UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended: June 30, 2021

☐	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)

(I.R.S. 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 under 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

Securities registered under section 12(g) of the Act:

Title of class

Series B Preferred Stock

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

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

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

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act).

Yes ☐ No ☒

As of August 13, 2021, there were 21,432,415 shares of the registrant’s common stock, $0.01 par value per share, issued and outstanding.

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

	Page
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020 (unaudited)	3
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020 (unaudited)	4
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2021 and 2020 (unaudited)	5
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (unaudited)	6
Notes to the Unaudited Condensed Consolidated Financial Statements	7
Item 2. Management’s discussion and analysis of financial condition and results of operations	20
Item 3. Quantitative and qualitative disclosures about market risk	31
Item 4. Controls and Procedures	31

PART II. OTHER INFORMATION
Item 1. Legal proceedings	32
Item 1A. Risk factors	32
Item 2. Unregistered sales of equity securities and use of proceeds	32
Item 3. Defaults upon senior securities	32
Item 4. Mine safety disclosures	32
Item 5. Other information	32
Item 6. Exhibits	33

Signatures	34

-2-

ENVERIC BIOSCIENCES, INC AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

	June 30, 2021			December 31, 2020

Assets
Current Assets:
Cash	$	20,617,917		$	1,578,460
Prepaid expenses and other current assets		891,467			700,710
Total current assets		21,509,384			2,279,170

Intangible assets, net		2,185,585			1,817,721
Total assets	$	23,694,969		$	4,096,891

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	1,018,920		$	681,250
Current portion of loans payable		148,604			-
Total current liabilities		1,167,524			681,250

Warrant liability		3,708,457			-
Total liabilities	$	4,875,981		$	681,250

Commitments and Contingencies		-			-

Shareholders’ Equity
Preferred Stock, $0.01 par value, 20,000,000 shares authorized, 0 and 3,275,407 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	$	-		$	32,754
Common stock, $0.01 par value, 100,000,000 shares authorized, 21,432,415 and 10,095,109 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		214,333			100,951
Additional paid-in capital		34,702,015			15,222,770
Accumulated deficit		(15,918,557	)		(11,759,557	)
Accumulated other comprehensive loss		(178,803	)		(181,277	)
Total shareholders’ equity		18,818,988			3,415,641
Total Liabilities and shareholders’ equity	$	23,694,969		$	4,096,891

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

-3-

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

	2021			2020			2021			2020
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2021			2020			2021			2020

Operating expenses
Research and development costs	$	879,843		$	50,957		$	1,076,487		$	70,957
General and administrative expenses		2,309,149			716,551			8,740,862			1,533,253
Amortization of intangible assets		174,019			-			310,659			-
Total operating expenses		3,363,011			767,508			10,128,008			1,604,210

Loss from Operations		(3,363,011	)		(767,508	)		(10,128,008	)		(1,604,210	)

Other income (expense)
Interest expense		(4,821	)		(50,883	)		(4,821	)		(312,642	)
Change in fair value of warrant liabilities		2,459,543			-			6,272,543
Inducement expense		-			-			(298,714	)
Total other income (expense)		2,454,722			(50,883	)		5,969,008			(312,642	)

Net Loss		(908,289	)		(818,391	)		(4,159,000	)		(1,916,852	)

Other comprehensive gain (loss)
Foreign currency translation		(33,262	)		(10,069	)		2,474			(22,767	)

Comprehensive loss	$	(941,551	)	$	(828,460	)	$	(4,156,526	)	$	(1,939,619	)

Net loss per share – basic and diluted	$	(0.04	)	$	(0.15	)	$	(0.22	)	$	(0.34	)

Weighted average shares outstanding, basic and diluted		21,333,515			5,672,025			18,692,526			5,668,471

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

-4-

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(UNAUDITED)

	Shares			Amount			Shares		Amount		Capital			Deficit			Loss			Total
																	Accumulated
	Series B Preferred Stock						Common Stock				Additional Paid-In			Accumulated			Other Comprehensive
	Shares			Amount			Shares		Amount		Capital			Deficit			Loss			Total
Balance as of December 31, 2019		-			-			5,573,915	$	55,739	$	3,039,163		$	(4,894,881	)	$	(11,622	)	$	(1,811,601	)

Common stock issued for accounts payable		-			-			85,942		859		172,623			-			-			173,482
Warrants issued in conjunction with notes payable		-			-			-		-		32,149			-			-			32,149
Beneficial conversion feature issued with note payable		-			-			-		-		17,851			-			-			17,851
Common stock issued in conjunction with not payable modification								-
Common stock issued in conjunction with not payable modification, shares
January 2021 registered direct offering
January 2021 registered direct offering ,shares
February 2021 registered direct offering
February 2021 registered direct offering, shares
Stock based compensation
Stock based compensation, shares
Induced conversion of stock options into restricted stock awards
Conversion of Series B Preferred Stock
Conversion of Series B Preferred Stock, shares
Conversion of stock options into restricted stock
Conversion of stock options into restricted stock, shares
Exercise of warrants
Exercise of warrants, shares
Exercise of options
Exercise of options, shares
Foreign exchange loss		-			-			-		-		-			-			(12,698	)		(12,698	)
Net loss		-			-			-		-		-			(1,098,461	)		-			(1,098,461	)
Balance as of March 31, 2020		-			-			5,659,857	$	56,598		3,261,786		$	(5,993,342	)	$	(24,320	)	$	(2,699,278	)

Common stock issued in conjunction with not payable modification		-			-			55,000		-		45,725			-			-			45,725
Foreign exchange loss		-			-			-		-		-			-			(10,069	)		(10,069	)
Net loss		-			-			-		-		-			(818,391	)		-			(818,391	)
Balance as of June 30, 2020		-		$	-			5,714,857	$	56,598	$	3,307,511		$	(6,811,733	)	$	(34,389	)	$	(3,482,013	)

Balance as of December 31, 2020		3,275,407		$	32,754			10,095,109	$	100,951	$	15,222,770		$	(11,759,557	)	$	(181,277	)	$	3,415,641
January 2021 registered direct offering		-			-			2,221,334		22,213		4,594,874			-			-			4,617,087
February 2021 registered direct offering		-			-			3,007,026		30,070		6,986,331			-			-			7,016,401
Stock based compensation		-			-			-		-		3,591,565			-			-			3,591,565
Induced conversion of stock options into restricted stock awards		-			-			-		-		298,714			-			-			298,714
Conversion of Series B Preferred Stock		(3,275,407	)		(32,754	)		3,275,407		32,754		-			-			-			-
Exercise of warrants		-			-			851,099		8,511		3,258,734			-			-			3,267,245
Foreign exchange gain		-			-			-		-		-			-			35,736			35,736
Net loss		-			-			-		-		-			(3,250,711	)		-			(3,250,711	)
Balance as of March 31, 2021		-		$	-			19,449,975	$	194,499	$	33,952,988			(15,010,268	)	$	(145,541	)	$	18,991,678

Stock based compensation		-			-			14,121		141		750,792									750,933
Conversion of stock options into restricted stock		-			-			42,125		421		(421	)								-
Exercise of warrants		-			-			1,791,948		17,930		(2	)								17,928
Exercise of options		-			-			134,246		1,342		(1,342	)								-
Foreign exchange loss		-			-			-		-		-						(33,262	)		(33,262	)
Net loss		-			-			-		-		-			(908,289	)					(908,289	)
Balance as of June 30, 2021		-		$	-			21,432,415	$	214,333	$	34,702,015		$	(15,918,557	)	$	(178,803	)	$	18,818,988

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

-5-

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	2021			2020
	For the Six Months Ended June 30,
	2021			2020
Cash Flows From Operating Activities:
Net loss	$	(4,159,000	)	$	(1,916,852	)
Adjustments to reconcile net loss to cash used in operating activities
Amortization of debt discount		-			249,570
Accrued interest		-			59,869
Change in fair value of warrant derivatives		(6,272,543	)		-
Stock-based compensation		4,342,498			-
Inducement expense		298,714			-
Amortization of intangible assets		310,659			-
Change in operating assets and liabilities
Prepaid expenses and other current assets		(190,757	)		(52,116	)
Accounts payable and other current liabilities		486,274			414,473
Net cash used in operating activities		(5,184,155	)		(1,245,056	)

Cash Flows From Investing Activities:
Purchase of Diverse Bio license agreement		(675,000	)		-
Net cash used in investing activities		(675,000	)		-

Cash Flows From Financing Activities:
Proceeds from sale of common stock and warrants, net of offering costs		21,614,488			-
Proceeds from convertible notes payable		-			50,000
Proceeds from note payable		-			1,812,410
Repayment of note payable		-			(157,714	)
Proceeds from warrant exercises		3,285,173
Net cash provided by financing activities		24,899,661			1,704,696

Effect of foreign exchange rate on cash		(1,049	)		(61,961	)

Net increase in cash		19,039,457			397,679
Cash - Beginning of period		1,578,460			43,714
Cash - end of period	$	20,617,917		$	441,393

Supplemental non-cash financing activities:
Beneficial conversion feature issued with note payable	$	-		$	17,851
Warrants issued in conjunction with notes payable issuances	$	-		$	32,149
Shares of common stock issued for accounts payable	$	-		$	173,482

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

-6-

Enveric Biosciences, Inc. and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 1 - BUSINESS

Nature of operations

Enveric Biosciences, Inc. (“Enveric Biosciences, Inc.” “Enveric” or the “Company”) (formerly known as Ameri Holdings, Inc.) (“Ameri”) is a pharmaceutical company developing innovative, evidence-based cannabinoid medicines. The head office of the Company is located in Naples, Florida.

On January 10, 2020, the Company entered into an Amalgamation Agreement (as amended on May 6, 2020), (the “Jay Pharma Amalgamation Agreement”) with Jay Pharma Merger Sub, Inc., a company organized under the laws of Canada and a wholly owned subsidiary of the Company (“Merger Sub”), Jay Pharma Inc., a company organized under the laws of Canada (“Jay Pharma”), Jay Pharma ExchangeCo., Inc. a company organized under the laws of British Columbia and a wholly owned subsidiary of the Company (“ExchangeCo”), and Barry Kostiner, as the Company Representative, which provided that, among other things, Merger Sub and Jay Pharma would be amalgamated and would continue as one corporation (“Amalco”), with Amalco continuing as a direct wholly owned subsidiary of ExchangeCo and an indirect wholly owned subsidiary of Ameri, on the terms and conditions set forth in the Jay Pharma Amalgamation Agreement. On August 12, 2020, the Company, Jay Pharma and certain other signatories thereto entered into a tender agreement (the “Tender Agreement”), which provided that, among other things, Ameri would make a tender offer (the “Offer”) to purchase all of the outstanding common shares of Jay Pharma for the number of shares of Enveric common stock equal to the exchange ratio set forth in the Tender Agreement, and Jay Pharma would become a wholly-owned subsidiary of Ameri, on the terms and conditions set forth in the Tender Agreement. The Tender Agreement terminated and replaced in its entirety the Jay Pharma Amalgamation Agreement. On December 30, 2020, the Company, Jay Pharma, Merger Sub, and ExchangeCo completed the Offer and Jay Pharma became a wholly owned subsidiary of the Company. The transaction was treated as a reverse acquisition and recapitalization and accordingly, the historical financial statements prior to the date of the business combination in these unaudited condensed consolidated financial statements are those of Jay Pharma.

COVID-19

During 2020 and continuing into 2021, the world has been, and continues to be, impacted by the novel coronavirus (COVID-19) pandemic. COVID-19 (including its variants and mutations) and measures to prevent its spread impacted our business in a number of ways. The impact of these disruptions and the extent of their adverse impact on our financial and operating results will be dictated by the length of time that such disruptions continue, which will, in turn, depend on the currently unknowable duration and severity of the impacts of COVID-19, and among other things, the impact of governmental actions imposed in response to COVID-19 and individuals’ and companies’ risk tolerance regarding health matters going forward and developing strain mutations.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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 10 of Regulation S-X. Accordingly, they do not include all of 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, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2020 and related notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2021.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and expenses during the periods reported. By their nature, these estimates are subject to measurement uncertainty and the effects on the financial statements of changes in such estimates in future periods could be significant. Significant areas requiring management’s estimates and assumptions include determining the fair value of transactions involving common stock and the valuation of stock-based compensation. Actual results could differ from those estimates.

-7-

Enveric Biosciences, Inc. and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

Foreign Currency Translation

The reporting currency of the Company is the United States Dollar. The financial statements of companies located outside of the U.S. are measured in their functional currency, which is the local currency. The functional currency of the Company is the United States dollar. Monetary assets and liabilities are translated using public exchange rates at the balance sheet date. Income and expense items are translated using average monthly exchange rates. Shareholders’ equity accounts and non-monetary assets are translated at their historical exchange rates. Translation adjustments are included in accumulated other comprehensive loss in the accompanying balance sheets.

Cash and cash equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2021 and December 31, 2020.

Warrant Liability

The Company accounts for warrants for shares of the Company’s common stock that are not indexed to its own stock as liabilities at fair value on the balance sheet. Such warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of other expense on the statement of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of such common stock warrants. At that time, the portion of the warrant liability related to such common stock warrants will be reclassified to additional paid-in capital.

Offering Costs

The Company allocates offering costs to the different components of the capital raise on a pro rata basis. Any offering costs allocated to common stock are charged directly to additional paid-in capital. Any offering costs allocated to warrant liabilities are charged to general and administrative expenses on the Company’s statement of operations.

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) and convertible notes. The computation of basic net loss per share for the three and six months ended June 30, 2021 and 2020 excludes potentially dilutive securities. The computations of net loss per share for each period presented is the same for both basic and fully diluted.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Potentially dilutive securities outlined in the table below have been excluded from the computation of diluted net loss per share for the six months ended June 30, 2021 and June 30, 2020 because the effect of their inclusion would have been anti-dilutive.

	For the three and six months ended June 30, 2021		For the three and six months ended June 30, 2020
Warrants to purchase shares of common stock		4,553,610		1,504,593
Convertible notes		-		380,920
Restricted stock units		2,596,459		-
Restricted stock awards		13,298		-
Options to purchase shares of common stock		225,565		3,604,348
Total potentially dilutive securities		7,388,932		5,489,861

-8-

Enveric Biosciences, Inc. and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

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. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

Fair Value Measurement

The Company follows Accounting Standards Codification (“ASC”) 820–10 “Fair Value Measurement” of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification to measure the fair value of its financial instruments and disclosures about fair value of its financial instruments. ASC 820–10 establishes a framework for measuring fair value and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820–10 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.

The three (3) levels of fair value hierarchy defined by ASC 820–10 are described below:

Level 1		Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3		Pricing inputs that are generally unobservable inputs and not corroborated by market data.

Financial assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these instruments.

The Company uses Level 3 of the fair value hierarchy to measure the fair value of its warrant liabilities. The Company revalues such liabilities at every reporting period and recognizes gains or losses as change in fair value of warrant liabilities in the condensed consolidated statements of operations that are attributable to the change in the fair value of the warrant liabilities.

The following table provides the financial liabilities measured on a recurring basis and reported at fair value on the balance sheet as of June 30, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Fair Value Measurement, continued

	Level		June 30, 2021
Warrant liabilities – January Warrants		3	$	1,895,303
Warrant liabilities – February Warrants		3		1,813,154
Fair value as of June 30, 2021			$	3,708,457

-9-

Enveric Biosciences, Inc. and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

The Company had no assets or liabilities measured at fair value on December 31, 2020.

Both the January and February Warrants are classified as Level 3, for which there is no current market for these securities such as the determination of fair value requires significant judgment or estimation. Changes in fair value measurement categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.

Initial measurement

	January Warrants			February Warrants
	January 13, 2021			February 12, 2021
Term (years)		5.0			5.0
Stock price	$	4.21		$	4.62
Exercise price	$	4.95		$	4.95
Dividend yield		0.0	%		0.0	%
Expected volatility		84.7	%		84.7	%
Risk free interest rate		0.5	%		0.5	%

Number of shares		1,821,514			1,714,005
Value (per share)	$	2.66		$	3.00

Subsequent measurement

The following table presents the changes in fair value of the warrant liabilities:

	January Warrants			February Warrants			Total Warrant Liability
Fair value as of December 31, 2020	$	-		$	-		$	-
Initial value of warrant liability		4,846,000			5,135,000			9,981,000
Change in fair value		(2,950,697	)		(3,321,846	)		(6,272,543	)

Fair value as of June 30, 2021	$	1,895,303		$	1,813,154		$	3,708,457

The key inputs into the Black Scholes valuation model for the Level 3 valuations as of June 30, 2021 are below:

	January Warrants			February Warrants
Term (years)		4.5			4.6
Stock price	$	2.38		$	2.38
Exercise price	$	4.95		$	4.90
Dividend yield		0.0	%		0.0	%
Expected volatility		76.6	%		76.5	%
Risk free interest rate		0.87	%		0.87	%

Number of shares		1,821,449			1,714,005
Value (per share)	$	1.04		$	1.06

-10-

Enveric Biosciences, Inc. and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, Income Taxes (Topic 740: Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which removes certain exceptions to the general principles in Topic 740. ASU 2019-12 is effective for the fiscal years beginning after December 15, 2020, with early adoption permitted. The adoption of this guidance did not have a material impact on the Company’s financial statements.

In October 2020, the FASB issued ASU 2020-10, “Codification Improvements.” The new accounting rules improve the consistency of the Codification by including all disclosure guidance in the appropriate Disclosure Section (Section 50) that had only been included in the Other Presentation Matters Section (Section 45) of the Codification. Additionally, the new rules also clarify guidance across various topics including defined benefit plans, foreign currency transactions, and interest expense. The new accounting rules were effective for the Company in the first quarter of 2021. The adoption of the new accounting rules did not have a material impact on the Company’s financial statements.

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The amendments in ASU No. 2021-04 provides guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU No. 2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, including interim periods within those fiscal years. As a result, the Company will not be required to adopt ASU 2021-04 until January 1, 2022. The Company is currently evaluating the impact of the adoption of this principle on the Company’s condensed consolidated financial statements.

Subsequent Events

The Company has evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Other than as described in these financial statements, the Company did not identify any subsequent events that would have required adjustment to or disclosure in the financial statements.

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Enveric Biosciences, Inc. and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 3 – INTANGIBLE ASSETS

As of June 30, 2021, the Company’s intangible assets consisted of:

	Useful Life	Gross Carrying Amount		Accumulated Amortization			Net

Skincare Assets and License Agreements	4 years	$	1,944,689	$	(391,916	)	$	1,552,773
Diverse Bio License Agreement	4 years		675,000		(42,188	)		632,812
Total		$	2,619,689	$	(434,104	)	$	2,185,585

During the three months ended June 30, 2021 and 2020, the Company recognized amortization expense of $174,019 and $0, respectively. During the six months ended June 30, 2021 and 2020, the Company recognized amortization expense of $310,659 and $0, respectively.

Acquisition of Diverse Bio License Agreement

On March 5, 2021, the Company entered into an Exclusive License Agreement (the “DB Agreement”) with Diverse Biotech, Inc. (“Diverse”), pursuant to which the Company acquired an exclusive, perpetual license to develop five therapeutic candidates (collectively, the “Agents”) with the goal of alleviating the side effects that cancer patients experience. Under the terms of the DB Agreement, Diverse has granted the Company an exclusive license to its intellectual property rights covering the Agents and its products. In exchange, the Company has granted Diverse the right to information relating to the Agents developed for the express purpose of using such information to obtain patent rights, which right terminates upon the issuance or denial of the patent rights.

Under the DB Agreement, the Company will maintain sole responsibility and ownership of the development and commercialization of the Agents and its products. Diverse has agreed not to develop or commercialize any agent or product that would compete with the Agents, or its products containing the Agents, at any time during or after the term of the DB Agreement. If Diverse intends to license, sell, or transfer any other molecules linked with cannabinoids not granted to the Company under the terms of the DB Agreement, the Company will have the first right, but not the obligation, to negotiate an agreement with Diverse for such cannabinoids. The Company has also agreed to pay Diverse an up-front investment payment in the amount of $675,000, as well as a running royalty starting with the first commercial sale by the Company to a third party in an arms’-length transaction.

The term of the DB Agreement shall continue for as long as the Company intends to develop or commercialize the new drugs, unless earlier terminated by either Party. The Agreement may be terminated by either party upon ninety (90) days written notice of an uncured material breach or in the event of bankruptcy or insolvency. In addition, the Company has the right to terminate the DB Agreement at any time upon sixty (60) days’ prior written notice to Diverse.

NOTE 4 – 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.

Stockholder Demand Letters

On July 14, 2021, the Company received a stockholder demand letter from the law firm of Rigrodsky Law P.A., on behalf of Matthew Whitfield, a purported stockholder of the Company, alleging that the registration statement (the “Amalgamation Registration Statement”) filed by the Company with the SEC on June 21, 2021 omits material information with respect to the Amalgamation and requesting that the Company and the Company board of directors provide certain corrective disclosures in an amendment or supplement to the Amalgamation Registration Statement. The Company does not believe the request has merit, but made certain changes to the Amalgamation Registration Statement, which it believes suffice to answer the purported stockholder’s demands.

On July 22, 2021, the Company received a DGCL Section 220 books and records demand letter from the law firm of Kahn Swick & Foti, on behalf of Scott Waller, a purported stockholder of the Company, seeking access to certain relevant books and records of the Company in connection with the process underlying the Amalgamation (as defined herein) and the Company’s engagement of its financial advisors. The Company does not believe the request has merit, but made certain changes to the Amalgamation Registration Statement, which it believes suffice to answer the purported stockholder’s demands.

-12-

Enveric Biosciences, Inc. and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

Development and Clinical Supply Agreement

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

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

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

Appointment of Chief Financial Officer

On April 9, 2021, John M. Van Buiten resigned from his position as the Company’s chief financial officer, effective May 15, 2021. Mr. Van Buiten’s resignation was not the result of any disagreement regarding any matter relating to the Company’s operations, policies, or practices.

On April 9, 2021, Carter J. Ward, 56, was appointed as the Company’s chief financial officer, effective May 15, 2021 (the “Ward Effective Date”).

In connection with Mr. Ward’s appointment as chief financial officer, Mr. Ward entered into an employment agreement with the Company on April 9, 2021 (the “Ward Employment Agreement”), effective as of May 15, 2021, pursuant to which Mr. Ward will receive a base salary of $295,000 (“Base Salary”) and is eligible to receive annual performance bonuses of up to 50% of his Base Salary, as determined from time-to-time by the Company’s board of directors. Additionally, Mr. Ward will receive 525,000 restricted stock units (“RSUs”), 262,500 of such RSUs shall be subject to time-based vesting (the “Time Based RSUs”), and the remaining 262,500 of such RSUs shall be subject to performance-based vesting (the “Performance RSUs”). The RSUs shall be subject to the terms and conditions of the Company’s 2020 Long-Term Incentive Plan. The Time Based RSUs shall vest in quarters on each anniversary of the Ward Effective Date, and the Performance RSUs shall vest based on the achievement of performance milestones established by the Company.

Amalgamation Agreement with MagicMed Industries Inc.

On May 24, 2021, the Company entered into an Amalgamation Agreement (the “Amalgamation Agreement”) with 1306432 B.C. Ltd., a corporation existing under the laws of the Province of British Columbia and a wholly-owned subsidiary of the Company (“HoldCo”), 1306436 B.C. Ltd., a corporation existing under the laws of the Province of British Columbia and a wholly-owned subsidiary of HoldCo (“Purchaser”), and MagicMed Industries Inc., a corporation existing under the laws of the Province of British Columbia (“MagicMed”), pursuant to which, among other things, the Company, indirectly through Purchaser, intends to acquire all of the outstanding securities of MagicMed in exchange for securities of the Company by way of an amalgamation under the British Columbia Business Corporations Act, upon the terms and conditions set forth in the Amalgamation Agreement, such that, upon completion of the Amalgamation (as defined herein), the amalgamated corporation (“Amalco”) will be an indirect wholly-owned subsidiary of the Company.

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Enveric Biosciences, Inc. and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

At the effective time of the Amalgamation (the “Effective Time”), holders of outstanding common shares of MagicMed (the “MagicMed Shares”) will receive such number of shares of common stock of the Company (“Company Shares”) representing, together with the Company Shares issuable upon exercise of the Warrants and the Converted Options (each as defined herein), approximately 36.6% of the issued and outstanding Company Shares (on a fully-diluted basis). The MagicMed Shares will initially be converted into Amalco Redeemable Preferred Shares (as defined in the Amalgamation Agreement), which immediately following the Amalgamation shall be redeemed for 0.000001 of a Company Share. Following such redemption, the shareholders of MagicMed shall receive additional Company Shares equal to the product of the Exchange Ratio (as defined in the Amalgamation Agreement) multiplied by the number of MagicMed Shares held by each such shareholder. Additionally, following the Effective Time (i) each outstanding MagicMed stock option will be converted into and become an option to purchase (the “Converted Options”) the number of Company Shares equal to the Exchange Ratio multiplied by the number of MagicMed Shares subject to such MagicMed stock option, and (ii) each holder of an outstanding MagicMed warrant (including Company Broker Warrants (as defined in the Amalgamation Agreement), the “Warrants”) will be entitled to receive upon exercise of such Warrant that number of Company Shares which the holder would have been entitled to receive as a result of the Amalgamation if, immediately prior to the date of the Amalgamation (the “Effective Date”), such holder had been the registered holder of the number of MagicMed Shares to which such holder would have been entitled if such holder had exercised such holder’s Warrants immediately prior to the Effective Time (the foregoing collectively, the “Amalgamation”).

The aggregate number of Company Shares that the Company will issue in connection with the Amalgamation (collectively, the “Share Consideration”) will be in excess of 20% of the Company’s pre-transaction outstanding Company Shares. Accordingly, the Company will seek stockholder approval of the issuance of the Share Consideration in the Amalgamation in accordance with the NASDAQ Listing Rules.

Pursuant to the terms of the Amalgamation Agreement, the Company has agreed to appoint upon the Effective Time two individuals selected by MagicMed to the Company Board of Directors, Dr. Joseph Tucker and Brad Thompson.

The Amalgamation Agreement contains representations and warranties, closing deliveries and indemnification provisions customary for a transaction of this nature. The closing of the Amalgamation is conditioned upon, among other things, (i) the Share Consideration being approved for listing on Nasdaq, (ii) the effectiveness of a Registration Statement on Form S-4 registering the Share Consideration (the “S-4 Registration Statement”) and (iii) the approval (a) of the MagicMed stockholders of the Amalgamation and (b) of the Company’s stockholders of each of the Amalgamation and the issuance of the Share Consideration in the Amalgamation.

The Amalgamation Agreement does not permit MagicMed to solicit alternative acquisition proposals from third parties, but it still may, on the terms and subject to the conditions of the Amalgamation Agreement, respond to any unsolicited alternative acquisition proposal that constitutes, or the MagicMed board of directors determines would reasonably be expected to lead to, a Superior Proposal (as defined in the Amalgamation Agreement).

The Amalgamation Agreement also contains customary termination provisions for the parties and provides that a termination fee of $4,500,000 is payable by (i) MagicMed, if the Agreement is terminated by (a) the Company as a result of (1) a change in recommendation by the MagicMed board of directors, (2) an approval or recommendation by the MagicMed board of directors of a different acquisition proposal or authorization by the MagicMed board of directors of a Superior Proposal, or (3) a breach of the non-solicit covenant by MagicMed, or (b) MagicMed in order to accept a Superior Proposal; or (ii) the Company, if the Agreement is terminated by (a) MagicMed as a result of (1) a change in recommendation by the Company board of directors, (2) an approval or recommendation by the Company board of directors of a different acquisition proposal or authorization by the Company board of directors of a Superior Proposal or (3) a breach of the non-solicit covenant by the Company, or (b) the Company in order to accept a Superior Proposal. The Amalgamation Agreement may be terminated by either party if the Amalgamation is not completed by December 31, 2021; provided, that either the Company or MagicMed may extend that date for an additional sixty (60) days if the Securities and Exchange Commission has not concluded its review of the S-4 Registration Statement by the date which is sixty (60) days prior to that date.

Simultaneously with the execution of the Amalgamation Agreement, holders of approximately 30% of MagicMed’s common shares entered into voting support agreements with the Company, and each of the Company’s directors and executive officers entered into voting support agreements with MagicMed pursuant to which such individuals have agreed, among other things, to execute and deliver a written consent with respect to their respective voting shares in favor of the approval of the Amalgamation Agreement or, if applicable, vote such shares in favor of the adoption of the Amalgamation Agreement at a meeting of stockholders called for such purpose.

-14-

Enveric Biosciences, Inc. and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

Appointment of Chief Executive Officer

On May 24, 2021, Dr. Joseph Tucker, 52, entered into an employment agreement (the “Tucker Employment Agreement”) with the Company pursuant to which he will become the Company’s chief executive officer, effective as of the Effective Date (the “Tucker Effective Date”).

Dr. Tucker has served as chief executive officer and president of MagicMed since May 2020. From 2019 until 2020, Dr. Tucker acted as the Executive Chairman and Chief Operating Officer of Willow Biosciences Inc. (TSX:WLLW). until leaving to join MagicMed in May 2020. From 2015 to 2019, his principal employment was acting as CEO, President, Director and Founder of Epimeron Inc., which merged with BioCan Technologies Inc. in 2018 and then listed by reverse-takeover with Makena Resources Inc. in 2019 as Willow Biosciences Inc. Dr. Tucker earned a Ph.D. in Biochemistry and Molecular Biology from the University of Calgary.

Pursuant to the Tucker Employment Agreement, effective as of the Tucker Effective Date Dr. Tucker will receive a base salary of $350,000 annually (“Tucker Base Salary”). Dr. Tucker will also receive a one-time signing bonus of $100,000 as well as up to 175,000 restricted stock units (“RSUs”), depending on the price of the Company Shares at the Tucker Effective Date. Half of any such RSUs shall be subject to time-based vesting, and the remaining half of any such RSUs shall be subject to performance-based vesting. Beginning in calendar year 2022, Dr. Tucker is eligible to receive annual performance bonuses of up to 75% of the Tucker Base Salary, as determined from time to time by the Company’s board of directors. Additionally, Dr. Tucker will receive 750,000 RSUs as equity compensation. 375,500 of such RSUs shall be subject to time-based vesting (the “Tucker Time Based RSUs”), and the remaining 375,500 of such RSUs shall be subject to performance-based vesting (the “Tucker Performance RSUs”). The RSUs shall be subject to the terms and conditions of the Company’s 2020 Long-Term Incentive Plan (the “LTIP”). The Tucker Time Based RSUs shall vest in quarters on each of the first four anniversaries of the Tucker Effective Date, and the Tucker Performance RSUs shall vest based on the achievement of performance milestones established by the Company.

The Tucker Employment Agreement will remain in effect until terminated by either party, unless the Company or Dr. Tucker delivers advance written notice of termination to the other party at least 30 days prior. In addition, the Tucker Employment Agreement is subject to early termination by him or the Company in accordance with the terms of the Tucker Employment Agreement.

Pursuant to the Tucker Employment Agreement, if Dr. Tucker’s employment is terminated by the Company without cause or by Dr. Tucker for good reason, then the Company must pay Dr. Tucker, in addition to any then-accrued and unpaid obligations owed to him, 12 months of the then-current Tucker Base Salary.

The Tucker Employment Agreement also contains covenants restricting Dr. Tucker from soliciting the Company’s employees or customers for a period of 12 months after the termination of Dr. Tucker’s employment with the Company and prohibiting him from disclosure of confidential information regarding the Company at any time.

Please also note that Tucker Employment Agreement requires completion of the amalgamation, as defined in the Amalgamation Agreement and there can be no assurances of such completion being achieved.

Appointment of Chief Scientific Officer

On May 24, 2021, Dr. Peter Facchini, 57, entered into an employment agreement (the “Facchini Employment Agreement”) with the Company pursuant to which he will become the Company’s chief scientific officer, effective as of the Effective Date (the “Facchini Effective Date”).

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Enveric Biosciences, Inc. and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

Dr. Facchini has served as chief scientific officer of MagicMed since April 2020. From 2019 until 2020, he held the role of Chief Scientific Officer at Willow Biosciences Inc. until leaving to co-found MagicMed. From 2013 until 2019, Dr. Facchini held the role of Chief Scientific Officer, Director and Founder of Epimeron Inc. Dr. Facchini has also been a Professor of Plant Biochemistry in the Department of Biological Sciences at the University of Calgary for 25 years.

Pursuant to the Facchini Employment Agreement, effective as of the Facchini Effective Date Dr. Facchini will receive a base salary of C$295,000 annually (“Facchini Base Salary”). Dr. Facchini will also receive a one-time signing bonus of C$50,000 as well as up to 130,000 RSUs, depending on the price of the Company Shares at the Facchini Effective Date. Half of any such RSUs shall be subject to time-based vesting, and the remaining half of any such RSUs shall be subject to performance-based vesting. Beginning in calendar year 2022, Dr. Facchini is eligible to receive annual performance bonuses of up to 50% of the Facchini Base Salary, as determined from time to time by the Company’s board of directors. Additionally, Dr. Facchini will receive 525,000 RSUs as equity compensation. 262,500 of such RSUs shall be subject to time-based vesting (the “Facchini Time Based RSUs”), and the remaining 262,500 of such RSUs shall be subject to performance-based vesting (the “Facchini Performance RSUs”). The RSUs shall be subject to the terms and conditions of the LTIP. The Facchini Time Based RSUs shall vest in quarters on each of the first four anniversaries of the Facchini Effective Date, and the Facchini Performance RSUs shall vest based on the achievement of performance milestones established by the Company.

The Facchini Employment Agreement will remain in effect until terminated by either party, unless the Company delivers advance written notice of termination to Dr. Facchini or Dr. Facchini delivers advance written notice of termination to the Company at least 30 days prior. In addition, the Facchini Employment Agreement is subject to early termination by him or the Company in accordance with the terms of the Facchini Employment Agreement.

Pursuant to the Facchini Employment Agreement, if Dr. Facchini’s employment is terminated by the Company without cause or by Dr. Facchini for good reason, then the Company must pay Dr. Facchini, in addition to any then-accrued and unpaid obligations owed to him, 12 months of the then-current Facchini Base Salary.

The Facchini Employment Agreement also contains covenants restricting Dr. Facchini from soliciting the Company’s employees or customers for a period of 12 months after the termination of Dr. Facchini’s employment with the Company and prohibiting him from disclosure of confidential information regarding the Company at any time.

Please also note that Facchini Employment Agreement requires completion of the amalgamation, as defined in the Amalgamation Agreement and there can be no assurances of such completion being achieved.

Appointment of Chief Technology Officer

On May 24, 2021, Dr. Jillian Hagel, 42, entered into an employment agreement (the “Hagel Employment Agreement”) with the Company pursuant to which she will become the Company’s chief technology officer, effective as of the Effective Date (the “Hagel Effective Date”).

Dr. Hagel has served as chief technology officer of MagicMed since April 2020. From 2019 until 2020, she acted as Vice President of Applied Sciences for Willow Biosciences Inc. until leaving in April 2020 to co-found MagicMed. From 2013 until 2019, Dr. Hagel’s primary employment was acting as Chief Operating Officer of Epimeron Inc. Dr. Hagel received her PhD in plant biochemistry from the University of Calgary.

Pursuant to the Hagel Employment Agreement, effective as of the Hagel Effective Date Dr. Hagel will receive a base salary of C$295,000 annually (“Hagel Base Salary”). Dr. Hagel will also receive a one-time signing bonus of C$50,000 as well as up to 130,000 RSUs, depending on the price of the Company Shares at the Hagel Effective Date. Half of any such RSUs shall be subject to time-based vesting, and the remaining half of any such RSUs shall be subject to performance-based vesting. Beginning in calendar year 2022, Dr. Hagel is eligible to receive annual performance bonuses of up to 50% of the Hagel Base Salary, as determined from time-to-time by the Company’s board of directors. Additionally, Dr. Hagel will receive 525,000 RSUs as equity compensation. 262,500 of such RSUs shall be subject to time-based vesting (the “Hagel Time Based RSUs”), and the remaining 262,500 of such RSUs shall be subject to performance-based vesting (the “Hagel Performance RSUs”). The RSUs shall be subject to the terms and conditions of the LTIP. The Hagel Time Based RSUs shall vest in quarters on each of the first four anniversaries of the Hagel Effective Date, and the Hagel Performance RSUs shall vest based on the achievement of performance milestones established by the Company.

-16-

Enveric Biosciences, Inc. and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

The Hagel Employment Agreement will remain in effect until terminated by either party, unless the Company delivers advance written notice of termination to Dr. Hagel or Dr. Hagel delivers advance written notice of termination to the Company at least 30 days prior. In addition, the Hagel Employment Agreement is subject to early termination by her or the Company in accordance with the terms of the Hagel Employment Agreement.

Pursuant to the Hagel Employment Agreement, if Dr. Hagel’s employment is terminated by the Company without cause or by Dr. Hagel for good reason, then the Company must pay Dr. Hagel, in addition to any then-accrued and unpaid obligations owed to her, 12 months of the then-current Hagel Base Salary.

The Hagel Employment Agreement also contains covenants restricting Dr. Hagel from soliciting the Company’s employees or customers for a period of 12 months after the termination of Dr. Hagel’s employment with the Company and prohibiting her from disclosure of confidential information regarding the Company at any time.

Please also note that Hagel Employment Agreement requires completion of the amalgamation, as defined in the Amalgamation Agreement and there can be no assurances of such completion being achieved.

NOTE 5 - SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

Offerings

On January 14, 2021, the Company completed an offering of 2,221,334 shares of Common Stock and pre-funded warrants at approximately $4.50 per share and a concurrent private placement of warrants to purchase 1,666,019 shares of Common Stock at $4.95 per share, exercisable immediately and terminating five years after the date of issuance for gross proceeds of approximately $10,000,000. The net proceeds to the Company after deducting financial advisory fees and other costs and expenses were approximately $8,806,087.

On February 11, 2021, the Company completed an offering of 3,007,026 shares of Common Stock and a concurrent private placement of warrants to purchase 1,503,513 shares of Common Stock at $4.90 per share, exercisable immediately and terminating five year from the date of issuance for gross proceeds of approximately $12,800,000. The net proceeds to Enveric from the offering after deducting financial advisory fees and other costs and expenses were approximately $11,624,401.

Stock Options

SCHEDULE OF STOCK OPTIONS

	Number of Shares			Weighted Average Exercise Price (USD)		Weighted Average Grant Date Fair Value (USD)		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (USD)

Outstanding – January 1, 2021		929,765		$	1.53	$	2.50
Exercised		(143,796	)	$	0.23	$	5.69
Expired forfeited, or cancelled		(560,404	)	$	1.65	$	1.66
Outstanding – June 30, 2021		225,565		$	2.06	$	2.59		5.9	$	82,420

Exercisable at June 30, 2021		225,565		$	2.06	$	2.59		5.9	$	82,420

The Company’s stock based compensation expense related to stock options for the three months ended June 30, 2021 and 2020 was $0 and $0, respectively. The Company’s stock based compensation expense related to stock options for the six months ended June 30, 2021 and 2020 was $0 and $0, respectively. As of June 30, 2021, the Company had $0 in unamortized stock option expense.

During the first quarter 2021, the Company exchanged options to purchase 560,404 shares of common stock for 325,410 restricted stock units and 42,125 restricted stock awards. In connection with this exchange, the Company recognized $298,714 in inducement expense related to the increase in fair value of the new awards over the old awards, which is included in other expenses on the Company’s statement of operations and comprehensive loss.

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Enveric Biosciences, Inc. and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

Restricted Stock Awards

The Company’s activity in restricted common stock was as follows for the six months ended June 30, 2021:

	Number of shares			Weighted average grant date fair value
Non–vested at January 1, 2021		-		$	-
Granted		70,986		$	4.18
Vested		(57,688	)	$	4.32
Non–vested at June 30, 2021		13,298		$	3.61

For the three months ended June 30, 2021 and 2020, the Company recorded $24,003 and $0, in stock-based compensation expense related to restricted stock awards, respectively. For the six months ended June 30, 2021 and 2020, the Company recorded $56,114 and $0, in stock-based compensation expense related to restricted stock awards, respectively. As of June 30, 2021, unamortized stock-based compensation costs related to restricted share awards was $48,006, which will be recognized over a weighted average period of 0.50 years.

Issuance of Restricted Stock Units

The Company’s activity in restricted stock units was as follows for the six months ended June 30, 2021:

	Number of shares			Weighted average grant date fair value
Non–vested at January 1, 2021		-		$	-
Granted		3,804,284		$	4.13
Vested		(1,207,825	)	$	4.46
Non–vested at June 30, 2021		2,596,459		$	3.97

For the three months ended June 30, 2021 and 2020, the Company recorded $748,603 and $0, respectively, in stock-based compensation expense related to restricted stock units. For the six months ended June 30, 2021 and 2020, the Company recorded $4,307,826 and $0, respectively, in stock-based compensation expense related to restricted stock units, which is a component of general and administrative expenses in the condensed consolidated statement of operations. As of June 30, 2021, the Company had unamortized stock-based compensation costs related to restricted stock units of $2,950,612 which will be recognized over a weighted average period of 3.2 years and unamortized stock based costs related to restricted stock units of $6,966,721 which will be recognized upon achievement of specified milestones.

-18-

Enveric Biosciences, Inc. and Subsidiary

Notes to Unaudited Condensed Consolidated Financial Statements

Warrants

The following table summarizes information about shares issuable under warrants outstanding at June 30, 2021:

SCHEDULE OF WARRANTS

	Warrant shares outstanding			Weighted average exercise price (USD)		Weighted average remaining life		Intrinsic value
Outstanding at January 1, 2021		3,661,178		$	1.98		5.0	$	8,040,836
Issued		4,146,146		$	4.20
Exercised		(3,253,714	)	$	1.10
Outstanding at June 30, 2021		4,553,610		$	4.63		4.7	$	365,421

Exercisable at June 30, 2021		4,553,610		$	4.63		4.7	$	365,421

NOTE 6 - SUBSEQUENT EVENTS

Registration Statement on Form S-3

On July 2, 2021, the Company filed a registration statement on Form S-3 (SEC File No. 333- 257690) relating to the sale of up to $200,000,000 in aggregate amount of securities of the Company identified in the prospectus that forms a part of the registration statement. The registration statement was declared effective by the SEC on July 9, 2021.

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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 condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Unless stated otherwise, references in this Quarterly Report on Form 10-Q to “us,” “we,” “our,” or our “Company” and similar terms refer to Enveric Biosciences, Inc., a Delaware corporation.

Cautionary Note Regarding Forward-Looking Statements

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

●	our dependence on the success of our prospective product candidates, which are in 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 IND application filings and into clinical development;
●	the impact of the novel coronavirus (COVID-19) on our business, including our current plans for product development, as well as any currently ongoing preclinical studies and clinical trials and any future studies or other development or commercialization activities;
●	the limited study on the effects of medical cannabinoids, and the chance that future clinical research studies may lead to conclusions that dispute or conflict with our understanding and belief regarding the medical benefits, viability, safety, efficacy, dosing, and social acceptance of cannabinoids;
●	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;
●	the ability to establish or maintain collaborations on the development of therapeutic candidates;
●	the ability to obtain appropriate or necessary governmental approvals to market potential products;
●	our ability to manufacture product candidates on a commercial scale or in collaborations with third parties;
●	our significant and increasing liquidity needs and potential requirements for additional funding;
●	our ability to obtain future funding for developmental products and working capital and to obtain such funding on commercially reasonable terms;
●	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; and
●	political, economic, and military instability in Israel which may impede our development programs.

For a more detailed discussion of these and other factors that may affect our business and that could cause the actual results to differ materially from those projected in these forward-looking statements, see the risk factors and uncertainties set forth in Part II, Item 1A of this Form 10-Q and Part I, Item 1A of the annual report on Form 10-K filed with the SEC on April 1, 2021. 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.

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Business Overview

We are an early-development-stage biosciences company that is developing innovative, evidence-based prescription products and combination therapies containing cannabinoids to address unmet needs in cancer care. We seek to improve the lives of patients suffering from cancer, initially by developing palliative and supportive care products for people suffering from certain side effects of cancer and cancer treatment such as pain or skin irritation. We currently intend to offer such palliative and supportive care products in the United States, following approval through established regulatory pathways.

We are also aiming to advance a pipeline of novel cannabinoid combination therapies for hard-to-treat cancers, including glioblastoma multiforme (GBM) and several other indications, which are currently being researched.

We intend to bring together leading oncology clinicians and researchers, academic and industry partners so as to develop both external proprietary products and a robust internal pipeline of product candidates aimed at improving quality of life and outcomes for cancer patients. We intend to evaluate options to out-license its proprietary technology as it moves along the regulatory pathway as well as evaluating building a small, targeted selling organization and will potentially utilize a hybrid approach based on the product indication and the market opportunity.

In developing its product candidates, we intend to focus on cannabinoids derived from hemp, other botanical sources, and synthetic materials containing no tetrahydrocannabinol (THC) in order to comply with U.S. federal regulations. Of the potential cannabinoids to be used in therapeutic formulations, THC, which is responsible for the psychoactive properties of marijuana, can result in undesirable mood effects. Cannabidiol (CBD) and cannabigerol (CBG), on the other hand, are not psychotropic and are therefore more attractive candidates for translation into therapeutic practice. In the future, we may utilize cannabinoids that are derived from cannabis plants, which may contain THC; however, we only intend to do so in jurisdictions where THC is legal. These product candidates will then be studied through a typical FDA drug approval process.

Tender Offer, Spin-Off and Reverse Stock Split

On December 30, 2020, pursuant to the previously announced Tender Offer Support Agreement and Termination of Amalgamation Agreement dated August 12, 2020 (“Original Amalgamation Agreement”), as amended by that certain Amendment No. 1 to the Tender Offer Support Agreement and Termination of Amalgamation Agreement dated December 18, 2020 (as amended the “Tender Agreement”), the Company completed a tender offer (“Offer”) to purchase all of the outstanding common shares of Jay Pharma, Inc., a Canada corporation and a wholly-owned subsidiary of the Company (“Jay Pharma”), for the number of shares of Company common stock, par value $0.01 per share (“Common Stock”) or Series B Preferred Stock, as applicable, equal to the exchange ratio of 0.8849 (the “Exchange Ratio”), and Jay Pharma became a wholly-owned subsidiary of the Company, on the terms and conditions set forth in the Tender Agreement. In connection with the Offer, the Company changed its name from AMERI Holdings, Inc. to Enveric Biosciences, Inc. The Offer has been accounted for as a “reverse merger” under the acquisition method of accounting for business combinations with Jay Pharma treated as the accounting acquirer of Ameri. As such, the historical financial statements of Jay Pharma have become the historical financial statements of Ameri, or the combined company, and are included in this filing labeled “Enveric Biosciences, Inc.” As a result of the Offer, historical common stock, stock options and additional paid-in capital, including share and per share amounts, have been retroactively adjusted to reflect the equity structure of the combined company, including the effect of the Exchange Ratio and the Common Stock.

Prior to the completion of the Offer, on December 30, 2020, pursuant to a Share Purchase Agreement, Ameri contributed to Ameri100 Inc. (“Private Ameri”) all of the issued and outstanding equity interests of the existing subsidiaries of Ameri, constituting the entire business and operations of Ameri and its subsidiaries, and Private Ameri assumed the liabilities of such subsidiaries. All of the issued and outstanding shares of Series A preferred stock of Ameri were redeemed for an equal number of shares of Series A preferred stock of Private Ameri.

Immediately following the completion of the Offer, on December 30, 2020, the Company effected a 1-for-4 reverse stock split of the issued and outstanding Common Stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, the per share exercise price of, and the number of shares of Company Common Stock underlying, our stock options and warrants outstanding immediately prior to the Reverse Stock Split were automatically proportionally adjusted based on the 1-for-4 split ratio in accordance with the terms of such options and warrants, as the case may be. Share and per-share amounts of Common Stock, options and warrants included herein have been adjusted to give effect to the Reverse Stock Split. The Reverse Stock Split did not alter the par value of the Common Stock, $0.01 per share, or modify any voting rights or other terms of the Common Stock. Unless otherwise noted, the accompanying financial statements and notes thereto, including the Exchange Ratio applied to historical Jay Pharma common stock and stock options, give retroactive effect to the Reverse Stock Split for all periods presented.

Recent Developments

January 2021 Offering

On January 14, 2021, we closed a registered direct offering of 1,610,679 shares of common stock and pre-funded warrants to purchase 610,679 shares of common stock, pursuant to a Securities Purchase Agreement (the “January 2021 Purchase Agreement”) with certain institutional investors at an offering price of $4.50 per share and $4.49 per pre-funded warrant (the “Pre-funded Warrant”), for gross proceeds of approximately $10,000,000 before the deduction of fees and offering expenses.

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The Pre-funded Warrants have an exercise price of $0.01 per share. The Pre-funded Warrants are immediately exercisable and may be exercised at any time after their original issuance until such Pre-funded Warrants are exercised in full. A holder of a Pre-funded Warrant may not exercise any portion of such holder’s Pre-funded Warrants to the extent that the holder, together with its affiliates, would beneficially own more than 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding shares of Common Stock immediately after exercise (the “Beneficial Ownership Limitation”), except that upon at least 61 days’ prior notice from the holder to the Company, the holder may increase the Beneficial Ownership Limitation to up to 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise.

Pursuant to the January 2021 Purchase Agreement, in a concurrent private placement (the “January 2021 Private Placement”) that also closed on January 14, 2021, the Company issued to the investors unregistered warrants to purchase up to 1,666,018 shares of Common Stock (the “January 2021 Warrants”). The January 2021 Warrants are exercisable immediately upon issuance and terminate five years following issuance and are exercisable at an exercise price of $4.95 per share, subject to adjustment as set forth therein. A holder of January 2021 Warrants does not have the right to exercise any portion of its January 2021 Warrants if the holder, together with its affiliates, would beneficially own in excess of the Beneficial Ownership Limitation; provided, however, that upon 61 days’ prior notice to the Company, the holder may increase or decrease the Beneficial Ownership Limitation, provided that in no event shall the Beneficial Ownership Limitation exceed 9.99%.

February 2021 Offering

On February 11, 2021, we closed a registered direct offering of 3,007,026 shares of common stock, pursuant to a Securities Purchase Agreement (the “February 2021 Purchase Agreement”) with certain institutional investors at an offering price of $4.27 per share, for gross proceeds of approximately $12,800,000 before the deduction of fees and offering expenses. The shares were offered by the Company pursuant to a shelf registration statement on Form S-3 (File No. 333-233260), previously filed with the SEC on August 14, 2019, and declared effective by the SEC on November 19, 2019.

Pursuant to the February 2021 Purchase Agreement, in a concurrent private placement (the “February 2021 Private Placement”) that also closed on February 11, 2021, the Company issued to the investors unregistered warrants to purchase up to 1,503,513 shares of Common Stock (the “February 2021 Warrants”). The February 2021 Warrants are exercisable immediately upon issuance and terminate five years following issuance and are exercisable at an exercise price of $4.90 per share, subject to adjustment as set forth therein. A holder of February 2021 Warrants does not have the right to exercise any portion of its February 2021 Warrants if the holder, together with its affiliates, would beneficially own in excess of the Beneficial Ownership Limitation; provided, however, that upon 61 days’ prior notice to the Company, the holder may increase or decrease the Beneficial Ownership Limitation, provided that in no event shall the Beneficial Ownership Limitation exceed 9.99%.

Palladium Warrants

In connection with its role as financial advisor to the Company in the January 2021 Direct Offering, the January 2021 Private Placement, the February 2021 Direct Offering, and the February 2021 Private Placement, the Company issued Palladium 155,493 warrants with an exercise price of $4.95 and 210,492 warrants with an exercise price of $4.90 (the “Palladium Warrants”) on February 11, 2021.

Stockholder Demand Letters

On January 21, 2021, the Company received a stockholder litigation demand letter from the law firm of Purcell Julie & Lefkowitz LLP, on behalf of James Self, a purported stockholder of our Company. The letter demands that the Company (i) deem ineffective the December 30, 2020 amendment to our Amended and Restated Certificate of Incorporation in which the Company effected a one-for-four reverse stock split of its common stock due to the manner in which non-votes by brokers were tabulated, (ii) seek appropriate relief for damages allegedly suffered by the company and its stockholders or seek a valid stockholder approval of the amendment and reverse stock split, and (iii) adopt adequate internal controls to prevent a recurrence of the alleged misconduct. The Company disputes that the amendment was ineffective or that there were any inadequate internal controls related to the same. However, to eliminate any questions about the amendment, the Company ratified the amendment at a special stockholders’ meeting pursuant to Section 204 of the Delaware General Corporation Law. This special stockholders’ meeting occurred on May 14, 2021. On May 14, 2021, the Company filed a Certificate of Validation with the State of Delaware to ratify the reverse stock split on December 30, 2020.

Development and Clinical Supply Agreement

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

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

Acquisition of Diverse Bio License Agreement

On March 5, 2021, the Company entered into an Exclusive License Agreement (the “DB Agreement”) with Diverse Biotech, Inc. (“Diverse”), pursuant to which the Company acquired an exclusive, perpetual license to develop five therapeutic candidates (collectively, the “Agents”) with the goal of alleviating the side effects that cancer patients experience. Under the terms of the DB Agreement, Diverse granted the Company an exclusive license to its intellectual property rights covering the Agents and its products. In exchange, the Company has granted Diverse the right to information relating to the Agents developed for the express purpose of using such information to obtain patent rights, which right terminates upon the issuance or denial of the patent rights.

The term of the DB Agreement shall continue for as long as the Company intends to develop or commercialize the new drugs, unless earlier terminated by either Party. The DB Agreement may be terminated by either party upon ninety (90) days written notice of an uncured material breach or in the event of bankruptcy or insolvency. In addition, the Company has the right to terminate the DB Agreement at any time upon sixty (60) days’ prior written notice to Diverse.

Amalgamation Agreement with MagicMed Industries Inc.

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Appointment of Chief Financial Officer

On April 9, 2021, Carter J. Ward, 56, was appointed as the Company’s chief financial officer, effective May 15, 2021 (the “Ward Effective Date”).

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Appointment of Chief Executive Officer

The Tucker Employment Agreement requires completion of the amalgamation, as defined in the Amalgamation Agreement and there can be no assurances of such completion being achieved.

Appointment of Chief Scientific Officer

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SEC Form 10-Q filed by Enveric Biosciences, Inc.