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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: June 30, 2024

 

OR

 

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)

 

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 (§ 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. ☐

 

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

 

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

 

As of August 9, 2024, there were 8,919,920 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 June 30, 2024 (Unaudited) and December 31, 2023 2
  Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2024 and 2023 3
  Unaudited Condensed Consolidated Statements of Changes in Mezzanine Equity and Shareholders’ Equity for the three and six months ended June 30, 2024 and 2023 4
  Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 5
  Notes to Unaudited Condensed Consolidated Financial Statements 6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17
Item 3. Quantitative and Qualitative Disclosures About Market Risk 25
Item 4. Controls and Procedures 25
     
  PART II - OTHER INFORMATION 26
Item 1. Legal Proceedings 26
Item 1A. Risk Factors 26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 27
Item 3. Defaults Upon Senior Securities 27
Item 4. Mine Safety Disclosures 27
Item 5. Other Information 27
Item 6. Exhibits 28
  Signatures 29

 

 
 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   June 30, 2024   December 31, 2023 
   (unaudited)     
ASSETS          
Current assets:          
Cash  $3,502,551   $2,287,977 
Prepaid expenses and other current assets   2,017,383    1,293,554 
Total current assets   5,519,934    3,581,531 
           
Other assets:          
Property and equipment, net   405,114    507,377 
Intangible assets, net   126,556    210,932 
Total other assets   531,670    718,309 
Total assets  $6,051,604   $4,299,840 
           
LIABILITIES, MEZZANINE EQUITY, AND SHAREHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable  $459,898   $1,218,783 
Accrued liabilities   176,373    1,075,643 
Investment option liability   4,443    23,608 
Warrant liability   4,626    25,470 
Total current liabilities   645,340    2,343,504 
           
Commitments and contingencies (Note 8)   -     -  
           
Mezzanine equity          
Series C redeemable preferred stock, $0.01 par value, 100,000 shares authorized, and 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023        
Total mezzanine equity        
           
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 June 30, 2024 and December 31, 2023        
Common stock, $0.01 par value, 100,000,000 shares authorized, 7,878,568 and 2,739,315 shares issued and outstanding as of June 30, 2024 and December 31, 2023   78,785    27,392 
Additional paid-in capital   106,729,801    100,815,851 
Stock subscription receivable       (1,817,640)
Accumulated deficit   (100,835,827)   (96,499,518)
Accumulated other comprehensive loss   (566,495)   (569,749)
Total shareholders’ equity   5,406,264    1,956,336 
Total liabilities, mezzanine equity, and shareholders’ equity  $6,051,604   $4,299,840 

 

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

 

2
 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 

   2024   2023   2024   2023 
   For the Three Months Ended June 30,   For the Six Months Ended June 30, 
   2024   2023   2024   2023 
Operating expenses                    
General and administrative  $1,297,651   $3,272,900   $3,231,404   $6,192,700 
Research and development   515,501    2,395,589    973,656    4,249,981 
Depreciation and amortization   84,779    86,518    170,188    173,004 
Total operating expenses   1,897,931    5,755,007    4,375,248    10,615,685 
                     
Loss from operations   (1,897,931)   (5,755,007)   (4,375,248)   (10,615,685)
                     
Other income (expense)                    
Change in fair value of warrant liabilities   10,805    (233,821)   20,844    (183,164)
Change in fair value of investment option liability   7,767    (1,082,141)   19,165    (962,636)
Change in fair value of derivative liability       714,000        727,000 
Interest income (expense), net   (35)   916    661    905 
Total other income (expense)   18,537    (601,046)   40,670    (417,895)
                     
Net loss before income taxes   (1,879,394)   (6,356,053)   (4,334,578)   (11,033,580)
                     
Income tax expense           (1,731)    
                     
Net loss   (1,879,394)   (6,356,053)   (4,336,309)   (11,033,580)
Less preferred dividends attributable to non-controlling interest       6,712        19,041 
Less deemed dividends attributable to accretion of embedded derivative at redemption value       36,997        147,988 
Net loss attributable to shareholders   (1,879,394)   (6,399,762)   (4,336,309)   (11,200,609)
                     
Other comprehensive loss                    
Foreign currency translation   (14,652)   (11,286)   3,254    (9,318)
                     
Comprehensive loss  $(1,894,046)  $(6,411,048)  $(4,333,055)  $(11,209,927)
                     
Net loss per share - basic and diluted  $(0.25)  $(3.04)  $(0.75)  $(5.35)
                     
Weighted average shares outstanding, basic and diluted   7,587,851    2,107,583    5,794,653    2,093,008 

 

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

 

3
 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

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

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

 

   Shares   Amount   Capital   Receivable   Deficit   Loss   Equity 
   Common Stock  

Additional

Paid-In

   Subscription   Accumulated   Accumulated Other Comprehensive   Total Shareholders’ 
   Shares   Amount   Capital   Receivable   Deficit   Loss   Equity 
Balance at January 1, 2024 - -2,739,315    27,392    100,815,851    (1,817,640)   (96,499,518)   (569,749)   1,956,336 
Stock-based compensation-  -        351,488                351,488 
Common stock sold under the Equity Distribution Agreement, net of offering costs of $583,713   1,668,000    16,680    1,792,109                1,808,789 
Issuance of direct offering shares (see Note 7)   228,690    2,287    320,166                322,453 
Exercise of Inducement Warrants for common stock   1,954,000    19,540    2,657,440                2,676,980 
Proceeds from the subscription receivable related to the issuance of Inducement Warrants, net of offering costs of $12,821           (12,821)   280,500            267,679 
Proceeds from the subscription receivable related to the exercise of warrants and preferred investment options and issuance of common stock in abeyance   704,000    7,040    (7,040)   1,537,140            1,537,140 
Foreign exchange translation gain                       17,906    17,906 
Net loss-  -                (2,456,915)       (2,456,915)
Balance at March 31, 2024-  -7,294,005   $72,939   $105,917,193   $   $(98,956,433)  $(551,843)  $6,481,856 
Stock-based compensation -  -        369,614                369,614 
Common stock sold under the Purchase Agreement, net of offering costs of $82,850   125,000    1,250    (1,250)                
Issuance of direct offering shares (see Note 7)   458,000    4,580    444,260                448,840 
Issuance of common shares for vested RSU   1,563    16    (16)                
Foreign exchange translation loss                       (14,652)   (14,652)
Net loss- -                 (1,879,394)       (1,879,394)
Balance at June 30, 2024- -7,878,568   $78,785   $106,729,801   $   $(100,835,827)  $(566,495)  $5,406,264 

 

   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       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 

 

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

 

4
 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   2024   2023 
   For the Six Months Ended June 30, 
   2024   2023 
Cash Flows From Operating Activities:          
Net loss  $(4,336,309)  $(11,033,580)
Adjustments to reconcile net loss to cash used in operating activities          
Change in fair value of warrant liability   (20,844)   183,164 
Change in fair value of investment option liability   (19,165)   962,636 
Change in fair value of derivative liability       (727,000)
Stock-based compensation   721,102    1,412,573 
Amortization of right of use asset       54,703 
Amortization of intangibles   84,376    84,375 
Depreciation expense   85,812    88,629 
Gain on disposal of property and equipment       (4,212)
Change in operating assets and liabilities:          
Prepaid expenses and other current assets   (543,822)   (1,111,913)
Accounts payable and accrued liabilities   (1,458,670)   542,397 
Right-of-use operating lease asset and obligation       (54,702)
Net cash used in operating activities   (5,487,520)   (9,602,930)
           
Cash Flows From Investing Activities:          
Purchases of property and equipment       (5,187)
Proceeds from disposal of property and equipment       16,872 
Net cash provided by investing activities       11,685 
           
Cash Flows From Financing Activities:          
Proceeds from the subscription receivable related to the issuance of Inducement Warrants and the exercise of warrants and preferred investment options   1,804,819     
Proceeds from exercise of Inducement Warrants   2,676,980     
Proceeds from common stock sold under the Equity Distribution Agreement, net of offering costs   2,290,186     
Proceeds from common stock sold under the Purchase Agreement, net of offering costs   82,026     
Payment for offering costs previously accrued   (161,312)    
Redemption of Series A Preferred Stock       (1,052,057)
Net cash provided by (used in) financing activities   6,692,699    (1,052,057)
           
Effect of Foreign Exchange Rate on Changes on Cash   9,395    826 
           
Net increase (decrease) in cash   1,214,574    (10,642,476)
Cash at beginning of period   2,287,977    17,723,884 
Cash at end of period  $3,502,551   $7,081,408 
           

Supplemental disclosure of cash and non-cash transactions:

          
Cash paid for interest  $   $11 
Income taxes paid  $24,001   $ 
Offering costs accrued not paid  $149   $ 
Deferred offering costs charged to offering costs  $240,969     
Issuance of common shares for offering costs  $771,293   $ 
Preferred dividends attributable to redeemable non-controlling interest  $   $19,041 
Accretion of embedded derivative to redemption value  $   $147,988 

 

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” or the “Company”) is a biotechnology company developing 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 subsidiaries: Jay Pharma Inc. (“Jay Pharma”), 1306432 B.C. Ltd., MagicMed Industries, Inc. (“MagicMed”), Enveric Biosciences Canada, Inc., Akos Biosciences, Inc. (“Akos”), and Enveric Therapeutics, Pty. Ltd. (“Enveric Therapeutics”).

 

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 EVM201 Series, comprises next generation synthetic prodrugs of the active metabolite, psilocin. Enveric is developing the first product from the EVM201 Series – EB-002 (formerly EB-373) – for the treatment of psychiatric disorders. Enveric is also advancing its product EB-003 from the EVM301 Series, which is expected to offer 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 patient.

 

The Company has continued to pursue the development of MagicMed’s proprietary 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,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™ the Company has three different types of molecules, Generation 1 (classic psychedelics), Generation 2 (new chemical entity pro-drugs of psilocin), and Generation 3 (new chemical entity analogs). The Company has created over 1000 novel psychedelic molecular compounds and derivatives that are housed in the Psybrary™. The Company’s current focus is to develop its lead molecules, EB-002 and EB-003, and to outlicense other molecules from the Psybrary™.

 

The Company screens newly synthesized molecules in the Psybrary™ through PsyAI™, a proprietary artificial intelligence (“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.

 

Going Concern, Liquidity and Other Uncertainties

 

The Company has incurred a loss since inception resulting in an accumulated deficit of $100,835,827 as of June 30, 2024, and further losses are anticipated in the development of its business. For the six months ended June 30, 2024, the Company has operating cash outflows of $5,487,520 and had a loss from operations of $4,375,248. Being a research and development company, since inception, 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 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 unaudited condensed consolidated financial statements.

 

6
 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED 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 June 30, 2024, the Company had cash of $3,502,551 and working capital of $4,874,594. The Company’s current cash on hand is not sufficient to satisfy its operating cash needs for the 12 months from 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 raising additional working capital through public or private equity or debt financings or other sources, the Purchase Agreement with Lincoln Park (see Note 7 and 9), subject to registration, and may include additional collaborations with third parties as well as disciplined cash spending. Adequate additional financing may not be available to us 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.

 

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 unaudited condensed consolidated 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.

 

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.

 

Nasdaq Notice

 

On November 21, 2023, the Company received a letter from the Listing Qualifications Department of the Nasdaq Stock Market (“Nasdaq”) stating that as of September 30, 2023, the Company did not meet the minimum of $2,500,000 in stockholders’ equity required for continued listing pursuant to Nasdaq Listing Rule 5550(b)(1). On February 6, 2024, the Company received a letter from Nasdaq, granting the Company an extension to regain compliance with the minimum stockholders’ equity requirement by May 20, 2024. On May 21, 2024, the Company received a letter from Nasdaq notifying the Company that it regained compliance with the minimum stockholders’ equity requirement for continued listing on the Nasdaq.

 

On May 16, 2024, the Company received a letter from Nasdaq’s Listing Qualifications Department stating that because the closing bid price for the Company’s common stock listed on Nasdaq was below $1.00 for 30 consecutive business days, the Company no longer meets the minimum bid price requirement for continued listing on the Nasdaq Capital Market (the “Minimum Bid Price Requirement”). The Company has a period of 180 calendar days from May 16, 2024, or until November 12, 2024, to regain compliance with the Minimum Bid Price Requirement. If at any time before November 12, 2024, the bid price of the Company’s common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written notification that the Company has achieved compliance with the Minimum Bid Price Requirement.

 

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 six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2023, 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 26, 2024.

 

7
 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

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, 2023. There were no significant changes to these accounting policies during the three and six months ended June 30, 2024.

 

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, the valuation of warrants and preferred investment options, and the valuation of stock-based compensation and accruals associated with third party providers supporting research and development efforts. Actual results could differ from those estimates.

 

Reclassification

 

Certain reclassifications have been made to the prior period’s unaudited condensed consolidated financial statements in order to conform to the current year presentation. In the prior year, the Company included certain investor related expenses were included within research and development on the unaudited condensed consolidated statements of operations. These expenses were reclassified to general and administrative expenses in the current year. This reclassification had no effect on the Company’s previously reported results of operations, changes in equity, or cash flows.

 

Foreign Currency Translation

 

From inception through June 30, 2024, the reporting currency of the Company was the United States dollar while the functional currency of certain of the Company’s subsidiaries was the Canadian dollar and Australian dollar. For the reporting periods ended June 30, 2024 and 2023, 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 United States dollar.

 

The Company translates the assets and liabilities of its Canadian subsidiaries and Australian subsidiary into the 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 unaudited condensed consolidated statements of shareholders’ equity as a component of accumulated other comprehensive loss.

 

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 loss in the unaudited condensed consolidated statements of operations and comprehensive 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 June 30, 2024, the Company had greater than $250,000 at United States financial institutions, less than $250,000 at Australian financial institutions, and less than $100,000 at Canadian financial institutions.

 

8
 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Research and Development

 

Research and development expenses are charged to operations as incurred. Research and development expenses include, among other things, internal and external costs associated with preclinical development, pre-commercialization manufacturing expenses, and clinical trials. The Company accrues for costs incurred as the services are being provided by monitoring the status of the trial or services provided and the invoices received from its external service providers. In the case of clinical trials, a portion of the estimated cost normally relates to the projected cost to treat a patient in the trials, and this cost is recognized based on the number of patients enrolled in the trial. As actual costs become known, the Company adjusts its accruals accordingly.

 

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.

 

Research and Development Tax Incentive Receivable

 

The Company, through its wholly-owned subsidiary in Australia, participates in the Australian research and development tax incentive program, such that a percentage of the Company’s qualifying research and development expenditures are reimbursed by the Australian government, and such incentives are reflected as a reduction of research and development expense. The Australian research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. At each period end, management estimates the reimbursement available to the Company based on available information at the time.

 

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 six months ended June 30, 2024 and 2023 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 for the three and six months ended June 30, 2024 and 2023 because the effect of their inclusion would have been anti-dilutive.

 SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

   For the three and six months ended June 30, 2024   For the three and six months ended June 30, 2023 
Warrants to purchase shares of common stock   845,213    655,463 
Restricted stock units - vested and unissued   41,901    55,622 
Restricted stock units - unvested   356,116    180,115 
Restricted stock awards - vested and unissued       708 
Investment options to purchase shares of common stock   70,000    1,070,000 
Options to purchase shares of common stock   23,082    36,579 
Total potentially dilutive securities   1,336,312    1,998,487 

 

Recent Accounting Pronouncements

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for all entities for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the potential impacts of ASU 2023-07, however as the Company currently has one reportable segment, does not expect this guidance will not have a material impact on its unaudited condensed consolidated financial statements.

 

9
 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which amends the disclosure to address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information and includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted. Early adoption is permitted. The Company is currently assessing potential impacts of ASU 2023-09 and does not expect the adoption of this guidance will have a material impact on its unaudited condensed consolidated financial statements and disclosures.

 

NOTE 3. PREPAID EXPENSES AND OTHER CURRENT ASSETS

 

As of June 30, 2024 and December 31, 2023, the prepaid expenses and other current assets of the Company consisted of the following:

 

   June 30, 2024   December 31, 2023 
Prepaid research and development  $257,218   $46,320 
Prepaid value-added taxes   241,269    243,429 
Prepaid insurance   375,215    149,559 
Prepaid other   81,192    62,036 
Deferred offering costs (see Note 7)   763,173    567,603 
Franchise tax receivable   38,258    79,258 
R&D tax incentive receivable   261,058    145,349 
Total prepaid expenses and other current assets  $2,017,383   $1,293,554 

 

NOTE 4. INTANGIBLE ASSETS

 

As of June 30, 2024, the Company’s intangible assets consisted of:

 

Definite lived intangible assets     
Balance at January 1, 2024  $210,932 
Amortization   (84,376)
Balance at June 30, 2024  $126,556 

 

For identified definite lived intangible assets, there was no impairment expense during the three and six months ended June 30, 2024 and 2023. For identified definite lived intangible assets, amortization expense amounted to $42,188 and $42,187 during the three months ended June 30, 2024 and 2023, respectively and $84,376 and $84,375 during each of the six months ended June 30, 2024 and 2023, respectively.

 

NOTE 5. PROPERTY AND EQUIPMENT

 

Property and equipment consists of the following assets which are located in Calgary, Canada, with all amounts converted into U.S. dollars:

 

   June 30, 2024   December 31, 2023 
Lab equipment  $808,523   $836,709 
Computer equipment and leasehold improvements   27,422    28,379 
Less: Accumulated depreciation   (430,831)   (357,711)
Property and equipment, net of accumulated depreciation  $405,114   $507,377 

 

Depreciation expense was $42,591 and $44,331 for the three months ended June 30, 2024 and 2023, respectively and $85,812 and $88,629 for the six months ended June 30, 2024 and 2023, respectively.

 

10
 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 6. ACCRUED LIABILITIES

 

As of June 30, 2024 and December 31, 2023, the accrued liabilities of the Company consisted of the following:

 

   June 30, 2024   December 31, 2023 
Product development  $79,197   $139,981 
Accrued salaries, wages, and bonuses   8,634    8,889 
Professional fees   70,542    584,810 
Accrued restructuring costs (see Note 8)       301,645 
Accrued income taxes       22,318 
Patent costs   18,000    18,000 
Total accrued expenses  $176,373   $1,075,643 

 

NOTE 7. SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

 

Equity Distribution Agreement

 

On September 1, 2023, the Company entered into the Equity Distribution Agreement (the “Distribution Agreement”), with Canaccord Genuity LLC (“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.

 

During the six months ended June 30, 2024, the Company issued 1,668,000 shares of common stock for gross proceeds of $2,392,502 under the Distribution Agreement, and charged offering costs of $583,713 to additional paid in capital on the unaudited condensed consolidated balance sheet. As of June 30, 2024 and December 31, 2023, there were deferred offering costs related to the Distribution Agreement of $0 and $171,944, respectively. As of June 30, 2024, there is $0 available under the Distribution Agreement.

 

On December 28, 2023, the Company entered into warrant exercise inducement offer letters (the “Inducement Letters”) with certain holders (the “Holders”) of the February 2022 Post-Modification Warrants and RD and PIPE preferred investment options to purchase shares of the Company’s common stock (the “Existing Warrants and Investment Options”) pursuant to which the Holders agreed to exercise for cash their Existing Warrants and Investment Options to purchase 1,122,000 shares of the Company’s common stock, in the aggregate, at a reduced exercised price of $1.37 per share (from an original exercise price of $7.78 per share), in exchange for the Company’s agreement to issue new warrants (the “Inducement Warrants”) to purchase up to 2,244,000 shares of the Company’s common stock (the “Inducement Warrant Shares”), and the Holders to make a cash payment of $0.125 per Inducement Warrant share for total proceeds of $280,500. In January 2024, the Company received aggregate gross proceeds of $1,817,640 from the exercise of the Existing Warrants and Investment Options by the Holders and the sale of the Inducement Warrants. Because the Existing Warrants and Investment Options by the Holders and the sale of the Inducement Warrants that exercised on December 28, 2023 and unsettled until January 2024, the proceeds are included in the condensed consolidated balance sheet as a subscription receivable as of December 31, 2023. As of December 31, 2023, 418,000 shares of the Existing Warrants and Investment Options exercised were considered issued as the Company had the enforceable right to the obtain the cash proceeds, which were in-transit, and the Holders were no longer able to rescind the exercise election. Due to the beneficial ownership limitation provisions, 704,000 shares of the Existing Warrants and Investment Options exercised were initially unissued and held in abeyance for the benefit of the Holder until notice is received from the Holder that the shares may be issued in compliance with such limitation. During the six months ended June 30, 2024, the Company issued all 704,000 shares of common stock of the 704,000 shares of Existing Warrants and Investment Options exercised that were held in abeyance due to the beneficial ownership limitation provisions.

 

11
 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

On December 28, 2023, the Company entered into warrant exercise inducement offer letters (the “Inducement Letters”) with certain holders of warrants and preferred investment options. The Inducement Letters prohibit the Company from entering into any variable rate transaction as defined in the Inducement Letters, including the issuance of (1) any variable priced debt or equity securities or (2) transactions whereby the Company may issue securities at a future determined price, such as through an at-the-market offering or an equity line of credit. The variable rate transaction restriction would have expired after six-months from the closing date of December 28, 2023 for the Inducement Letters for an issuance through an at-the-market offering, and one-year for the remaining variable rate transactions, however the restriction was waived for the at-the-market offering on March 8, 2024 and the equity line on May 3, 2024.

 

On March 8, 2024, the Company entered into a series of common stock purchase agreements for the issuance in a registered direct offering of 228,690 shares of the Company’s common stock to the Holders of the Inducement Warrants. The issuance was made in exchange for the permanent and irrevocable waiver of the variable rate transaction limitation solely with respect to the entry into and/or issuance of shares of common stock in an at the market offering contained in the Inducement Letters. The fair value of the shares issued for consideration of waiving the variable rate transaction limitation was $322,453 and was charged to additional paid in capital, as it is direct and incremental to the Distribution Agreement, on the unaudited condensed consolidated balance sheet as an offering cost related to the Distribution Agreement.

 

Lincoln Park Equity Line

 

On November 3, 2023, the Company entered into a Purchase Agreement (the “Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”), with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park has committed to purchase up to $10.0 million of the Company’s common stock 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 limitations on number of shares that may be sold. Sales may occur from time to time, at the Company’s sole discretion, over the 24-month period commencing on the date that the conditions to Lincoln Park’s purchase obligation set forth in the Purchase Agreement are satisfied, including that a registration statement on Form S-1 covering the resale of the shares of the Company’s Common Stock that have been and may be issued to Lincoln Park under the Purchase Agreement, which the Company has filed with the 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 shares of Common Stock that the Company may elect to sell to Lincoln Park under the Purchase Agreement, if any, will fluctuate based on the market prices of the Company’s Common Stock at the time the Company elects 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 the Company will sell to Lincoln Park under the 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 the Company will receive from those purchases by Lincoln Park under the Purchase Agreement.

 

On May 3, 2024, the Company entered into a series of common stock purchase agreements for the issuance in a registered direct offering of an aggregate of 458,000 shares of the Company’s common stock, to certain institutional investors. The issuance was made in exchange for the permanent and irrevocable waiver of the variable rate transaction limitation with respect to any existing or future agreement by the Company to effect any issuance of shares and issue such shares thereunder, as contained in those certain Inducement Offer Letters, dated December 28, 2023, between the Company and those certain institutional investors. The Company will not receive any net proceeds in connection with the offering. The fair value of the shares issued for consideration of waiving the variable rate transaction limitation was $448,840 and was recorded as deferred offering costs, as direct and incremental to the Purchase Agreement, within prepaid expenses and other current assets on the unaudited condensed consolidated balance sheet related to the Purchase Agreement.

 

12
 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The common stock purchase agreements contain customary representations and warranties and certain indemnification obligations of the Company. The common stock purchase agreements also restrict the Company from issuing, entering into any agreement to issue, or announcing the issuance of the Company’s common stock from the date of the common stock purchase agreements until the earlier of 30 days after entering into the agreements or at such time as fifteen million (15,000,000) shares of the Company’s common stock have traded in the open market. The closing of the issuance of the Shares pursuant to the common stock purchase agreements closed on May 3, 2024.

 

During the three and six months ended June 30, 2024, the Company had issued 125,000 shares of common stock through the Purchase Agreement for gross cash proceeds of $82,850 and the Company charged offering costs of $82,850 to additional paid in capital on the unaudited condensed consolidated balance sheet. As of June 30, 2024 and December 31, 2023, the Company has capitalized deferred offering costs of $763,173 and $395,660, respectively. See Note 9 for shares issued after June 30, 2024.

 

Stock Options

 

Amendment to 2020 Long-Term Incentive Plan

 

On November 2, 2023, the stockholders 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 (i) increased the number of authorized shares reserved for issuance under the Amended Incentive Plan to a maximum of 350,000, subject to adjustment, and (ii) removed the Evergreen Provision implemented in the Plan Amendment. During the first quarter of 2024, the Board approved an equitable adjustment to increase the number of shares available under the Plan by 134,779 shares. As of June 30, 2024, the total number of shares available for grant under the Incentive Plan was 6,257.

 

A summary of the stock option activity under the Company’s incentive plan for the six months ended June 30, 2024 is presented below:

 

   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, 2023   30,329   $57.17   $77.22    3.4   $ 
Granted      $   $          
Forfeited   (7,247)  $39.35   $54.02          
Outstanding at June 30, 2024   23,082   $62.77   $84.51    2.9   $ 
                          
Exercisable at June 30, 2024   21,988   $65.74   $88.59    2.5   $ 

 

The Company’s stock based compensation expense, recorded within general and administrative expense in the unaudited condensed consolidated statement of operations and comprehensive loss, related to stock options for the three months ended June 30, 2024 and 2023 was $414 and $54,375, respectively.

 

The Company’s stock-based compensation expense, recorded within general and administrative expense, related to stock options for the six months ended June 30, 2024 and 2023 was $(6,268) and $102,461, respectively.

 

As of June 30, 2024, the Company had $2,760 in unamortized stock option expense, which will be recognized over a weighted average period of 1.65 years.

 

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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 six months ended June 30, 2024:

 

   Number of shares   Weighted average fair value 
Non-vested at December 31, 2023   140,491   $28.97 
Granted   251,500   $0.85 
Forfeited   (9,750)  $2.87 
Vested   (26,125)  $2.62 
Non-vested at June 30, 2024   356,116   $11.76 

 

For the three months ended June 30, 2024 and 2023, the Company recorded $369,200 and $825,363, 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 unaudited condensed consolidated statement of operations and comprehensive loss. For the six months ended June 30, 2024 and 2023, the Company recorded $727,370 and $1,310,112, 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 June 30, 2024, the Company had unamortized stock-based compensation costs related to restricted stock units of $1,478,726 which will be recognized over a weighted average period of 1.71 years. As of June 30, 2024, 41,901 restricted stock units are vested without shares of common stock being issued, with all of these shares due as of June 30, 2024.

 

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

 

  2024   2023   2024   2023 
   Three Months Ended June 30,   Six Months Ended June 30, 
Stock-based compensation expense for RSUs:  2024   2023   2024   2023 
General and administrative  $162,042   $592,929   $314,471   $845,244 
Research and development   207,158    232,434    412,899    464,868 
Total  $369,200   $825,363   $727,370   $1,310,112 

 

Warrants and Preferred Investment Options

 

The following table summarizes information about shares issuable under warrants outstanding at June 30, 2024:

 

   Warrant shares outstanding   Weighted average exercise price   Weighted average remaining life   Intrinsic value 
Outstanding at December 31, 2023   2,799,213   $11.79    4.6   $ 
Exercised   (1,954,000)   1.37       $ 
Outstanding at June 30, 2024   845,213   $35.87    3.2   $ 
                     
Exercisable at June 30, 2024   845,213   $35.87    3.2   $ 

 

The following table summarizes information about investment options outstanding at June 30, 2024:

 

   Investment options outstanding   Weighted average exercise price   Weighted average remaining life   Intrinsic value 
Outstanding at December 31, 2023   70,000   $10.00    4.1   $ 
Outstanding at June 30, 2024   70,000   $10.00    3.1   $ 
                     
Exercisable at June 30, 2024   70,000   $10.00    3.1   $ 

 

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ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 8. 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

 

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-002, 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-002 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-002. EB-002, a next-generation proprietary psilocin prodrug, has been recognized as a New Chemical Entity (NCE) by Australia’s Therapeutic Goods Administration and is currently in preclinical development targeting the treatment of anxiety disorder. The total cost of the Avance Clinical contract is approximately 3,400,000 AUD, which translates to approximately $2,225,000 USD as of June 30, 2024. As of June 30, 2024, the Company has paid approximately $2,225,000 of the Avance Clinical contract costs and has $251,254 recorded as prepaid assets within prepaid and other current assets, accrued $— recorded as accrued liabilities and $— as accounts payable on the accompanying condensed consolidated balance sheet. For the three and six months ended June 30, 2024 and 2023, the Company has expensed $(154,354) and $244,390, and $354,419 and $355,232, respectively, in research and development expenses within the accompanying unaudited condensed consolidated statement of operations. As of June 30, 2024, all payments have been made and the project is substantially completed.

 

According to Australian tax law, the Company is allowed an R&D tax credit that reduces a company’s tax bill in Australia for expenses incurred in R&D subject to certain requirements. The Company’s Australian subsidiary submits R&D tax credit requests annually for research and development expenses incurred. At June 30, 2024 and December 31, 2023, the Company had a research and development tax credit receivable of $261,058 and $145,349, respectively, for R&D expenses incurred in Australia, included in prepaid and other current assets within the accompanying unaudited condensed consolidated statement of operations.

 

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 patent portfolio acquired and developed under the Vogel-Nathan Purchase Agreement was sold to undisclosed buyers for an undisclosed sum in the first quarter of 2024. No additional financial or other obligations exist regarding the Vogel-Nathan Purchase Agreement.

 

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 one and 12 months. These agreements, in aggregate, commit the Company to approximately $0.1 million in future cash payments, inclusive of amounts in accounts payable.

 

Reduction in Force/Restructuring

 

In May 2023, the Company entered into a cost reduction plan, including a reduction in force (“RIF”) 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 were terminated. The plan included a focus on progressing the Company’s existing non-cannabinoid pipeline while reducing the rate of spend and managing cash flow. In June 2023, the Company completed the reduction in force, with such severance expenses recorded in general and administrative accounts.

 

In June 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 received salary and benefits that is paid out in twelve monthly installments beginning in July 2023, was eligible for his 2023 performance bonus, which was not achieved, and any outstanding restricted stock units retained their vesting conditions.

 

15
 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The following table summarizes the Reduction in Force/Restructuring activity and ending balance at June 30, 2024 for the remaining severance payments included in accrued expenses in the consolidated balance sheet:

 

   Accrued Restructuring Costs 
January 1, 2024 beginning balance  $301,645 
Restructuring costs paid   (301,645)
June 30, 2024 ending balance  $ 

 

NOTE 9. SUBSEQUENT EVENTS

 

Subsequent to June 30, 2024, the Company issued 1,015,477 shares of common stock through the Purchase Agreement with Lincoln Park for gross cash proceeds of $494,887. As of July 30, 2024, there were no remaining shares available to be issued in connection with this agreement.

 

On July 10, 2024, Akos entered into an Exclusive License Agreement (the “License Agreement”) with Aries Science and Technology, LLC, an Ohio limited liability company (“Aries”), pursuant to which Akos granted Aries a license of Akos’s patented radiation dermatitis topical product. The license allows Akos to use the patented formulation to develop pharmaceutical or non-pharmaceutical products for treating radiation dermatitis suitable for administration to humans or animals. The license is exclusive (subject to certain exceptions contained in the License Agreement), worldwide, royalty-bearing, and includes the right to sublicense. Akos is entitled to potential license payments, milestone payments and royalties based on net revenues of the Licensed Product on a licensed product-by-licensed product and country-by-country basis pursuant to the terms of the Agreement. Aries has the option during the license term, to purchase the rights to each licensed product (on a licensed product-by-licensed product basis) in the form of an exclusive (as to the applicable licensed product), fully paid, transferable right and license to the licensed product.

 

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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, and its subsidiaries.

 

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,” “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 limited study on the effects of medical 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 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;

 

17
 

 

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;
   
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 success at managing the risks involved in the foregoing; and
   
the risk of loss in excess of insurance limitations on funds held in U.S Banking 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 for the year ended December 31, 2023. 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, and addiction disorders. Leveraging our unique discovery and development platform, The Psybrary™, we have created a robust intellectual property portfolio of new chemical entities for specific mental health indications. Our lead program, the EVM201 Series, comprises next generation synthetic prodrugs of the active metabolite, psilocin. We are developing the first product from the EVM201 Series – EB-002 – for the treatment of psychiatric disorders. We are also advancing its second program, the EVM301 Series – EB 003 – expected to offer 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 patient.

 

Psychedelics

 

We have continued to pursue the development of MagicMed’s proprietary 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 anxiety. We synthesize novel versions of classic psychedelics, such as psilocybin, 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 (new chemical entity pro-drugs of psilocin), and Generation 3 (new chemical entity analogs). The Company has created over 1,000 novel psychedelic molecular compounds and derivatives (“Psychedelic Derivatives”) that are housed in the Psybrary™. Our current focus is develop our lead molecules EB-002 and EB-003 and to out-license other molecules from the Psybrary™.

 

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Recent Developments

 

Equity Distribution Agreement

 

During the six months ended June 30, 2024, the Company issued 1,668,000 shares of common stock for gross proceeds of $2,392,502 under the Distribution Agreement, and charged offering costs of $583,713 to additional paid in capital on the unaudited condensed consolidated balance sheet. As of June 30, 2024 and December 31, 2023, there were deferred offering costs related to the Distribution Agreement of $0 and $171,944, respectively.

 

On December 28, 2023, the Company entered into warrant exercise inducement offer letters (the “Inducement Letters”) with certain holders (the “Holders”) of the February 2022 Post-Modification Warrants and RD and PIPE preferred investment options to purchase shares of the Company’s common stock (the “Existing Warrants and Investment Options”) pursuant to which the Holders agreed to exercise for cash their Existing Warrants and Investment Options to purchase 1,122,000 shares of the Company’s common stock, in the aggregate, at a reduced exercised price of $1.37 per share (from an original exercise price of $7.78 per share), in exchange for the Company’s agreement to issue new warrants (the “Inducement Warrants”) to purchase up to 2,244,000 shares of the Company’s common stock (the “Inducement Warrant Shares”), and the Holders to make a cash payment of $0.125 per Inducement Warrant share for total proceeds of $280,500. In January 2024, the Company received aggregate gross proceeds of $1,817,640 from the exercise of the Existing Warrants and Investment Options by the Holders and the sale of the Inducement Warrants. Because the Existing Warrants and Investment Options by the Holders and the sale of the Inducement Warrants that exercised on December 28, 2023 and unsettled until January 2024, the proceeds are included in the condensed consolidated balance sheet as a subscription receivable as of December 31, 2023. As of December 31, 2023, 418,000 shares of the Existing Warrants and Investment Options exercised were considered issued as the Company had the enforceable right to the obtain the cash proceeds, which were in-transit, and the Holders were no longer able to rescind the exercise election. Due to the beneficial ownership limitation provisions, 704,000 shares of the Existing Warrants and Investment Options exercised were initially unissued and held in abeyance for the benefit of the Holder until notice is received from the Holder that the shares may be issued in compliance with such limitation. During the six months ended June 30, 2024, the Company issued all 704,000 shares of common stock of the 704,000 shares of Existing Warrants and Investment Options exercised that were held in abeyance due to the beneficial ownership limitation provisions.

 

On December 28, 2023, the Company entered into warrant exercise inducement offer letters (the “Inducement Letters”) with certain holders of warrants and preferred investment options. The Inducement Letters prohibit the Company from entering into any variable rate transaction as defined in the Inducement Letters, including the issuance of (1) any variable priced debt or equity securities or (2) transactions whereby the Company may issue securities at a future determined price, such as through an at-the-market offering or an equity line of credit. The variable rate transaction restriction would have expired after six-months from the closing date of December 28, 2023 for the Inducement Letters for an issuance through an at-the-market offering, and one-year for the remaining variable rate transactions, however the restriction was waived for the at-the-market offering on March 8, 2024 and the equity line on May 3, 2024.

 

On March 8, 2024, the Company entered into a series of common stock purchase agreements for the issuance in a registered direct offering of 228,690 shares of the Company’s common stock, par value $0.01 per share to the Holders of the Inducement Warrants. The issuance was made in exchange for the permanent and irrevocable waiver of the variable rate transaction limitation solely with respect to the entry into and/or issuance of shares of common stock in an at the market offering contained in the Inducement Letters. The fair value of the shares issued for consideration of waiving the variable rate transaction limitation was $322,453 and was charged to additional paid in capital on the unaudited condensed consolidated balance sheet as an offering cost related to the Distribution Agreement.

 

19
 

 

Lincoln Park Equity Line

 

During the three and six months ended June 30, 2024, the Company had issued 125,000 shares of common stock through the Purchase Agreement for gross cash proceeds of $82,850 and the Company charged offering costs of $82,850 to additional paid in capital on the unaudited condensed consolidated balance sheet. As of June 30, 2024 and December 31, 2023, the Company has capitalized deferred offering costs of $763,173 and $395,660, respectively.

 

On May 3, 2024, the Company entered into a series of common stock purchase agreements for the issuance in a registered direct offering of an aggregate of 458,000 shares of the Company’s common stock, to certain institutional investors. The issuance was made in exchange for the permanent and irrevocable waiver of the variable rate transaction limitation with respect to any existing or future agreement by the Company to effect any issuance of shares and issue such shares thereunder, as contained in those certain Inducement Offer Letters, dated December 28, 2023, between the Company and those certain institutional investors. The Company will not receive any net proceeds in connection with the offering. The fair value of the shares issued for consideration of waiving the variable rate transaction limitation was $448,840 and was recorded as deferred offering costs within prepaid expenses and other current assets on the unaudited condensed consolidated balance sheet related to the Purchase Agreement.

 

During July 2024, the Company issued 1,015,477 shares of common stock through the Purchase Agreement with Lincoln Park for gross cash proceeds of $494,887. As of July 30, 2024, there were no remaining shares available to be issued in connection with this agreement.

 

Inducement Warrants

 

On February 29, 2024, a Holder of the Inducement Warrants, exercised 1,954,000 Inducement Warrants at an exercise price of $1.37 per share for 1,954,000 shares of the Company’s common stock for total gross proceeds of $2,676,980.

 

20
 

 

Results of Operations

 

The following table sets forth information comparing the components of net loss for the three months ended June 30, 2024 and 2023:

 

   For the Three Months Ended June 30, 
   2024   2023 
Operating expenses          
General and administrative  $1,297,651   $3,272,900 
Research and development   515,501    2,395,589 
Depreciation and amortization   84,779    86,518 
Total operating expenses   1,897,931    5,755,007 
           
Loss from operations   (1,897,931)   (5,755,007)
           
Other income (expense)          
Change in fair value of warrant liabilities   10,805    (233,821)
Change in fair value of investment option liability   7,767    (1,082,141)
Change in fair value of derivative liability       714,000 
Interest income (expense), net   (35)   916 
Total other income (expense)   18,537    (601,046)
           
Net loss before income taxes  $(1,879,394)  $(6,356,053)
           
Income tax expense        
           
Net loss  $(1,879,394)  $(6,356,053)

 

General and Administrative Expenses

 

Our general and administrative expenses decreased to $1,297,651 for the three months ended June 30, 2024 from $3,272,900 for the three months ended June 30, 2023, a decrease of $1,975,249, or 60%. This change was primarily driven by decreases in consulting expenses of $357,747, salaries and wages of $806,006, stock compensation expense of $484,848, legal fees of $109,403 and accounting fees of $63,919, all primarily related to the second quarter 2023 reduction in force and no longer pursuing the transfer and spin-off its cannabinoid clinical development pipeline assets to Akos Biosciences, Inc.

 

Research and Development Expenses

 

Our research and development expense for the three months ended June 30, 2024 was $515,501 as compared to $2,395,589 for the three months ended June 30, 2023 with a decrease of $1,880,088, or approximately 78%. This decrease was primarily driven by a decrease in CRO expense of $531,305, salaries and wages of $564,333, research costs of $722,777 and product development of $124,199.

 

Depreciation and Amortization Expense

 

Depreciation and amortization expense for the three months ended June 30, 2024 was $84,779 as compared to $86,518 for the three months ended June 30, 2023, with a decrease of $1,739, or approximately 2%.

 

21
 

 

Change in Fair Value of Warrant Liabilities

 

Change in fair value of warrant liabilities for the three months ended June 30, 2024 resulted in income of $10,805 as compared to an expense of $233,821 for the three months ended June 30, 2023. The change in fair value of warrant liabilities is due to the exercise of 122,000 of warrants on December 28, 2023, resulting in less warrants outstanding and re-valued at June 30, 2024, as well as, 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.

 

Change in Fair Value of Investment Option Liability

 

Change in fair value of investment option liability the three months ended June 30, 2024 resulted in income of $7,767 as compared to an expense of $1,082,141 during the three months ended June 30, 2023. The change in fair value is due to the exercise of 1,000,000 investment options on December 28, 2023, resulting in less investment options re-valued at June 30, 2024 and a significant decrease in the Company’s stock price for the three months ended June 30, 2024.

 

Change in Fair Value of Derivative Liability

 

The Company’s change in fair value of derivative liability is due to the May 2023 redemption which ceased the probability of occurrence of the Akos spin-off and Akos Series A Preferred Stock redemption.

 

The following table sets forth information comparing the components of net loss for the six months ended June 30, 2024 and 2023:

 

   For the Six Months Ended June 
   2024   2023 
Operating expenses          
General and administrative  $3,231,404   $6,192,700 
Research and development   973,656    4,249,981 
Depreciation and amortization   170,188    173,004 
Total operating expenses   4,375,248    10,615,685 
           
Loss from operations   (4,375,248)   (10,615,685)
           
Other income (expense)          
Change in fair value of warrant liabilities   20,844    (183,164)
Change in fair value of investment option liability   19,165    (962,636)
Change in fair value of derivative liability       727,000 
Interest income, net   661    905 
Total other income (expense)   40,670    (417,895)
           
Net loss before income taxes  $(4,334,578)  $(11,033,580)
           
Income tax expense   (1,731)    
           
Net loss  $(4,336,309)  $(11,033,580)

 

22
 

 

General and Administrative Expenses

 

Our general and administrative expenses decreased to $3,231,404 for the six months ended June 30, 2024 from $6,192,700 for the six months ended June 30, 2023, a decrease of $2,961,296, or 48%. This change was primarily driven by decreases in consulting expenses of $697,659, salaries and wages of $1,041,946, stock compensation expense of $639,502, investor relations of $256,219 and accounting fees of $142,950, all primarily related to the second quarter 2023 reduction in force and no longer pursuing the transfer and spin-off its cannabinoid clinical development pipeline assets to Akos Biosciences, Inc., and Delaware franchise taxes of $220,075 partially offset by an increase in director fees of $113,573.

 

Research and Development Expenses

 

Our research and development expense for the six months ended June 30, 2024 was $973,656 as compared to $4,249,981 for the six months ended June 30, 2023 with a decrease of $3,276,325, or approximately 77%. This decrease was primarily driven by a decrease salaries and wages of $1,329,698, research costs of $1,046,750, product development costs of $323,751 and the gain realized related to the Australian R&D tax incentive of $259,591.

 

Depreciation and Amortization Expense

 

Depreciation and amortization expense for the six months ended June 30, 2024 was $170,188 as compared to $173,004 for the six months ended June 30, 2023, with a decrease of $2,816, or approximately 2%.

 

Change in Fair Value of Warrant Liabilities

 

Change in fair value of warrant liabilities for the six months ended June 30, 2024 resulted in income of $20,844 as compared to a loss of $183,164 for the six months ended June 30, 2023. The change in fair value of warrant liabilities is due to the exercise of 122,000 of warrants on December 28, 2023, resulting in less warrants outstanding and re-valued at June 30, 2024, as well as, 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.

 

Change in Fair Value of Investment Option Liability

 

Change in fair value of investment option liability the six months ended June 30, 2024 resulted in income of $19,165 as compared to a loss of $962,636 during the six months ended June 30, 2023. The change in fair value is due to the exercise of 1,000,000 investment options on December 28, 2023, resulting in less investment options re-valued at June 30, 2024 and a significant decrease in the Company’s stock price for the six months ended June 30, 2024.

 

Change in Fair Value of Derivative Liability

 

The Company’s change in fair value of derivative liability is due to the May 2023 redemption which ceased the probability of occurrence of the Akos spin-off and Akos Series A Preferred Stock redemption.

 

Going Concern, Liquidity and Capital Resources

 

The Company has incurred a loss since inception resulting in an accumulated deficit of $100,835,827 as of June 30, 2024 and further losses are anticipated in the development of its business. Further, the Company had operating cash outflows of $5,487,520 for the six months ended June 30, 2024. For the six months ended June 30, 2024, the Company had a loss from operations of $4,375,248. 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 unaudited condensed consolidated financial statements.

 

23
 

 

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 June 30, 2024, the Company had cash of $3,502,551 and working capital of $4,874,594. The Company’s current cash on hand is insufficient to satisfy its operating cash needs for the 12 months 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 raising additional working capital through public or private equity or debt financings or other sources, and may include additional collaborations with third parties as well as disciplined cash spending. Adequate additional financing may not be available to us 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.

 

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

 

Cash Flows

 

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

 

Cash Flows for the Six Months Ended June 30, 2024 and 2023:

 

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

 

   For the Six Months Ended June 30, 
   2024   2023 
Net cash used in operating activities  $(5,487,520)  $(9,602,930)
Net cash provided by investing activities       11,685 
Net cash provided by (used in) financing activities   6,692,699    (1,052,057)
Effect of Foreign Exchange Rate on Changes on Cash   9,395    826 
Net increase (decrease) in cash  $1,214,574   $(10,642,476)

 

Operating Activities

 

Net cash used in operating activities was $5,487,520 during the six months ended June 30, 2024, which consisted primarily of a net loss adjusted for non-cash items of $3,485,028 and an increase in prepaid expenses and other current assets of $543,822 and a decrease in accounts payable and accrued liabilities of $1,458,670.

 

Net cash used in operating activities was $9,602,930 during the six months ended June 30, 2023, which consisted primarily of a net loss adjusted for non-cash items of $8,978,712, an increase in prepaid expenses and other current assets of $1,111,913, offset by an increase in accounts payable and accrued liabilities of $542,397.

 

Investing Activities

 

Net cash used in investing activities was $0 during the six months ended June 30, 2024.

 

Net cash used in investing activities was $11,685 during the six months ended June 30, 2023, which consisted of proceeds from disposal of property and equipment of $16,872, offset by the purchase of property and equipment of $5,187.

 

24
 

 

Financing Activities

 

Net cash provided by financing activities was $6,692,699 during the six months ended June 30, 2024, which consisted of $1,804,819 from the proceeds received from the stock subscription receivable, $2,676,980 for the exercise of the Inducement Warrants, $2,290,186 for the common stock sold under the Distribution agreement, net of offering costs, and $82,026 for the common stock sold under the Purchase Agreement, offset by $161,312 offering costs previously accrued for the Inducement Warrants.

 

Net cash used in financing activities was $1,052,057 during the six months ended June 30, 2023, which consisted of the redemption of redeemable non-controlling interest.

 

Critical Accounting Estimates

 

Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, costs and expenses and related disclosures. Our critical accounting estimates are those estimates that involve a significant level of uncertainty at the time the estimate was made, and changes in them have had or are reasonably likely to have a material effect on our financial condition or results of operations. Accordingly, actual results could differ materially from our estimates. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Our most critical accounting estimate includes determining the accruals associated with third party providers supporting research and development efforts.

 

There have been no material changes to our critical accounting estimates as compared to the critical accounting estimates disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

From inception through June 30, 2024, the Company’s reporting currency is the United States dollar while the functional currency of certain of the Company’s subsidiaries is the Canadian dollar and Australian dollar. For the reporting periods ended June 30, 2024 and June 30, 2023, 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 for the year ended December 31, 2023, continued to exist and were still considered material weaknesses in our internal control over financial reporting at June 30, 2024.

 

25
 

 

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 June 30, 2024. 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 June 30, 2024.

 

Management’s Remediation Plan

 

As previously discussed in our Annual Report for the year ended December 31, 2023, management had concluded that our internal control over financial reporting was not effective as of December 31, 2023, 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 June 30, 2024, 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 June 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

The Company may be periodically involved in legal proceedings, legal actions and claims arising in the ordinary course of business. 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 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on March 26, 2024. 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. As of the date of this Quarterly Report, other than as described below, there have been no material changes to the risk factors disclosed in the Company’s Annual Report.

 

26
 

 

In the event that we fail to regain compliance with the listing requirements of The Nasdaq Capital Market or satisfy any of the listing requirements of Nasdaq, our common stock may be delisted, which could affect our market price and liquidity.

 

Our common stock is listed on Nasdaq. For continued listing on Nasdaq, we will be required to comply with the continued listing requirements, including the minimum market capitalization standard, the stockholders’ equity requirement, the corporate governance requirements and the minimum closing bid price requirement, among other requirements. On May 16, 2024, the Company received a letter from the Listing Qualifications Department of the Nasdaq Stock Market stating that because the closing bid price for the Company’s common stock listed on Nasdaq was below $1.00 for 30 consecutive business days, the Company no longer meets the minimum bid price requirement for continued listing on the Nasdaq Capital Market (the “Minimum Bid Price Requirement”). The Company has a period of 180 calendar days from May 16, 2024, or until November 12, 2024, to regain compliance with the Minimum Bid Price Requirement. If at any time before November 12, 2024, the bid price of the Company’s common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written notification that the Company has achieved compliance with the Minimum Bid Price Requirement.

 

In the event that we fail to regain compliance with the Minimum Bid Price Requirement or satisfy any of the listing requirements of Nasdaq, our common stock may be delisted. We will have an opportunity to appeal the determination to a Hearings Panel, but we cannot guarantee that such appeal will be successful. If we are unable to list on Nasdaq, we would likely be more difficult to trade in or obtain accurate quotations as to the market price of our common stock. If our common stock is delisted from trading on Nasdaq, and we are not able to list our common stock on another exchange or to have it quoted on Nasdaq, our securities could be quoted on the OTC Bulletin Board or on the “pink sheets.” As a result, we could face significant adverse consequences including, without limitation:

 

a limited availability of market quotations for our securities;
   
a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
   
a limited amount of news and analyst coverage for our Company; and
   
a decreased ability to issue additional securities (including pursuant to short-form registration statements on Form S-3 or obtain additional financing in the future).

 

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

 

None.

 

27
 

 

Item 6. Exhibits

 

INDEX TO EXHIBITS

 

Exhibit No.   Description
10.1   Form of Common Stock Purchase Agreement, dated May 3, 2024, between Enveric Biosciences, Inc. and the investors set forth therein (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on May 3, 2024)
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
32.1   Certification pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer, Principal Financial and Accounting Officer
101.INS   Inline XBRL Instance Document
101.SCH   Inline XBRL Taxonomy Extension Schema
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

28
 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the 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.
     
August 12, 2024 By: /s/ Dr. Joseph Tucker
    Joseph Tucker, Ph.D
    Chief Executive Officer
    (Principal Executive Officer)

 

     
August 12, 2024 By: /s/ Kevin Coveney
    Kevin Coveney
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

 

29

 

EXHIBIT 31.1

 

CERTIFICATION PURSUANT to Exchange Act Rule 13a-14(a)/15d-14(a) as Adopted

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Dr. Joseph Tucker, Chief Executive Officer of Enveric Biosciences, Inc., certify that:

 

1. I have reviewed this report on Form 10-Q of Enveric Biosciences, Inc. (the “registrant”);

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: August 12, 2024 /s/ Dr. Joseph Tucker
  Joseph Tucker, Ph.D.
  Chief Executive Officer (Principal Executive Officer)

 

 

 

EXHIBIT 31.2

 

CERTIFICATION PURSUANT to Exchange Act Rule 13a-14(a)/15d-14(a) as Adopted

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Kevin Coveney, Chief Financial Officer of Enveric Biosciences, Inc., certify that:

 

1. I have reviewed this report on Form 10-Q of Enveric Biosciences, Inc. (the “registrant”);

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: August 12, 2024 /s/ Kevin Coveney
  Kevin Coveney
  Chief Financial Officer (Principal Financial and Accounting Officer)

 

 

 

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Enveric Biosciences, Inc. (the “Issuer”) on Form 10-Q for the period ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(i) the Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

 

(ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

 

Dated: August 12, 2024

 

  By: /s/ Dr. Joseph Tucker
    Joseph Tucker, Ph.D.
    Chief Executive Officer
    (Principal Executive Officer)
     
  By: /s/ Kevin Coveney
    Kevin Coveney
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

 

 

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Cover - $ / shares
6 Months Ended
Jun. 30, 2024
Aug. 09, 2024
Cover [Abstract]    
Document Type 10-Q  
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Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Jun. 30, 2024  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2024  
Current Fiscal Year End Date --12-31  
Entity File Number 001-38286  
Entity Registrant Name ENVERIC BIOSCIENCES, INC.  
Entity Central Index Key 0000890821  
Entity Tax Identification Number 95-4484725  
Entity Incorporation, State or Country Code DE  
Entity Address, Address Line One 4851 Tamiami Trail N  
Entity Address, Address Line Two Suite 200  
Entity Address, City or Town Naples  
Entity Address, State or Province FL  
Entity Address, Postal Zip Code 34103  
City Area Code (239)  
Local Phone Number 302-1707  
Title of 12(b) Security Common Stock, $0.01 par value per share  
Trading Symbol ENVB  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
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Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   8,919,920
Entity Listing, Par Value Per Share $ 0.01  
v3.24.2.u1
Condensed Consolidated Balance Sheets - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Current assets:    
Cash $ 3,502,551 $ 2,287,977
Prepaid expenses and other current assets 2,017,383 1,293,554
Total current assets 5,519,934 3,581,531
Other assets:    
Property and equipment, net 405,114 507,377
Intangible assets, net 126,556 210,932
Total other assets 531,670 718,309
Total assets 6,051,604 4,299,840
Current liabilities:    
Accounts payable 459,898 1,218,783
Accrued liabilities 176,373 1,075,643
Investment option liability 4,443 23,608
Warrant liability 4,626 25,470
Total current liabilities 645,340 2,343,504
Commitments and contingencies (Note 8)
Mezzanine equity    
Series C redeemable preferred stock, $0.01 par value, 100,000 shares authorized, and 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023
Total mezzanine equity
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 June 30, 2024 and December 31, 2023
Common stock, $0.01 par value, 100,000,000 shares authorized, 7,878,568 and 2,739,315 shares issued and outstanding as of June 30, 2024 and December 31, 2023 78,785 27,392
Additional paid-in capital 106,729,801 100,815,851
Stock subscription receivable (1,817,640)
Accumulated deficit (100,835,827) (96,499,518)
Accumulated other comprehensive loss (566,495) (569,749)
Total shareholders’ equity 5,406,264 1,956,336
Total liabilities, mezzanine equity, and shareholders’ equity $ 6,051,604 $ 4,299,840
v3.24.2.u1
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Jun. 30, 2024
Dec. 31, 2023
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares authorized 20,000,000 20,000,000
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 7,878,568 2,739,315
Common stock, shares outstanding 7,878,568 2,739,315
Series B Preferred Stock [Member]    
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares authorized 3,600,000 3,600,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Series C Redeemable Preferred Stock [Member]    
Temporary equity, par value $ 0.01 $ 0.01
Temporary equity, shares authorized 100,000 100,000
Temporary equity, shares issued 0 0
Temporary equity, shares outstanding 0 0
v3.24.2.u1
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Operating expenses        
General and administrative $ 1,297,651 $ 3,272,900 $ 3,231,404 $ 6,192,700
Research and development 515,501 2,395,589 973,656 4,249,981
Depreciation and amortization 84,779 86,518 170,188 173,004
Total operating expenses 1,897,931 5,755,007 4,375,248 10,615,685
Loss from operations (1,897,931) (5,755,007) (4,375,248) (10,615,685)
Other income (expense)        
Change in fair value of warrant liabilities 10,805 (233,821) 20,844 (183,164)
Change in fair value of investment option liability 7,767 (1,082,141) 19,165 (962,636)
Change in fair value of derivative liability 714,000 727,000
Interest income (expense), net (35) 916 661 905
Total other income (expense) 18,537 (601,046) 40,670 (417,895)
Net loss before income taxes (1,879,394) (6,356,053) (4,334,578) (11,033,580)
Income tax expense (1,731)
Net loss (1,879,394) (6,356,053) (4,336,309) (11,033,580)
Less preferred dividends attributable to non-controlling interest 6,712 19,041
Less deemed dividends attributable to accretion of embedded derivative at redemption value 36,997 147,988
Net loss attributable to shareholders (1,879,394) (6,399,762) (4,336,309) (11,200,609)
Other comprehensive loss        
Foreign currency translation (14,652) (11,286) 3,254 (9,318)
Comprehensive loss $ (1,894,046) $ (6,411,048) $ (4,333,055) $ (11,209,927)
Net loss per share - basic $ (0.25) $ (3.04) $ (0.75) $ (5.35)
Net loss per share - diluted $ (0.25) $ (3.04) $ (0.75) $ (5.35)
Weighted average shares outstanding, basic 7,587,851 2,107,583 5,794,653 2,093,008
Weighted average shares outstanding, diluted 7,587,851 2,107,583 5,794,653 2,093,008
v3.24.2.u1
Condensed Consolidated Statements of Changes in Mezzanine Equity and Shareholders' Equity (Unaudited) - USD ($)
Redeemable Noncontrolling Interest [Member]
Mezzanine Equity [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Subscription Receivable [Member]
Retained Earnings [Member]
AOCI Attributable to Parent [Member]
Total
Balance value at Dec. 31, 2022 $ 885,028 $ 885,028 $ 20,782 $ 94,395,662   $ (79,207,786) $ (536,734) $ 14,671,924
Beginning balance, shares at Dec. 31, 2022     2,078,271          
Mezzanine equity balance, shares at Dec. 31, 2022 1,000              
Stock-based compensation 532,835   532,835
Foreign exchange translation loss   1,968 1,968
Net loss   (4,677,527) (4,677,527)
Preferred dividends attributable to redeemable 12,329 12,329 (12,329)   (12,329)
Accretion of embedded derivative to redemption value 110,991 110,991 (110,991)   (110,991)
Balance value at Mar. 31, 2023 1,008,348 1,008,348 $ 20,782 94,805,177   (83,885,313) (534,766) 10,405,880
Ending balance, shares at Mar. 31, 2023     2,078,271          
Balance value at Dec. 31, 2022 $ 885,028 885,028 $ 20,782 94,395,662   (79,207,786) (536,734) 14,671,924
Beginning balance, shares at Dec. 31, 2022     2,078,271          
Mezzanine equity balance, shares at Dec. 31, 2022 1,000              
Foreign exchange translation loss               (9,318)
Net loss               (11,033,580)
Preferred dividends attributable to redeemable               (19,041)
Accretion of embedded derivative to redemption value               (147,988)
Balance value at Jun. 30, 2023 $ 21,417 95,640,571   (90,241,366) (546,052) 4,874,570
Ending balance, shares at Jun. 30, 2023     2,141,782          
Mezzanine equity balance, shares at Jun. 30, 2023              
Balance value at Dec. 31, 2022 $ 885,028 885,028 $ 20,782 94,395,662   (79,207,786) (536,734) 14,671,924
Beginning balance, shares at Dec. 31, 2022     2,078,271          
Mezzanine equity balance, shares at Dec. 31, 2022 1,000              
Proceeds from the subscription receivable related to the exercise of warrants and preferred investment options and issuance of common stock in abeyance, shares     418,000          
Balance value at Dec. 31, 2023 $ 27,392 100,815,851 $ (1,817,640) (96,499,518) (569,749) 1,956,336
Ending balance, shares at Dec. 31, 2023     2,739,315          
Balance value at Mar. 31, 2023 1,008,348 1,008,348 $ 20,782 94,805,177   (83,885,313) (534,766) 10,405,880
Beginning balance, shares at Mar. 31, 2023     2,078,271          
Stock-based compensation 879,738   879,738
Foreign exchange translation loss   (11,286) (11,286)
Net loss   (6,356,053) (6,356,053)
Preferred dividends attributable to redeemable 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 $ (1,052,057) (1,052,057)  
Redemption of Series A preferred stock, shares (1,000)              
Issuance of common shares in exchange for RSU conversions from the reduction in force $ 635 (635)  
Issuance of common shares in exchange for RSU conversions from the reduction in force, shares     63,511          
Balance value at Jun. 30, 2023 $ 21,417 95,640,571   (90,241,366) (546,052) 4,874,570
Ending balance, shares at Jun. 30, 2023     2,141,782          
Mezzanine equity balance, shares at Jun. 30, 2023              
Balance value at Dec. 31, 2023 $ 27,392 100,815,851 (1,817,640) (96,499,518) (569,749) 1,956,336
Beginning balance, shares at Dec. 31, 2023     2,739,315          
Stock-based compensation 351,488 351,488
Common stock sold under the Purchase Agreement, net of offering costs of $82,850     $ 16,680 1,792,109 1,808,789
Common stock sold under the Equity Distribution Agreement, shares     1,668,000          
Issuance of direct offering shares (see Note 7)     $ 2,287 320,166 322,453
Issuance of direct offering shares, shares     228,690          
Exercise of Inducement Warrants for common stock     $ 19,540 2,657,440 2,676,980
Exercise of Inducement Warrants for common stock, shares     1,954,000          
Proceeds from the subscription receivable related to the issuance of Inducement Warrants, net of offering costs of $12,821     (12,821) 280,500 267,679
Proceeds from the subscription receivable related to the exercise of warrants and preferred investment options and issuance of common stock in abeyance     $ 7,040 (7,040) 1,537,140 1,537,140
Proceeds from the subscription receivable related to the exercise of warrants and preferred investment options and issuance of common stock in abeyance, shares     704,000          
Foreign exchange translation loss     17,906 17,906
Net loss (2,456,915) (2,456,915)
Balance value at Mar. 31, 2024 $ 72,939 105,917,193 (98,956,433) (551,843) 6,481,856
Ending balance, shares at Mar. 31, 2024     7,294,005          
Balance value at Dec. 31, 2023 $ 27,392 100,815,851 (1,817,640) (96,499,518) (569,749) 1,956,336
Beginning balance, shares at Dec. 31, 2023     2,739,315          
Foreign exchange translation loss               3,254
Net loss               (4,336,309)
Preferred dividends attributable to redeemable              
Accretion of embedded derivative to redemption value              
Balance value at Jun. 30, 2024 $ 78,785 106,729,801 (100,835,827) (566,495) 5,406,264
Ending balance, shares at Jun. 30, 2024     7,878,568          
Balance value at Mar. 31, 2024 $ 72,939 105,917,193 (98,956,433) (551,843) 6,481,856
Beginning balance, shares at Mar. 31, 2024     7,294,005          
Stock-based compensation 369,614 369,614
Common stock sold under the Purchase Agreement, net of offering costs of $82,850     $ 1,250 (1,250)
Common stock sold under the Equity Distribution Agreement, shares     125,000          
Issuance of direct offering shares (see Note 7)     $ 4,580 444,260 448,840
Issuance of direct offering shares, shares     458,000          
Foreign exchange translation loss     (14,652) (14,652)
Net loss (1,879,394) (1,879,394)
Issuance of common shares for vested RSU     $ 16 (16)
Issuance of common shares for vested RSU, shares     1,563          
Balance value at Jun. 30, 2024 $ 78,785 $ 106,729,801 $ (100,835,827) $ (566,495) $ 5,406,264
Ending balance, shares at Jun. 30, 2024     7,878,568          
v3.24.2.u1
Condensed Consolidated Statements of Changes in Mezzanine Equity and Shareholders' Equity (Unaudited) (Parenthetical)
3 Months Ended
Mar. 31, 2024
USD ($)
Statement of Stockholders' Equity [Abstract]  
Common stock equity distribution costs $ 583,713
Net offering costs $ 12,821
v3.24.2.u1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Cash Flows From Operating Activities:      
Net loss $ (6,356,053) $ (4,336,309) $ (11,033,580)
Adjustments to reconcile net loss to cash used in operating activities      
Change in fair value of warrant liability 233,821 (20,844) 183,164
Change in fair value of investment option liability 1,082,141 (19,165) 962,636
Change in fair value of derivative liability (714,000) (727,000)
Stock-based compensation   721,102 1,412,573
Amortization of right of use asset   54,703
Amortization of intangibles 42,187 84,376 84,375
Depreciation expense 44,331 85,812 88,629
Gain on disposal of property and equipment   (4,212)
Change in operating assets and liabilities:      
Prepaid expenses and other current assets   (543,822) (1,111,913)
Accounts payable and accrued liabilities   (1,458,670) 542,397
Right-of-use operating lease asset and obligation   (54,702)
Net cash used in operating activities   (5,487,520) (9,602,930)
Cash Flows From Investing Activities:      
Purchases of property and equipment   (5,187)
Proceeds from disposal of property and equipment   16,872
Net cash provided by investing activities   11,685
Cash Flows From Financing Activities:      
Proceeds from the subscription receivable related to the issuance of Inducement Warrants and the exercise of warrants and preferred investment options   1,804,819
Proceeds from exercise of Inducement Warrants   2,676,980
Proceeds from common stock sold under the Equity Distribution Agreement, net of offering costs   2,290,186
Proceeds from common stock sold under the Purchase Agreement, net of offering costs   82,026
Payment for offering costs previously accrued   (161,312)
Redemption of Series A Preferred Stock   (1,052,057)
Net cash provided by (used in) financing activities   6,692,699 (1,052,057)
Effect of Foreign Exchange Rate on Changes on Cash   9,395 826
Net increase (decrease) in cash   1,214,574 (10,642,476)
Cash at beginning of period   2,287,977 17,723,884
Cash at end of period 7,081,408 3,502,551 7,081,408
Supplemental disclosure of cash and non-cash transactions:      
Cash paid for interest   11
Income taxes paid   24,001
Offering costs accrued not paid   149
Deferred offering costs charged to offering costs   240,969
Issuance of common shares for offering costs   771,293
Preferred dividends attributable to redeemable non-controlling interest 6,712 19,041
Accretion of embedded derivative to redemption value $ 36,997 $ 147,988
v3.24.2.u1
Pay vs Performance Disclosure - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2024
Jun. 30, 2023
Pay vs Performance Disclosure [Table]            
Net Income (Loss) $ (1,879,394) $ (2,456,915) $ (6,356,053) $ (4,677,527) $ (4,336,309) $ (11,033,580)
v3.24.2.u1
BUSINESS AND LIQUIDITY AND OTHER UNCERTAINTIES
6 Months Ended
Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
BUSINESS AND LIQUIDITY AND OTHER UNCERTAINTIES

NOTE 1. BUSINESS AND LIQUIDITY AND OTHER UNCERTAINTIES

 

Nature of Operations

 

Enveric Biosciences, Inc. (“Enveric” or the “Company”) is a biotechnology company developing 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 subsidiaries: Jay Pharma Inc. (“Jay Pharma”), 1306432 B.C. Ltd., MagicMed Industries, Inc. (“MagicMed”), Enveric Biosciences Canada, Inc., Akos Biosciences, Inc. (“Akos”), and Enveric Therapeutics, Pty. Ltd. (“Enveric Therapeutics”).

 

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 EVM201 Series, comprises next generation synthetic prodrugs of the active metabolite, psilocin. Enveric is developing the first product from the EVM201 Series – EB-002 (formerly EB-373) – for the treatment of psychiatric disorders. Enveric is also advancing its product EB-003 from the EVM301 Series, which is expected to offer 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 patient.

 

The Company has continued to pursue the development of MagicMed’s proprietary 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,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™ the Company has three different types of molecules, Generation 1 (classic psychedelics), Generation 2 (new chemical entity pro-drugs of psilocin), and Generation 3 (new chemical entity analogs). The Company has created over 1000 novel psychedelic molecular compounds and derivatives that are housed in the Psybrary™. The Company’s current focus is to develop its lead molecules, EB-002 and EB-003, and to outlicense other molecules from the Psybrary™.

 

The Company screens newly synthesized molecules in the Psybrary™ through PsyAI™, a proprietary artificial intelligence (“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.

 

Going Concern, Liquidity and Other Uncertainties

 

The Company has incurred a loss since inception resulting in an accumulated deficit of $100,835,827 as of June 30, 2024, and further losses are anticipated in the development of its business. For the six months ended June 30, 2024, the Company has operating cash outflows of $5,487,520 and had a loss from operations of $4,375,248. Being a research and development company, since inception, 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 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 unaudited condensed consolidated financial statements.

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED 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 June 30, 2024, the Company had cash of $3,502,551 and working capital of $4,874,594. The Company’s current cash on hand is not sufficient to satisfy its operating cash needs for the 12 months from 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 raising additional working capital through public or private equity or debt financings or other sources, the Purchase Agreement with Lincoln Park (see Note 7 and 9), subject to registration, and may include additional collaborations with third parties as well as disciplined cash spending. Adequate additional financing may not be available to us 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.

 

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 unaudited condensed consolidated 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.

 

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.

 

Nasdaq Notice

 

On November 21, 2023, the Company received a letter from the Listing Qualifications Department of the Nasdaq Stock Market (“Nasdaq”) stating that as of September 30, 2023, the Company did not meet the minimum of $2,500,000 in stockholders’ equity required for continued listing pursuant to Nasdaq Listing Rule 5550(b)(1). On February 6, 2024, the Company received a letter from Nasdaq, granting the Company an extension to regain compliance with the minimum stockholders’ equity requirement by May 20, 2024. On May 21, 2024, the Company received a letter from Nasdaq notifying the Company that it regained compliance with the minimum stockholders’ equity requirement for continued listing on the Nasdaq.

 

On May 16, 2024, the Company received a letter from Nasdaq’s Listing Qualifications Department stating that because the closing bid price for the Company’s common stock listed on Nasdaq was below $1.00 for 30 consecutive business days, the Company no longer meets the minimum bid price requirement for continued listing on the Nasdaq Capital Market (the “Minimum Bid Price Requirement”). The Company has a period of 180 calendar days from May 16, 2024, or until November 12, 2024, to regain compliance with the Minimum Bid Price Requirement. If at any time before November 12, 2024, the bid price of the Company’s common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written notification that the Company has achieved compliance with the Minimum Bid Price Requirement.

 

v3.24.2.u1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
6 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2023, 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 26, 2024.

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

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, 2023. There were no significant changes to these accounting policies during the three and six months ended June 30, 2024.

 

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, the valuation of warrants and preferred investment options, and the valuation of stock-based compensation and accruals associated with third party providers supporting research and development efforts. Actual results could differ from those estimates.

 

Reclassification

 

Certain reclassifications have been made to the prior period’s unaudited condensed consolidated financial statements in order to conform to the current year presentation. In the prior year, the Company included certain investor related expenses were included within research and development on the unaudited condensed consolidated statements of operations. These expenses were reclassified to general and administrative expenses in the current year. This reclassification had no effect on the Company’s previously reported results of operations, changes in equity, or cash flows.

 

Foreign Currency Translation

 

From inception through June 30, 2024, the reporting currency of the Company was the United States dollar while the functional currency of certain of the Company’s subsidiaries was the Canadian dollar and Australian dollar. For the reporting periods ended June 30, 2024 and 2023, 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 United States dollar.

 

The Company translates the assets and liabilities of its Canadian subsidiaries and Australian subsidiary into the 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 unaudited condensed consolidated statements of shareholders’ equity as a component of accumulated other comprehensive loss.

 

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 loss in the unaudited condensed consolidated statements of operations and comprehensive 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 June 30, 2024, the Company had greater than $250,000 at United States financial institutions, less than $250,000 at Australian financial institutions, and less than $100,000 at Canadian financial institutions.

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Research and Development

 

Research and development expenses are charged to operations as incurred. Research and development expenses include, among other things, internal and external costs associated with preclinical development, pre-commercialization manufacturing expenses, and clinical trials. The Company accrues for costs incurred as the services are being provided by monitoring the status of the trial or services provided and the invoices received from its external service providers. In the case of clinical trials, a portion of the estimated cost normally relates to the projected cost to treat a patient in the trials, and this cost is recognized based on the number of patients enrolled in the trial. As actual costs become known, the Company adjusts its accruals accordingly.

 

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.

 

Research and Development Tax Incentive Receivable

 

The Company, through its wholly-owned subsidiary in Australia, participates in the Australian research and development tax incentive program, such that a percentage of the Company’s qualifying research and development expenditures are reimbursed by the Australian government, and such incentives are reflected as a reduction of research and development expense. The Australian research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. At each period end, management estimates the reimbursement available to the Company based on available information at the time.

 

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 six months ended June 30, 2024 and 2023 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 for the three and six months ended June 30, 2024 and 2023 because the effect of their inclusion would have been anti-dilutive.

 SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

   For the three and six months ended June 30, 2024   For the three and six months ended June 30, 2023 
Warrants to purchase shares of common stock   845,213    655,463 
Restricted stock units - vested and unissued   41,901    55,622 
Restricted stock units - unvested   356,116    180,115 
Restricted stock awards - vested and unissued       708 
Investment options to purchase shares of common stock   70,000    1,070,000 
Options to purchase shares of common stock   23,082    36,579 
Total potentially dilutive securities   1,336,312    1,998,487 

 

Recent Accounting Pronouncements

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for all entities for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the potential impacts of ASU 2023-07, however as the Company currently has one reportable segment, does not expect this guidance will not have a material impact on its unaudited condensed consolidated financial statements.

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which amends the disclosure to address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information and includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted. Early adoption is permitted. The Company is currently assessing potential impacts of ASU 2023-09 and does not expect the adoption of this guidance will have a material impact on its unaudited condensed consolidated financial statements and disclosures.

 

v3.24.2.u1
PREPAID EXPENSES AND OTHER CURRENT ASSETS
6 Months Ended
Jun. 30, 2024
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
PREPAID EXPENSES AND OTHER CURRENT ASSETS

NOTE 3. PREPAID EXPENSES AND OTHER CURRENT ASSETS

 

As of June 30, 2024 and December 31, 2023, the prepaid expenses and other current assets of the Company consisted of the following:

 

   June 30, 2024   December 31, 2023 
Prepaid research and development  $257,218   $46,320 
Prepaid value-added taxes   241,269    243,429 
Prepaid insurance   375,215    149,559 
Prepaid other   81,192    62,036 
Deferred offering costs (see Note 7)   763,173    567,603 
Franchise tax receivable   38,258    79,258 
R&D tax incentive receivable   261,058    145,349 
Total prepaid expenses and other current assets  $2,017,383   $1,293,554 

 

v3.24.2.u1
INTANGIBLE ASSETS
6 Months Ended
Jun. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS

NOTE 4. INTANGIBLE ASSETS

 

As of June 30, 2024, the Company’s intangible assets consisted of:

 

Definite lived intangible assets     
Balance at January 1, 2024  $210,932 
Amortization   (84,376)
Balance at June 30, 2024  $126,556 

 

For identified definite lived intangible assets, there was no impairment expense during the three and six months ended June 30, 2024 and 2023. For identified definite lived intangible assets, amortization expense amounted to $42,188 and $42,187 during the three months ended June 30, 2024 and 2023, respectively and $84,376 and $84,375 during each of the six months ended June 30, 2024 and 2023, respectively.

 

v3.24.2.u1
PROPERTY AND EQUIPMENT
6 Months Ended
Jun. 30, 2024
Property, Plant and Equipment [Abstract]  
PROPERTY AND EQUIPMENT

NOTE 5. PROPERTY AND EQUIPMENT

 

Property and equipment consists of the following assets which are located in Calgary, Canada, with all amounts converted into U.S. dollars:

 

   June 30, 2024   December 31, 2023 
Lab equipment  $808,523   $836,709 
Computer equipment and leasehold improvements   27,422    28,379 
Less: Accumulated depreciation   (430,831)   (357,711)
Property and equipment, net of accumulated depreciation  $405,114   $507,377 

 

Depreciation expense was $42,591 and $44,331 for the three months ended June 30, 2024 and 2023, respectively and $85,812 and $88,629 for the six months ended June 30, 2024 and 2023, respectively.

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

v3.24.2.u1
ACCRUED LIABILITIES
6 Months Ended
Jun. 30, 2024
Payables and Accruals [Abstract]  
ACCRUED LIABILITIES

NOTE 6. ACCRUED LIABILITIES

 

As of June 30, 2024 and December 31, 2023, the accrued liabilities of the Company consisted of the following:

 

   June 30, 2024   December 31, 2023 
Product development  $79,197   $139,981 
Accrued salaries, wages, and bonuses   8,634    8,889 
Professional fees   70,542    584,810 
Accrued restructuring costs (see Note 8)       301,645 
Accrued income taxes       22,318 
Patent costs   18,000    18,000 
Total accrued expenses  $176,373   $1,075,643 

 

v3.24.2.u1
SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS
6 Months Ended
Jun. 30, 2024
Equity [Abstract]  
SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

NOTE 7. SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

 

Equity Distribution Agreement

 

On September 1, 2023, the Company entered into the Equity Distribution Agreement (the “Distribution Agreement”), with Canaccord Genuity LLC (“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.

 

During the six months ended June 30, 2024, the Company issued 1,668,000 shares of common stock for gross proceeds of $2,392,502 under the Distribution Agreement, and charged offering costs of $583,713 to additional paid in capital on the unaudited condensed consolidated balance sheet. As of June 30, 2024 and December 31, 2023, there were deferred offering costs related to the Distribution Agreement of $0 and $171,944, respectively. As of June 30, 2024, there is $0 available under the Distribution Agreement.

 

On December 28, 2023, the Company entered into warrant exercise inducement offer letters (the “Inducement Letters”) with certain holders (the “Holders”) of the February 2022 Post-Modification Warrants and RD and PIPE preferred investment options to purchase shares of the Company’s common stock (the “Existing Warrants and Investment Options”) pursuant to which the Holders agreed to exercise for cash their Existing Warrants and Investment Options to purchase 1,122,000 shares of the Company’s common stock, in the aggregate, at a reduced exercised price of $1.37 per share (from an original exercise price of $7.78 per share), in exchange for the Company’s agreement to issue new warrants (the “Inducement Warrants”) to purchase up to 2,244,000 shares of the Company’s common stock (the “Inducement Warrant Shares”), and the Holders to make a cash payment of $0.125 per Inducement Warrant share for total proceeds of $280,500. In January 2024, the Company received aggregate gross proceeds of $1,817,640 from the exercise of the Existing Warrants and Investment Options by the Holders and the sale of the Inducement Warrants. Because the Existing Warrants and Investment Options by the Holders and the sale of the Inducement Warrants that exercised on December 28, 2023 and unsettled until January 2024, the proceeds are included in the condensed consolidated balance sheet as a subscription receivable as of December 31, 2023. As of December 31, 2023, 418,000 shares of the Existing Warrants and Investment Options exercised were considered issued as the Company had the enforceable right to the obtain the cash proceeds, which were in-transit, and the Holders were no longer able to rescind the exercise election. Due to the beneficial ownership limitation provisions, 704,000 shares of the Existing Warrants and Investment Options exercised were initially unissued and held in abeyance for the benefit of the Holder until notice is received from the Holder that the shares may be issued in compliance with such limitation. During the six months ended June 30, 2024, the Company issued all 704,000 shares of common stock of the 704,000 shares of Existing Warrants and Investment Options exercised that were held in abeyance due to the beneficial ownership limitation provisions.

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

On December 28, 2023, the Company entered into warrant exercise inducement offer letters (the “Inducement Letters”) with certain holders of warrants and preferred investment options. The Inducement Letters prohibit the Company from entering into any variable rate transaction as defined in the Inducement Letters, including the issuance of (1) any variable priced debt or equity securities or (2) transactions whereby the Company may issue securities at a future determined price, such as through an at-the-market offering or an equity line of credit. The variable rate transaction restriction would have expired after six-months from the closing date of December 28, 2023 for the Inducement Letters for an issuance through an at-the-market offering, and one-year for the remaining variable rate transactions, however the restriction was waived for the at-the-market offering on March 8, 2024 and the equity line on May 3, 2024.

 

On March 8, 2024, the Company entered into a series of common stock purchase agreements for the issuance in a registered direct offering of 228,690 shares of the Company’s common stock to the Holders of the Inducement Warrants. The issuance was made in exchange for the permanent and irrevocable waiver of the variable rate transaction limitation solely with respect to the entry into and/or issuance of shares of common stock in an at the market offering contained in the Inducement Letters. The fair value of the shares issued for consideration of waiving the variable rate transaction limitation was $322,453 and was charged to additional paid in capital, as it is direct and incremental to the Distribution Agreement, on the unaudited condensed consolidated balance sheet as an offering cost related to the Distribution Agreement.

 

Lincoln Park Equity Line

 

On November 3, 2023, the Company entered into a Purchase Agreement (the “Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”), with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park has committed to purchase up to $10.0 million of the Company’s common stock 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 limitations on number of shares that may be sold. Sales may occur from time to time, at the Company’s sole discretion, over the 24-month period commencing on the date that the conditions to Lincoln Park’s purchase obligation set forth in the Purchase Agreement are satisfied, including that a registration statement on Form S-1 covering the resale of the shares of the Company’s Common Stock that have been and may be issued to Lincoln Park under the Purchase Agreement, which the Company has filed with the 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 shares of Common Stock that the Company may elect to sell to Lincoln Park under the Purchase Agreement, if any, will fluctuate based on the market prices of the Company’s Common Stock at the time the Company elects 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 the Company will sell to Lincoln Park under the 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 the Company will receive from those purchases by Lincoln Park under the Purchase Agreement.

 

On May 3, 2024, the Company entered into a series of common stock purchase agreements for the issuance in a registered direct offering of an aggregate of 458,000 shares of the Company’s common stock, to certain institutional investors. The issuance was made in exchange for the permanent and irrevocable waiver of the variable rate transaction limitation with respect to any existing or future agreement by the Company to effect any issuance of shares and issue such shares thereunder, as contained in those certain Inducement Offer Letters, dated December 28, 2023, between the Company and those certain institutional investors. The Company will not receive any net proceeds in connection with the offering. The fair value of the shares issued for consideration of waiving the variable rate transaction limitation was $448,840 and was recorded as deferred offering costs, as direct and incremental to the Purchase Agreement, within prepaid expenses and other current assets on the unaudited condensed consolidated balance sheet related to the Purchase Agreement.

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The common stock purchase agreements contain customary representations and warranties and certain indemnification obligations of the Company. The common stock purchase agreements also restrict the Company from issuing, entering into any agreement to issue, or announcing the issuance of the Company’s common stock from the date of the common stock purchase agreements until the earlier of 30 days after entering into the agreements or at such time as fifteen million (15,000,000) shares of the Company’s common stock have traded in the open market. The closing of the issuance of the Shares pursuant to the common stock purchase agreements closed on May 3, 2024.

 

During the three and six months ended June 30, 2024, the Company had issued 125,000 shares of common stock through the Purchase Agreement for gross cash proceeds of $82,850 and the Company charged offering costs of $82,850 to additional paid in capital on the unaudited condensed consolidated balance sheet. As of June 30, 2024 and December 31, 2023, the Company has capitalized deferred offering costs of $763,173 and $395,660, respectively. See Note 9 for shares issued after June 30, 2024.

 

Stock Options

 

Amendment to 2020 Long-Term Incentive Plan

 

On November 2, 2023, the stockholders 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 (i) increased the number of authorized shares reserved for issuance under the Amended Incentive Plan to a maximum of 350,000, subject to adjustment, and (ii) removed the Evergreen Provision implemented in the Plan Amendment. During the first quarter of 2024, the Board approved an equitable adjustment to increase the number of shares available under the Plan by 134,779 shares. As of June 30, 2024, the total number of shares available for grant under the Incentive Plan was 6,257.

 

A summary of the stock option activity under the Company’s incentive plan for the six months ended June 30, 2024 is presented below:

 

   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, 2023   30,329   $57.17   $77.22    3.4   $ 
Granted      $   $          
Forfeited   (7,247)  $39.35   $54.02          
Outstanding at June 30, 2024   23,082   $62.77   $84.51    2.9   $ 
                          
Exercisable at June 30, 2024   21,988   $65.74   $88.59    2.5   $ 

 

The Company’s stock based compensation expense, recorded within general and administrative expense in the unaudited condensed consolidated statement of operations and comprehensive loss, related to stock options for the three months ended June 30, 2024 and 2023 was $414 and $54,375, respectively.

 

The Company’s stock-based compensation expense, recorded within general and administrative expense, related to stock options for the six months ended June 30, 2024 and 2023 was $(6,268) and $102,461, respectively.

 

As of June 30, 2024, the Company had $2,760 in unamortized stock option expense, which will be recognized over a weighted average period of 1.65 years.

 

 

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 six months ended June 30, 2024:

 

   Number of shares   Weighted average fair value 
Non-vested at December 31, 2023   140,491   $28.97 
Granted   251,500   $0.85 
Forfeited   (9,750)  $2.87 
Vested   (26,125)  $2.62 
Non-vested at June 30, 2024   356,116   $11.76 

 

For the three months ended June 30, 2024 and 2023, the Company recorded $369,200 and $825,363, 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 unaudited condensed consolidated statement of operations and comprehensive loss. For the six months ended June 30, 2024 and 2023, the Company recorded $727,370 and $1,310,112, 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 June 30, 2024, the Company had unamortized stock-based compensation costs related to restricted stock units of $1,478,726 which will be recognized over a weighted average period of 1.71 years. As of June 30, 2024, 41,901 restricted stock units are vested without shares of common stock being issued, with all of these shares due as of June 30, 2024.

 

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

 

  2024   2023   2024   2023 
   Three Months Ended June 30,   Six Months Ended June 30, 
Stock-based compensation expense for RSUs:  2024   2023   2024   2023 
General and administrative  $162,042   $592,929   $314,471   $845,244 
Research and development   207,158    232,434    412,899    464,868 
Total  $369,200   $825,363   $727,370   $1,310,112 

 

Warrants and Preferred Investment Options

 

The following table summarizes information about shares issuable under warrants outstanding at June 30, 2024:

 

   Warrant shares outstanding   Weighted average exercise price   Weighted average remaining life   Intrinsic value 
Outstanding at December 31, 2023   2,799,213   $11.79    4.6   $ 
Exercised   (1,954,000)   1.37       $ 
Outstanding at June 30, 2024   845,213   $35.87    3.2   $ 
                     
Exercisable at June 30, 2024   845,213   $35.87    3.2   $ 

 

The following table summarizes information about investment options outstanding at June 30, 2024:

 

   Investment options outstanding   Weighted average exercise price   Weighted average remaining life   Intrinsic value 
Outstanding at December 31, 2023   70,000   $10.00    4.1   $ 
Outstanding at June 30, 2024   70,000   $10.00    3.1   $ 
                     
Exercisable at June 30, 2024   70,000   $10.00    3.1   $ 

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

v3.24.2.u1
COMMITMENTS AND CONTINGENCIES
6 Months Ended
Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 8. 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

 

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-002, 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-002 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-002. EB-002, a next-generation proprietary psilocin prodrug, has been recognized as a New Chemical Entity (NCE) by Australia’s Therapeutic Goods Administration and is currently in preclinical development targeting the treatment of anxiety disorder. The total cost of the Avance Clinical contract is approximately 3,400,000 AUD, which translates to approximately $2,225,000 USD as of June 30, 2024. As of June 30, 2024, the Company has paid approximately $2,225,000 of the Avance Clinical contract costs and has $251,254 recorded as prepaid assets within prepaid and other current assets, accrued $— recorded as accrued liabilities and $— as accounts payable on the accompanying condensed consolidated balance sheet. For the three and six months ended June 30, 2024 and 2023, the Company has expensed $(154,354) and $244,390, and $354,419 and $355,232, respectively, in research and development expenses within the accompanying unaudited condensed consolidated statement of operations. As of June 30, 2024, all payments have been made and the project is substantially completed.

 

According to Australian tax law, the Company is allowed an R&D tax credit that reduces a company’s tax bill in Australia for expenses incurred in R&D subject to certain requirements. The Company’s Australian subsidiary submits R&D tax credit requests annually for research and development expenses incurred. At June 30, 2024 and December 31, 2023, the Company had a research and development tax credit receivable of $261,058 and $145,349, respectively, for R&D expenses incurred in Australia, included in prepaid and other current assets within the accompanying unaudited condensed consolidated statement of operations.

 

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 patent portfolio acquired and developed under the Vogel-Nathan Purchase Agreement was sold to undisclosed buyers for an undisclosed sum in the first quarter of 2024. No additional financial or other obligations exist regarding the Vogel-Nathan Purchase Agreement.

 

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 one and 12 months. These agreements, in aggregate, commit the Company to approximately $0.1 million in future cash payments, inclusive of amounts in accounts payable.

 

Reduction in Force/Restructuring

 

In May 2023, the Company entered into a cost reduction plan, including a reduction in force (“RIF”) 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 were terminated. The plan included a focus on progressing the Company’s existing non-cannabinoid pipeline while reducing the rate of spend and managing cash flow. In June 2023, the Company completed the reduction in force, with such severance expenses recorded in general and administrative accounts.

 

In June 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 received salary and benefits that is paid out in twelve monthly installments beginning in July 2023, was eligible for his 2023 performance bonus, which was not achieved, and any outstanding restricted stock units retained their vesting conditions.

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The following table summarizes the Reduction in Force/Restructuring activity and ending balance at June 30, 2024 for the remaining severance payments included in accrued expenses in the consolidated balance sheet:

 

   Accrued Restructuring Costs 
January 1, 2024 beginning balance  $301,645 
Restructuring costs paid   (301,645)
June 30, 2024 ending balance  $ 

 

v3.24.2.u1
SUBSEQUENT EVENTS
6 Months Ended
Jun. 30, 2024
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 9. SUBSEQUENT EVENTS

 

Subsequent to June 30, 2024, the Company issued 1,015,477 shares of common stock through the Purchase Agreement with Lincoln Park for gross cash proceeds of $494,887. As of July 30, 2024, there were no remaining shares available to be issued in connection with this agreement.

 

On July 10, 2024, Akos entered into an Exclusive License Agreement (the “License Agreement”) with Aries Science and Technology, LLC, an Ohio limited liability company (“Aries”), pursuant to which Akos granted Aries a license of Akos’s patented radiation dermatitis topical product. The license allows Akos to use the patented formulation to develop pharmaceutical or non-pharmaceutical products for treating radiation dermatitis suitable for administration to humans or animals. The license is exclusive (subject to certain exceptions contained in the License Agreement), worldwide, royalty-bearing, and includes the right to sublicense. Akos is entitled to potential license payments, milestone payments and royalties based on net revenues of the Licensed Product on a licensed product-by-licensed product and country-by-country basis pursuant to the terms of the Agreement. Aries has the option during the license term, to purchase the rights to each licensed product (on a licensed product-by-licensed product basis) in the form of an exclusive (as to the applicable licensed product), fully paid, transferable right and license to the licensed product.

v3.24.2.u1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
6 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
Basis of Presentation and Principal of Consolidation

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 six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2023, 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 26, 2024.

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

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, 2023. There were no significant changes to these accounting policies during the three and six months ended June 30, 2024.

 

Use of Estimates

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, the valuation of warrants and preferred investment options, and the valuation of stock-based compensation and accruals associated with third party providers supporting research and development efforts. Actual results could differ from those estimates.

 

Reclassification

Reclassification

 

Certain reclassifications have been made to the prior period’s unaudited condensed consolidated financial statements in order to conform to the current year presentation. In the prior year, the Company included certain investor related expenses were included within research and development on the unaudited condensed consolidated statements of operations. These expenses were reclassified to general and administrative expenses in the current year. This reclassification had no effect on the Company’s previously reported results of operations, changes in equity, or cash flows.

 

Foreign Currency Translation

Foreign Currency Translation

 

From inception through June 30, 2024, the reporting currency of the Company was the United States dollar while the functional currency of certain of the Company’s subsidiaries was the Canadian dollar and Australian dollar. For the reporting periods ended June 30, 2024 and 2023, 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 United States dollar.

 

The Company translates the assets and liabilities of its Canadian subsidiaries and Australian subsidiary into the 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 unaudited condensed consolidated statements of shareholders’ equity as a component of accumulated other comprehensive loss.

 

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 loss in the unaudited condensed consolidated statements of operations and comprehensive loss as incurred.

 

Concentration of Credit Risk

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 June 30, 2024, the Company had greater than $250,000 at United States financial institutions, less than $250,000 at Australian financial institutions, and less than $100,000 at Canadian financial institutions.

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Research and Development

Research and Development

 

Research and development expenses are charged to operations as incurred. Research and development expenses include, among other things, internal and external costs associated with preclinical development, pre-commercialization manufacturing expenses, and clinical trials. The Company accrues for costs incurred as the services are being provided by monitoring the status of the trial or services provided and the invoices received from its external service providers. In the case of clinical trials, a portion of the estimated cost normally relates to the projected cost to treat a patient in the trials, and this cost is recognized based on the number of patients enrolled in the trial. As actual costs become known, the Company adjusts its accruals accordingly.

 

Income Taxes

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.

 

Research and Development Tax Incentive Receivable

Research and Development Tax Incentive Receivable

 

The Company, through its wholly-owned subsidiary in Australia, participates in the Australian research and development tax incentive program, such that a percentage of the Company’s qualifying research and development expenditures are reimbursed by the Australian government, and such incentives are reflected as a reduction of research and development expense. The Australian research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. At each period end, management estimates the reimbursement available to the Company based on available information at the time.

 

Net Loss per Share

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 six months ended June 30, 2024 and 2023 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 for the three and six months ended June 30, 2024 and 2023 because the effect of their inclusion would have been anti-dilutive.

 SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

   For the three and six months ended June 30, 2024   For the three and six months ended June 30, 2023 
Warrants to purchase shares of common stock   845,213    655,463 
Restricted stock units - vested and unissued   41,901    55,622 
Restricted stock units - unvested   356,116    180,115 
Restricted stock awards - vested and unissued       708 
Investment options to purchase shares of common stock   70,000    1,070,000 
Options to purchase shares of common stock   23,082    36,579 
Total potentially dilutive securities   1,336,312    1,998,487 

 

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for all entities for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the potential impacts of ASU 2023-07, however as the Company currently has one reportable segment, does not expect this guidance will not have a material impact on its unaudited condensed consolidated financial statements.

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which amends the disclosure to address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information and includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted. Early adoption is permitted. The Company is currently assessing potential impacts of ASU 2023-09 and does not expect the adoption of this guidance will have a material impact on its unaudited condensed consolidated financial statements and disclosures.

v3.24.2.u1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
6 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

Potentially dilutive securities outlined in the table below have been excluded from the computation of diluted net loss per share for the three and six months ended June 30, 2024 and 2023 because the effect of their inclusion would have been anti-dilutive.

 SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

   For the three and six months ended June 30, 2024   For the three and six months ended June 30, 2023 
Warrants to purchase shares of common stock   845,213    655,463 
Restricted stock units - vested and unissued   41,901    55,622 
Restricted stock units - unvested   356,116    180,115 
Restricted stock awards - vested and unissued       708 
Investment options to purchase shares of common stock   70,000    1,070,000 
Options to purchase shares of common stock   23,082    36,579 
Total potentially dilutive securities   1,336,312    1,998,487 
v3.24.2.u1
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables)
6 Months Ended
Jun. 30, 2024
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of June 30, 2024 and December 31, 2023, the prepaid expenses and other current assets of the Company consisted of the following:

 

   June 30, 2024   December 31, 2023 
Prepaid research and development  $257,218   $46,320 
Prepaid value-added taxes   241,269    243,429 
Prepaid insurance   375,215    149,559 
Prepaid other   81,192    62,036 
Deferred offering costs (see Note 7)   763,173    567,603 
Franchise tax receivable   38,258    79,258 
R&D tax incentive receivable   261,058    145,349 
Total prepaid expenses and other current assets  $2,017,383   $1,293,554 
v3.24.2.u1
INTANGIBLE ASSETS (Tables)
6 Months Ended
Jun. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
SCHEDULE OF INTANGIBLE ASSETS

As of June 30, 2024, the Company’s intangible assets consisted of:

 

Definite lived intangible assets     
Balance at January 1, 2024  $210,932 
Amortization   (84,376)
Balance at June 30, 2024  $126,556 
v3.24.2.u1
PROPERTY AND EQUIPMENT (Tables)
6 Months Ended
Jun. 30, 2024
Property, Plant and Equipment [Abstract]  
SCHEDULE OF PROPERTY PLANT AND EQUIPMENT NET OF ACCUMULATED DEPRECIATION

Property and equipment consists of the following assets which are located in Calgary, Canada, with all amounts converted into U.S. dollars:

 

   June 30, 2024   December 31, 2023 
Lab equipment  $808,523   $836,709 
Computer equipment and leasehold improvements   27,422    28,379 
Less: Accumulated depreciation   (430,831)   (357,711)
Property and equipment, net of accumulated depreciation  $405,114   $507,377 
v3.24.2.u1
ACCRUED LIABILITIES (Tables)
6 Months Ended
Jun. 30, 2024
Payables and Accruals [Abstract]  
SCHEDULE OF ACCRUED LIABILITIES

As of June 30, 2024 and December 31, 2023, the accrued liabilities of the Company consisted of the following:

 

   June 30, 2024   December 31, 2023 
Product development  $79,197   $139,981 
Accrued salaries, wages, and bonuses   8,634    8,889 
Professional fees   70,542    584,810 
Accrued restructuring costs (see Note 8)       301,645 
Accrued income taxes       22,318 
Patent costs   18,000    18,000 
Total accrued expenses  $176,373   $1,075,643 
v3.24.2.u1
SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS (Tables)
6 Months Ended
Jun. 30, 2024
Equity [Abstract]  
SCHEDULE OF STOCK OPTION

A summary of the stock option activity under the Company’s incentive plan for the six months ended June 30, 2024 is presented below:

 

   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, 2023   30,329   $57.17   $77.22    3.4   $ 
Granted      $   $          
Forfeited   (7,247)  $39.35   $54.02          
Outstanding at June 30, 2024   23,082   $62.77   $84.51    2.9   $ 
                          
Exercisable at June 30, 2024   21,988   $65.74   $88.59    2.5   $ 
SCHEDULE OF RESTRICTED STOCK UNITS AND AWARDS ACTIVITY

The Company’s activity in restricted stock units was as follows for the six months ended June 30, 2024:

 

   Number of shares   Weighted average fair value 
Non-vested at December 31, 2023   140,491   $28.97 
Granted   251,500   $0.85 
Forfeited   (9,750)  $2.87 
Vested   (26,125)  $2.62 
Non-vested at June 30, 2024   356,116   $11.76 
SCHEDULE OF STOCK-BASED COMPENSATION FOR RESTRICTED STOCK UNITS

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

 

  2024   2023   2024   2023 
   Three Months Ended June 30,   Six Months Ended June 30, 
Stock-based compensation expense for RSUs:  2024   2023   2024   2023 
General and administrative  $162,042   $592,929   $314,471   $845,244 
Research and development   207,158    232,434    412,899    464,868 
Total  $369,200   $825,363   $727,370   $1,310,112 
SCHEDULE OF WARRANTS OUTSTANDING

The following table summarizes information about shares issuable under warrants outstanding at June 30, 2024:

 

   Warrant shares outstanding   Weighted average exercise price   Weighted average remaining life   Intrinsic value 
Outstanding at December 31, 2023   2,799,213   $11.79    4.6   $ 
Exercised   (1,954,000)   1.37       $ 
Outstanding at June 30, 2024   845,213   $35.87    3.2   $ 
                     
Exercisable at June 30, 2024   845,213   $35.87    3.2   $ 
SCHEDULE OF WARRANTS AND INVESTMENT OPTIONS

The following table summarizes information about investment options outstanding at June 30, 2024:

 

   Investment options outstanding   Weighted average exercise price   Weighted average remaining life   Intrinsic value 
Outstanding at December 31, 2023   70,000   $10.00    4.1   $ 
Outstanding at June 30, 2024   70,000   $10.00    3.1   $ 
                     
Exercisable at June 30, 2024   70,000   $10.00    3.1   $ 
v3.24.2.u1
COMMITMENTS AND CONTINGENCIES (Tables)
6 Months Ended
Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]  
SCHEDULE OF REDUCTION IN FORCE/RESTRUCTURING ACTIVITY

The following table summarizes the Reduction in Force/Restructuring activity and ending balance at June 30, 2024 for the remaining severance payments included in accrued expenses in the consolidated balance sheet:

 

   Accrued Restructuring Costs 
January 1, 2024 beginning balance  $301,645 
Restructuring costs paid   (301,645)
June 30, 2024 ending balance  $ 
v3.24.2.u1
BUSINESS AND LIQUIDITY AND OTHER UNCERTAINTIES (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
May 16, 2024
Dec. 31, 2023
Nov. 21, 2023
Nov. 12, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]                
Accumulated deficit $ (100,835,827)   $ (100,835,827)     $ (96,499,518)    
Net cash used in operating activities     (5,487,520) $ (9,602,930)        
Loss from operations (1,897,931) $ (5,755,007) (4,375,248) $ (10,615,685)        
Cash 3,502,551   3,502,551     $ 2,287,977    
Working capital $ 4,874,594   $ 4,874,594          
Minimum of stockholders equity required for continued listing pursuant to exchange             $ 2,500,000  
Shares issued price         $ 1.00     $ 1.00
v3.24.2.u1
SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES (Details) - shares
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Total potentially dilutive securities 1,336,312 1,998,487 1,336,312 1,998,487
Warrants to Purchase Shares of Common Stock [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Total potentially dilutive securities 845,213 655,463 845,213 655,463
Restricted Stock Units Vested and Unissued [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Total potentially dilutive securities 41,901 55,622 41,901 55,622
Restricted Stock Units Unvested [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Total potentially dilutive securities 356,116 180,115 356,116 180,115
Restricted Stock Awards Vested and Unissued [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Total potentially dilutive securities 708 708
Investment Options to Purchase Shares of Common Stock [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Total potentially dilutive securities 70,000 1,070,000 70,000 1,070,000
Options to Purchase Shares of Common Stock [Member]        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Total potentially dilutive securities 23,082 36,579 23,082 36,579
v3.24.2.u1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)
Jun. 30, 2024
USD ($)
UNITED STATES  
Cash FDIC insured amount $ 250,000
CANADA  
Cash FDIC insured amount 100,000
AUSTRALIA  
Cash FDIC insured amount $ 250,000
v3.24.2.u1
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]    
Prepaid research and development $ 257,218 $ 46,320
Prepaid value-added taxes 241,269 243,429
Prepaid insurance 375,215 149,559
Prepaid other 81,192 62,036
Deferred offering costs (see Note 7) 763,173 567,603
Franchise tax receivable 38,258 79,258
R&D tax incentive receivable 261,058 145,349
Total prepaid expenses and other current assets $ 2,017,383 $ 1,293,554
v3.24.2.u1
SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]        
Balance, Definite lived intangible assets     $ 210,932  
Amortization $ (42,188) $ (42,187) (84,376) $ (84,375)
Balance, Definite lived intangible assets $ 126,556   $ 126,556  
v3.24.2.u1
INTANGIBLE ASSETS (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]        
Identified definite lived assets, impairment loss $ 0 $ 0 $ 0 $ 0
Intangible assets, amortization expense $ 42,188 $ 42,187 $ 84,376 $ 84,375
v3.24.2.u1
SCHEDULE OF PROPERTY PLANT AND EQUIPMENT NET OF ACCUMULATED DEPRECIATION (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Property, Plant and Equipment [Line Items]    
Less: Accumulated depreciation $ (430,831) $ (357,711)
Property and equipment, net of accumulated depreciation 405,114 507,377
Lab Equipment [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross 808,523 836,709
Computer Equipment and Leasehold Improvements [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross $ 27,422 $ 28,379
v3.24.2.u1
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Property, Plant and Equipment [Abstract]        
Depreciation $ 42,591 $ 44,331 $ 85,812 $ 88,629
v3.24.2.u1
SCHEDULE OF ACCRUED LIABILITIES (Details) - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Payables and Accruals [Abstract]    
Product development $ 79,197 $ 139,981
Accrued salaries, wages, and bonuses 8,634 8,889
Professional fees 70,542 584,810
Accrued restructuring costs (see Note 8) 301,645
Accrued income taxes 22,318
Patent costs 18,000 18,000
Total accrued expenses $ 176,373 $ 1,075,643
v3.24.2.u1
SCHEDULE OF STOCK OPTION (Details) - USD ($)
6 Months Ended 12 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Equity [Abstract]    
Number of shares, outstanding at beginning 30,329  
Weighted average exercise price, outstanding at beginning $ 57.17  
Weighted average grant date fair value, outstanding at beginning $ 77.22  
Weighted average remaining contractual term, outstanding balance 2 years 10 months 24 days 3 years 4 months 24 days
Aggregate intrinsic value, outstanding at beginning  
Number of shares, granted  
Weighted average exercise price, granted  
Weighted average grant date fair value, granted  
Number of shares, forfeited (7,247)  
Weighted average exercise price, forfeited $ 39.35  
Weighted average grant date fair value, forfeited $ 54.02  
Number of shares, outstanding at end 23,082 30,329
Weighted average exercise price, outstanding at end $ 62.77 $ 57.17
Weighted average grant date fair value, outstanding at end $ 84.51 $ 77.22
Aggregate intrinsic value, outstanding at end
Exercisable shares at end 21,988  
Exercisable weighted average price at end $ 65.74  
Weighted average grant date fair value, exercisable $ 88.59  
Weighted average remaining contractual term, exercisable 2 years 6 months  
Aggregate intrinsic value, exercisable  
v3.24.2.u1
SCHEDULE OF RESTRICTED STOCK UNITS AND AWARDS ACTIVITY (Details) - Restricted Stock Units (RSUs) [Member]
6 Months Ended
Jun. 30, 2024
$ / shares
shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Number of shares, Non-vested beginning | shares 140,491
Weighted average fair value, Non-vested beginning | $ / shares $ 28.97
Number of shares, Granted | shares 251,500
Weighted average fair value, Granted | $ / shares $ 0.85
Number of shares, Forfeited | shares (9,750)
Weighted average fair value, Forfeited | $ / shares $ 2.87
Number of shares, vested | shares (26,125)
Weighted average fair value, Vested | $ / shares $ 2.62
Number of shares, non-vested ending | shares 356,116
Weighted average fair value, Non-vested ending | $ / shares $ 11.76
v3.24.2.u1
SCHEDULE OF STOCK-BASED COMPENSATION FOR RESTRICTED STOCK UNITS (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Stock-based compensation expense for RSUs $ 369,200 $ 825,363 $ 727,370 $ 1,310,112
General and Administrative Expense [Member]        
Stock-based compensation expense for RSUs 162,042 592,929 314,471 845,244
Research and Development Expense [Member]        
Stock-based compensation expense for RSUs $ 207,158 $ 232,434 $ 412,899 $ 464,868
v3.24.2.u1
SCHEDULE OF WARRANTS OUTSTANDING (Details) - Warrant [Member] - USD ($)
6 Months Ended 12 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Accumulated Other Comprehensive Income (Loss) [Line Items]    
Warrant shares outstanding at beginning 2,799,213  
Weighted average exercise price, outstanding at beginning $ 11.79  
Weighted average remaining life, outstanding 3 years 2 months 12 days 4 years 7 months 6 days
Intrinsic value, outstanding beginning  
Warrant shares outstanding, exercised (1,954,000)  
Weighted average exercise price, exercised $ 1.37  
Warrant shares outstanding at end 845,213 2,799,213
Weighted average exercise price, outstanding at end $ 35.87 $ 11.79
Intrinsic value, outstanding ending
Warrant shares outstanding, exercisable 845,213  
Weighted average exercise price, exercisable $ 35.87  
Weighted average remaining life, exercisable 3 years 2 months 12 days  
Intrinsic value, exercisable  
v3.24.2.u1
SCHEDULE OF WARRANTS AND INVESTMENT OPTIONS (Details) - Investment Options [Member] - USD ($)
6 Months Ended 12 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Accumulated Other Comprehensive Income (Loss) [Line Items]    
Warrant shares outstanding at beginning 70,000  
Weighted average exercise price, issued $ 10.00  
Weighted average remaining life, outstanding 3 years 1 month 6 days 4 years 1 month 6 days
Intrinsic value, outstanding beginning  
Warrant shares outstanding at end 70,000 70,000
Weighted average exercise price, outstanding at end $ 10.00  
Intrinsic value, outstanding ending
Warrant shares outstanding, exercisable 70,000  
Weighted average exercise price, exercisable $ 10.00  
Weighted average remaining life, exercisable 3 years 1 month 6 days  
Intrinsic value, exercisable  
v3.24.2.u1
SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
May 03, 2024
Mar. 08, 2024
Dec. 28, 2023
Nov. 03, 2023
Sep. 01, 2023
Jan. 31, 2024
Jun. 30, 2024
Mar. 31, 2024
Jun. 30, 2023
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
Nov. 02, 2023
Class of Warrant or Right [Line Items]                          
Common stock, par value             $ 0.01     $ 0.01   $ 0.01  
Proceeds from common stock                   $ 2,290,186    
Offering costs                   161,312    
Offering costs             $ 763,173     763,173   $ 567,603  
Gross proceeds           $ 1,817,640       2,676,980    
Deferred offering costs             82,850 $ 583,713          
Stock based compensation expenses             369,200   $ 825,363 727,370 1,310,112    
Share-Based Payment Arrangement, Option [Member]                          
Class of Warrant or Right [Line Items]                          
Stock based compensation expenses             414   54,375 6,268 102,461    
Unamortized stock-based compensation costs             2,760     $ 2,760      
Weighted average period                   1 year 7 months 24 days      
Restricted Stock Units (RSUs) [Member]                          
Class of Warrant or Right [Line Items]                          
Stock based compensation expenses             369,200   $ 825,363 $ 727,370 $ 1,310,112    
Unamortized stock-based compensation costs             $ 1,478,726     $ 1,478,726      
Weighted average period                   1 year 8 months 15 days      
Common stock vested restricted stock units                   26,125      
2020 Long Term Incentive Plan [Member]                          
Class of Warrant or Right [Line Items]                          
Authorized shares reserved                         350,000
2020 Long Term Incentive Plan [Member] | Board [Member]                          
Class of Warrant or Right [Line Items]                          
Shares available for grant             6,257 134,779   6,257      
Common Stock [Member]                          
Class of Warrant or Right [Line Items]                          
Stock Issued During Period, Shares, Other               704,000       418,000  
Common Stock [Member] | Restricted Stock Units (RSUs) [Member]                          
Class of Warrant or Right [Line Items]                          
Common stock vested restricted stock units                   41,901      
February Warrants [Member]                          
Class of Warrant or Right [Line Items]                          
Issued shares     1,122,000                    
Issued shares     2,244,000       704,000     704,000   704,000  
Cash payment     $ 0.125                    
Proceeds from inducement warrant     $ 280,500                    
February Warrants [Member] | Minimum [Member]                          
Class of Warrant or Right [Line Items]                          
Share price     $ 1.37                    
February Warrants [Member] | Maximum [Member]                          
Class of Warrant or Right [Line Items]                          
Share price                       $ 7.78  
Distribution Agreement [Member]                          
Class of Warrant or Right [Line Items]                          
Offering costs             $ 0     $ 0      
Distribution Agreement [Member] | Canaccord Genuity LLC [Member]                          
Class of Warrant or Right [Line Items]                          
Common stock, par value         $ 0.01                
Common stock, offering price         $ 10,000,000.0                
Aggregate gross sales price         $ 2,392,514                
Commission percentage         3.00%                
Issued shares                   1,668,000      
Proceeds from common stock                   $ 2,392,502      
Offering costs                   583,713      
Offering costs             $ 0     $ 0   $ 171,944  
Purchase Agreement [Member]                          
Class of Warrant or Right [Line Items]                          
Issued shares 458,000 228,690                      
Issued stock value $ 448,840 $ 322,453                      
Registration Rights Agreement [Member]                          
Class of Warrant or Right [Line Items]                          
Purchase committment       $ 10,000,000.0                  
Purchase Agreements [Member]                          
Class of Warrant or Right [Line Items]                          
Issued shares             125,000     125,000      
Proceeds from common stock             $ 82,850     $ 82,850      
Offering costs             $ 763,173     763,173   $ 395,660  
Number of shares traded in market 15,000,000                        
Deferred offering costs                   $ 82,850      
v3.24.2.u1
SCHEDULE OF REDUCTION IN FORCE/RESTRUCTURING ACTIVITY (Details)
6 Months Ended
Jun. 30, 2024
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
Restructuring cost payable, beginning $ 301,645
Restructuring costs paid (301,645)
Restructuring cost payable, ending
v3.24.2.u1
COMMITMENTS AND CONTINGENCIES (Details Narrative)
3 Months Ended 6 Months Ended
May 31, 2023
Jun. 30, 2024
USD ($)
Jun. 30, 2023
USD ($)
Jun. 30, 2024
USD ($)
Jun. 30, 2023
USD ($)
Jun. 30, 2024
AUD ($)
Dec. 31, 2023
USD ($)
Property, Plant and Equipment [Line Items]              
Research and development expenses   $ 515,501 $ 2,395,589 $ 973,656 $ 4,249,981    
Research and development expense tax credit receivable   261,058   261,058     $ 145,349
Future cash   3,502,551   3,502,551     $ 2,287,977
Reduction in force restructuring percentage 35.00%            
Other Consulting and Vendor Agreements [Member]              
Property, Plant and Equipment [Line Items]              
Future cash   100,000   100,000      
Avance Clinical [Member]              
Property, Plant and Equipment [Line Items]              
Contract cost   2,225,000   2,225,000   $ 3,400,000  
Payment of contract cost   2,225,000   2,225,000      
Prepaid assets   251,254   251,254      
Research and development expenses   $ 154,354 $ 354,419 $ 244,390 $ 355,232    
v3.24.2.u1
SUBSEQUENT EVENTS (Details Narrative) - USD ($)
1 Months Ended 6 Months Ended
Aug. 14, 2024
Jun. 30, 2024
Jun. 30, 2023
Subsequent Event [Line Items]      
Gross proceeds   $ 2,290,186
Subsequent Event [Member] | Common Stock [Member] | Purchase Agreeent [Member]      
Subsequent Event [Line Items]      
Stock issued during period shares new issues 1,015,477    
Gross proceeds $ 494,887    

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