Skye Bioscience, Inc.

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 common stock is listed on the Nasdaq Capital Market ("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 the minimum bid price requirement (which, following our transfer to the Nasdaq Capital Market described below, is set forth in Nasdaq Listing Rule 5550(a)(2)) 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 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.

Separately, on May 13, 2026, we received a notification letter from Nasdaq notifying us that our stockholders’ equity had fallen below the $10.0 million minimum required for continued listing on the Nasdaq Global Market under Nasdaq Listing Rule 5450(b)(1)(A). To resolve this deficiency, we applied to transfer the listing of our common stock to the Nasdaq Capital Market, which has lower continued listing requirements, including a lower minimum stockholders’ equity requirement. Nasdaq approved the transfer, which became effective on June 23, 2026, and, as a result, we regained compliance with the stockholders’ equity requirement. Our common stock continues to trade on Nasdaq under the symbol “SKYE.” The minimum bid price requirement described above continues to apply to our common stock on the Nasdaq Capital Market.

In addition, on July 22, 2026, the SEC approved Nasdaq's recently proposed rule changes to (i) adopt Nasdaq Listing Rule 5550(a)(6) to require issuers listed on the Nasdaq to maintain a minimum Market Value of Listed Securities (as defined in Nasdaq Listing Rule 5005(a)(23)) ("MVLS") of at least $5 million for a period of thirty (30) consecutive business days, and (ii) amend Rule 5810 to suspend trading and immediately delist from Nasdaq securities of issuers that do not satisfy the proposed new requirements, and Rule 5815 to set forth the procedures for requesting a hearing before a Hearings Panel and the scope of the Hearings Panel’s discretion. MVLS is generally calculated by multiplying the consolidated closing bid price by the number of shares of listed securities outstanding and, where a company has more than one class or series of equity security listed on Nasdaq, the values are aggregated. Under the new rule, if a company’s MVLS remains below $5 million for 30 consecutive business days, Nasdaq will issue a Staff Delisting Determination and immediately suspend trading of the company’s securities.

Unlike many other Nasdaq continued listing standards, the new MVLS requirement does not provide a compliance or cure period before a Staff Delisting Determination is issued. Additionally, a request for a hearing before the Hearings Panel does not automatically stay the suspension of trading. While the Hearings Panel may reverse a Staff Delisting Determination if it concludes that Nasdaq made an error, or in limited circumstances grant an exception of up to 180 calendar days for a company to demonstrate compliance with Nasdaq’s initial listing standards — which are generally more stringent than the continued listing standards — there can be no assurance that any such relief would be granted. A company may further appeal an adverse Hearings Panel decision to the Nasdaq Listing and Hearing Review Council; however, the company’s securities would generally trade in the over-the-counter market during the pendency of any such appeal.

On July 29, 2026, Nasdaq’s new continued listing requirement requiring companies to maintain at least $5 million in MVLS was automatically stayed. The rule, which the SEC approved on July 22, would have required companies whose MVLS remained below $5 million for 30 consecutive business days to be immediately suspended and delisted, with no compliance period. Although companies would still have been able to appeal to a Nasdaq Hearings Panel, trading on Nasdaq would not have continued during the appeal.

For now, Nasdaq’s new $5 million MVLS continued listing requirement is not effective. The Commission must decide whether to review the Division’s approval and, if it does, whether to affirm, modify, reverse, set aside, or remand the matter for further proceedings. The Commission may also decline review. During that process, the stay remains in place, and there is no prescribed timeline for the Commission to reach a decision. Because filing a petition for Commission review is generally a prerequisite to seeking judicial review, the matter could ultimately proceed to a federal court of appeals. If that occurs, the listing requirement could remain stayed during the pendency of the litigation, potentially delaying implementation for a significant period of time.

There can be no assurance that our MVLS will remain at or above the $5 million threshold for periods long enough to comply with the new standard. Our MVLS may be adversely affected by factors outside of our control, including general market conditions, macroeconomic uncertainty, sector-specific developments, investor sentiment, and volatility in the trading price of our Common Stock. Because the rule is triggered by 30 consecutive business days below the threshold, even a sustained but temporary decline in our stock price could result in non-compliance and the immediate suspension and delisting of our Common Stock.

If Nasdaq delists our securities from trading on its exchange at some future date, we would take actions to restore our compliance with Nasdaq's listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below Nasdaq's minimum bid price requirement or prevent future non-compliance with Nasdaq's listing requirements. In the event of a delisting, we could face significant material adverse consequences, including:

•reduced liquidity with respect to our securities;

•a determination that our Common Stock is a “penny stock” which will require brokers trading in our ordinary shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our ordinary shares;

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. However, although, we may effect a reverse stock split by action of our board of directors without a stockholder vote, there can be no assurance 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 the minimum bid price requirement 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.

Failure to complete, or delays in completing, the proposed Transaction with Redx could materially and adversely affect our results of operations, business, financial results and/or stock price.

Any failure to satisfy a required condition to closing may prevent, delay or otherwise materially and adversely affect the completion of the Transaction, which could materially and adversely affect our results of operations, business, financial results and/or stock price. We cannot predict with certainty whether or when any of the required closing conditions will be satisfied or if another uncertainty may arise and cannot assure you that the proposed Transaction will be successfully consummated or that we will be able to successfully consummate the proposed Transaction as currently contemplated under the Transaction Agreement or at all.

The conditions specified in the Transaction Agreement must be satisfied or, to the extent permitted by applicable law, waived to complete the Transaction. We cannot assure you that all of the conditions will be satisfied or waived.

Risks related to the failure to consummate, or delay in consummating, the proposed Transaction with Redx include, but are not limited to, the following:

•we would not realize any or all of the potential benefits of the Transaction, which could have a material adverse effect on our results of operations, business or stock price;

•under certain circumstances, a termination fee may be payable by us to Redx, subject to adjustment as set forth in the Transaction Agreement;

•we would remain liable for significant transaction costs, including legal, accounting, financial advisory and other costs relating to the Transaction regardless of whether the Transaction is consummated;

•the trading price of our common stock may decline to the extent that the current market price for our common stock reflects a market assumption that the Transaction will be completed;

•the attention of our management and employees may have been diverted to the Transaction rather than to our historical operations and the pursuit of other opportunities that could have been beneficial to us;

•we could be subject to litigation related to any failure to complete the Transaction;

•we could potentially lose key personnel during the pendency of the Transaction; and

•under the Transaction Agreement, we are subject to certain customary restrictions on the conduct of our business prior to completing the Transaction, which restrictions could adversely affect our ability to conduct our business as we otherwise would have done if we were not subject to these restrictions.

The occurrence of any of these events individually or in combination could materially and adversely affect our results of operations, business, and our common stock price, and we may lose some or all the intended benefits of the Transaction.

We are substantially dependent on our remaining employees to facilitate the consummation of the Transaction.

Our ability to consummate a strategic transaction depends upon our ability to retain our remaining employees required to consummate such a transaction, the loss of whose services may adversely impact the ability to consummate such transaction. As of the date of this Quarterly Report on Form 10-Q, we had only two full-time employees. Our ability to successfully complete the Transaction depends in large part on our ability to retain key personnel that are necessary to maintain our operations between now and the Effective Time. Despite our efforts to retain these employees, one or more may terminate their employment with us on short notice. Our cash conservation activities may yield other unintended consequences, such as reduced employee morale, which may cause remaining employees to seek alternative employment. The loss of the services of certain employees could potentially harm our ability to consummate the Transaction, to run our day-to-day business operations, as well as to fulfill our reporting obligations as a public company.

The Transaction may be completed even though a material adverse effect may result from the announcement of the Transaction, industry-wide changes and/or other causes.

In general, either we or Redx can refuse to complete the Transaction if there is an Acquiror Material Adverse Effect (as defined inthe Transaction Agreement) or a Material Adverse Effect (as defined in the Transaction Agreement), as applicable, between the date of the Transaction Agreement and the Closing. However, certain types of changes do not permit either party to refuse to complete the Transaction, even if such change could be said to have a material adverse effect on us or Redx, including:

•any changes in general United States or global economic conditions or other general business, financial or market conditions;

•any changes in conditions generally affecting the industry in which the Company or any of its subsidiaries operate;

•fluctuations in the value of any currency;

•regulatory, legislative or political conditions or conditions in securities, credit, financial, debt or other capital markets, in each case in the United States or any foreign country;

•any failure, in and of itself, by the Company or any of its subsidiaries to meet any internal or published projections, forecasts, estimates or predictions, revenues, earnings or other financial or operating metrics for any period (provided, that any events, changes, effects, circumstances, facts, developments or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of Material Adverse Effect may be taken into account in determining whether there has been, or would reasonably be expected to be, a Material Adverse Effect);

•the execution and delivery of the Transaction Agreement, the public announcement or the pendency of the Transaction Agreement or the pendency or consummation of the transactions contemplated by the Transaction Agreement (including the Transaction), the taking of any action required by the Transaction Agreement (subject to certain exceptions), or the identity of, or any facts or circumstances relating to, Redx or any of its subsidiaries, including the impact of any of the foregoing on the relationships, contractual or otherwise, of the Company or any of its subsidiaries with governmental authorities, customers, suppliers, partners, officers, employees or other material business relations;

•any adoption, implementation, promulgation, repeal, modification, amendment, authoritative interpretation, change or proposal of any applicable law of or by any governmental authority or any recommendations, statements or other pronouncements made, published or proposed by professional medical organizations;

•any changes or prospective changes in IFRS (or authoritative interpretations thereof);

•geopolitical conditions, the outbreak or escalation of hostilities, civil or political unrest, any acts of war, sabotage, cyberattack or terrorism, or any escalation or worsening of the foregoing;

•any epidemic, pandemic or other outbreak of illness or public health event, any hurricane, earthquake, flood, calamity or other natural disasters, acts of God or any change resulting from weather conditions (or any worsening of any of the foregoing); or

• any claims, actions, suits or proceedings arising from allegations of a breach of fiduciary duty or violation of securities laws, in each case relating to the Transaction Agreement or the transactions contemplated thereby (including the Transaction).

If a material adverse change occurs with respect to either party or both parties and we and Redx still complete the Transaction, the stock price of the combined company following the Closing may suffer and may reduce the value of the Transaction to our stockholders.

Some of our executive officers and directors have interests in the Transaction that are different from our stockholders and that may influence them to support or approve the Transaction without regard to the interests of our stockholders.

Certain of our executive officers and directors are parties to arrangements that provide them with interests in the Transaction that are different from our stockholders, including severance benefits, the acceleration of equity award vesting and continued indemnification.

Our board of directors was aware of and considered these interests, among other matters, in reaching itsdetermination (i) that the terms of the Transaction Agreement and the Transaction are fair to, advisable and in the best interest of us and our stockholders and (ii) to approve and declare advisable the Transaction Agreement, including the Transaction and the issuance of shares of our common stock to the stockholders of Redx pursuant to the Transaction Agreement. These interests, among other factors, may have influenced the directors and executive officers to support or approve the Transaction.

Our stockholders may not realize a benefit from the Transaction commensurate with the ownership dilution they will experience in connection with the Transaction.

If the combined company is unable to realize the full strategic and financial benefits currently anticipated from the Transaction, our stockholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the Transaction.

Our equityholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the completion of the Transaction as compared to their current ownership and voting interests in the respective companies.

After the completion of the Transaction, our current stockholders are expected to own a smaller percentage of the combined company than their ownership of their respective companies prior to the Transaction. Upon the Closing, on a pro forma basis and based upon the number of shares of Exchange Shares expected to be issued in connection with the Transaction and the Concurrent Financing, pre-Transaction equityholders of the Company are expected to own approximately 5.38% of the combined company, pre-Transaction equityholders of Redx are expected to own approximately 46.17% of the combined company and investors in the Concurrent Financing and the Series A Financing are expected to own approximately 48.45% of the combined company (assuming gross proceeds from the Concurrent Financing of $67.9 million and assuming gross proceeds from the Series A Financing of $36.0 million), in each case, calculated on a fully diluted basis, using the treasury stock method, and, subject to certain assumptions, including (i) a valuation for the Company of $14.5 million (assuming the Company has no net cash as a result of its pre-Closing distributions (“Company Net Cash”) as of the Closing), (ii) a valuation for Redx of $125.0 million (iii) the relative capitalization of the Company and Redx and (iv) assuming that the Concurrent Financing is not increased pursuant to the Side Letter. The percentage of the combined company that each party’s equityholders will own following the Closing is subject to certain adjustments as described in the Transaction Agreement, including the amount of the final Company Net Cash at Closing.

Lawsuits may be filed against us and the members of our board of directors arising out of the proposed Transaction, which may delay or prevent the proposed Transaction.

Putative stockholder complaints, including stockholder class action complaints, and other complaints may be filed against us, our board of directors, Redx, the Redx board of directors and others in connection with the transactions contemplated by the Transaction Agreement. The outcome of litigation is uncertain, and we may not be successful indefending against any such future claims. Lawsuits that may be filed against us, our board of directors, Redx, or the Redx board of directors could delay or prevent the Transaction, divert the attention of our management and employees from our day-to-day business and otherwise adversely affect our financial condition.

During the pendency of the Transaction , we may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Transaction Agreement, which could adversely affect their respective businesses.

Covenants in the Transaction Agreement impede our ability to make acquisitions or complete other mergers, sales of assets or other business combinations pending completion of the Transaction. As a result, if the Transaction is not completed, the parties may be at a disadvantage to their competitors during that period. In addition, while the Transaction Agreement is in effect, each party is generally prohibited from soliciting, initiating, knowingly encouraging or entering into specified extraordinary transactions, such as a merger, sale of assets or other business combination, with any third party, subject to specified exceptions, even if any such transaction could be favorable to such party’s stockholders or stockholders, as applicable.

Certain provisions of the Transaction Agreement may discourage third parties from submitting competing proposals, including proposals that may be superior to the arrangements contemplated by the Transaction Agreement.

The terms of the Transaction Agreement prohibit each of us and Redx from soliciting competing proposals or cooperating with persons making unsolicited Acquisition Proposals (as defined in the Transaction Agreement), except in certain limited circumstances. With respect to us, the board of directors may respond to an unsolicited Acquisition Proposal if it determines in good faith, after consultation with its outside financial advisor and outside legal counsel, that the unsolicited competing proposal constitutes, or is reasonably likely to result in, a Superior Proposal (as defined in the Transaction Agreement) and, after consultation with its outside legal counsel, that failure to take such action would be inconsistent with the fiduciary duties of our board of directors. With respect to Redx, following receipt of a bona fide acquisition proposal by any person that the Redx board hasdetermined is reasonably likely to result in a superior competing proposal, Redx may solicit Acquisition Proposals and furnish information to, and enter into discussions with, any person (including persons not making such proposal) if the Redx board concludes in good faith, after consultation with its outside legal counsel and financial advisor, that failure to take such action would be inconsistent with the fiduciary duties of the Redx board.

In certain circumstances, and subject to compliance with the Transaction Agreement, our board of directors or the Redx board may change its recommendation to its respective stockholders if it determines such recommendation change is required to avoid a breach of its fiduciary duties. Additionally, subject to compliance with the procedures set forth in the Transaction Agreement, including paying the applicable termination fee, Redx may terminate the Transaction Agreement in order to enter into an agreement with respect to a Superior Proposal (as defined in the Transaction Agreement).

Upon termination of the Transaction Agreement in certain circumstances, a termination fee may be payable by us to Redx if (i)(a) the Transaction Agreement is terminated because the Transaction has not been consummated by the End Date or we (1) fail to obtain the requisite stockholder approval or (2) breach the Transaction Agreement, (b) an alternative acquisition proposal was announced or disclosed prior to such termination, and (c) within 12 months of the termination of the Transaction Agreement, we enter into a definitive agreement with respect to an alternative transaction, (ii) we fail to include our board recommendation in the related proxy statement/prospectus, or (iii) our board of directors changes or withdraws its recommendation in favor of the Transaction or approves an alternative transaction, or willfully and intentionally breaches its non-solicitation or certain other obligations under the Transaction Agreement.

Both we and Redx have also each agreed to reimburse the other party for certain third-party expenses, as applicable, if the Transaction Agreement is terminated in certain circumstances.

These termination fees and expense reimbursement provisions may discourage third parties from submitting competing proposals to us or Redx or their respective stockholders and may cause our board of directors or the Redx board, as the case may be, to be less inclined to recommend a competing proposal.

Our stockholders may not receive any payment on the Company Legacy CVRs and the Company Legacy CVRs may otherwise expire valueless.

The right of our stockholders to receive any future payment for or derive any value from the Company Legacy CVRs will be contingent solely upon our and Redx’s (or the combined company’s) ability to monetize all or any part of the Legacy Assets (as defined below) pursuant to one or more disposition agreements entered into within the time period specified in the Legacy CVR Agreement, and the timing and amount of the consideration received thereunder . If we and/or Redx or the combined company are not successful in entering into disposition agreements related to the Legacy Assets (as defined below) or receiving payments thereunder within the time period specified in the Legacy CVR Agreement, no payments will be made in respect of the Company Legacy CVRs, and the Company Legacy CVRs will expire valueless.

Following the Effective Time, the combined company will have sole authority over whether and how to monetize the Legacy Assets (if at all), and the combined company’s only obligations will be to carry out the obligations set forth in the Legacy CVR Agreement.

Furthermore, the Company Legacy CVRs will be unsecured obligations of the combined company and all payments under the Company Legacy CVRs and all other obligations under the Legacy CVR Agreement and the Company Legacy CVRs and any rights or claims relating thereto will be subordinated in right of payment to the prior payment in full of all current or future senior obligations of the combined company.

The tax treatment of the Company Legacy CVRs is uncertain.

We intend to treat a holder’s receipt of the Company Legacy CVRs as a distribution of property with respect to the holder’s existing shares of our common stock for U.S. federal income tax purposes, which could be taxable to our stockholders without the corresponding receipt of cash. However, the U.S. federal income tax treatment of the Company Legacy CVRs is uncertain. There is no legal authority directly addressing the U.S. federal income tax treatment of the receipt of, and payments under, the Company Legacy CVRs, and there can be no assurance that the IRS would not assert, or that a court would not sustain, a position that could result in adverse U.S. federal income tax consequences to holders of the Company Legacy CVRs.

If the Transaction is not completed, our stock price may decline significantly.

The market price of our Common Stock is subject to significant fluctuations. During the 12-month period ended June 30, 2026, the closing per share sales price of our Common Stock on Nasdaq ranged from a high of $4.9902 on October 3, 2025 to a low of $0.5655 on March 30, 2026. Market prices for securities of pharmaceutical, biotechnology and other life science companies have historically been particularly volatile. In addition, the market price of our Common Stock will likely be volatile based on whether stockholders and other investors believe that we can complete the Transaction or otherwise raise additional capital to support our operations if the Transaction is not consummated and another strategic transaction cannot be identified, negotiated and consummated in a timely manner, if at all. The volatility of the market price of our Common Stock is exacerbated by low trading volume.

Additional factors that may cause the market price of our Common Stock to fluctuate include:

•the loss of key employees;

•future sales of our common stock;

•period-to-period fluctuations in financial results.

If we do not complete the Transaction, we may face substantial competition for attractive counterparties for any proposed strategic transactions.

There can be no assurance that the Transaction will be completed. If the Transaction is not completed, our board of directors may decide to pursue an alternative strategic transaction. We may face substantial competition for attractive counterparties for any proposed strategic transactions. For example, there may be many other biotechnology and pharmaceutical companies that halt development of their programs and instead choose to pursue strategic transactions like the ones we have been exploring in connection with our strategic review process. These companies may possess greater financial and managerial resources than we do, and they may have more attractive product candidates, intellectual property or other assets. As a result, these other companies may prove to be more attractive than us to counterparties pursuing strategic transactions. There can be no assurance that any future strategic review process will result in us pursuing a transaction, or that any transaction, if pursued, will be completed on terms favorable to us and our stockholders.

If we do not successfully consummate the Transaction or another strategic transaction, our board of directors may decide to pursue a dissolution and liquidation of our company. In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities, as to which we can give you no assurance.

There can be no assurance that the Transaction will be completed. If the Transaction is not completed, our board of directors may decide to pursue a dissolution and liquidation of our company. In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such decision and, ultimately, such liquidation, since the amount of cash available for distribution continues to decrease as we fund our operations while pursuing the Transaction. In addition, if our board of directors were to approve and recommend, and our stockholders were to approve, a dissolution and liquidation of the company, we would be required under Nevada corporate law to pay our outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to stockholders. Our commitments and contingent liabilities may include obligations under our employment and related agreements or policies with certain employees that provide for severance and other payments following a termination of employment occurring for various reasons, including a change in control of the company, litigation against us, and other various claims and legal actions arising in the ordinary course of business, and other unexpected and/or contingent liabilities. As a result of this requirement, a portion of our assets would need to be reserved pending the resolution of such obligations.

In addition, we may be subject to litigation or other claims related to a dissolution and liquidation of our company. If a dissolution and liquidation were to be pursued, our board of directors, in consultation with our advisors, would need toevaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of our common stock could lose all or a significant portion of their investment in the event of a liquidation, dissolution or winding up of the company. A liquidation would be a lengthy and uncertain process with no assurance of any value ever being returned to our stockholders.