of any of the foregoing of macroeconomic events, including inflation, fluctuating interest and exchange rates, and market volatility as a result of trade, fiscal and regulatory policies, including tariffs and any effects of a prolonged government shutdown.

Cash Flows

The following is a summary of our cash flows for the periods indicated and has been derived from our unaudited condensed consolidated financial statements which are included elsewhere in this Quarterly Report on Form 10-Q:


	Three Months Ended March 31,
	2026		2025
Net cash used in operating activities	$	(8,557,917)	$	(9,185,480)
Net cash provided by (used in) investing activities	10,895,959		(12,808,962)
Net cash used in financing activities	(71,525)		—

Cash Flows from Operating Activities

The primary use of cash for our operating activities during the period was to fund research development activities for our clinical product candidate and general and administrative activities. Our cash used in operating activities also reflected changes in our working capital, net of adjustments for non-cash charges, such as stock-based compensation, depreciation and amortization.

Cash used in operating activities of $8,557,917 during the three months ended March 31, 2026, reflected a net loss of $12,509,361, partially offset by aggregate non-cash charges of $1,677,490 and included a $2,273,954 net cash inflow in our operating assets and liabilities.

Non-cash charges included $1,496,989 for stock-based compensation expense primarily attributable to the recognition of current period expense on prior grants and $172,886 in depreciation and amortization. The net change in our operating assets and liabilities included a $220,450 cash inflow from the decrease in our prepaid expenses and other current assets, a $38,381

net cash outflow from decrease in our accrued expenses and other current liabilities and a $1,903,517 cash inflow from the increase of our accounts payable.

Cash used in operating activities of 9,185,480 during the three months ended March 31, 2025, reflected a net loss $11,103,319, partially offset by aggregate non-cash charges of $2,379,288 and included a $461,449 net cash outflow in our operating assets and liabilities.

Cash Flows from Investing Activities

During the three months ended March 31, 2026, our cash provided by investing activities related primarily to the maturity, of $10,895,109 in short-term investments.

During the three months ended March 31, 2025, our cash used in investing activities related primarily to the purchase of

$12,802,650 in short-term investments.

Cash Flows from Financing Activities

During the three months ended March 31, 2026, cash used in financing activities included $71,525 in repayments on the our insurance premium loan payable.

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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.

Item 4. 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 Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any control and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily is required to apply its judgement in evaluating the cost-benefit relationship of possible controls and procedures.

We conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026. Based upon their evaluation and subject to the foregoing, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the disclosure controls and procedures were effective at a reasonable assurance level.

Changes in internal controls. Management determined there were no changes in internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

For a description of material legal proceedings, see Note 8, "General Litigation and Disputes" to the accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors.

Except as set forth below, there have been no material changes to the risk factors previously disclosed by us in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 10, 2026.

Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock, which could negatively impact the market price and liquidity of our common stock and our ability to access the capital markets.

Our common stock is listed on the Nasdaq Global Market, or Nasdaq. In order to maintain this listing, we must satisfy the continued listing requirements and standards of Nasdaq, including a minimum closing bid price requirement for our common stock of $1.00 per share. On March 17, 2026, we received a notification letter from Nasdaq notifying us that, for the last 30 consecutive business days, the closing bid price for our common stock has been below the minimum $1.00 per share required for continued listing on Nasdaq pursuant to Nasdaq Listing Rule 5450(a)(1) (“Rule 5450(a)(1)”). We have 180 calendar days, or until September 14, 2026, to regain compliance with Rule 5450(a)(1) by maintaining a closing bid price of at least $1.00 per share for a minimum of 10 consecutive trading days, subject to Nasdaq’s discretion. If we do not regain compliance with Rule 5450(a)(1) by September 14, 2026, we may be afforded a second 180 calendar day period to regain compliance, subject to meeting applicable listing standards and written notice of our intention to cure the deficiency during the second compliance period, including by effecting a reverse stock split if necessary.

If the closing bid price of our common stock continues to trade below $1.00 per share, we intend to implement a reverse stock split to attempt to regain compliance, as disclosed in our Current Report on Form 8-K filed with the SEC on March 19, 2026. However, a reverse stock split requires stockholder approval, and there can be no assurance that our stockholders will approve the proposal or that a reverse stock split, if effected, would result in our regaining or maintaining compliance with Nasdaq’s continued listing requirements.

If we are unable to regain compliance within the applicable cure period, including any available extension, our common stock would be subject to delisting from Nasdaq. Further, even if we regain compliance, we may not be able to sustain compliance with Rule 5450(a)(1) in the long term. A delisting could significantly reduce the liquidity and market price of our common stock, limit investors’ ability to buy and sell our common stock, reduce analyst coverage, and negatively affect our ability to access the capital markets or complete strategic transactions on favorable terms, or at all. Delisting could also trigger certain contractual provisions or investor concerns that may further adversely affect us.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements

No officers or directors, as defined in Rule 16a-1(f) under the Exchange Act, adopted and/or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as defined in Regulation S-K Item 408, during the last fiscal quarter.

Item 6. Exhibits.


3.1			Amended and Restated Articles of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 to our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 22, 2024)
3.2			Amended and Restated Bylaws of Registrant (incorporated by reference to Exhibit 3.2 to our Annual Report on Form 10-K for the year ended December 31, 2020 filed on March 2, 2021)
10.1			Master Services Agreement, dated March 31, 2026, by and between Skye Bioscience, Inc. and Lohman & Associates, Inc. (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on April 3, 2026)
31.1#			Certification of Principal Executive Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934
31.2#			Certification of Principal Financial Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934
32.1#			Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2#			Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101#			The following materials from the Skye Biosciences, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Condensed Consolidated Balance Sheets (Unaudited), (ii) Condensed Consolidated Statements of Operations (Unaudited), (iii) Condensed Consolidated Statements of Cash Flows (Unaudited), (iv) Condensed Consolidated Statements of Stockholders’ Deficit (Unaudited), and (v) related Notes to the Unaudited Condensed Consolidated Financial Statements.
104			Cover Page Interactive Data File (embedded within the Inline XBRL document)

_________

# Filed Herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Skye Bioscience, Inc., a Nevada corporation

May 11, 2026	By:	/s/ Punit Dhillon
		Punit Dhillon
	Its:	Chief Executive Officer, President, Secretary and Director (Principal Executive Officer)

May 11, 2026	By:	/s/ John P. Sharp
		John P. Sharp
	Its:	Chief Financial Officer (Principal Financial and Accounting Officer)

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Date	Price Target	Rating	Analyst
10/6/2025	$2.00	Buy → Hold	Craig Hallum
10/6/2025	$2.00	Overweight → Neutral	Cantor Fitzgerald
8/15/2025	$10.00	Outperform	Evercore ISI
2/28/2025		Outperform	William Blair
9/30/2024	$20.00	Sector Outperform	Scotiabank
9/10/2024	$15.00	Mkt Outperform	JMP Securities
7/9/2024	$18.00	Buy	Craig Hallum
5/23/2024	$21.00	Overweight	Cantor Fitzgerald

SEC Form 10-Q filed by Skye Bioscience Inc.

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