skye-20260630

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 June 30, 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

The Nasdaq Stock Exchange LLC

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 August 11, 2026, there were 35,421,413 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:	5
	Condensed Consolidated Balance Sheets as of June 30 , 2026 (Unaudited) and December 31, 2025	6
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2026 and 2025 (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 (Unaudited)	8
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2026 and 2025 (Unaudited)	9
	Notes to the Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4.	Controls and Procedures	30

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	39
Item 6.	Exhibits	39

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:

•delays in or failure to complete the Transaction (as defined herein), whether due to an inability by either party to satisfy one or more conditions to the closing of the Transaction (the "Closing" and such date, the "Closing Date"), including an inability to obtain required shareholder approvals or certain regulatory approvals, the occurrence of events or changes in circumstances that give rise to the termination of the Transaction Agreement (as defined herein) by either party, or otherwise;

•risks related to the pendency of the Transaction and its effect on our business, financial condition, results of operations, cash flows and stock price;

•diversion of management time and attention from ordinary course business operations to the Transaction and other potential disruptions to our business relating thereto;

•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;

•our expectations regarding the termination of our Phase 2a CBeyond clinical trial;

•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: consummating the Transaction in the anticipated timeframe, if at all; the occurrence of any event, change or other circumstance that could give rise to the termination of the Transaction Agreement; uncertainties as to the ability to obtain stockholder approval; the possibility that competing acquisition proposals will be made; the possibility that various closing conditions for the Transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the Transaction, or only grant approval subject to adverse conditions or limitations; the effects of the Transaction on relationships with employees, suppliers, other business partners or governmental entities, including the risk that the Transaction adversely affects employee retention; the difficulty of predicting the timing or outcome of regulatory approvals or actions; the impact of competitive products and pricing; the risk that Redx may not realize the potential benefits of the Transaction, including the possibility that the expected benefits from the proposed Transaction will not be realized or will not be realized within the expected time period and that Redx (as defined below) and the Company will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; the risks related to disruption of management's time from ongoing business operations as a result of the Transaction; risks that the Transaction disrupts current plans and operations; changes in the Company's business during the period between announcement and Closing; any legal proceedings and/or regulatory actions that may be instituted related to the Transaction; other business effects, including the effects of industry, economic or political conditions outside of the companies’ control; costs and expenses related to the Transaction; actual or contingent liabilities; the effects of the Transaction, or the announcement thereof, on the Company’s stock price and/or operating results; 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 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 this Quarterly Report and 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


	June 30, 2026		December 31, 2025
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	8,068,357	$	5,882,498
Short-term investments	1,995,784		19,854,723
Prepaid expenses	415,164		504,890
Other current assets	479,582		852,036
Total current assets	10,958,887		27,094,147

Property and equipment, net	32,939		898,930
Operating lease right-of-use asset	33,660		266,646
Other assets	8,309		53,910
Total assets	$	11,033,795	$	28,313,633

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	4,278,419	$	2,033,431
Accrued payroll liabilities	690,566		1,269,474
Other current liabilities	966,121		2,643,840
Estimate for accrued legal contingencies and related expenses	5,417,250		2,069,067
Insurance premium loan payable	143,050		—
Operating lease liability, current portion	35,696		189,647
Total current liabilities	11,531,102		8,205,459

Non-current liabilities
Operating lease liability, net of current portion	—		83,999
Total liabilities	11,531,102		8,289,458

Commitments and contingencies (Note 9)

Stockholders’ equity (deficit)
Preferred stock, $0.001 par value; 200,000 shares authorized at June 30, 2026 and December 31, 2025; no shares issued and outstanding at June 30, 2026 and December 31, 2025	—		—
Common stock, $0.001 par value; 300,000,000 and 100,000,000 shares authorized at June 30, 2026 and December 31, 2025; 35,143,722 and 33,378,139 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively	35,144		33,379
Additional paid-in-capital	209,637,990		206,865,282
Accumulated deficit	(210,170,441)		(186,874,486)
Total stockholders’ equity (deficit)	(497,307)		20,024,175
Total liabilities and stockholders’ equity (deficit)	$	11,033,795	$	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 June 30,				For the Six Months Ended June 30,
	2026		2025		2026		2025
Operating expenses
Research and development	$	3,941,932	$	14,337,753	$	11,877,612	$	21,535,010
General and administrative	3,869,371		3,906,172		8,608,057		8,468,477
Change in estimate for legal contingency	3,250,000		—		3,250,000		—
Total operating expenses	11,061,303		18,243,925		23,735,669		30,003,487

Operating loss	(11,061,303)		(18,243,925)		(23,735,669)		(30,003,487)

Other (income) expense
Interest expense	3,299		—		5,498		—
Interest and other income, net	(103,208)		(533,090)		(272,823)		(1,191,333)
Gains from asset sales	(178,200)		(89,363)		(178,200)		(89,363)
Other expense	—		—		2,411		—
Total other (income) expense, net	(278,109)		(622,453)		(443,114)		(1,280,696)

Loss before income taxes	(10,783,194)		(17,621,472)		(23,292,555)		(28,722,791)
Provision for income taxes	3,400		3,400		3,400		5,400

Net loss	$	(10,786,594)	$	(17,624,872)	$	(23,295,955)	$	(28,728,191)

Loss per common share:
Basic	$	(0.27)	$	(0.44)	$	(0.59)	$	(0.72)
Diluted	$	(0.27)	$	(0.44)	$	(0.59)	$	(0.72)

Weighted average shares of common stock outstanding used to compute loss per share:
Basic	39,694,243		39,659,266		39,687,418		39,655,597
Diluted	39,694,243		39,659,266		39,687,418		39,655,597

See accompanying notes to the unaudited condensed consolidated financial statements.

SKYE BIOSCIENCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	For the Six Months Ended June 30,
	2026		2025
Cash flows from operating activities:
Net Loss	$	(23,295,955)	$	(28,728,191)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	330,484		364,445
Stock-based compensation expense	2,768,199		4,235,018
Gains from asset sales	(178,200)		(89,363)

Loss from disposal of assets	597,275		—
Change in estimate for legal contingencies	3,250,000		—
Changes in assets and liabilities:
Prepaid expenses	411,589		(1,061,850)
Right-of-use assets	170,368		—
Other current assets	372,454		1,476,121
Other assets	45,601		—
Accounts payable	2,244,988		2,584,507

Accrued payroll liabilities	(578,908)		(246,231)
Operating lease liability	(237,950)		(88,050)
Other current liabilities	(1,579,536)		1,621,927
Net cash used in operating activities	(15,679,591)		(19,931,667)

Cash flows from investing activities:
Proceeds from the sale of assets, net of sales costs	178,200		89,363
Maturities/(purchase) of short-term investments, net of maturities	17,858,939		(24,747,039)
Purchase of property and equipment	—		(6,312)
Cash from asset disposition	850		—
Net cash provided by (used in) investing activities	18,037,989		(24,663,988)

Cash flows from financing activities:
Purchase under employee stock purchase plan	6,274		18,158
Repayment of insurance premium loan payable	(178,813)		—
Net cash (used in) provided by in financing activities	(172,539)		18,158

Net increase (decrease) in cash and cash equivalents	2,185,859		(44,577,497)

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

Cash and cash equivalents, end of period	$	8,068,357	$	23,838,244

Cash paid during the year for:
Interest	$	5,498	$	—
Income taxes	3,400		5,400

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 (DEFICIT)

(UNAUDITED)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
	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

Stock-based compensation expense	8,438	8		1,271,201		—		1,271,209

Purchases under employee stock purchase plan	8,400	8		6,266		—		6,274

Net loss for the three months ended June 30, 2026	—	—		—		(10,786,594)		(10,786,594)

Balance, June 30, 2026	35,143,722	$	35,144	$	209,637,990	$	(210,170,441)	$	(497,307)


	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

Stock-based compensation expense	3,750	4		2,033,105		—		2,033,109

Purchases under employee stock purchase plan	9,799	9		18,149		—		18,158

Net loss for the three months ended June 30, 2025	—	—		—		(17,624,872)		(17,624,872)

Balance, June 30, 2025	30,988,108	$	30,988	$	203,323,584	$	(159,677,863)	$	43,676,709

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.

The Company's lead asset, nimacimab, was being developed for weight loss in patients with obesity and overweight. In October 2025, results from its CBeyond Phase 2a trial demonstrated no difference in weight loss at 26-weeks between placebo and nimacimab-alone, while there was a significant difference in weight loss when nimacimab was combined with semaglutide compared to semaglutide alone.

In March 2026, the Company 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 comprised 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).

Since inception, the Company had 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. Following the Company's review of the rapidly changing anti-obesity medicine landscape and the potential commercial success of nimacimab's target product profile, in the second quarter of 2026, Skye management determined that in order to maximize shareholder value the CBeyond trial was terminated and all associated R&D activities for nimacimab were paused. On April 19, 2026 the Company engaged Stifel, Nicolaus & Company, Incorporated ("Stifel") as its exclusive financial advisor to assist in evaluating strategic alternatives.

Pending Transaction with Redx Pharma Limited

On August 14, 2026, Skye entered into a transaction agreement (“Transaction Agreement”) with Redx Pharma Limited with registered number 07368089 (“Redx”), a private limited company incorporated in England and Wales. Pursuant to the Transaction Agreement, and subject to the terms and conditions set forth therein, Skye will acquire the entire issued and to be issued share capital of Redx pursuant to a scheme of arrangement under Part 26 of the United Kingdom Companies Act 2006 (the “Scheme of Arrangement” and such transaction, the “Transaction”). See Note 11 Subsequent Events for Additional Information.

In anticipation of the Transaction Agreement, the Company initiated a reduction in operating activities during the second quarter of 2026. These actions included a workforce reduction, the disposition of certain manufacturing-related assets that were no longer expected to be used in operations, and other activities associated with the wind-down of the Company's legacy operations. As a result, the Company recognized certain non-recurring charges during the three and six months ended June 30, 2026. Additional information regarding the operating reductions and related asset impairment is included in Note 4, Property and equipment, net, and additional information regarding the Transaction Agreement is included in Note 11, Subsequent Events, and the Company's Current Report on Form 8-K filed with the SEC on August 14, 2026.

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 June 30, 2026, had a working capital deficit of $572,215 and an accumulated deficit of $210,170,441. As of June 30, 2026, the Company had unrestricted cash and cash equivalents and short-term investments in the amount of $10,064,141. For the three months ended June 30, 2026 and 2025, the Company incurred losses from operations of $11,061,303 and $18,243,925, respectively. For the

six months ended June 30, 2026 and 2025, the Company incurred losses from operations of $23,735,669 and $30,003,487, respectively. For the three months ended June 30, 2026 and 2025, the Company incurred net losses of $10,786,594 and $17,624,872, respectively. For the six months ended June 30, 2026 and 2025, the Company incurred net losses of $23,295,955 and $28,728,191, 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 close its proposed transaction with Redx or to raise sufficient additional funding to cover operating expenses. As of the date that these financials are filed, management estimates that the Company has sufficient capital through the Closing. However, the Company's continued operations beyond the fourth quarter of 2026 will depend on its ability to complete the proposed transaction with Redx or 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.

The Company is a party to a legal proceeding with a former employee (see note 9). As of June 30, 2026, the estimated legal contingency, including accrued legal expenses, is $5,417,250.

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.

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 “Bid Price 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)”). In addition, as previously disclosed by the Company in its Current Report on Form 8-K filed with the SEC on May 15, 2026, on May 13, 2026, the Company received a written notification from the Listing Qualifications Department of Nasdaq notifying the Company that, based on the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, the Company’s stockholders’ equity was $9,011,804, and therefore, the Company was not in compliance with Nasdaq Global Market’s Listing Rule 5450(b)(1)(A), which requires a $10,000,000 minimum stockholders’ equity standard. On June 18, 2026, the Company received approval from Nasdaq to transfer the listing of the Company’s common stock from the Nasdaq Global Market to the Nasdaq Capital Market, which requires a $3,000,000 minimum stockholders’ equity standard, effective with the open of business on June 23, 2026. The Company’s common stock continues to trade on the Nasdaq Capital 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 the minimum bid price requirement. 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.

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 8 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 10, Segment Reporting. Such reclassifications did not have a material impact on the accompanying unaudited condensed consolidated financial statements.

During the six months ended June 30, 2026, except as described below under "Property and Equipment, net," 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.

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.

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is assessed by comparing the carrying amount of the asset to the estimated undiscounted future cash flows expected to result from the asset's use and eventual disposition. If the carrying amount is determined to be unrecoverable, an impairment loss is recognized for the amount by which the carrying amount exceeds the asset's fair value. During the six months ended June 30, 2026, the Company recognized an impairment loss of $589,660 related to certain clinical manufacturing fixed assets. The impairment resulted from changes in the Company's strategic plans and the determination that the carrying amounts of the assets were no longer recoverable. See Note 4, Property and equipment, net, for additional information.

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 June 30, 2026
	Valuation
	Hierarchy	Total
Assets:
Money market funds (included in cash and cash equivalents)	Level 1	$	5,088,978
U.S. treasury obligations (included in short-term investments)	Level 1	1,995,784
Total cash equivalents and marketable securities		$	7,084,762

3. Prepaid Expenses, Other Current Assets and Liabilities

Prepaid expenses consist of the following:


	June 30, 2026		December 31, 2025
Prepaid clinical expenses	$	—	$	231,493
Prepaid insurance	230,629		90,807
Other prepaid expenses	184,535		182,590
	$	415,164	$	504,890

Other current assets consist of the following:


	June 30, 2026		December 31, 2025
Vendor deposits	440,584		827,781
Other tax receivables	7,356		10,474
Other current assets	31,642		13,781
	$	479,582	$	852,036

Other current liabilities consist of the following:


	June 30, 2026		December 31, 2025
Research and development costs	$	33,923	$	2,518,724
Legal expenses	917,818		88,838
Consulting and professional fees	4,457		26,356
Other accrued liabilities	9,923		9,922
	$	966,121	$	2,643,840

4. Property and equipment, net

Property and equipment, net consists of the following:


	June 30, 2026		December 31, 2025
Machinery and equipment	$	11,150	$	1,527,419
Computer equipment	96,744		96,744
Furniture and fixtures	18,999		24,496
Leasehold improvements	13,954		23,918
Total property and equipment, gross	140,847		1,672,577
Less: accumulated depreciation and amortization	(107,908)		(773,647)
Total property and equipment, net	$	32,939	$	898,930

During the second quarter of 2026, the Company began winding down its existing operations in in connection with its strategic review process and evaluation of the proposed Transaction Agreement. As a result, management determined that certain reusable manufacturing chromatography materials previously capitalized as machinery and equipment would no longer be used in the Company's operations.

Management evaluated these assets under ASC 360, Property, Plant, and Equipment, and concluded that the carrying amounts were not recoverable. In reaching this conclusion, management considered that the assets would no longer be used in operations, could not be repurposed for alternative internal use, were not intended to be sold, and that no active secondary market or other market participants were identified from whom the Company could reasonably expect to realize proceeds upon disposition.

Accordingly, the Company estimated the fair value of the assets to be zero and recorded a non-cash loss on disposal of approximately $589,660 during the three and six months ended June 30, 2026. The impairment loss was included within research and development expenses in the accompanying Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2026. The Company removed the related gross asset cost and accumulated depreciation from its balance sheet, and the carrying value of these assets was zero as of June 30, 2026.

5. 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 June 30, 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	0.33	160
2021 Inducement Warrants	37.50	0.07	84,667
2021 Inducement Warrants to Placement Agent	47.00	0.07	5,927
2021 Common Stock Warrants	22.50	0.24	311,113
2021 Common Stock Warrants to Placement Agent	27.50	0.24	21,778
August 2023 Convertible Note Common Stock Warrants	5.16	7.13	340,000
August 2023 PIPE Financing Common Stock Warrants	5.16	7.13	2,325,537
January 2024 Pre-Funded Warrants Common Stock	0.001	Indefinite	4,550,860
Total warrants outstanding as of June 30, 2026			7,640,042

As of June 30, 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.

6. 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").

At the Company's 2026 Annual Meeting of Stockholders held on May 26, 2026, the Company's stockholders approved an amendment to the Company's Articles of Incorporation to increase the number of authorized shares of the Company's common stock from 100,000,000 shares to 300,000,000 shares. The Certificate of Amendment became effective upon its filing with the Nevada Secretary of State on May 28, 2026. This amendment did not modify the terms of the Amended and Restated Plan or increase the number of shares authorized for issuance under the Amended and Restated Plan.

As of June 30, 2026, the Company had 1,080,494 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 June 30, 2026, the Company had 426,563 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 six months ended June 30, 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	0.81
Exercised	—	—
Cancelled	(41,908)	6.51
Forfeited	(741,720)	2.77
Outstanding, June 30, 2026	5,152,727	$	2.45	8.25	$	195,469
Exercisable, June 30, 2026	2,479,027	$	3.84	7.56	$	76,863

*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 June 30, 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 six months ended June 30, 2026, was $0.62.

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:


	Six Months Ended June 30,
	2026	2025
Dividend yield	0.00%	0.00%
Volatility	84.61 - 86.16%	83.86 - 85.93%
Risk-free interest rate	3.78- 4.00%	3.93 - 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, to be recognized over the remaining service period.

Restricted Stock Units

The following is a summary of restricted stock unit ("RSU") activity during the six months ended June 30, 2026:


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

Vested	(9,375)	7.56

Unvested, June 30, 2026	483,113	$	9.76

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 June 30, 2026, 8,400 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 June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Research and development	$	519,271	$	519,018	$	1,078,725	$	1,008,606
General and administrative	751,938		1,514,091		1,689,474		3,226,412
	$	1,271,209	$	2,033,109	$	2,768,199	$	4,235,018

The total amount of unrecognized compensation cost was $7,221,567 as of June 30, 2026. This amount will be recognized over a weighted average period of 2.28 years.

7. 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 June 30, 2026, a total of $210,803 and $143,050, remains financed in prepaid expenses and insurance premium loan payable, respectively.

8. 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 June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Basic EPS and diluted EPS:

Loss (Numerator)
Net loss	$	(10,786,594)	$	(17,624,872)	$	(23,295,955)	$	(28,728,191)

Shares (Denominator)
Weighted average common shares outstanding **	39,694,243		39,659,266		39,687,418		39,655,597
Per-Share Amount	$	(0.27)	$	(0.44)	$	(0.59)	$	(0.72)

** 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 June 30,		Six Months Ended June 30,
	2026	2025	2026	2025
Stock options	5,152,727	4,523,762	5,152,727	4,523,762
Warrants	3,089,182	3,121,850	3,089,182	3,121,850
Unvested restricted stock units	483,113	499,363	483,113	499,363

9. 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 October 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. During the six months ended June 30, 2026, management reassessed its estimate of the legal contingency based on developments in the litigation and information available through June 30, 2026. These developments included ongoing settlement discussions, the approaching retrial, and updated assessments regarding potential damages and litigation risk. Based on this reassessment, the Company increased its estimated legal contingency. As of June 30, 2026, the estimated legal contingency, including accrued legal expenses, is $5,417,250. The increase in the estimated legal contingency during the six months ended June 30, 2026 resulted in the recognition of a $3,250,000 change in estimate for legal contingencies in the accompanying Unaudited Condensed Consolidated Statements of Operations.

In reassessing the estimated legal contingency as of June 30, 2026, management considered the following factors:

•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, including discussions occurring during the current reporting period,

•the Company’s possible defenses and counterclaims, and

•the procedural posture of the litigation, including the Ninth Circuit's remand for a new trial 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.

Two derivative actions have been filed in the United States District Court for the Southern District of California. On January 29, 2026, a plaintiff filed a putative derivative lawsuit captioned Domulot v. Dhillon et al., Case No. 3:26-cv-00600-WQH (the “Domulot Action”). On May 1, 2026, a second plaintiff filed a punitive derivative lawsuit captioned Dillan White v. Dhillon, et al., Case No. 3:26-cv-2776-MSB (the “White Action”). Both the Domulot Action and the White Action assert 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 the Exchange Act based on the dissemination of allegedly false and misleading statements related to nimacimab. Both complaints seek unspecified damages, an award of costs and expenses, including attorneys’ fees and expert fees, and other relief, including corporate governance reforms. Both the Domulot Action and the White Action have since been stayed pending developments in the securities class action. On August 11, 2026, the parties filed a joint motion to consolidate the Domulot Action and the White Action.

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.

On August 11, 2026, the Company notified Halozyme of its intent to terminate the Halozyme License Agreement.

10. 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 June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
External clinical development expenses (1)
SBI-100	$	—	$	—	$	—	$	2,241
nimacimab	1,712,599		11,723,402		7,041,837		16,623,528
Total External clinical development expenses	1,712,599		11,723,402		7,041,837		16,625,769
Personnel related and stock-based compensation	1,644,315		1,408,024		3,357,113		2,745,773
Other research and development expenses (2)	585,018		1,206,327		1,478,662		2,163,468
Total research and development expenses	$	3,941,932	$	14,337,753	$	11,877,612	$