UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: ~~March 31,~~September 30, 2023

☐ 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 001-38286

ENVERIC BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)

Delaware

95-4484725

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

4851 Tamiami Trail N, Suite 200

Naples, FL

34103

(Address of principal executive offices)

(Zip code)

~~(239)302-1707~~

~~(Registrant’s telephone number, including area code)~~

(239)302-1707

(Registrant’s telephone number, including area code)

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, $0.01 par value per share		ENVB		The Nasdaq Stock Market 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 (Section 232.405 of this chapter) during the preceding 12 months (or 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 12,~~November 9, 2023, there were ~~2,078,271~~2,321,315 shares outstanding of Registrant’s Common Stock (par value $0.01 per share).

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of ~~March 31,~~September 30, 2023 (Unaudited) and December 31, 2022	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended ~~March 31,~~September 30, 2023 and 2022	2
	Unaudited Condensed Consolidated Statements of Changes in Mezzanine Equity and Shareholders’ Equity for the three and nine months ended ~~March 31,~~September 30, 2023 and 2022	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2023 and 2022	45
	Notes to Unaudited Condensed Consolidated Financial Statements	56
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2021
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2629
Item 4.	Controls and Procedures	2629

	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	2730
Item 1A.	Risk Factors	2730
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2730
Item 3.	Defaults Upon Senior Securities	2730
Item 4.	Mine Safety Disclosures	2730
Item 5.	Other Information	2730
Item 6.	Exhibits	2831
	Signatures	3032

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2023			December 31, 2022			September 30, 2023			December 31, 2022
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash	$	12,561,813		$	17,723,884		$	4,266,568		$	17,723,884
Prepaid expenses and other current assets		2,277,187			708,053			1,560,354			708,053
Total current assets		14,839,000			18,431,937			5,826,922			18,431,937

Other assets:
Property and equipment, net		638,935			677,485			539,152			677,485
Right-of-use operating lease asset		37,041			63,817			—			63,817
Intangible assets, net		337,498			379,686			253,120			379,686
Total other assets		1,013,474			1,120,988			792,272			1,120,988
Total assets	$	15,852,474		$	19,552,925		$	6,619,194		$	19,552,925

LIABILITIES, MEZZANINE EQUITY, AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,792,959		$	463,275		$	1,098,233		$	463,275
Accrued liabilities		1,028,182			1,705,655			1,533,829			1,705,655
Current portion of right-of-use operating lease obligation		37,044			63,820			—			63,820
Investment option liability		731,503			851,008			1,250,929			851,008
Warrant liability		134,558			185,215			300,557			185,215
Derivative liability		714,000			727,000			—			727,000
Total current liabilities	$	4,438,246		$	3,995,973		$	4,183,548		$	3,995,973

Commitments and contingencies (Note 8)		-
Commitments and contingencies (Note 9)								-			-

Mezzanine equity
Series C redeemable preferred stock, $0.01 par value, 100,000 shares authorized, and 0 shares issued and outstanding as of March 31, 2023 and December 31, 2022		—			—
Series C redeemable preferred stock, $0.01 par value, 100,000 shares authorized, and 0 shares issued and outstanding as of September 30, 2023 and December 31, 2022								—			—
Redeemable non-controlling interest		1,008,348			885,028			—			885,028
Total mezzanine equity		1,008,348			885,028			—			885,028

Shareholders’ equity
Preferred stock, $0.01 par value, 20,000,000 shares authorized; Series B preferred stock, $0.01 par value, 3,600,000 shares authorized, 0 shares issued and outstanding as of March 31, 2023 and December 31, 2022		—			—
Common stock, $0.01 par value, 100,000,000 shares authorized, 2,078,271 shares issued and outstanding as of March 31, 2023 and December 31, 2022		20,782			20,782
Preferred stock, $0.01 par value, 20,000,000 shares authorized; Series B preferred stock, $0.01 par value, 3,600,000 shares authorized, 0 shares issued and outstanding as of September 30, 2023 and December 31, 2022								—			—
Common stock, $0.01 par value, 100,000,000 shares authorized, 2,181,912 and 2,078,271 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively								21,818			20,782
Additional paid-in capital		94,805,177			94,395,662			96,013,029			94,395,662
Accumulated deficit		(83,885,313	)		(79,207,786	)		(93,063,582	)		(79,207,786	)
Accumulated other comprehensive loss		(534,766	)		(536,734	)		(535,619	)		(536,734	)
Total shareholders’ equity		10,405,880			14,671,924			2,435,646			14,671,924
Total liabilities, mezzanine equity, and shareholders’ equity	$	15,852,474		$	19,552,925		$	6,619,194		$	19,552,925

See the accompanying notes to the unaudited condensed consolidated financial statements.

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	2023			2022			2023			2022			2023			2022
	For the Three Months Ended March 31,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022			2023			2022
Operating expenses
General and administrative	$	2,784,191		$	2,767,866		$	2,010,349		$	3,514,547		$	7,921,340		$	8,783,619
Research and development		1,990,001			1,958,714			1,351,750			2,055,656			5,883,440			6,134,421
Depreciation and amortization		86,486			69,265			86,296			86,646			259,300			241,413
Total operating expenses		4,860,678			4,795,845			3,448,395			5,656,849			14,064,080			15,159,453

Loss from operations		(4,860,678	)		(4,795,845	)		(3,448,395	)		(5,656,849	)		(14,064,080	)		(15,159,453	)

Other income (expense)
Change in fair value of warrant liabilities		50,657			275,969			67,822			1,599,623			(115,342	)		3,845,514
Change in fair value of investment option liability		119,505			—			562,715			1,809,622			(399,921	)		1,809,622
Change in fair value of derivative liability		13,000			—			—			(231,000	)		727,000			(284,000	)
Interest expense		(11	)		(4,138	)
Interest income (expense)								2,237			(308	)		3,142			(5,114	)
Total other income		183,151			271,831			632,774			3,177,937			214,879			5,366,022

Net loss before income taxes								(2,815,621	)		(2,478,912	)		(13,849,201	)		(9,793,431	)

Income tax expense								(6,595	)		—			(6,595	)		—

Net loss		(4,677,527	)		(4,524,014	)		(2,822,216	)		(2,478,912	)		(13,855,796	)		(9,793,431	)
Less preferred dividends attributable to non-controlling interest		12,329			—			—			12,603			19,041			20,411
Less deemed dividends attributable to accretion of embedded derivative at redemption value		110,991			—			—			110,991			147,988			184,985
Net loss attributable to shareholders		(4,800,847	)		(4,524,014	)		(2,822,216	)		(2,602,506	)		(14,022,825	)		(9,998,827	)

Other comprehensive loss
Foreign currency translation		1,968			88,709			10,433			(417,390	)		1,115			(609,695	)

Comprehensive loss	$	(4,798,879	)	$	(4,435,305	)	$	(2,811,783	)	$	(3,019,896	)	$	(14,021,710	)	$	(10,608,522	)

Net loss per share - basic and diluted	$	(2.31	)	$	(5.34	)	$	(1.30	)	$	(1.46	)	$	(6.62	)	$	(8.11	)

Weighted average shares outstanding, basic and diluted		2,078,271			847,136			2,164,656			1,787,235			2,117,153			1,232,936

See the accompanying notes to the unaudited condensed consolidated financial statements.

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Shares Amount Equity Shares Amount Capital Deficit Loss Equity
Redeemable Non-controlling Interest Total Mezzanine Common Stock Additional Paid-In Accumulated
Accumulated
Other Comprehensive

Total
Shareholders’

Shares Amount Equity Shares Amount Capital Deficit Loss Equity
Balance at January 1, 2023 1,000 $ 885,028 $ 885,028 - - 2,078,271 $ 20,782 $ 94,395,662 $ (79,207,786 ) $ (536,734 ) $ 14,671,924
Stock-based compensation — — — — — 532,835 — — 532,835
Preferred dividends attributable to redeemable non-controlling interest — 12,329 12,329 - - — — (12,329 ) — — (12,329 )
Accretion of embedded derivative to redemption value — 110,991 110,991 - - — — (110,991 ) — — (110,991 )
Foreign exchange translation gain — — — — — — — 1,968 1,968
Net loss — — — - - — — — (4,677,527 ) — (4,677,527 )
Balance at March 31, 2023 1,000 $ 1,008,348 $ 1,008,348 - - 2,078,271 $ 20,782 $ 94,805,177 $ (83,885,313 ) $ (534,766 ) $ 10,405,880

Shares Amount Capital Deficit Income (Loss) Total
Common Stock Additional Paid-In Accumulated Accumulated Other Comprehensive
Total
Shareholders’

Shares Amount Capital Deficit Income (Loss) Equity
Balance at January 1, 2022 651,921 $ 6,519 $ 83,066,656 $ (60,736,453 ) $ (30,802 ) $ 22,305,920
February 2022 registered direct offering 400,000 4,000 5,798,464 — — 5,802,464
Stock-based compensation — — 768,619 — — 768,619
Conversion of RSUs into common shares 899 9 (9 ) — — —
Foreign exchange translation gain — — — — 88,709 88,709
Net loss — — — (4,524,014 ) — (4,524,014 )
Balance at March 31, 2022 1,052,820 $ 10,528 $ 89,633,730 $ (65,260,467 ) $ 57,907 $ 24,441,698
- Shares Amount Equity Shares Amount Capital Deficit Loss
Equity

Redeemable Non-controlling Interest Total Mezzanine Common Stock Additional Paid-In Accumulated Accumulated Other Comprehensive
Total
Shareholders’

Shares Amount Equity Shares Amount Capital Deficit Loss Equity
Balance at January 1, 2023 - 1,000 $ 885,028 $ 885,028 2,078,271 $ 20,782 $ 94,395,662 $ (79,207,786 ) $ (536,734 ) $ 14,671,924
Stock-based compensation — — — — — 532,835 — — 532,835
Preferred dividends attributable to redeemable non-controlling interest — 12,329 12,329 — — (12,329 ) — — (12,329 )
Accretion of embedded derivative to redemption value — 110,991 110,991 — — (110,991 ) — — (110,991 )
Foreign exchange translation gain — — — — — — — 1,968 1,968
Net loss - — — — — — — (4,677,527 ) — (4,677,527 )
Balance at March 31, 2023 - 1,000 $ 1,008,348 $ 1,008,348 2,078,271 $ 20,782 $ 94,805,177 $ (83,885,313 ) $ (534,766 ) $ 10,405,880
Stock-based compensation — — — — — 879,738 — — 879,738
Preferred dividends attributable to redeemable non-controlling interest — 6,712 6,712 — — (6,712 ) — — (6,712 )
Accretion of embedded derivative to redemption value — 36,997 36,997 — — (36,997 ) — — (36,997 )
Redemption of Series A preferred stock (1,000 ) (1,052,057 ) (1,052,057 ) — — — — — —
Issuance of common shares in exchange for RSU conversions from the reduction in force — — — 63,511 635 (635 ) — — —
Foreign exchange translation loss — — — — — — — (11,286 ) (11,286 )
Net loss - — — — — — — (6,356,053 ) — (6,356,053 )
Balance at June 30, 2023 - — $ — $ — 2,141,782 $ 21,417 $ 95,640,571 $ (90,241,366 ) $ (546,052 ) $ 4,874,570
Stock-based compensation — — — — — 372,859 — — 372,859
Issuance of common shares in exchange for RSU conversions — — — 40,130 401 (401 ) — — —
Foreign exchange translation loss — — — — — — — 10,433 10,433
Net loss - — — — — — — (2,822,216 ) — (2,822,216 )
Balance at September 30, 2023 - — $ — $ — 2,181,912 $ 21,818 $ 96,013,029 $ (93,063,582 ) $ (535,619 ) $ 2,435,646

See the accompanying notes to the unaudited condensed consolidated financial statements.

3

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~CHANGES IN MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

2023 2022
For the Three Months Ended March 31,
2023 2022
Cash Flows From Operating Activities:
Net loss $ (4,677,527 ) $ (4,524,014 )
Adjustments to reconcile net loss to cash used in operating activities
Change in fair value of warrant liability (50,657 ) (275,969 )
Change in fair value of investment option liability (119,505 ) —
Change in fair value of derivative liability (13,000 ) —
Stock-based compensation 532,835 768,619
Amortization of right-of-use asset 26,847 34,455
Amortization of intangible assets 42,188 42,188
Depreciation expense 44,298 27,077
Change in operating assets and liabilities:
Prepaid expenses and other current assets (1,549,354 ) (588,975 )
Accounts payable and accrued liabilities 653,712 6,021
Right-of-use operating lease liability (26,846 ) (38,343 )
Net cash used in operating activities (5,137,009 ) (4,548,941 )

Cash Flows From Investing Activities:
Purchases of property and equipment (5,169 ) (505,507 )
Net cash used in investing activities (5,169 ) (505,507 )

Cash Flows From Financing Activities:
Proceeds from sale of common stock, warrants, and investment options, net of offering costs — 9,397,884
Net cash provided by financing activities — 9,397,884

Effect of foreign exchange rate on cash (19,893 ) (4,900 )

Net (decrease) increase in cash (5,162,071 ) 4,338,536
Cash at beginning of period 17,723,884 17,355,999
Cash at end of period $ 12,561,813 $ 21,694,535

Supplemental disclosure of cash and non-cash transactions:
Cash paid for interest $ 11 $ 4,138
Income taxes paid $ — $ —
Warrants issued in conjunction with common stock issuance $ — $ 3,595,420
Preferred dividends attributable to redeemable non-controlling interest $ 12,329 $ —
Accretion of embedded derivative to redemption value $ 110,991 $ —
Shares Amount Shares Amount Equity Shares Amount Capital Deficit Income (Loss)
Equity

Series C Preferred Stock Redeemable Non-controlling Interest Total Mezzanine Common Stock Additional Paid-In Accumulated Accumulated Other Comprehensive Total Shareholders’
Shares Amount Shares Amount Equity Shares Amount Capital Deficit Income (Loss) Equity
Balance at January 1, 2022 — $ — — $ — — 651,921 $ 6,519 $ 83,066,656 $ (60,736,453 ) $ (30,802 ) $ 22,305,920
February 2022 registered direct offering — — — — — 400,000 4,000 5,798,464 — — 5,802,464
Stock-based compensation — — — — — — — 768,619 — — 768,619
Conversion of RSUs into common shares — — — — — 899 9 (9 ) — — —
Foreign exchange translation gain — — — — — — — — — 88,709 88,709
Net loss — — — — — — — — (4,524,014 ) — (4,524,014 )
Balance at March 31, 2022 — $ — — $ — $ — 1,052,820 $ 10,528 $ 89,633,730 $ (65,260,467 ) $ 57,907 $ 24,441,698
Stock-based compensation — — — — — — — 677,543 — — 677,543
Redeemable non-controlling interest, net of $402,000 embedded derivative and net of issuance costs of $41,962 — — 1,000 556,038 556,038 — — — — — —
Issuance of redeemable non-controlling Series C preferred stock 52,685 527 — — 527 — — (527 ) — — (527 )
Preferred dividends attributable to redeemable non-controlling interest — — — 7,808 7,808 — — (7,808 ) — — (7,808 )
Accretion of embedded derivative to redemption value — — — 73,994 73,994 — — (73,994 ) — — (73,994 )
Conversion of RSAs into common shares — — — — — 1,223 12 (12 ) — — —
Foreign exchange translation gain — — — — — — — — — (281,014 ) (281,014 )
Net loss — — — — — — — — (2,790,505 ) — (2,790,505 )
Balance at June 30, 2022 52,685 $ 527 1,000 $ 637,840 $ 638,367 1,054,043 $ 10,540 $ 90,228,932 $ (68,050,972 ) $ (223,107 ) $ 21,965,393
Balance 52,685 $ 527 1,000 $ 637,840 $ 638,367 1,054,043 $ 10,540 $ 90,228,932 $ (68,050,972 ) $ (223,107 ) $ 21,965,393
Stock-based compensation — — — — — — — 645,137 — — 645,137
July 2022 registered direct offering, PIPE offering, modification of warrants and exercise of pre-funded warrants, net of offering costs — — — — — 1,000,000 10,000 3,239,125 — — 3,249,125
Issuance of rounded shares as a result of the reverse stock split — — — — — 24,228 242 (242 ) — — —
Preferred dividends attributable to redeemable non-controlling interest — — — 12,603 12,603 — — (12,603 ) — — (12,603 )
Accretion of embedded derivatives to redemption value — — — 110,991 110,991 — — (110,991 ) — — (110,991 )
Redemption of Series C preferred stock (52,685 ) (527 ) — — (527 ) — — 527 — — 527
Foreign exchange translation loss — — — — — — — — — (417,390 ) (417,390 )
Net loss — — — — — — — — (2,478,912 ) — (2,478,912 )
Balance at September 30, 2022 — $ — 1,000 $ 761,434 $ 761,434 2,078,271 $ 20,782 $ 93,989,885 $ (70,529,884 ) $ (640,497 ) $ 22,840,286
Balance — $ — 1,000 $ 761,434 $ 761,434 2,078,271 $ 20,782 $ 93,989,885 $ (70,529,884 ) $ (640,497 ) $ 22,840,286

See the accompanying notes to the unaudited condensed consolidated financial statements.

4

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
2023 2022
For the Nine Months Ended
2023 2022
Cash Flows From Operating Activities:
Net loss $ (13,855,796 ) $ (9,793,431 )
Adjustments to reconcile net loss to cash used in operating activities
Change in fair value of warrant liability 115,342 (3,845,514 )
Change in fair value of investment option liability 399,921 (1,809,622 )
Change in fair value of derivative liability (727,000 ) 284,000
Stock-based compensation 1,785,432 2,091,299
Amortization of right-of-use asset 64,246 103,365
Amortization of intangible assets 126,566 126,563
Depreciation expense 132,734 114,850
Gain on disposal of property and equipment (4,219 ) —
Change in operating assets and liabilities:
Prepaid expenses and other current assets (746,033 ) (758,419 )
Accounts payable and accrued liabilities 429,688 (106,675 )
Right-of-use operating lease liability (64,244 ) (91,022 )
Net cash used in operating activities (12,343,363 ) (13,684,606 )

Cash Flows From Investing Activities:
Purchases of property and equipment (5,195 ) (577,972 )
Proceeds from disposal of property and equipment 16,900 —
Net cash provided by (used in) investing activities 11,705 (577,972 )

Cash Flows From Financing Activities:
Payment for the deferred offering costs from the equity distribution agreement (105,000 ) —
Proceeds from sale of common stock, warrants, and investment options, net of offering costs — 17,222,100
Redemption of Series A Preferred Stock (see Note 8) (1,052,057 ) —
Proceeds from the sale of redeemable non-controlling interest, net of offering — 958,038
Net cash (used in) provided by financing activities (1,157,057 ) 18,180,138

Effect of foreign exchange rate on cash 31,399 (72,554 )

Net (decrease) increase in cash (13,457,316 ) 3,845,006
Cash at beginning of period 17,723,884 17,355,999
Cash at end of period $ 4,266,568 $ 21,201,005

Supplemental disclosure of cash and non-cash transactions:
Cash paid for interest $ — $ 5,114
Income taxes paid $ 6,595 $ —
Warrants issued in conjunction with common stock issuance $ — $ 3,595,420
Issuance of embedded derivative $ — $ 402,000
Issuance of redeemable non-controlling Series C preferred stock $ — $ —
Offering costs accrued not paid $ 20,800 $ —
Preferred dividends attributable to redeemable non-controlling interest $ 19,041 $ 20,411
Accretion of embedded derivative to redemption value $ 147,988 $ 184,985
Investment options issued in conjunction with common stock issuance $ — $ 4,323,734
Modification of warrants as part of share capital raise $ — $ 251,357
See the accompanying notes to the unaudited condensed consolidated financial statements.
5
ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BUSINESS AND LIQUIDITY AND OTHER UNCERTAINTIES

Nature of Operations

Enveric Biosciences, Inc. (“~~Enveric Biosciences, Inc.” “Enveric”~~Enveric” or the “Company”) is a ~~pharmaceutical~~biotechnology company developing ~~innovative, evidence-based cannabinoid medicines.~~novel neuroplastogenic small-molecule therapeutics for the treatment of depression, anxiety, and addiction disorders. The head office of the Company is located in Naples, Florida. The Company has the following ~~wholly owned~~wholly-owned subsidiaries: Jay Pharma Inc. (“Jay Pharma”), 1306432 B.C. Ltd. (“HoldCo”), MagicMed Industries, Inc. (“MagicMed”), Enveric Canada Inc., and Enveric Therapeutics, Pty. Ltd. (“Enveric Therapeutics”). ~~The Company has an Amalgamation Agreement (“Amalgamation Agreement”) and tender agreement (“Tender Agreement”) with Jay Pharma, which was entered into in prior years.~~

~~MagicMed Industries develops~~Leveraging its unique discovery and ~~commercializes psychedelic-derived pharmaceutical candidates. MagicMed’s psychedelic derivatives library,~~development platform, The Psybrary™, Enveric has created a robust Intellectual Property portfolio of New Chemical Entities for specific mental health indications. Enveric’s lead program, the ~~Psybrary™, is an essential building block from which the industry can develop new patented products. The initial focus~~EVM201 Series, comprises next generation synthetic prodrugs of the ~~Psybrary™~~active metabolite, psilocin. Enveric is ~~on psilocybin and DMT derivatives, and it~~developing the first product from the EVM201 Series – EB-373 – for the treatment of psychiatric disorders. Enveric is ~~then~~also advancing its second program, the EVM301 Series, expected to ~~be expanded~~offer a first-in-class, new approach to ~~other psychedelics.~~the treatment of difficult-to-address mental health disorders, mediated by the promotion of neuroplasticity without also inducing hallucinations in the patient.

Following the Company’s amalgamation with MagicMed completed in September 2021 (the “Amalgamation”), the Company has continued to pursue the development of MagicMed’s proprietary ~~psychedelic derivatives~~Psychedelic Derivatives library, the Psybrary™ which the Company believes will help to identify and develop the right drug candidates needed to address mental health challenges, including cancer-related distress. The Company synthesizes novel versions of classic psychedelics, such as psilocybin, ~~N-dimethyltryptamine (DMT),~~DMT, mescaline and MDMA, using a mixture of chemistry and synthetic biology, resulting in the expansion of the Psybrary™, which includes 15 patent families with over a million potential variations and hundreds of synthesized molecules. Within the Psybrary™ the Company has three different types of molecules, Generation 1 (classic psychedelics), Generation 2 (pro-drugs), and Generation 3 (new chemical entities). The Company is working to add novel psychedelic molecular compounds and derivatives (“Psychedelic Derivatives”) on a regular basis through its work at ~~Enveric Labs~~the Company’s labs in Calgary, Alberta, Canada, where the Company has a team of PhD scientists with expertise in synthetic biology and chemistry. To date the Company has created over 500 molecules that are housed in the ~~Psybrary.~~Psybrary™.

The Company screens newly synthesized molecules in the Psybrary™ through PsyAI™, a proprietary artificial intelligence ~~(AI)~~(“AI”) tool. Leveraging AI systems is expected to reduce the time and cost of pre-clinical, clinical, and commercial development. The Company believes it streamlines pharmaceutical design by predicting ideal binding structures of molecules, manufacturing capabilities, and pharmacological effects to help determine ideal drug candidates, tailored to each indication. Each of these molecules that the Company believes are patentable can then be further screened to see how changes to its makeup alter its effects in order to synthesize additional new molecules. New compounds of sufficient purity are undergoing pharmacological screening, including non-clinical (receptors/cell lines), preclinical (animal), and ultimately clinical (human) evaluations. The Company intends to utilize the Psybrary™ and the AI tool to categorize and characterize the Psybrary™ substituents to focus on bringing more psychedelics-inspired molecules from discovery to the clinical phase.

Akos Spin-Off
On May 11, 2022, the Company announced plans to transfer and spin-off its cannabinoid clinical development pipeline assets to Akos Biosciences, Inc. (formerly known as Acanna Therapeutics, Inc.), a majority-owned subsidiary of the Company (hereafter referred to as “Akos”), which was incorporated on April 13, 2022, by way of dividend to Enveric shareholders (the “Spin-Off”). The Spin-Off was subject to various conditions, including Akos meeting the qualifications for listing on the Nasdaq Stock Market, and if successful, would result in two standalone public companies. The new company resulting from the Spin-Off will be referred to as Akos. As of May 5, 2023, since the Spin-Off has not occurred, the holders of the Akos Series A Preferred Stock have the right, but not the obligation, to cause Akos to purchase all or a portion of the Akos Series A Preferred Stock. As of May 12, 2023, the holders of the Company’s Akos Series A Preferred Stock, par value $0.01 per share (“Akos Series A Preferred Stock”) have exercised this right to force redemption of all of the Akos Series A Preferred Stock for $1,000 per share, plus accrued but unpaid dividends of ~~approximately~~ $~~50,000~~52,057 for a total of ~~approximately~~ $~~1,050,000~~1,052,057. The Company ~~has 20 days following the receipt of the Put Exercise Notice (the “Put Exercise Notice”) to make the payment.~~ made full payment on May 19, 2023. See ~~Notes 7 and~~ 9.Note 8.

~~Reverse Stock Split~~Australian Subsidiary
~~On July 14, 2022, the Company effected a~~ ~~1-for-50 reverse stock split. All historical share and per share amounts reflected throughout this report have been adjusted to reflect the Reverse Stock Split.~~
~~Australian Subsidiary~~

On March 21, 2023, the Company established Enveric Therapeutics, an Australia-based subsidiary, to support the Company’s plans to advance its lead program, the EVM201 Series, comprised of the next generation synthetic prodrugs of the active metabolite, psilocin (“EVM201 Series”), towards the clinic. Enveric Therapeutics will oversee the Company’s preclinical, clinical, and regulatory activities in Australia, including ongoing interactions with the local Human Research Ethics Committees (HREC) and the Therapeutic Goods Administration (TGA), Australia’s regulatory authority.

6
ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Going Concern, Liquidity and Other Uncertainties

The Company has incurred a loss since inception resulting in an accumulated deficit of $~~83,885,313~~93,063,582 as of ~~March 31,~~September 30, 2023, and further losses are anticipated in the development of its business. Further, the Company ~~has~~had operating cash outflows of $~~5,137,009~~12,343,363 for the ~~three~~nine months ended ~~March 31,~~September 30, 2023. For the ~~three~~nine months ended ~~March 31,~~September 30, 2023, the Company had a loss from operations of $~~4,860,678~~14,064,080. Since its inception, being a research and development company, the Company has not yet generated revenue and the Company has incurred continuing losses from its operations. The Company’s operations have been funded principally through the issuance of debt and equity. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements.

In assessing the Company’s ability to continue as a going concern, the Company monitors and analyzes its cash and its ability to generate sufficient cash flow in the future to support its operating and capital expenditure commitments. At ~~March 31,~~September 30, 2023, the Company had cash of $~~12,561,813~~4,266,568 and working capital of $~~10,400,754~~1,643,374. The Company’s current cash on hand is ~~not sufficient enough~~insufficient to satisfy its operating cash needs for the 12 months ~~from~~following the filing of this Quarterly Report on Form 10-Q. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date the financial statements are issued. Management’s plan to alleviate the conditions that raise substantial doubt include reducing the Company’s rate of spend, managing its cash flow, advancing its programs, and raising additional working capital through public or private equity or debt financings or other sources, which has included the Equity Distribution Agreement with Canaccord for proceeds of up to $2.4 million (see Note 7) and the Purchase Agreement with Lincoln Park (see Note 10), subject to registration, and may include collaborations with additional third parties, as well as disciplined cash spending, to increase the Company’s cash runway. ~~See Note 9.~~ Adequate additional financing may not be available to usthe Company on acceptable terms, or at all. Should the Company be unable to raise sufficient additional capital, the Company may be required to undertake cost-cutting measures including delaying or discontinuing certain operating activities.

The Company’s material cash requirements consist of working capital to fund capital expenditures incurred at their research facility in Calgary and their operations, which consist primarily of, without limitation, employee related expenses, product development activities conducted by third parties, research materials and lab supplies, facility related expenses including rent and maintenance, costs associated with preclinical studies, patent related costs, costs of regulatory and public company compliance, insurance costs, audit costs, consultants and legal fees. Additionally, the Company currently utilizes third-party contract ~~CROs~~research organizations (“CROs”) to assist with clinical development activities. If the Company obtains regulatory approval for any of their product candidates, they expect to incur significant expenses to engage third-party contract ~~CMOs~~manufacturing organizations (“CMOs”) to carry out their clinical manufacturing activities as ~~they do~~it does not yet have a ~~commercial organization,~~commercialization infrastructure, and incur significant expenses related to developing ~~their~~its internal commercialization capability to support product sales, marketing and distribution. The Company’s current working capital resources are ~~not sufficient~~insufficient to fund these material cash requirements for the next twelve months.
5
~~ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

As a result of these factors, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern for a period of one year after the date of the financial statements are issued. The Company’s unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Reduction in Force/Restructuring
In May 2023, the Company entered into a cost reduction plan, including a reduction in force of approximately 35%35% of its full-time ~~employees.~~employees to streamline its operations and conserve cash resources. Additionally, contracts with seven consultants that were focused on the Akos cannabinoid spin-out ~~will be~~were terminated. The Company ~~expects to record a charge~~recognized severance charges of approximately $~~500,000~~453,059 in severance and benefits. The Company expects the charges will be recognized primarily in the second quarter of 2023, with the majority of such charges anticipated to be paid by the end of the second quarter ofthrough September 30, 2023. The ~~estimated costs that the Company expects to incur in connection with the cost reduction~~ plan are subject to a number of assumptions, and actual results may differ significantly from these estimates. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the cost reduction plan. The reduction in force may take longer than anticipated and the reduction in force may have an adverse impact on the Company’s performance. The plan includesincluded a focus on progressing the Company’s existing non-cannabinoid pipeline while reducing the rate of spend and managing cash flow. ~~The~~In June 2023, the Company ~~expects to substantially complete~~completed the reduction in force, ~~by the end of the second quarter of 2023.~~
with such severance expenses recorded in general and administrative accounts.

On June 16, 2023, the Company entered into a separation agreement with Avani Kanubaddi, the Company’s President and Chief Operating Officer (the “Kanubaddi Separation Agreement”). In accordance with the Kanubaddi Separation Agreement, Mr. Kanubaddi’s outstanding restricted stock units (“RSUs”) will retain their vesting conditions. Mr. Kanubaddi’s 2023 salary and benefits of $550,974 were accrued and will be paid out in twelve equal monthly installments beginning in July 2023. Upon termination, any unvested time-based RSUs became fully vested. The Company accelerated expense recognized related to these shares that vested was $231,273. Of the 11,278 market performance-based RSUs previously granted, 3,759 will continue to be subject to the original terms and conditions of Mr. Kanubaddi’s employment agreement and the remainder were forfeited.
7
ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SCHEDULE OF RESTRUCTURING COSTS PAYABLE
Accrued Restructuring Costs
January 1, 2023 Beginning balance $ —
Restructuring costs incurred 1,004,033
Restructuring costs paid (396,431 )
September 30, 2023 ending balance $ 607,602
Inflation Risks

The Company considers the current inflationary trend existing in the North American economic environment reasonably likely to have a material unfavorable impact on results of continuing operations. Higher rates of price inflation, as compared to recent prior levels of price inflation, have caused a general increase in the cost of labor and materials. In addition, there is an increased risk of the Company experiencing labor shortages due to a potential inability to attract and retain human resources due to increased labor costs resulting from the current inflationary environment.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principal of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. Management’s opinion is that all adjustments (consisting of normal accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended ~~March 31,~~September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2022, and related notes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 31, ~~2023.~~2023 and subsequently amended on Form 10-K/A Amendment No. 1 filed with the SEC on June 9, 2023 (as amended, the “Annual Report”).

The Company’s significant accounting policies and recent accounting standards are summarized in Note 2 of the Company’s consolidated financial statements for the year ended December 31, 2022. There were no significant changes to these accounting policies during the three and nine months ended ~~March 31,~~September 30, 2023.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and expenses during the periods reported. By their nature, these estimates are subject to measurement uncertainty and the effects on the financial statements of changes in such estimates in future periods could be significant. Significant areas requiring management’s estimates and assumptions include determining the fair value of transactions involving common stock and the valuation of stock-based compensation, accruals associated with third party providers supporting research and development efforts, and estimated fair values of long lived assets used to record impairment charges related to intangible assets. Actual results could differ from those estimates.

Foreign Currency Translation

From inception through ~~March 31,~~September 30, 2023, the reporting currency of the Company was the United States dollar while the functional currency of certain of the Company’s subsidiaries ~~were~~was the Canadian dollar and Australian dollar. For the reporting periods ended ~~March 31,~~September 30, 2023 and ~~March 31,~~ 2022, the Company engaged in a number of transactions denominated in Canadian dollars and Australian dollars. As a result, the Company is subject to exposure from changes in the exchange rates of the Canadian dollar and Australian dollar against the ~~U.S.~~United States dollar.

The Company translates the assets and liabilities of its Canadian subsidiaries and Australian subsidiary into the ~~U.S.~~United States dollar at the exchange rate in effect on the balance sheet date. Revenues and expenses are translated at the average exchange rate in effect during each monthly period. Unrealized translation gains and losses are recorded as foreign currency translation gain (loss), which is included in the condensed consolidated statements of shareholders’ equity as a component of accumulated other comprehensive ~~income (loss).~~loss.

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ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company has not entered into any financial derivative instruments that expose it to material market risk, including any instruments designed to hedge the impact of foreign currency exposures. The Company may, however, hedge such exposure to foreign currency exchange fluctuations in the future.

Adjustments that arise from exchange rate changes on transactions denominated in a currency other than the local currency are included in other comprehensive ~~income (loss)~~loss in the condensed consolidated statements of operations and comprehensive ~~income (loss)~~loss as incurred.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the federal depository insurance coverage of $250,000 in the United States and Australia and $100,000 in Canada. The Company has not experienced losses on these accounts, and management believes the Company is not exposed to significant risks on such accounts. As of ~~March 31,~~September 30, 2023, the Company had greater than $250,000 at USUnited States financial institutions, less than $250,000 at Australian financial institutions, and greater than $100,000 at Canadian financial institutions.
Deferred Offering Costs
The Company complies with the requirements of ASC Topic 340, Other Assets and Deferred Costs (“ASC 340”) and SAB 5A - Expenses of Offering. Offering costs, which consist mainly of legal, accounting and consulting fees directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity. During September 2023, the Company incurred $125,800 in deferred offering costs in connection with the Equity Distribution Agreement (the “Distribution Agreement”), with Canaccord Genuity LLC (“Canaccord”) and the Purchase Agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”). These deferred offering costs will be proportionately offset against the total proceeds from the issuance of common stock available under the agreements and the Company will expense any remaining balance of deferred offering costs if the agreements are terminated. For the three and nine months ended September 30, 2023, there were no issuances of common stock under the agreements resulting in the deferral of offering costs.

Warrant Liability and Investment Options

The Company evaluates all of its financial instruments, including issued stock purchase warrants and investment options, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 “Distinguishing Liabilities from Equity” (“ASC 480”) and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The Company accounts for warrants and investment options for shares of the Company’s common stock that are not indexed to its own stock as derivative liabilities at fair value on the unaudited condensed consolidated balance sheets. The Company accounts for common stock warrants and investment options with put options as liabilities under ASC 480. Such warrants and investment options are subject to remeasurement at each unaudited condensed consolidated balance sheet date and any change in fair value is recognized as a component of other expense on the unaudited condensed consolidated statements of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of such common stock warrants and investment options. At that time, the portion of the warrant liability and investment options related to such common stock warrants will be reclassified to additional paid-in capital.

Derivative Liability

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815. For derivative financial instruments that are accounted for as assets or liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the unaudited condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as assets or liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the unaudited condensed consolidated balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

Income Taxes
The Company files U.S. federal and state returns. The Company’s foreign subsidiary also files a local tax return in their local jurisdiction. From a U.S. federal, state, and Canadian perspective, the years that remain open to examination are consistent with each jurisdiction’s statute of limitations.

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ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and warrants (using the treasury stock method). The computation of basic net loss per share for the three and nine months ended ~~March 31,~~September 30, 2023 and 2022 excludes potentially dilutive securities. The computations of net loss per share for each period presented is the same for both basic and fully diluted. In accordance with ASC 260 “Earnings per Share” (“ASC 260”), penny warrants were included in the calculation of weighted average shares outstanding for the purposes of calculating basic and diluted earnings per share.

Potentially dilutive securities outlined in the table below have been excluded from the computation of diluted net loss per share the three and nine months ended ~~March 31,~~September 30, 2023 and 2022 because the effect of their inclusion would have been anti-dilutive.
SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES
2023 2022
For the three months ended March 31,
2023 2022 For the three and nine months ended September 30, 2023 For the three and nine months ended September 30, 2022
Warrants to purchase shares of common stock 655,463 655,376 609,893 655,463
Restricted stock units - vested and unissued 65,312 55,717 20,847 61,428
Restricted stock units – unvested 87,733 95,863
Restricted stock units - unvested 148,251 65,117
Restricted stock awards - vested and unissued 708 843 — 974
Restricted stock awards – unvested — 130
Investment options to purchase shares of common stock 1,070,000 — 1,070,000 1,070,000
Options to purchase shares of common stock 47,954 22,829 31,852 22,829
Total potentially dilutive securities 1,927,170 830,758 1,880,843 1,875,811
Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1 - Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2 - Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

For certain financial instruments, including cash and accounts payable, the carrying amounts approximate their fair values as of ~~March 31,~~September 30, 2023, and December 31, 2022 because of their short-term nature.
8
~~ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

The following table provides the financial liabilities measured on a recurring basis and reported at fair value on the balance sheet as of ~~March 31,~~September 30, 2023, and December 31, 2022, and indicates the fair value of the valuation inputs the Company utilized to determine such fair value of warrant liabilities, derivative liability, and investment options:
SCHEDULE OF FAIR VALUE HIERARCHY OF VALUATION INPUTS ON RECURRING BASIS
Level March 31, 2023 December 31, 2022
Level March 31, 2023 December 31, 2022 Level September 30, 2023 December 31, 2022
Warrant liabilities - January 2021 Warrants 3 $ 12 $ 81 3 $ 18 $ 81
Warrant liabilities - February 2021 Warrants 3 34 79 3 59 79
Warrant liabilities - February 2022 Warrants 3 134,512 185,055 3 300,480 185,055
Fair value of warrant liability $ 134,558 $ 185,215 $ 300,557 $ 185,215

Level March 31, 2023 December 31, 2022
Derivative liability - May 2022 3 $ 714,000 $ 727,000
Fair value of derivative liability $ 714,000 $ 727,000
10
Level March 31, 2023 December 31, 2022
Wainwright investment options 3 $ 38,087 $ 44,904
RD investment options 3 260,031 302,289
PIPE investment options 3 433,385 503,815
Fair value of investment option liability $ 731,503 $ 851,008

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Level September 30, 2023 December 31, 2022
Derivative liability - May 2022 3 $ — $ 727,000
Fair value of derivative liability $ — $ 727,000
Level September 30, 2023 December 31, 2022
H.C. Wainwright & Co., LLC investment options 3 $ 70,521 $ 44,904
RD investment options 3 442,653 302,289
PIPE investment options 3 737,755 503,815
Fair value of investment option liability $ 1,250,929 $ 851,008
The warrant liabilities, derivative liability, and investment options are all classified as Level 3, for which there is no current market for these securities such as the determination of fair value requires significant judgment or estimation. Changes in fair value measurement categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded ~~as appropriate.~~within other income (expense) on the condensed consolidated statements of operations and comprehensive loss.

9
~~ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES~~Subsequent measurement
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Subsequent measurement~~

The following table presents the changes in fair value of the warrant liabilities, derivative liability, and investment options that are classified as Level 3:

SCHEDULE OF FAIR VALUE OF WARRANT LIABILITIES AND DERIVATIVE LIABILITY AND INVESTMENT OPTIONS

	Total Warrant Liabilities			Total Warrant Liabilities
Fair value as of December 31, 2022	$	185,215		$	185,215
Change in fair value		(50,657	)		115,342
Fair value as of March 31, 2023	$	134,558
Fair value as of September 30, 2023				$	300,557

Total Derivative
Liability

Fair value as of December 31, 2022 $ 727,000
Change in fair value (13,000 )
Fair value of derivative liability as of March 31, 2023 $ 714,000

	Total Derivative Liability
Fair value as of December 31, 2022	$	727,000
Change in fair value arising from redemption of Akos Series A Preferred Stock - See Note 8		(727,000	)
Fair value of derivative liability as of September 30, 2023	$	—

	Total Investment Option Liability			Total Investment Option Liability
Fair value as of December 31, 2022	$	851,008		$	851,008
Change in fair value		(119,505	)		399,921
Fair value of investment option liability as of March 31, 2023	$	731,503
Fair value of investment option liability as of September 30, 2023				$	1,250,929

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ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The key inputs into the Black Scholes valuation model for the Level 3 valuations of the warrant liabilities as of ~~March 31,~~September 30, 2023 are below:

SCHEDULE OF BLACK SCHOLES VALUATION MODELS OF WARRANT LIABILITIES AND INVESTMENT OPTIONS

	January 2021 Warrants			February 2021 Warrants			February 2022 Warrants			February 2022 Post-Modification Warrants
Term (years)		2.3			2.4			3.4			4.3
Stock price	$	2.38		$	2.38		$	2.38		$	2.38
Exercise price	$	247.50		$	245.00		$	27.50		$	7.78
Dividend yield		—	%		—	%		—	%		—	%
Expected volatility		80.0	%		85.0	%		96.0	%		94.0	%
Risk free interest rate		5.00	%		4.90	%		4.80	%		4.70	%
Number of warrants		36,429			34,281			338,000			122,000
Value (per share)	$	—		$	—		$	0.46		$	1.18

January 2021
Warrants

February 2021
Warrants

February 2022
Warrants

February 2022
Post-Modification
Warrants

Term (years) 2.8 2.9 3.9 4.8
Stock price $ 1.66 $ 1.66 $ 1.66 $ 1.66
Exercise price $ 247.50 $ 245.00 $ 27.50 $ 7.78
Dividend yield — % — % — % — %
Expected volatility 77.0 % 81.0 % 80.0 % 88.0 %
Risk free interest rate 3.90 % 3.80 % 3.70 % 3.60 %

Number of warrants 36,429 34,281 338,000 122,000
Value (per share) $ 0.00 $ 0.00 $ 0.15 $ 0.69

The key inputs into the Black Scholes valuation model for the Level 3 valuations of the investment options as of September 30, 2023 are below:

	H.C. Wainwright & Co., LLC Options			RD Offering Options			PIPE Offering Options
Term (years)		3.8			4.3			4.3
Stock price	$	2.38		$	2.38		$	2.38
Exercise price	$	10.00		$	7.78		$	7.78
Dividend yield		—	%		—	%		—	%
Expected volatility		97.0	%		94.0	%		94.0	%
Risk free interest rate		4.70	%		4.70	%		4.70	%
Number of investment options		70,000			375,000			625,000
Value (per share)	$	1.01		$	1.18		$	1.18

The key inputs into the Weighted Expected Return valuation model for the Level 3 valuations of the derivative liability as of ~~March 31, 2023,~~redemption, are below:

May 2022
Derivative Liability

Principal $ 1,000,000
Dividend rate 5.0 %
Market rate 5.9 %

		May 2022 Derivative Liability
Principal	$	—
Dividend rate		—	%
Market rate		—	%

~~The key inputs into~~At the ~~Black Scholes valuation model for the Level 3 valuations~~date of the ~~investment options as~~redemption of ~~March 31,~~the of Akos Series A Preferred Stock in May 2023, ~~are below:~~the derivative liability fair value was $0 due to the probability of a spin-off occurring was zero. See Note 8

Wainwright
Options
RD Options PIPE Options
Term (years) 4.3 4.8 4.8
Stock price $ 1.66 $ 1.66 $ 1.66
Exercise price $ 10.00 $ 7.78 $ 7.78
Dividend yield — % — % — %
Expected volatility 88.0 % 88.0 % 88.0 %
Risk free interest rate 3.70 % 3.60 % 3.60 %

Number of investment options 70,000 375,000 625,000
Value (per share) $ 0.54 $ 0.69 $ 0.69

Redeemable Non-controlling Interest

In connection with the issuance of Akos Series A Preferred Stock, the Akos Purchase Agreement (as defined below in Note 8) and certificate of designation contain a put right guaranteed by the Company as defined in Note 7.8. Applicable accounting guidance requires an equity instrument that is redeemable for cash or other assets to be classified outside of permanent equity if it is redeemable (a) at a fixed or determinable price on a fixed or determinable date, (b) at the option of the holder, or (c) upon the occurrence of an event that is not solely within the control of the issuer. As a result of this feature, the Company recorded the non-controlling interests as redeemable non-controlling interests and classified them in mezzanine equity within its unaudited condensed consolidated balance sheet initially at its acquisition-date estimated redemption value or fair value. In addition, the Company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument by accreting the embedded derivative at each reporting period over 12 months.

In May 2023, pursuant to the Akos Series A Preferred Certificate of Designations, the holders of the Akos Series A Preferred Stock exercised the Put Right (as defined below) requiring Akos to force redemption of all of the Akos Series A Preferred Stock. See Note 8.

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment Reporting

The Company determines its reporting units in accordance with FASB ASC 280, “Segment Reporting” (“ASC 280”). The Company evaluates a reporting unit by first identifying its operating segments under ASC 280. The Company then evaluates each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units. If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated. The Company has multiple operations related to psychedelics and cannabinoids. Both of these operations exist under one reporting unit: Enveric. The Company has one operating segment and reporting unit. The Company is organized and operated as one business. Management reviews its business as a single operating segment, using financial and other information rendered meaningful only by the fact that such information is presented and reviewed in the aggregate.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, and should be applied on a full or modified retrospective basis. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company early adopted ASU 2020-06 effective January 1, 2023, and has determined that the adoption of this guidance had no impact on its condensed consolidated financial statements.

NOTE 3. PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of September 30, 2023 and December 31, 2022, the prepaid expenses and other current assets of the Company consisted of the following:

SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

	September 30, 2023		December 31, 2022
Prepaid research and development	$	651,623	$	268,686
Prepaid value-added taxes		229,909		159,782
Prepaid professional fees		74,500		—
Prepaid insurance		332,508		174,406
Prepaid other		146,014		105,179
Deferred offering costs		125,800		—
Total prepaid expenses and other current assets	$	1,560,354	$	708,053

NOTE 3.4. INTANGIBLE ASSETS

As of ~~March 31,~~September 30, 2023, the Company’s intangible assets consisted of:

SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS

Definite lived intangible assets
Balance at December 31, 2022 $ 379,686
Amortization (42,188 )
Balance at March 31, 2023 $ 337,498

~~For identified definite lived intangible assets, there was~~ no ~~impairment expense during the three months ended March 31, 2023 and 2022. For identified definite lived intangible assets, amortization expense amounted to $42,188~~ ~~during the three months ended March 31, 2023 and 2022.~~

Definite lived intangible assets
Balance at December 31, 2022	$	379,686
Amortization		(126,566	)
Balance at September 30, 2023	$	253,120

1213

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For identified definite lived intangible assets, there was no impairment expense during the three and nine months ended September 30, 2023 and 2022. For identified definite lived intangible assets, amortization expense amounted to $42,191 during the three months ended September 30, 2023, and 2022, respectively. For identified definite lived intangible assets, amortization expense amounted to $126,566 and $126,563 during the nine months ended September 30, 2023 and 2022.

NOTE 4.5. PROPERTY AND EQUIPMENT

Property and equipment consists of the following assets which are located in Calgary, Canada and placed in service by Enveric Biosciences Canada, ~~Inc~~Inc. (“EBCI”), with all amounts translated into U.S. dollars:

SCHEDULE OF PROPERTY PLANT AND EQUIPMENT NET OF ACCUMULATED DEPRECIATION

	March 31, 2023			December 31, 2022			September 30, 2023			December 31, 2022
Lab equipment	$	834,274		$	831,123		$	818,460		$	831,123
Computer equipment and leasehold improvements		27,734			25,137			27,759			25,137
Property and equipment, gross		27,734			25,137

Less: Accumulated depreciation		(223,073	)		(178,775	)		(307,067	)		(178,775	)
Property and equipment, net of accumulated depreciation	$	638,935		$	677,485		$	539,152		$	677,485

Depreciation expense was $~~44,298~~44,105 and $~~27,077~~44,458 for the three months ended ~~March 31,~~September 30, 2023, and 2022, respectively. Depreciation expense was $132,734 and $114,850 for the nine months ended September 30, 2023 and 2022, respectively.

NOTE 5.6. ACCRUED LIABILITIES

As of ~~March 31,~~September 30, 2023 and December 31, 2022, the accrued liabilities of the Company consisted of the following:

SCHEDULE OF ACCRUED LIABILITIES

	March 31, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Product development	$	147,968	$	195,104	$	94,663	$	195,104
Accrued salaries and wages		397,912		1,175,963		729,616		1,175,963
Professional fees		246,976		83,255		74,499		83,255
Accrued restructuring costs						607,602		—
Accrued franchise taxes		217,326		—		9,449		—
Patent costs		18,000		251,333		18,000		251,333
Total accrued expenses	$	1,028,182	$	1,705,655	$	1,533,829	$	1,705,655

NOTE 6.7. SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

Authorized Capital

The holders of the Company’s common stock are entitled to one vote per ~~share.~~share. Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of legally available funds. Upon the liquidation, dissolution, or winding up of the Company, holders of common stock are entitled to share ratably in all assets of the Company that are legally available for distribution. As of ~~March 31,~~September 30, 2023, 100,000,000 shares of common stock and 20,000,000 shares of Preferred Stock were authorized under the Company’s articles of incorporation.

Equity Distribution Agreement

On September 1, 2023, the Company entered into the Distribution Agreement, with Canaccord, pursuant to which the Company may offer and sell from time to time, through Canaccord as sales agent and/or principal, shares of common stock of the Company, par value $0.01 per share having an aggregate offering price of up to $10.0 million. Due to the offering limitations applicable to the Company and in accordance with the terms of the Distribution Agreement, the Company may offer Common Stock having an aggregate gross sales price of up to $2,392,514 pursuant to the prospectus supplement dated September 1, 2023 (the “Prospectus Supplement”). Subject to the terms and conditions of the Distribution Agreement, Canaccord may sell the Common Stock by any method permitted by law deemed to be an “at-the-market offering”. The Company will pay Canaccord a commission equal to 3.0% of the gross sales price of the Common Stock sold through Canaccord under the Distribution Agreement and has also agreed to reimburse Canaccord for certain expenses. The Company may also sell Common Stock to Canaccord as principal for Canaccord’s own account at a price agreed upon at the time of sale. Any sale of Common Stock to Canaccord as principal would be pursuant to the terms of a separate terms agreement between the Company and Canaccord.

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the three and nine months ended September 30, 2023, the Company has issued no shares of common stock through the Distribution Agreement. The Company had capitalized deferred offering costs of $125,800 related to establishing the Distribution Agreement with Canaccord and the Purchase Agreement with Lincoln Park and no reductions to additional paid in capital.

Common Stock Activity

On February 15, 2022, the Company completed a public offering of 400,000shares of Common Stock and warrants to purchase up to 400,000shares of Common Stock for gross proceeds of approximately $10 10.0million, before deducting underwriting discounts and commissions and other offering expenses. A.G.P./Alliance Global Partners acted as sole book-running manager for the offering. In addition, Enveric granted the underwriter a 45-day option to purchase up to an additional 60,000shares of Common Stock and/or warrants to purchase up to an additional 60,000shares of Common Stock at the public offering price, which the underwriter has partially exercised for warrants to purchase up to 60,000shares of common stock. At closing, Enveric received net proceeds from the offering of approximately $9.1million, after deducting underwriting discounts and commissions and estimated offering expenses with $5.8million allocated to equity, $3.6million to warrant liability and the remaining $0.3million recorded as an expense.

~~ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

On July 22, 2022, the Company entered into a securities purchase agreement (the “Registered Direct Securities Purchase Agreement”) with an institutional investor for the purchase and sale of 116,500shares of the Company’s common stock, pre-funded warrants to purchase up to 258,500shares of common stock (the “RD Pre-Funded Warrants”), and unregistered preferred investment options (the “RD Preferred Investment Options”) to purchase up to 375,000shares of common stock (the “RD Offering”). The gross proceeds from the RD Offering were approximately $3,000,000. Subject to certain ownership limitations, the RD Pre-Funded Warrants became immediately exercisable at an exercise price equal to $0.0001per share of common stock. On August 3, 2022, all of the issued RD Pre-Funded Warrants were exercised.

Concurrently with the RD Offering, the Company entered into a securities purchase agreement (the “PIPE Securities Purchase Agreement”) with institutional investors for the purchase and sale of 116,000shares of common stock, pre-funded warrants to purchase up to 509,000shares of common stock (the “PIPE Pre-Funded Warrants”), and preferred investment options (the “PIPE Preferred Investment Options”) to purchase up to 625,000shares of the common stock in a private placement (the “PIPE Offering”). The gross proceeds from the PIPE Offering were approximately $5,000,000. Subject to certain ownership limitations, the PIPE Pre-Funded Warrants became immediately exercisable at an exercise price equal to $0.0001per share of common stock. All of the issued PIPE Pre-Funded Warrants were exercised on various dates prior to August 18, 2022.

The RD ~~offering~~Offering and PIPE Offering closed on July 26, 2022, with aggregate gross proceeds of approximately $8 million. The aggregate net proceeds from the offerings, after deducting the placement agent fees and other estimated offering expenses, were approximately $7.1 million, with $3.2 million allocated to equity, $4.3 million to investment option liability, and the remaining $0.4 million recorded as an expense.

During the nine months ended September 30, 2023, a total of 103,641 shares of Common Stock were issued pursuant to the conversion of restricted stock units. During the nine months ended September 30, 2022, a total of 2,122 shares of Common Stock were issued pursuant to the conversion of restricted stock units.

Stock Options

Amendment to 2020 Long-Term Incentive Plan

On May 3, 2022, our ~~Board~~board of directors (“Board”) adopted the First Amendment (the “Plan Amendment”) to the Enveric Biosciences, Inc. 2020 Long-Term Incentive Plan (the “Incentive Plan”) to (i) increase the aggregate number of shares available for the grant of awards by 146,083 shares to a total of 200,000 shares, and (ii) add an “evergreen” provision whereby the number of shares authorized for issuance pursuant to awards under the Incentive Plan will be automatically increased on the first trading date immediately following the date the Company issues any share of Common Stock (defined below) to any person or entity, to the extent necessary so that the number of shares of the Company’s Common Stock authorized for issuance under the Incentive Plan will equal the greater of (x) 200,000 shares, and (y) 15% of the total number of shares of the Company’s Common Stock outstanding as of such issuance date. The Plan Amendment was approved by the Company’s ~~stockholders~~shareholders at a special meeting of the Company’s ~~stockholders~~shareholders held on July 14, ~~2022.~~2022.

1415

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of activity under the Company’s incentive plan for the ~~three~~nine months ended ~~March 31,~~September 30, 2023, is presented below:

SCHEDULE OF STOCK OPTION

	Number of Shares			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value		Number of Shares			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at December 31, 2022		48,329		$	37.05	$	44.82		4.1	$	—		48,329		$	37.05	$	44.82		4.1	$	—
Forfeited		(375	)	$	3.07	$	2.58		—		—		(16,476	)	$	5.79	$	5.80		—	$	—
Outstanding at March 31, 2023		47,954		$	37.29	$	49.79		3.9	$	—

Exercisable at March 31, 2023		26,901		$	58.37	$	78.21		2.7	$	—
Outstanding at September 30, 2023													31,852		$	53.18	$	74.04		3.4	$	—
Exercisable at September 30, 2023													24,626		$	63.72	$	86.52		3.0	$	—

The Company’s ~~stock based~~stock-based compensation expense, recorded within general and administrative expense in the condensed consolidated statement of operations and comprehensive loss, related to stock options for the three months ended ~~March 31,~~September 30, 2023, and 2022 was $~~48,086~~44,606 and $~~36,989~~48,697, respectively. The Company’s stock-based compensation expense, recorded within general and administrative expense, related to stock options for the nine months ended September 30, 2023 and 2022 was $147,067 and $134,383, respectively. As of ~~March 31,~~September 30, 2023, the Company had $~~192,764~~93,697 in unamortized stock option expense, which will be recognized over a weighted average period of ~~1.7~~1 ~~years.~~year.

Restricted Stock Awards

For the three months ended ~~March 31,~~September 30, 2023, and 2022, the Company recorded $0and $~~11,863~~6,250, respectively, in stock-based compensation expense within general and administrative expense, related to restricted stock awards. For the nine months ended September 30, 2023 and 2022, the Company recorded $0 and $24,363, respectively, in stock-based compensation expense within general and administrative expense, related to restricted stock awards. As of ~~March 31,~~September 30, 2023, there were no unamortized stock-based compensation costs related to restricted share awards. ~~There~~During the three months ended September 30, 2023, the Company settled the 708 vested and unissued shares for cash of $14,250. As of September 30, 2023, there are ~~708~~0 vested and unissued shares of restricted stock ~~awards as of March 31, 2023.~~awards.

1516

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Issuance of Restricted Stock Units

The Company’s activity in restricted stock units was as follows for the ~~three~~nine months ended ~~March 31,~~September 30, 2023:

SCHEDULE OF RESTRICTED STOCK UNITS AND AWARDS ACTIVITY

	Number of shares			Weighted average fair value		Number of shares			Weighted average fair value
Non-vested at December 31, 2022		64,053		$	92.57		64,053		$	92.57
Granted		26,500		$	1.88		182,500		$	2.73
Vested		(2,820	)	$	33.65		(62,636	)	$	19.80
Non-vested at March 31, 2023		87,733		$	67.07
Forfeited							(35,666	)	$	27.45
Non-vested at September 30, 2023							148,251		$	28.39

For the three months ended ~~March 31,~~September 30, 2023, and 2022, the Company recorded $~~484,749~~328,253 and $~~719,767~~590,190, respectively, in stock-based compensation expense related to restricted stock units. For the nine months ended September 30, 2023 and 2022, the Company recorded $1,638,365 and $1,932,553 respectively, in stock-based compensation expense related to restricted stock units, which is a component of both general and administrative and research and development expenses in the condensed consolidated statement of operations and comprehensive loss.

As of ~~March 31,~~September 30, 2023, the Company had unamortized stock-based compensation costs related to restricted stock units of $~~2,790,640~~2,388,221 which will be recognized over a weighted average period of ~~2.6~~2.3 years and unamortized stock-based costs related to restricted stock units which will be recognized upon achievement of specified milestones.

As of ~~March 31,~~September 30, 2023, ~~65,312~~ 20,847restricted stock units are vested without shares of common stock being issued, with ~~1,313~~all of these shares due as of ~~March 31,~~September 30, 2023.

The following table summarizes the Company’s recognition of stock-based compensation for restricted stock units for the following periods:

SCHEDULE OF STOCK-BASED COMPENSATION FOR RESTRICTED STOCK UNITS

					2023		2022		2023		2022
	Three Months Ended March 31,				Three months ended September 30,				Nine months ended September 30,
Stock-based compensation for RSUs	2023		2022
					2023		2022		2023		2022
Stock-based compensation expense for RSUs:
General and administrative	$	252,315	$	358,818	$	101,607	$	357,756	$	946,851	$	1,138,080
Research and development		232,434		360,949		226,646		232,434		691,514		794,473
Total	$	484,749	$	719,767	$	328,253	$	590,190	$	1,638,365	$	1,932,553

Warrants

The following table summarizes information about shares issuable under warrants outstanding on ~~March 31,~~September 30, 2023:

SCHEDULE OF WARRANTS OUTSTANDING

Warrant shares outstanding Weighted average exercise price Weighted average remaining life Intrinsic value
Outstanding at December 31, 2022 655,463 $ 58.36 3.6 $
5,514

Outstanding at March 31, 2023 655,463 $ 58.36 3.4 $ —

Exercisable at March 31, 2023 655,463 $ 58.36 3.4 $ —

	Warrant shares outstanding			Weighted average exercise price		Weighted average remaining life		Intrinsic value
Outstanding at December 31, 2022		655,463		$	58.36		3.6	$	5,514
Expired		(45,570	)	$	111.50		—	$	—
Outstanding at September 30, 2023		609,893		$	50.46		2.9	$	—
Exercisable at September 30, 2023		609,893		$	50.46		2.9	$	—

The warrants assumed pursuant to the acquisition of MagicMed contain certain down round features, which were not triggered by the February 2022 public offering and July 2022 ~~public offerings,~~RD Offering, that would require adjustment to the exercise price upon certain events when the offering price is less than the stated exercise price.

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Preferred Investment Options

The following table summarizes information about investment options outstanding on ~~March 31,~~September 30, 2023:

SCHEDULE OF WARRANTS AND INVESTMENT OPTIONS

Investment options outstanding Weighted average exercise price Weighted average remaining life Intrinsic value
Outstanding at December 31, 2022 1,070,000 $ 7.93 5.1 —
Outstanding at March 31, 2023 1,070,000 $ 7.93 4.9 $ —

Exercisable at March 31, 2023 1,070,000 $ 7.93 4.9 $ —

~~ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

	Investment options outstanding		Weighted average exercise price		Weighted average remaining life		Intrinsic value
Outstanding at December 31, 2022		1,070,000	$	7.93		5.1	$	—
Outstanding at September 30, 2023		1,070,000	$	7.93		4.3	$	—
Exercisable at September 30, 2023		1,070,000	$	7.93		4.3	$	—

NOTE 7.8. REDEEMABLE NON-CONTROLLING INTEREST

Spin-Off and Related Private Placement

In connection with the ~~planned~~ Spin-Off, on May 5, 2022, Akos and the Company entered into ~~the Akos~~into a Securities Purchase Agreement (the “Akos Purchase Agreement”) with ~~the Akos Investor,~~an accredited investor (the “Akos Investor”), pursuant to which Akos agreed to sell up to an aggregate of 5,000 shares of Akos Series A Preferred Stock, at price of $1,000 per share, and warrants (the “Akos Warrants”) Akos Warrants to purchase shares of Akos’ common stock, par value $0.01 per share (the “Akos Common Stock”), for an aggregate purchase price of up to $5,000,000 (the “Akos Private Placement”). The Akos Purchase Agreement iswas guaranteed by the Company. Pursuant to the Akos Purchase Agreement, Akos ~~has~~ issued 1,000 shares of the Akos Series A Preferred Stock to the Akos Investor in exchange for $1,000,000 on May 5, 2022. The additional $4,000,000 ~~will~~was to be received on or immediately prior to the Spin-Off. The issuance of the Akos Series A Preferred Stock results in RNCI (see Note 2). Palladium Capital Advisors, LLC (“Palladium”) acted as placement agent for the Akos Private Placement. Pursuant to the Akos Purchase Agreement, Akos ~~has~~had agreed to pay Palladium a fee equal to 9% of the aggregate gross proceeds raised from the sale of the shares of the Akos Series A Preferred Stock and a non-accountable expense allowance of 1% of the aggregate gross proceeds raised the sale of the Akos Series A Preferred Stock in the Akos Private Placement. The fee due in connection with the Akos Private Placement ~~shall~~to be paid to Palladium in the form of convertible preferred stock and warrants was on similar terms to the securities issued in the Akos Private Placement. ~~As of March 31, 2023, no accruals have been recorded for the fees or warrants since the closing of the spin-off is not probable.~~ Palladium iswas also entitled to warrants to purchase Akos Common Stock in an amount up to 8% of the number of shares of Akos Common Stock underlying the shares issuable upon conversion of the Akos Series A Preferred Stock. As of September 30, 2023, no accruals are required to be recorded for the fees or warrants since the Akos Series A Preferred Stock has been redeemed.

Terms of Akos Series A Preferred Stock

Under the Certificate of the Designations, Preferences, and Rights of Series A Convertible Preferred Stock of Akos (the “Akos Series A Preferred Certificate of Designations”), on or immediately prior to the completion of the spin-off of Akos into an independent, separately traded public company listed on the Nasdaq Stock Market, the outstanding Akos Series A Preferred Stock ~~will be~~ automatically converted into a number of shares of Akos Common Stock equal to 25% of the then issued and outstanding Akos Common Stock, subject to the Beneficial Ownership Limitation (as defined in the Akos Purchase Agreement). Cumulative dividends on each share of Akos Series A Preferred Stock accrue at the rate of 5% annually.

The Akos Series A Preferred Certificate of Designations ~~provides~~provided that upon the earlier of (i) the one-year anniversary of May 5, 2022, and only in the event that the Spin-Off has not occurred; or (ii) such time that Akos and the Company have abandoned the Spin-Off or the Company is no longer pursuing the Spin-Off in good faith, the holders of the Akos Series A Preferred Stock shall have the right (the “Put Right”), but not the obligation, to cause Akos to purchase all or a portion of the Akos Series A Preferred Stock for a purchase price equal to $1,000 per share, subject to certain adjustments as set forth in the Akos Series A Preferred Certificate of Designations (the “Stated Value”), plus all the accrued but unpaid dividends per share. In addition, after the one-year anniversary of May 5, 2022, and only in the event that the Spin-Off has not occurred and Akos is not in material default of any of the transaction documents, Akos may, at its option, at any time and from time to time, redeem the outstanding shares of Akos Series A Preferred Stock, in whole or in part, for a purchase price equal to the aggregate Stated Value of the shares of Akos Series A Preferred Stock being redeemed and the accrued and unpaid dividends on such shares. Pursuant to the Akos Purchase Agreement, the Company has guaranteed the payment of the purchase price for the shares purchased under the Put Right.

The Akos Series A Preferred Certificate of Designations contains limitations that prevent the holder thereof from acquiring shares of Akos Common Stock upon conversion of the Akos Series A Preferred Stock that would result in the number of shares of Akos Common Stock beneficially owned by such holder and its affiliates exceeding 9.99% of the total number of shares of Akos Common Stock outstanding immediately after giving effect to the conversion (the “Beneficial Ownership Limitation”), except that upon notice from the holder to Akos, the holder may increase or decrease the limit of the amount of ownership of outstanding shares of Akos Common Stock after converting the holder’s shares of Akos Series A Preferred Stock, provided that any change in the Beneficial Ownership Limitation shall not be effective until 61 days following notice to Akos.

AsENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Redemption of Akos Series A Preferred Stock

In May ~~12,~~ 2023, pursuant to the Akos Series A Preferred Certificate of Designations, the holders of the Akos Series A Preferred Stock ~~have~~ exercised ~~this right~~the Put Right requiring Akos to force redemption of all of the Akos Series A Preferred Stock for $1,000 per share, plus accrued but unpaid dividends of approximately $~~50,000~~52,000 for a total of approximately $~~1,050,000~~1,052,000. The Company ~~has~~had 20 days following the receipt of the Put Exercise Notice to make the ~~payment. See Note 9.~~

payment and made payment on May 19, 2023. Upon redemption in May 2023, the Company revalued the derivative liability and the Company recognized a change in fair value of the derivative liability on the Company’s condensed consolidated statement of operations during the second quarter of 2023 of $714,000.

~~ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~The Company, Akos, and the Akos Investor have terminated the Akos Purchase Agreement in connection with the planned Spin-Off and certain registration rights agreement in connection with the Akos Private Placement.

Accounting for Akos Series A Preferred Stock

Since the shares of Akos Series A Preferred Stock ~~are~~were redeemable at the option of the holder and the redemption is not solely in the control of the Company, the shares of Akos Series A Preferred Stock ~~are~~were accounted for as a redeemable non-controlling interest and classified within mezzanine equity in the Company’s condensed consolidated balance sheets. The redeemable non-controlling interest was initially measured at fair value. Dividends on the shares of Akos Series A Preferred Stock ~~are~~were recognized as preferred dividends attributable to redeemable non-controlling interest in the Company’s condensed consolidated statement of operations and comprehensive loss.

The table below presents the reconciliation of changes in redeemable non-controlling interest:

SCHEDULE OF RECONCILIATION CHANGE IN ~~REDEEMBALE~~REDEEMABLE NONCONTROLLING INTEREST

Reconciliation of changes in redeemable non-controlling interest
Balance at December 31, 2022 $ 885,028
Preferred dividends attributable to redeemable non-controlling interest 12,329
Accretion of embedded derivative and transaction costs associated with Series A Preferred Stock to redemption value 110,991
Balance at March 31, 2023 $ 1,008,348

Balance at December 31, 2022	$	885,028
Preferred dividends attributable to redeemable non-controlling interest		19,041
Accretion of embedded derivative and transaction costs associated with Akos Series A Preferred		147,988
Redemption of Akos Series A Preferred Stock		(1,052,057	)
Balance at September 30, 2023	$	—

~~As of March 31,~~In May 2023, the ~~redemption value~~Akos Series A Preferred Stock was redeemed for a total of $1,052,057, and the balance of the redeemable non-controlling interest is $~~1,000,000~~0 ~~plus cumulative dividends which accrue at the rate~~as of 5~~% annually, or approximately $1,045,000. The Company has guaranteed this redemption on behalf of Akos. See Note 9.~~September 30, 2023.

NOTE 8.9. COMMITMENTS AND CONTINGENCIES

The Company is periodically involved in legal proceedings, legal actions and claims arising in the normal course of business. Management believes that the outcome of such legal proceedings, legal actions and claims will not have a significant adverse effect on the Company’s financial position, results of operations or cash flows.

Australian Subsidiary Research and Development

~~Australian Subsidiary~~

On March 23, 2023, the Company issued a press release announcing the selection of Australian CRO, Avance Clinical, in preparation for Phase 1 Study of EB-373, the Company’s lead candidate targeting the treatment of anxiety disorders. Under the agreement, Avance Clinical will manage the Phase 1 clinical trial of EB-373 in coordination with the Company’s newly established Australian subsidiary, Enveric Therapeutics Pty, Ltd. The Phase 1 clinical trial is designed as a multi-cohort, dose-ascending study to measure the safety and tolerability of EB-373. EB-373, a next-generation proprietary psilocin prodrug, has been recognized as a New Chemical Entity (NCE) by Australia’s Therapeutic Goods Administration (TGA) and is currently in preclinical development targeting the treatment of anxiety disorder. The total cost of the Avance Clinical contract is approximately 3,000,000 AUD, which translates to approximately $2,000,000 USD as of ~~March 31,~~September 30, 2023. As of September 30, 2023, the Company has paid approximately $950,997 of the Avance Clinical contract costs and has $549,713 recorded as prepaid assets within prepaid and other current assets on the accompanying condensed consolidated balance sheet. For the three and nine months ended September 30, 2023, the Company has expensed $157,117 and $401,284 in research and development expenses, respectively, within the accompanying condensed consolidated statement of operations.

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Development and Clinical Supply Agreement

On February 22, 2021, the Company entered into a Development and Clinical Supply Agreement (the “PureForm Agreement”) with PureForm Global, Inc. (“PureForm”), pursuant to which PureForm will be the exclusive provider of synthetic cannabidiol (“API”) for the Company’s development plans for cancer treatment and supportive care. Under the terms of the PureForm Agreement, PureForm has granted the Company the exclusive right to purchase API and related product for cancer treatment and supportive care during the term of the Agreement (contingent upon an initial minimum order of 1 kilogram during the first thirty (30) days from the effective date) and has agreed to manufacture, package and test the API and related product in accordance with specifications established by the parties. All inventions that are developed jointly by the parties in the course of performing activities under the PureForm Agreement will be owned jointly by the parties in accordance with applicable law; however, if the Company funds additional research and development efforts by PureForm, the parties may enter into a further agreement whereby PureForm would assign any resulting inventions or technical information to the Company.

The initial term of the PureForm Agreement is three (3) years commencing on the effective date of the PureForm Agreement, subject to extension by mutual agreement of the parties. The PureForm Agreement may be terminated by either party upon thirty (30) days written notice of an uncured material breach or immediately in the event of bankruptcy or insolvency. The PureForm Agreement contains, among other provisions, representation and warranties, indemnification obligations and confidentiality provisions in favor of each party that are customary for an agreement of this nature.

The Company has met the minimum purchase requirement of 1 kilogram during the first thirty days of the PureForm Agreement’s effectiveness.

Purchase agreement with Prof. Zvi Vogel and Dr. Ilana Nathan

On December 26, 2017, Jay Pharma entered into a purchase agreement with Prof. Zvi Vogel and Dr. Ilana Nathan (the “Vogel-Nathan Purchase Agreement”), pursuant to which Jay Pharma was assigned ownership rights to certain patents, which were filed and unissued as of the date of the Vogel-Nathan Purchase Agreement. The Vogel-Nathan Purchase Agreement includes a commitment to pay a one-time milestone totaling $200,000 upon the issuance of a utility patent in the United States or by the European Patent Office, as defined in the agreement. The Company has accrued such amount as of December 31, 2021, as a result of the milestone criteria being achieved. Payment was made during January 2022. In addition, a milestone payment totaling $300,000 is due upon initiation of a Phase II(b) study. Research activities related to the relevant patents are still in pre-clinical stage, and accordingly, this milestone has not been achieved. The Vogel-Nathan Purchase Agreement contains a commitment for payment of royalties equaling 2%2% of the first $20$20 million in net sales derived from the commercialization of products utilizing the relevant patent. As these products are still in the preclinical phase of development, no royalties have been earned.

~~ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Other Consulting and Vendor Agreements

The Company has entered into a number of agreements and work orders for future consulting, clinical trial support, and testing services, with terms ranging between 1 and 2118 months. These agreements, in aggregate, commit the Company to approximately $~~1.9~~ 1.2million in future cash payments. ~~Excluded from these future cash payments is approximately $1.1~~ ~~million due to Avance Clinical Pty Ltd recorded in accounts payable as of March 31, 2023.~~

NOTE 9.10. SUBSEQUENT EVENTS

In May 2023, pursuant to the Akos Series A Preferred Certificate of Designations, the holders of the Akos Series A Preferred Stock exercised the Put Right requiring Akos to force redemption of all of the Akos Series A Preferred Stock for $~~1,000~~ ~~per share, plus accrued but unpaid dividends of approximately $50,000~~ ~~for a total of approximately $1,050,000. The Company has 20 days following the receipt of the Put Exercise Notice to make the payment.~~Lincoln Park Equity Line

~~In May~~On November 3, 2023, the Company entered into a ~~cost reduction plan,~~Purchase Agreement and a registration rights agreement (the “Registration Rights Agreement”), with Lincoln Park, pursuant to which Lincoln Park has committed to purchase up to $10.0 million of the Company’s common stock, par value $0.01 per share subject to certain limitations and satisfaction of the conditions set forth in the Purchase Agreement.

Under the terms and subject to the conditions of the Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase up to $10.0 million of the Company’s Common Stock (the “Purchase Shares”). However, such sales of Common Stock by the Company, if any, will be subject to important limitations set forth in the Purchase Agreement, including ~~a reduction in force~~limitations on number of ~~approximately~~ 35~~% of its full-time employees. Additionally, contracts with seven consultants~~shares that ~~were focused~~may be sold. Sales may occur from time to time, at the Company’s sole discretion, over the 24-month period commencing on the ~~Akos cannabinoid spin-out will be terminated. The Company expects~~date that the conditions to ~~record a charge of approximately $500,000~~ ~~in severance and benefits. The Company expects the charges will be recognized primarily~~Lincoln Park’s purchase obligation set forth in the ~~second quarter~~Purchase Agreement are satisfied, including that a registration statement on Form S-1 covering the resale of ~~2023,~~the shares of our Common Stock that have been and may be issued to Lincoln Park under the Purchase Agreement, which the Company has filed with the ~~majority of such charges anticipated~~SEC pursuant to the Registration Rights Agreement, is declared effective by the SEC and a final prospectus relating thereto is filed with the SEC.

Because the purchase price per share to be paid by Lincoln Park for the ~~end~~shares of Common Stock that we may elect to sell to Lincoln Park under the ~~second quarter~~Purchase Agreement, if any, will fluctuate based on the market prices of ~~2023. The estimated costs~~our Common Stock at the time we elect to sell shares to Lincoln Park pursuant to the Purchase Agreement, if any, it is not possible for us to predict the number of shares of Common Stock that we will sell to Lincoln Park under the ~~Company expects~~Purchase Agreement, the purchase price per share that Lincoln Park will pay for shares purchased from us under the Purchase Agreement, or the aggregate gross proceeds that we will receive from those purchases by Lincoln Park under the Purchase Agreement.

For additional details, please refer to ~~incur in connection~~the Company’s Current Report on Form 8-K filed with the ~~cost reduction plan are~~SEC on November 6, 2023.

2020 Long-Term Incentive Plan Amended

On November 2, 2023, the shareholders approved the amendments to the 2020 Long-Term Incentive Plan, which was approved by the Board on August 8, 2023 (the “Amended Incentive Plan”). The Amended Incentive Plan increased the number of authorized shares reserved for issuance under the Amended Incentive Plan to a maximum of 350,000, subject to a number of assumptions, and actual results may differ significantly from these estimates. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the cost reduction plan. The reduction in force may take longer than anticipated and the reduction in force may have an adverse impact on the Company’s performance. The plan includes a focus on progressing the Company’s existing non-cannabinoid pipeline while reducing the rate of spend and managing cash flow. The Company expects to substantially complete the reduction in force by the end of the second quarter of 2023.adjustment.

1920

Item 2. Management’s discussion and analysis of financial condition and results of operations

The information set forth below should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Unless stated otherwise, references in this Quarterly Report on Form 10-Q to “us,” “we,” “our,” or our “Company” and similar terms refer to Enveric Biosciences, Inc., a Delaware corporation.

Cautionary Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terms such as “anticipates,” “assumes,” “believes,” “can,” “could,” “estimates,” “expects,” “forecasts,” “guides,” “intends,” “is confident that,” “may,” “plans,” “seeks,” “projects,” “targets,” and “would” or the negative of such terms or other variations on such terms or comparable terminology. Such forward-looking statements include, but are not limited to, future financial and operating results, the company’s plans, objectives, expectations and intentions and other statements that are not historical facts. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Form 10-Q and are subject to a number of risks, uncertainties, and assumptions that could cause actual results to differ materially from our historical experience and our present expectations, or projections described under the sections in this Form 10-Q entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These risks and uncertainties include, but are not limited to:

	●	our dependence on the success of our prospective product candidates, which are in the early stages of development and may not reach a particular stage in development, receive regulatory approval, or be successfully commercialized;
	●	potential difficulties that may delay, suspend, or scale back our efforts to advance additional early research programs through preclinical development and investigational new drug (“IND”) application filings and into clinical development;
	●	the risk that the cost savings, synergies and growth from our combination with MagicMed Industries Inc. and the successful use of the rights and technologies acquired in the combination may not be fully realized or may take longer to realize than expected;
	●	the ongoing impact of the novel coronavirus (COVID-19) on our business, including our current plans for product development, as well as any currently ongoing preclinical studies and clinical trials and any future studies or other development or commercialization activities;

	●	the limited study on the effects of medical cannabinoids and psychedelics, and the chance that future clinical research studies may lead to conclusions that dispute or conflict with our understanding and belief regarding the medical benefits, viability, safety, efficacy, dosing, and social acceptance of cannabinoids or psychedelics;
	●	the expensive, time-consuming, and uncertain nature of clinical trials, which are susceptible to change, delays, termination, and differing interpretations;
	●	the ability to establish that potential products are efficacious or safe in preclinical or clinical trials;
	●	the fact that our current and future preclinical and clinical studies may be conducted outside the United States, and the United States Food and Drug Administration may not accept data from such studies to support any new drug applications we may submit after completing the applicable developmental and regulatory prerequisites;
	●	our ability to effectively and efficiently build, maintain and legally protect our molecular derivatives library so that it can be an essential building block from which those in the biotech industry can develop new patented products;
	●	our ability to establish or maintain collaborations on the development of therapeutic candidates;
	●	our ability to obtain appropriate or necessary governmental approvals to market potential products;
	●	our ability to manufacture product candidates on a commercial scale or in collaborations with third parties;
	●	our significant and increasing liquidity needs and potential requirements for additional funding;
	●	our ability to obtain future funding for developing products and working capital and to obtain such funding on commercially reasonable terms;
	●	legislative changes related to and affecting the healthcare system, including, without limitation, changes and proposed changes to the Patient Protection and Affordable Care ~~Act (“PPACA”);~~Act;
	●	the intense competition we face, often from companies with greater resources and experience than us;
	●	our ability to retain key executives and scientists;
	●	the ability to secure and enforce legal rights related to our products, including intellectual property rights and patent protection;
	●	political, economic, and military instability in Israel which may impede our development programs;
	●	our ~~ability to successfully spin off our cannabinoid assets; and~~
	●	~~our~~ success at managing the risks involved in the ~~foregoing~~foregoing; and
	●	the risk of loss in excess of insurance limitations on funds help in U.S Banking ~~Institutions~~Institutions.

For a more detailed discussion of these and other factors that may affect our business and that could cause the actual results to differ materially from those projected in these forward-looking statements, see the risk factors and uncertainties set forth in Part II, Item 1A of this Form 10-Q and Part I, Item 1A of the ~~annual report on Form 10-K filed with the SEC on March 31, 2023.~~Annual Report. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise, except as required by law.

Business Overview

We are a biotechnology company dedicated to the development of novel neuroplastogenic small-molecule therapeutics for the treatment of depression, anxiety, ~~depression,~~ and addiction disorders. ~~We seek to improve~~Leveraging its unique discovery and development platform, The Psybrary™, Enveric has created a robust intellectual property portfolio of New Chemical Entities for specific mental health indications. Enveric’s lead program, the ~~lives~~EVM201 Series, comprises next generation synthetic prodrugs of ~~patients suffering~~the active metabolite, psilocin. Enveric is developing the first product from ~~cancer, initially by developing palliative and supportive care products~~the EVM201 Series – EB-373 – for ~~people suffering from certain side effects~~the treatment of ~~cancer and cancer treatment such as pain or skin irritation. We currently intend~~psychiatric disorders. Enveric is also advancing its second program, the EVM301 Series, expected to offer ~~such palliative and supportive care products~~a first-in-class, new approach to the treatment of difficult-to-address mental health disorders, mediated by the promotion of neuroplasticity without also inducing hallucinations in the ~~United States, following approval through established regulatory pathways.~~patient.

Psychedelics

Following our amalgamation with MagicMed completed in September 2021 (the “Amalgamation”), we have continued to pursue the development of MagicMed’s proprietary ~~psychedelic derivatives~~Psychedelic Derivatives library, the Psybrary™ which we believe will help us to identify and develop the right drug candidates needed to address mental health challenges, including cancer-related distress. We synthesize novel versions of classic psychedelics, such as psilocybin, N-dimethyltryptamine (DMT), mescaline and MDMA, using a mixture of chemistry and synthetic biology, resulting in the expansion of the Psybrary™, which includes 15 patent families with over a million potential variations and hundreds of synthesized molecules. Within the Psybrary™ we have three different types of molecules, Generation 1 (classic psychedelics), Generation 2 (pro-drugs), and Generation 3 (new chemical entities). The Company is working to add novel psychedelic molecular compounds and ~~derivatives (“~~Psychedelic ~~Derivatives”)~~Derivatives on a regular basis through our work at Enveric Labs in Calgary, Alberta, Canada, where we have a team of PhD scientists with expertise in synthetic biology and chemistry. To date we have created over 500 molecules that are housed in the Psybrary.

We screen newly synthesized molecules in the Psybrary™ through PsyAI™, a proprietary ~~artificial intelligence (AI)~~AI tool. Leveraging AI systems is expected to reduce the time and cost of pre-clinical, clinical, and commercial development. We believe it streamlines pharmaceutical design by predicting ideal binding structures of molecules, manufacturing capabilities, and pharmacological effects to help determine ideal drug candidates, tailored to each indication. Each of these molecules that we believe are patentable can then be further screened to see how changes to its makeup alter its effects in order to synthesize additional new molecules. New compounds of sufficient purity are undergoing pharmacological screening, including non-clinical (receptors/cell lines), preclinical (animal), and ultimately clinical (human) evaluations. We intend to utilize our Psybrary™ and the AI tool to categorize and characterize the Psybrary™ substituents to focus on bringing more psychedelics-inspired molecules from discovery to the clinical phase.

Cannabinoids

We aim to advance a pipeline of novel cannabinoid combination therapies for the side effects of cancer treatments, such as chemotherapy and radiotherapy.

We intend to bring together leading oncology clinicians, researchers, academic and industry partners to develop both external proprietary products and a robust internal pipeline of product candidates aimed at improving quality of life and outcomes for cancer patients. We intend to evaluate options to out-license our proprietary technology as it moves along the regulatory pathway.

In developing our product candidates, we intend to focus on cannabinoids derived from non-hemp botanical sources, and synthetic materials containing no tetrahydrocannabinol ~~(THC)~~(“THC”) in order to comply with U.S. federal regulations. Of the potential cannabinoids to be used in therapeutic formulations, THC, which is responsible for the psychoactive properties of marijuana, can result in undesirable mood effects. Selected cannabidiol (CBD) and cannabigerol (CBG) candidates, on the other hand, have amounts of THC well below 0.1% and are not psychotropic and therefore more attractive candidates for translation into therapeutic practice. Drugs with less than 0.1% THC have a history, when approved as drugs by ~~FDA,~~the Food and Drug Administration “FDA”, of being able to be rescheduled by DEA from Schedule I to Schedule V, as in the case of Epidiolex and Marinol. In the future, we may utilize cannabinoids that are derived from cannabis plants, which may contain higher amounts of THC; however, we only intend to do so in jurisdictions where THC is legal. However, synthetic THC is a Schedule I controlled substance; so, the use of any APIs (Active Pharmaceutical Ingredients) containing synthetic THC (or naturally derived THC in concentrations greater than 0.3%) may increase regulatory scrutiny and require additional expenses and authorizations. All current and future product candidates that we are developing or may develop will be tested for safety and efficacy under an IND application and subject to the ~~Food and Drug Administration (“FDA”)~~FDA pre-market approval process for new ~~drugs~~drugs.

While we continue to pursue the development of our cannabinoid-based product candidates, our principal focus is on the development of psychedelic-based treatments.

On May 11, 2022, the Company announced plans to transfer and spin-off its cannabinoid clinical development pipeline assets (the “Spin-Off”) to Akos Biosciences, Inc. (formerly known as Acanna Therapeutics, Inc.), a majority owned subsidiary of the Company (“Akos”). In connection with the Spin-Off, the Company would transfer its cannabinoid clinical development pipeline assets to Akos, while retaining its psychedelics clinical development pipeline assets. The Spin-Off was subject to various conditions, including Akos meeting the qualifications for listing on the Nasdaq Stock Market, and if successful, would result in two standalone public companies. ~~The new company resulting from~~

In May 2023, pursuant to the ~~Spin-Off will be referred to as Akos. As~~Akos Series A Preferred Certificate of ~~May 5, 2023, since the Spin-Off has not occurred,~~Designations, the holders of the Akos Series A Preferred Stock ~~have the right, but not the obligation, to cause~~exercised their Put Right requiring Akos to ~~purchase~~redeem all ~~or a portion~~ of the ~~Akos Series A Preferred Stock. As~~outstanding shares of ~~May 12, 2023, the holders of the Akos Series A Preferred Stock have exercised this right to force redemption of all of the~~ Akos Series A Preferred Stock for $1,000 per share, plus accrued but unpaid dividends of approximately ~~$50,000~~$52,000 for a total redemption amount of approximately ~~$1,050,000.~~$1,052,000. The Company ~~has 20 days following~~completed the ~~receipt of~~redemption May 19, 2023. The Company now plans to engage with strategic advisors to identify and pursue alternative routes to capture value from the ~~Put Exercise Notice (the “Put Exercise Notice”) to make the payment.~~

cannabinoid assets.

Recent Developments

Australian Subsidiary

On March 21, 2023, the Company established Enveric Therapeutics, Pty. Ltd. (“Enveric Therapeutics”), an Australia-based subsidiary, to support the Company’s plans to advance its EVM201 Series towards the clinic. Enveric Therapeutics will oversee the Company’s preclinical, clinical, and regulatory activities in Australia, including ongoing interactions with the local Human Research Ethics Committees (HREC) and the Therapeutic Goods Administration ~~(TGA)~~(“TGA”), Australia’s regulatory authority.

On March 23, 2023, the Company issued a press release announcing the selection of Australian CRO, Avance Clinical, in preparation for Phase 1 Study of EB-373, the Company’s lead candidate targeting the treatment of anxiety disorders. Under the agreement, Avance Clinical will manage the Phase 1 clinical trial of EB-373 in coordination with the Company’s newly established Australian subsidiary, Enveric Therapeutics Pty, Ltd. The Phase 1 clinical trial is designed as a multi-cohort, dose-ascending study to measure the safety and tolerability of EB-373. EB-373, a next-generation proprietary psilocin prodrug, has been recognized as a New Chemical Entity (NCE) by Australia’s ~~Therapeutic Goods Administration (TGA)~~TGA and is currently in preclinical development targeting the treatment of anxiety disorder. The total cost of the Avance Clinical contract is approximately 3,000,000 AUD, which translates to approximately $2,000,000 as of ~~March 31,~~September 30, 2023. As of September 30, 2023, the Company has paid $950,997 of the Avance Clinical contract costs and has $549,713 recorded as prepaid assets. For the three and nine months ended September 30, 2023, the Company has expensed $157,117 and $401,284 in research and development expenses, respectively.

Reduction in Force/Restructuring

~~Reduction in Force~~

In May 2023, the Company entered into a cost reduction plan, including a reduction in force of approximately 35% of its full-time ~~employees.~~employees to streamline its operations and conserve cash resources. Additionally, contracts with seven consultants that were focused on the Akos cannabinoid spin-out ~~will be~~were terminated. The Company ~~expects to record a charge~~recognized severance charges of approximately $500,000 in severance and benefits. The Company expects the charges will be recognized primarily in the second quarter of 2023, with the majority of such charges anticipated to be paid by the end of the second quarter of$453,059 through September 30, 2023. The ~~estimated costs that the Company expects to incur in connection with the cost reduction~~ plan are subject to a number of assumptions, and actual results may differ significantly from these estimates. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the cost reduction plan. The reduction in force may take longer than anticipated and the reduction in force may have an adverse impact on the Company’s performance. The plan includesincluded a focus on progressing the Company’s existing non-cannabinoid pipeline while reducing the rate of spend and managing cash flow. ~~The~~As of September 30, 2023, the Company ~~expects to substantially complete~~has completed the reduction in force, bywith such severance expenses recorded in salaries and wages and legal accounts.

On June 16, 2023, the ~~end~~Company entered into a separation agreement with Avani Kanubaddi, the Company’s President and Chief Operating Officer (the “Kanubaddi Separation Agreement”). In accordance with the Kanubaddi Separation Agreement, Mr. Kanubaddi’s outstanding RSUs will retain their vesting conditions. Mr. Kanubaddi’s 2023 salary and benefits of $550,974 was accrued and will be paid out in twelve equal monthly installments beginning in July 2023. Upon termination, any unvested time-based RSU’s became fully vested. The Company accelerated expense recognized related to these shares that vested upon termination of $231,273. Of the 11,278 market performance-based RSUs, 3,759 will continue to be subject to the original terms and conditions of Mr. Kanubaddi’s employment agreement and the remainder were forfeited.

Equity Distribution Agreement

On September 1, 2023, the Company entered into the Distribution Agreement, with Canaccord, pursuant to which the Company may offer and sell from time to time, through Canaccord as sales agent and/or principal, shares of common stock of the ~~second quarter~~Company, par value $0.01 per share having an aggregate offering price of ~~2023.~~up to $10.0 million. Due to the offering limitations applicable to the Company and in accordance with the terms of the Distribution Agreement, the Company may offer Common Stock having an aggregate gross sales price of up to $2,392,514 pursuant to the prospectus supplement dated September 1, 2023 (the “Prospectus Supplement”). Subject to the terms and conditions of the Distribution Agreement, Canaccord may sell the Common Stock by any method permitted by law deemed to be an “at-the-market offering”. The Company will pay Canaccord a commission equal to 3.0% of the gross sales price of the Common Stock sold through Canaccord under the Distribution Agreement and has also agreed to reimburse Canaccord for certain expenses. The Company may also sell Common Stock to Canaccord as principal for Canaccord’s own account at a price agreed upon at the time of sale. Any sale of Common Stock to Canaccord as principal would be pursuant to the terms of a separate terms agreement between the Company and Canaccord.

During the three and nine months ended September 30, 2023, the Company has issued no shares of common stock through the Distribution Agreement.

Results of Operations

For the Three Months Ended March 31,
2023 2022
Operating expenses
General and administrative 2,784,191 $ 2,767,866
Research and development 1,990,001 1,958,714
Depreciation and amortization 86,486 69,265
Total operating expenses 4,860,678 4,795,845

Loss from operations (4,860,678 ) (4,795,845 )

Other income (expense)
Change in fair value of warrant liabilities 50,657 275,969
Change in fair value of investment option liability 119,505 —
Change in fair value of derivative liability 13,000 —
Interest expense (11 ) (4,138 )
Total other income 183,151 271,831

Net loss $ (4,677,527 ) (4,524,014 )

The following table sets forth information comparing the components of net loss for the three months ended September 30, 2023, and 2022:

	For the Three Months Ended September 30,
	2023			2022
Operating expenses
General and administrative	$	2,010,349		$	3,514,547
Research and development		1,351,750			2,055,656
Depreciation and amortization		86,296			86,646
Total operating expenses		3,448,395			5,656,849

Loss from operations		(3,448,395	)		(5,656,849	)

Other income (expense)
Change in fair value of warrant liabilities		67,822			1,599,623
Change in fair value of investment option liability		562,715			1,809,622
Change in fair value of derivative liability		—			(231,000	)
Interest income (expense)		2,237			(308	)
Total other income		632,774			3,177,937
Net loss before income taxes	$	(2,815,621	)	$	(2,478,912	)

Income tax expense		(6,595	)		—

Net loss	$	(2,822,216	)	$	(2,478,912	)

General and Administrative Expenses

Our general and administrative expenses ~~increased~~decreased to ~~$2,784,191~~$2,010,349 for the three months ended ~~March 31,~~September 30, 2023 from ~~$2,767,866~~$3,514,547 for the three months ended ~~March 31,~~September 30, 2022, ~~an increase~~a decrease of ~~$16,325,~~$1,504,198, or 1%43%. This change was primarily driven by ~~an increase of $301,934 in accounting fees, an increase of $296,736 in consulting fees, and an increase of $44,477 in audit fees, offset by~~ a decrease in transaction expenses from liability classified equity offerings of ~~$264,350 in director~~$704,094, stock based compensation of $329,178, directors and officer insurance ~~a decrease~~ of ~~$238,174 in salaries~~$252,097, and ~~wages, and a decrease~~marketing of ~~$106,503 in stock-based compensation during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022.~~$201,862.

Research and Development Expenses

Our research and development expense for the three months ended ~~March 31,~~September 30, 2023 was ~~$1,990,001~~$1,351,750 as compared to ~~$1,958,714~~$2,055,656 for the three months ended ~~March 31,~~September 30, 2022 with ~~an increase~~a decrease of ~~$31,287,~~$703,906, or approximately 2%34%. This change was primarily driven by ~~an increase of $268,033~~the change in ~~salaries~~strategy and ~~wages, offset by~~cost reduction plan resulting in a decrease of ~~$100,000 in patent costs~~payroll and ~~a decrease~~consulting fees of ~~$128,515 in stock-based compensation during~~$804,023, scientific advisory board fees of $41,198 and product development expense of $151,989, offset by the ~~three months ended March 31, 2023 as compared to~~increase of the ~~three months ended March 31, 2022.~~Avance clinical contract of $290,797.

Depreciation and Amortization Expense

Depreciation and amortization expense for the three months ended ~~March 31,~~September 30, 2023 was ~~$86,486~~$86,296 as compared to ~~$69,265~~$86,646 for the three months ended ~~March 31,~~September 30, 2022, with ~~an increase~~a decrease of ~~$17,221, or approximately 25%. This increase is due to a significant number of fixed asset additions during~~$350. Depreciation and amortization expense was substantially similar for the three months ended ~~March 31, 2022 which only incurred partial depreciation,~~September 30, 2023 compared ~~to a full three months’ of depreciation during~~with the three months ended ~~March 31, 2023.~~September 30, 2022.

Change in Fair Value of Warrant Liabilities

Change in fair value of warrant liabilities for the three months ended ~~March 31,~~September 30, 2023 resulted in income of ~~$50,657~~$67,822 as compared to ~~$275,969~~income of $1,599,623 for the three months ended ~~March 31,~~September 30, 2022. The change in fair value of warrant liabilities is significantly influenced by the change in the closing price of Common Stock at the end of each period, as compared to the closing price of Common Stock at the beginning of each period with a strong inverse relationship between changes in fair value of warrant liabilities and the trading price of Common Stock. The Company’s stock price was ~~$1.66~~$2.38 as of ~~March 31,~~September 30, 2023, ~~$2.08~~$3.37 as of ~~December 31, 2022, $15.62~~June 30, 2023, $4.22 as of ~~March 31,~~September 30, 2022 and ~~$46.50~~$10.70 as of ~~December 31, 2021.~~June 30, 2022. The stock price of the Company decreased approximately ~~20%~~29% during the three months ended ~~March 31,~~September 30, 2023 compared to a decrease of approximately ~~66%~~61% during the three months ended ~~March 31,~~September 30, 2022. The significant percentage change in the Company’s stock price during the three months ended ~~March 31,~~September 30, 2023 compared to the three months ended ~~March 31,~~September 30, 2022, resulted in the increase to the change in fair value of warrant liabilities.

Change in Fair Value of Investment Option Liability

Change in fair value of investment option liability for the three months ended September 30, 2023 resulted in income of $562,715, as compared to $1,809,622 during the three months ended September 30, 2022. The change in fair value is due to the significant decrease in the Company’s stock price for the three months ended September 30, 2023. The Company’s stock price was $2.38 on September 30, 2023 and $3.37 on June 30, 2023, a decrease of approximately 29% during that time compared to a decrease of approximately 33% during the three months ended September 30, 2022.

Change in Fair Value of Derivative Liability

The Company’s change in fair value of derivative liability expense was $231,000 for the three months ended September 30, 2022, compared to $0 for the three months ended September 30, 2023 due to redemption of the redeemable stock in May 2023 and therefore no probability of occurrence of the Akos spin-off as of September 30, 2023 as compared to June 30, 2023.

The following table sets forth information comparing the components of net loss for the nine months ended September 30, 2023 and 2022:

	For the Nine Months Ended September 30,
	2023			2022
Operating expenses
General and administrative	$	7,921,340		$	8,783,619
Research and development		5,883,440			6,134,421
Depreciation and amortization		259,300			241,413
Total operating expenses		14,064,080			15,159,453

Loss from operations		(14,064,080	)		(15,159,453	)

Other income (expense)
Change in fair value of warrant liabilities		(115,342	)		3,845,514
Change in fair value of investment option liability		(399,921	)		1,809,622
Change in fair value of derivative liability		727,000			(284,000	)
Interest income (expense)		3,142			(5,114	)
Total other income		214,879			5,366,022

Net loss before income taxes	$	(13,849,201	)	$	(9,793,431	)
Income tax expense		(6,595	)		—
Net loss	$	(13,855,796	)	$	(9,793,431	)

General and Administrative Expenses

Our general and administrative expenses decreased to $7,921,340 for the nine months ended September 30, 2023 from $8,783,619 for the nine months ended September 30, 2022, a decrease of $862,279, or 10%. This change was primarily driven by a decrease in transaction expenses from liability classified equity offerings of $823,970, directors and officers insurance of $780,797, stock based compensation of $202,908 and marketing of $274,814, partially offset by an increase in consulting fees of $626,382, accounting fees of $310,797 and franchise taxes of $307,644.

Research and Development Expenses

Our research and development expense for the nine months ended September 30, 2023 was $5,883,440 as compared to $6,134,421 for the nine months ended September 30, 2022 with a decrease of $250,981, or approximately 4%. This change was primarily driven by increase of the Avance clinical contract of $646,029 and product development of $141,085 offset by payroll and consulting fees of $1,021,851 for the change in strategy and reduction in workforce as part of the cost reduction plan.

Depreciation and Amortization Expense

Depreciation and amortization expense for the nine months ended September 30, 2023 was $259,300 as compared to $241,413 for the nine months ended September 30, 2022, with an increase of $17,887, or approximately 7%. This increase is due to fixed asset additions during the nine months ended September 30, 2022 which only incurred partial depreciation, compared to a full nine months’ of depreciation during the nine months ended September 30, 2023.

Change in Fair Value of Warrant Liabilities

Change in fair value of warrant liabilities the nine months ended September 30, 2023 resulted in expense of $115,342 as compared to income of $3,845,514 for the nine months ended September 30, 2022. The change in fair value of warrant liabilities is significantly influenced by the change in the closing price of Common Stock at the end of each period, as compared to the closing price of Common Stock at the beginning of each period with a strong inverse relationship between changes in fair value of warrant liabilities and the trading price of Common Stock. The Company’s stock price per share was $2.38 as of September 30, 2023, $2.08 as of December 31, 2022, $4.22 as of September 30, 2022 and $46.50 as of December 31, 2021. The stock price of the Company increased approximately 14% during the nine months ended September 30, 2023 compared to a decrease of approximately 91% during the nine months ended September 30, 2022. The significant percentage change in the Company’s stock price during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, resulted in the increase to the change in fair value of warrant liabilities.

Change in Fair Value of Investment Option Liability

Change in fair value of investment option liability ~~for~~during the ~~three~~nine months ended ~~March 31,~~September 30, 2023 resulted in ~~income~~expense of ~~$119,505. The Company did not have any outstanding investment option liabilities~~$399,921, as compared to $1,809,622 during the ~~three~~nine months ended ~~March 31,~~September 30, 2022. The change in fair value is due to the significant ~~decrease~~increase in the Company’s stock price ~~for~~ the ~~three~~nine months ended ~~March 31,~~September 30, 2023. The Company’s stock price per share was $2.08 on December 31, 2022 and ~~$1.66~~$2.38 on ~~March 31,~~September 30, 2023, an increase of approximately 14% during that time, compared to a decrease of approximately ~~20%~~33% during ~~that time.~~the nine months ended September 30, 2022. The significant percentage change in the Company’s stock price during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, resulted in the increase to the change in fair value of warrant liabilities.

Change in Fair Value of Derivative Liability

The Company’s change in fair value of derivative liability ~~decreased by $13,000~~was expense of $284,000 for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 compared to income of $727,000 for the nine months ended September 30, 2023, due primarily to the ~~decreased~~May 2023 redemption which ceased the probability of occurrence of the Akos spin-off and Akos Series A Preferred Stock redemption as of ~~March 31,~~September 30, 2023 as compared to December 31, 2022.

Going Concern, Liquidity and Capital Resources

The Company has incurred a loss since inception resulting in an accumulated deficit of ~~$83,885,313~~$93,063,582 as of ~~March 31,~~September 30, 2023 and further losses are anticipated in the development of its business. Further, the Company ~~has~~had operating cash outflows of ~~$5,137,009~~$12,343,363 for the ~~year~~nine months ended ~~March 31,~~September 30, 2023. For the ~~three~~nine months ended ~~March 31,~~September 30, 2023, the Company had a loss from operations of ~~$4,860,678.~~$14,064,080. Since inception, being a research and development company, the Company has not yet generated revenue and the Company has incurred continuing losses from its operations. The Company’s operations have been funded principally through the issuance of debt and equity. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements.

In assessing the Company’s ability to continue as a going concern, the Company monitors and analyzes its cash and its ability to generate sufficient cash flow in the future to support its operating and capital expenditure commitments. At ~~March 31,~~September 30, 2023, the Company had cash of ~~$12,561,813~~$4,266,568 and working capital of ~~$10,400,754.~~$1,643,374. The Company’s current cash on hand is ~~not sufficient~~insufficient enough to satisfy its operating cash needs for the 12 months ~~from~~following the filing of this Quarterly Report on Form 10-Q. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date the financial statements are issued. Management’s plan to alleviate the conditions that raise substantial doubt include reducing the Company’s rate of spend, managing its cash flow, advancing its programs, and raising additional working capital through public or private equity or debt financings or other sources, which has included the Equity Distribution Agreement with Canaccord for proceeds of up to $2.4 million and the Purchase Agreement with Lincoln Park, which may include collaborations with third parties as well as disciplined cash spending, to increase the Company’s cash runway. Adequate additional financing may not be available to usthe Company on acceptable terms, or at all. Should the Company be unable to raise sufficient additional capital, the Company may be required to undertake cost-cutting measures including delaying or discontinuing certain operating activities.

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In May 2023, the Company entered into a cost reduction plan, including a reduction in force of approximately 35% of its full-time employees to streamline its operations and conserve cash resources. Additionally, contracts with seven consultants that were focused on the Akos cannabinoid spin-out will be terminated. Additionally, on June 16, 2023, the Company entered into the Kanubaddi Separation Agreement with Avani Kanubaddi, the Company’s President and Chief Operating Officer. In accordance with the Kanubaddi Separation Agreement, Mr. Kanubaddi’s outstanding RSUs will retain their vesting conditions. Mr. Kanubaddi’s 2023 salary and benefits was accrued and will be paid out in twelve equal monthly installments beginning in July 2023. The Company recognized severance charges of approximately $1,004,033 through September 30, 2023, with $396,431 of these charges paid as of September 30, 2023. The plan included a focus on progressing the Company’s existing non-cannabinoid pipeline while reducing the rate of spend and managing cash flow. As of September 30, 2023, the Company has completed the reduction in force, with such severance expenses recorded in salaries and wages and legal accounts.

As a result of these factors, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern for a period of one year after the date of the financial statements are issued. The Company’s condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In May 2023, the Company entered into a cost reduction plan, including a reduction in force of approximately 35% of its full-time employees. Additionally, contracts with seven consultants that were focused on the Akos cannabinoid spin-out will be terminated. The Company expects to record a charge of approximately $500,000 in severance and benefits. The Company expects the charges will be recognized primarily in the second quarter of 2023, with the majority of such charges anticipated to be paid by the end of the second quarter of 2023. The estimated costs that the Company expects to incur in connection with the cost reduction plan are subject to a number of assumptions, and actual results may differ significantly from these estimates. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the cost reduction plan. The reduction in force may take longer than anticipated and the reduction in force may have an adverse impact on the Company’s performance. The plan includes a focus on progressing the Company’s existing non-cannabinoid pipeline while reducing the rate of spend and managing cash flow. The Company expects to substantially complete the reduction in force by the end of the second quarter of 2023.

Cash Flows

Since inception, we have primarily used our available cash to fund our product development and operations expenditures.

Cash Flows for the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2023 and 2022

The following table sets forth a summary of cash flows for the years presented:

	For the Three Months Ended March 31,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Net cash used in operating activities	$	(5,137,009	)	$	(4,548,941	)	$	(12,343,363	)	$	(13,684,606	)
Net cash used in investing activities		(5,169	)		(505,507	)
Net cash provided by financing activities		—			9,397,884
Net cash provided by (used in) investing activities								11,705			(577,972	)
Net cash (used in) provided by financing activities								(1,157,057	)		18,180,138
Effect of foreign exchange rate on cash		(19,893	)		(4,900	)		31,399			(72,554	)
Net (decrease) increase in cash	$	(5,162,071	)	$	4,338,536		$	(13,457,316	)	$	3,845,006

Operating Activities

Net cash used in operating activities was ~~$5,137,009~~$12,343,363 during the ~~three~~nine months ended ~~March 31,~~September 30, 2023, which consisted primarily of a net loss adjusted for non-cash items of ~~$4,214,521 and~~$11,962,774, an increase in prepaid expenses of ~~$1,549,354, partially offset by~~$746,033, and an increase in accounts payable and accrued liabilities of ~~$653,712.~~$429,688.

Net cash used in operating activities was ~~$4,548,941~~$13,684,606 during the ~~three~~nine months ended ~~March 31,~~September 30, 2022, which consisted primarily of a net loss adjusted for non-cash items of ~~$4,524,014,~~$12,728,490, increase in prepaid expenses and other current assets of ~~$588,975,~~$758,419, and a ~~change~~decrease in ~~fair value of warrant~~accounts payable and accrued liabilities of ~~$275,969 offset by stock-based compensation of $768,619.~~$106,675.

Investing Activities

Net cash ~~used in~~provided by investing activities was ~~$5,169~~$11,705 during the ~~three~~nine months ended ~~March 31,~~September 30, 2023, which consisted of the purchase of property and equipment, offset by proceeds from sale of property and equipment.

Net cash used in investing activities was ~~$505,507~~$577,972 during the ~~three~~nine months ended ~~March 31,~~September 30, 2022, which consisted of the purchase of property and equipment.

Financing Activities

Net cash ~~provided by~~used in financing activities was $0$1,157,057 during the ~~three~~nine months ended ~~March 31, 2023.~~September 30, 2023, which consisted of the redemption of redeemable non-controlling interest and payment of deferred offering costs.

Net cash provided by financing activities was ~~$9,397,884~~$18,180,138 during the ~~three~~nine months ended ~~March 31,~~September 30, 2022, which consisted of ~~$9,397,884~~$17,222,100 in proceeds from the sale of common stock and ~~warrants.~~warrants and $958,038 in proceeds from the sale of redeemable non-controlling interest.

Critical Accounting Policies and Significant Judgments and Estimates

The Company’s accounting policies are fundamental to understanding its management’s discussion and analysis. The Company’s significant accounting policies are presented in Note 2 to its financial statements for the year ended December 31, 2022, and included in the Annual ~~Report on Form 10-K filed with the SEC on March 31, 2023.~~Report. The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP. However, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of the financial position and operating results have been included in the Company’s unaudited condensed consolidated financial statements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

From inception through ~~March 31,~~September 30, 2023, the Company’s reporting currency is the United States dollar while the functional currency of certain of the Company’s subsidiaries were the Canadian dollar and Australian dollar. For the reporting periods ended ~~March 31,~~September 30, 2023 and ~~March 31,~~September 30, 2022, the Company engaged in a number of transactions denominated in Canadian dollars and Australian dollars. As a result, the Company is subject to exposure from changes in the exchange rates of the Canadian dollar and Australian dollar against the U.S. dollar.

The Company has not entered into any financial derivative instruments that expose it to material market risk, including any instruments designed to hedge the impact of foreign currency exposures. The Company may, however, hedge such exposure to foreign currency exchange fluctuations in the future.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that the information we are required to disclose in reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified under the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The matters that management identified in our Annual Report ~~on Form 10-K~~ for the year ended December 31, 2022, ~~filed on March 31, 2023,~~ continued to exist and were still considered material weaknesses in our internal control over financial reporting at ~~March 31,~~September 30, 2023.

As required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer (our principal executive) and Chief Financial Officer (our principal financial officer and principal accounting officer) carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~March 31,~~September 30, 2023. Based on this evaluation, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in paragraph (e) of Rules 13a-15 and 15d-15 under the Exchange Act) were not effective as of ~~March 31,~~September 30, 2023.

Management’s Remediation Plan

As previously discussed in our Annual Report ~~on Form 10-K~~ for the year ended December 31, 2022, ~~filed on March 31, 2023,~~ management had concluded that our internal control over financial reporting was not effective as of December 31, 2022, because management identified inadequate segregation of duties to ensure the processing, review, and authorization of all transactions, including non-routine transactions resulting in deficiencies, which, in aggregate, amounted to a material weakness in the Company’s internal control over financial reporting.

As of ~~March 31,~~September 30, 2023, there were control deficiencies that constituted a material weakness in our internal control over financial reporting. Management has taken, and is taking steps to strengthen our internal control over financial reporting: we have conducted evaluation of the material weakness to determine the appropriate remedy and have established procedures for documenting disclosures and disclosure controls.

While we have taken certain actions to address the material weaknesses identified, additional measures may be necessary as we work to improve the overall effectiveness of our internal controls over financial reporting.

Changes in Internal Control over Financial Reporting

Other than the changes discussed above in the Remediation Plan, there have been no other changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-(f) of the Exchange Act) that occurred during quarter ending ~~March 31,~~September 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is periodically involved in legal proceedings, legal actions and claims arising in the ordinary course of business. Other than as described below, we do not have any pending litigation that, separately or in the aggregate, would, in the opinion of management, have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A. Risk Factors

Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described ~~below and~~ in the Company’s annual report on Form 10-K as filed with the SEC on March 31, 2023, as amended on June 9, 2023 and quarterly reports on Form 10-Q as filed with the SEC on May 15, 2023 and August 11, 2023. Any of these factors could result in a significant or material adverse effect on our results of operations of financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.

~~The following discussion~~ As of the date of this Quarterly Report, there have been no material changes to the risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Form 10-Q. The following information should be read in conjunction with the condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.

We may not realize the benefits we expect from our cost reduction plan or, as a result of the reduction in force, we may not be successful in attracting, motivating and retaining highly qualified personnel in the future.

In May 2023, the Company entered into a cost reduction plan, including a reduction in force of approximately 35% of its full-time employees. Additionally, contracts with seven consultants that were focused on the Akos cannabinoid spin-out will be terminated. The Company expects to record a charge of approximately $500,000 in severance and benefits. The Company expects the charges will be recognized primarily in the second quarter of 2023, with the majority of such charges anticipated to be paid by the end of the second quarter of 2023. The Company may not realize, in full or in part, the anticipated benefits and savings from its cost reduction plan, and it cannot guarantee that it will not have to undertake additional reductions in force or restructuring activities in the future. Furthermore, the cost reduction plan may be disruptive to the Company’s operations. For example, the cost reduction plan could yield unanticipated consequences, such as attrition beyond planned staff reductions, increased difficultiesdisclosed in the Company’s ~~day-to-day operations and reduced employee morale.~~

The reduction in force could also harm the Company’s ability to attract, motivate and retain qualified personnel who are critical to its business in the future. Recruiting and retaining qualified employees, consultants and advisors for the Company’s business is and will continue to be critical to its success. Competition for skilled personnel is intense and the turnover rate can be high. Any failure to attract or retain qualified personnel could prevent the Company from successfully developing the Company’s product candidates in the future.

Our reprioritization and the associated headcount reduction may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business.

~~The Company may incur additional expenses not currently contemplated due to events associated~~annual report on Form 10-K as filed with the ~~reduction in force entered into by~~SEC on March 31, 2023, as amended on June 9, 2023 and quarterly reports on Form 10-Q as filed with the ~~Company in~~SEC on May 15, 2023 ~~for example, the reduction in force may have a future impact on other areas of the Company’s liabilities~~ and obligations. The Company may not realize, in full or in part, the anticipated benefits and savings from the reduction in force due to unforeseen difficulties, delays or unexpected costs. If the Company is unable to realize the expected operational efficiencies and cost savings from the reduction in force, the Company’s operating results and financial condition would be adversely affected. In addition, the Company may need to undertake restructuring activities or workforce reductions in the future. Furthermore, the Company’s initiatives to re-balance its cost structure, including the reduction in force, may be disruptive to the Company’s operations. If employees who were not affected by the reduction in force seek alternative employment, this could result in the Company seeking contractor support at unplanned additional expense or harm its productivity. Any disruption in the Company’s business as a result of the reduction in force could prevent the Company from successfully developing the Company’s product candidates in the future.August 11, 2023.

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

In May 2023, pursuant to the Akos Series A Preferred Certificate of Designations, the holders of the Akos Series A Preferred Stock ~~(the “Akos Investor”)~~ exercised the Put Right requiring Akos to force redemption of all of the Akos Series A Preferred Stock for $1,000 per share, plus accrued but unpaid dividends of approximately $50,000 for a total of approximately ~~$1,050,000.~~$1,052,057. The Company has 20 days following the receipt of the Put Exercise Notice to make the ~~payment. In connection with the exercise of the Put Right, the~~payment and made payment on May 19, 2023.

The Company, Akos, and the Akos Investor intend to terminate the Akos Purchase Agreement in connection with the planned Spin-Off and that certain registration rights agreement in connection with the Akos Private Placement. The Company has delivered that certain Termination of Prior Agreements and Mutual Release, a copy of which is attached hereto as Exhibit 10.2 to this Quarterly Report on Form 10-Q and is incorporated herein by reference, as notice of termination to Akos and the Akos Investor on May 12, 2023.

In May 2023, the Company entered into a cost reduction plan, including a reduction in force of approximately 35% of its full-time ~~employees.~~employees to streamline its operations and conserve cash resources. Additionally, contracts with seven consultants that were focused on the Akos cannabinoid spin-out will be terminated. The Company ~~expects to record a charge~~recognized severance charges of approximately $500,000 in severance and benefits. The Company expects the charges will be recognized primarily in the second quarter of 2023, with the majority of such charges anticipated to be paid by the end of the second quarter of$1,004,033 through September 30, 2023. The ~~estimated costs that the Company expects to incur in connection with the cost reduction~~ plan are subject to a number of assumptions, and actual results may differ significantly from these estimates. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the cost reduction plan. The reduction in force may take longer than anticipated and the reduction in force may have an adverse impact on the Company’s performance. The plan includesincluded a focus on progressing the Company’s existing non-cannabinoid pipeline while reducing the rate of spend and managing cash flow. ~~The~~As of September 30, 2023, the Company ~~expects to substantially complete~~has completed the reduction in force, ~~by the end of the second quarter of 2023.~~

with such severance expenses recorded in salaries and wages and legal accounts.

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Item 6. Exhibits

INDEX TO EXHIBITS

Exhibit No.		Description

~~2.1~~10.1		~~Share Purchase~~Equity Distribution Agreement, dated ~~January 10, 2020,~~as of September 1, 2023, by and between ~~AMERI Holdings,~~Enveric Biosciences, Inc. and ~~Ameri100, Inc.~~Cannacord Genuity LLC (incorporated by reference to Exhibit ~~2.1~~1.1 to the Company’s Current Report on Form 8-K, filed with the Commission on ~~January 13, 2020)~~
~~2.2~~		Tender Offer Support Agreement and Termination of Amalgamation Agreement, dated August 12, 2020, by and among AMERI Holdings, Inc., Jay Pharma Merger Sub, Inc., Jay Pharma Inc., 1236567 B.C. Unlimited Liability Company and Barry Kostiner, as the Ameri representative (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on August 12, 2020)
~~2.3~~		~~Amendment No.~~September 1, To Tender Offer Support Agreement and Termination of Amalgamation Agreement, dated December 18, 2020, by and among Ameri, Jay Pharma Merger Sub, Inc., Jay Pharma Inc., 1236567 B.C. Unlimited Liability Company and Barry Kostiner, as the Ameri representative (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on December 18, 2020)
~~2.4~~		Amalgamation Agreement, dated May 24, 2021, by and among Enveric Biosciences, Inc., 1306432 B.C. LTD., 1306436 B.C. LTD., and MagicMed Industries, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the Commission on May 24, 2021)
~~3.1~~		Amended and Restated Certificate of Incorporation of Enveric Biosciences, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Commission on January 6, 2021)
~~3.2~~		Certificate of Amendment to Amended and Restated Certificate of Incorporation of Enveric Biosciences, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the Commission on January 6, 2021)
~~3.3~~		Certificate of Designations of Series B Preferred Stock of Enveric Biosciences, Inc. (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K, filed with the Commission on January 6, 2021)
~~3.4~~		~~Amended and Restated Bylaws of Enveric Biosciences, Inc. (incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K, filed with the Commission on January 6, 2021)~~
~~3.5~~		Amendment to the Amended and Restated Bylaws of Enveric Biosciences, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Commission on November 18, 2021)
~~3.6~~		Certificate of Designation of the Series C Preferred Stock of the Company, dated May 4, 2022 (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A, filed with the Securities and Exchange Commission on May 4, 2022, File No. 000-26460)
~~3.7~~		Certificate of Amendment of Certificate of Designation of the Series C Preferred Stock of the Company, dated May 17, 2022 (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 8-A/A, filed with the Securities and Exchange Commission on May 17, 2022, File No. 000 26460)
~~3.8~~		Certificate of Amendment of Amended and Restated Certificate of Incorporation of Enveric Biosciences, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Commission on July 14, 2022)
~~4.1~~		Form of Pre-Funded Warrant (issued in connection with January 2021 Registered Direct Offering) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the Commission on January 12, 2021)
~~4.2~~		Form of Warrant (issued in connection with January 2021 Registered Direct Offering) (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the Commission on January 12, 2021)
~~4.3~~		Form of Warrant (issued in connection with February 2021 Registered Direct Offering) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the Commission on February 11, 2021)
~~4.4~~		~~Form of Series B Warrant (incorporated by reference to Exhibit 4.5 to the Company’s Annual Report on Form 10-K filed with the Commission on April 1, 2021)~~
~~4.5~~		~~Form of MagicMed Warrant Certificate (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 17, 2021)~~
~~4.6~~		Form of Common Stock Purchase Warrant (in connection with February 2022 Offering) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the Commission on February 15, 2022)
~~4.7~~		Form of RD Pre-Funded Warrant (in connection with July 2022 Offering) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022)

~~4.8~~		Form of PIPE Pre-Funded Warrant (in connection with July 2022 Offering) (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022)
~~4.9~~		Form of RD Preferred Investment Option (in connection with July 2022 Offering) (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022)
~~4.10~~		Form of PIPE Preferred Investment Option (in connection with July 2022 Offering) (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022)
~~4.11~~		~~Form of Wainwright Warrant (in connection with July 2022 Offering) (incorporated by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022)~~
~~10.1#~~		Employment Agreement between Kevin Coveney and the Company, effective March 13, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on February 28, 2023)
10.2***		Form of Termination of Prior Agreements and Mutual Release***
31.1*		Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer*
31.2*		Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Financial and Accounting Officer*
3232.1*		Certification pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer, Principal Financial and Accounting Officer**
~~99.1~~		~~Press release dated May 15, 2023~~
~~101.INS~~101.INS*		Inline XBRL Instance Document*
~~101.SCH~~101.SCH*		Inline XBRL Taxonomy Extension Schema*
~~101.CAL~~101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document*
~~101.DEF~~101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document*
~~101.LAB~~101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document*
~~101.PRE~~101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document*
~~104~~104*		Cover Page Interactive Data File ~~(embedded within the~~(formatted as Inline XBRL ~~document)~~document and contained in Exhibit 101)

*		Filed herewith.
**		Furnished herewith.
~~***~~	Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets (“[***]”) because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.
#	~~Management contract or compensatory plan or arrangement.~~

2931

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.

			ENVERIC BIOSCIENCES, INC
November 13, 2023
~~May 15, 2023~~	By:	/s/ Dr. Joseph Tucker
		Dr. Joseph Tucker
		Chief Executive Officer
		(Principal Executive Officer)

~~May 15,~~
November 13, 2023
	By:	/s/ Kevin Coveney
		Kevin Coveney
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

3032

	Shares		Amount		Equity				Shares		Amount		Capital			Deficit			Loss			Equity
	Redeemable Non-controlling Interest				Total Mezzanine				Common Stock				Additional Paid-In			Accumulated			Accumulated Other Comprehensive			Total Shareholders’
	Shares		Amount		Equity				Shares		Amount		Capital			Deficit			Loss			Equity
Balance at January 1, 2023		1,000	$	885,028	$	885,028	-	-		2,078,271	$	20,782	$	94,395,662		$	(79,207,786	)	$	(536,734	)	$	14,671,924
Stock-based compensation		—		—		—				—		—		532,835			—			—			532,835
Preferred dividends attributable to redeemable non-controlling interest		—		12,329		12,329	-	-		—		—		(12,329	)		—			—			(12,329	)
Accretion of embedded derivative to redemption value		—		110,991		110,991	-	-		—		—		(110,991	)		—			—			(110,991	)
Foreign exchange translation gain		—		—		—				—		—		—			—			1,968			1,968
Net loss		—		—		—	-	-		—		—		—			(4,677,527	)		—			(4,677,527	)
Balance at March 31, 2023		1,000	$	1,008,348	$	1,008,348	-	-		2,078,271	$	20,782	$	94,805,177		$	(83,885,313	)	$	(534,766	)	$	10,405,880

	2023			2022
	For the Nine Months Ended
	2023			2022
Cash Flows From Operating Activities:
Net loss	$	(13,855,796	)	$	(9,793,431	)
Adjustments to reconcile net loss to cash used in operating activities
Change in fair value of warrant liability		115,342			(3,845,514	)
Change in fair value of investment option liability		399,921			(1,809,622	)
Change in fair value of derivative liability		(727,000	)		284,000
Stock-based compensation		1,785,432			2,091,299
Amortization of right-of-use asset		64,246			103,365
Amortization of intangible assets		126,566			126,563
Depreciation expense		132,734			114,850
Gain on disposal of property and equipment		(4,219	)		—
Change in operating assets and liabilities:
Prepaid expenses and other current assets		(746,033	)		(758,419	)
Accounts payable and accrued liabilities		429,688			(106,675	)
Right-of-use operating lease liability		(64,244	)		(91,022	)
Net cash used in operating activities		(12,343,363	)		(13,684,606	)

Cash Flows From Investing Activities:
Purchases of property and equipment		(5,195	)		(577,972	)
Proceeds from disposal of property and equipment		16,900			—
Net cash provided by (used in) investing activities		11,705			(577,972	)

Cash Flows From Financing Activities:
Payment for the deferred offering costs from the equity distribution agreement		(105,000	)		—
Proceeds from sale of common stock, warrants, and investment options, net of offering costs		—			17,222,100
Redemption of Series A Preferred Stock (see Note 8)		(1,052,057	)		—
Proceeds from the sale of redeemable non-controlling interest, net of offering		—			958,038
Net cash (used in) provided by financing activities		(1,157,057	)		18,180,138

Effect of foreign exchange rate on cash		31,399			(72,554	)

Net (decrease) increase in cash		(13,457,316	)		3,845,006
Cash at beginning of period		17,723,884			17,355,999
Cash at end of period	$	4,266,568		$	21,201,005

Supplemental disclosure of cash and non-cash transactions:
Cash paid for interest	$	—		$	5,114
Income taxes paid	$	6,595		$	—
Warrants issued in conjunction with common stock issuance	$	—		$	3,595,420
Issuance of embedded derivative	$	—		$	402,000
Issuance of redeemable non-controlling Series C preferred stock	$	—		$	—
Offering costs accrued not paid	$	20,800		$	—
Preferred dividends attributable to redeemable non-controlling interest	$	19,041		$	20,411
Accretion of embedded derivative to redemption value	$	147,988		$	184,985
Investment options issued in conjunction with common stock issuance	$	—		$	4,323,734
Modification of warrants as part of share capital raise	$	—		$	251,357

	Accrued Restructuring Costs
January 1, 2023 Beginning balance	$	—
Restructuring costs incurred		1,004,033
Restructuring costs paid		(396,431	)
September 30, 2023 ending balance	$	607,602

	Level		March 31, 2023		December 31, 2022
	Level		March 31, 2023		December 31, 2022		Level	September 30, 2023		December 31, 2022
Warrant liabilities - January 2021 Warrants		3	$	12	$	81	3	$	18	$	81
Warrant liabilities - February 2021 Warrants		3		34		79	3		59		79
Warrant liabilities - February 2022 Warrants		3		134,512		185,055	3		300,480		185,055
Fair value of warrant liability			$	134,558	$	185,215		$	300,557	$	185,215

	Total Derivative Liability
Fair value as of December 31, 2022	$	727,000
Change in fair value		(13,000	)
Fair value of derivative liability as of March 31, 2023	$	714,000

	January 2021 Warrants			February 2021 Warrants			February 2022 Warrants			February 2022 Post-Modification Warrants
Term (years)		2.8			2.9			3.9			4.8
Stock price	$	1.66		$	1.66		$	1.66		$	1.66
Exercise price	$	247.50		$	245.00		$	27.50		$	7.78
Dividend yield		—	%		—	%		—	%		—	%
Expected volatility		77.0	%		81.0	%		80.0	%		88.0	%
Risk free interest rate		3.90	%		3.80	%		3.70	%		3.60	%

Number of warrants		36,429			34,281			338,000			122,000
Value (per share)	$	0.00		$	0.00		$	0.15		$	0.69

	May 2022 Derivative Liability
Principal	$	1,000,000
Dividend rate		5.0	%
Market rate		5.9	%

	Wainwright Options			RD Options			PIPE Options
Term (years)		4.3			4.8			4.8
Stock price	$	1.66		$	1.66		$	1.66
Exercise price	$	10.00		$	7.78		$	7.78
Dividend yield		—	%		—	%		—	%
Expected volatility		88.0	%		88.0	%		88.0	%
Risk free interest rate		3.70	%		3.60	%		3.60	%

Number of investment options		70,000			375,000			625,000
Value (per share)	$	0.54		$	0.69		$	0.69