10-Q - ENVB - Equibles

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<br> Act of 1934

Forthe quarterly period ended: ### June 30, 2024

☐	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<br> or other jurisdiction of<br><br> <br>incorporation<br> or organization)	(IRS<br> Employer<br><br> <br>Identification<br> No.)
4851 Tamiami Trail N, Suite 200<br><br> <br>Naples, FL	34103
---	---
(Address<br> of principal executive offices)	(Zip<br> code)
(239) 302-1707
---
(Registrant’s<br> 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<br> Stock, $0.01 par value per share	ENVB	The<br> 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<br> accelerated filer ☐	Accelerated<br> filer ☐
Non-accelerated<br> filer ☒	Smaller<br> reporting company ☒
	Emerging<br> 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<br> 1.	Financial<br> Statements
	Condensed<br> Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023	2
	Unaudited<br> Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2024 and 2023	3
	Unaudited<br> Condensed Consolidated Statements of Changes in Mezzanine Equity and Shareholders’ Equity for the three and six months ended<br> June 30, 2024 and 2023	4
	Unaudited<br> Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	5
	Notes<br> to Unaudited Condensed Consolidated Financial Statements	6
Item<br> 2.	Management’s<br> Discussion and Analysis of Financial Condition and Results of Operations	17
Item<br> 3.	Quantitative<br> and Qualitative Disclosures About Market Risk	25
Item<br> 4.	Controls<br> and Procedures	25
	PART II - OTHER INFORMATION	26
Item<br> 1.	Legal<br> Proceedings	26
Item<br> 1A.	Risk<br> Factors	26
Item<br> 2.	Unregistered<br> Sales of Equity Securities and Use of Proceeds	27
Item<br> 3.	Defaults<br> Upon Senior Securities	27
Item<br> 4.	Mine<br> Safety Disclosures	27
Item<br> 5.	Other<br> Information	27
Item<br> 6.	Exhibits	28
	Signatures	29

ENVERIC

BIOSCIENCES, INC. AND SUBSIDIARIES

CONDENSED

CONSOLIDATED BALANCE SHEETS

			December<br> 31, 2023

ASSETS
Current<br> 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<br> 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,<br> AND SHAREHOLDERS’ EQUITY
Current<br> 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<br> (Note 8)	-			-
Mezzanine equity
Series C redeemable<br> preferred stock, 0.01 par value, 100,000 shares authorized, and 0 shares issued and outstanding as of June 30, 2024 and December<br> 31, 2023	—			—
Total<br> mezzanine equity	—			—
Shareholders’ equity
Preferred stock, 0.01 par value, 20,000,000<br> shares authorized; Series B preferred stock, 0.01 par value, 3,600,000 shares authorized, 0 shares issued and outstanding as of<br> June 30, 2024 and December 31, 2023	—			—
Common stock, 0.01 par value, 100,000,000<br> 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<br> shareholders’ equity	5,406,264			1,956,336
Total<br> liabilities, mezzanine equity, and shareholders’ equity	6,051,604		$	4,299,840

All values are in US Dollars.

See

the accompanying notes to the unaudited condensed consolidated financial statements.

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ENVERIC

BIOSCIENCES, INC. AND SUBSIDIARIES

UNAUDITED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	2024			2023			2024			2023
	For<br> the Three Months Ended June 30,						For<br> the Six Months Ended June 30,
	2024			2023			2024			2023
Operating expenses
General and<br> 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<br> 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<br> warrant liabilities		10,805			(233,821	)		20,844			(183,164	)
Change in fair value of<br> investment option liability		7,767			(1,082,141	)		19,165			(962,636	)
Change in fair value of<br> derivative liability		—			714,000			—			727,000
Interest income (expense),<br> net		(35	)		916			661			905
Total<br> 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<br> attributable to non-controlling interest		—			6,712			—			19,041
Less deemed dividends attributable<br> to accretion of embedded derivative at redemption value		—			36,997			—			147,988
Net loss attributable to<br> 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<br> loss	$	(1,894,046	)	$	(6,411,048	)	$	(4,333,055	)	$	(11,209,927	)
Net loss per share -<br> basic and diluted	$	(0.25	)	$	(3.04	)	$	(0.75	)	$	(5.35	)
Weighted average shares outstanding, basic<br> 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.

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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<br><br> <br>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<br> 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<br> shares (see Note 7)		228,690		2,287		320,166			—			—			—			322,453
Exercise of Inducement<br> Warrants for common stock		1,954,000		19,540		2,657,440			—			—			—			2,676,980
Proceeds from the subscription<br> 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<br> 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<br> gain		—		—		—			—			—			17,906			17,906
Net loss	-	—		—		—			—			(2,456,915	)		—			(2,456,915	)
Balance at March 31,<br> 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<br> the Purchase Agreement, net of offering costs of 82,850		125,000		1,250		(1,250	)		—			—			—			—
Issuance of direct offering<br> shares (see Note 7)		458,000		4,580		444,260			—			—			—			448,840
Issuance of common shares<br> for vested RSU		1,563		16		(16	)		—			—			—			—
Foreign exchange translation<br> loss		—		—		—			—			—			(14,652	)		(14,652	)
Net loss	-	—		—		—			—			(1,879,394	)		—			(1,879,394	)
Balance at June 30,<br> 2024	-	7,878,568	$	78,785	$	106,729,801		$	—		$	(100,835,827	)	$	(566,495	)	$	5,406,264

All values are in US Dollars.

	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<br> to redeemable non-controlling interest		—			12,329			12,329			—		—		(12,329	)		—			—			(12,329	)
Accretion of embedded derivative<br> to redemption value		—			110,991			110,991			—		—		(110,991	)		—			—			(110,991	)
Foreign exchange translation<br> gain		—			—			—			—		—		—			—			1,968			1,968
Net loss		—			—			—			—		—		—			(4,677,527	)		—			(4,677,527	)
Balance at March 31,<br> 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
Balance value		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<br> to redeemable		—			6,712			6,712			—		—		(6,712	)		—			—			(6,712	)
Accretion of embedded derivative<br> to redemption value		—			36,997			36,997			—		—		(36,997	)		—			—			(36,997	)
Redemption of Series A<br> preferred stock		(1,000	)		(1,052,057	)		(1,052,057	)		—		—		—			—			—			—
Issuance of common shares<br> in exchange for RSU conversions from the reduction in force		—			—			—			63,511		635		(635	)		—			—			—
Foreign exchange translation<br> loss		—			—			—			—		—		—			—			(11,286	)		(11,286	)
Net loss		—			—			—			—		—		—			(6,356,053	)		—			(6,356,053	)
Balance at June 30,<br> 2023		—		$	—		$	—			2,141,782	$	21,417	$	95,640,571		$	(90,241,366	)	$	(546,052	)	$	4,874,570
Balance value		—		$	—		$	—			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.

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ENVERIC

BIOSCIENCES, INC. AND SUBSIDIARIES

UNAUDITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	2024			2023
	For the Six<br> Months Ended June 30,
	2024			2023
Cash Flows From Operating<br> Activities:
Net loss	$	(4,336,309	)	$	(11,033,580	)
Adjustments to reconcile<br> net loss to cash used in operating activities
Change in fair value of<br> warrant liability		(20,844	)		183,164
Change in fair value of<br> investment option liability		(19,165	)		962,636
Change in fair value of<br> derivative liability		—			(727,000	)
Stock-based compensation		721,102			1,412,573
Amortization of right of<br> use asset		—			54,703
Amortization of intangibles		84,376			84,375
Depreciation expense		85,812			88,629
Gain on disposal of property<br> and equipment		—			(4,212	)
Change<br> in operating assets and liabilities:
Prepaid expenses and other<br> current assets		(543,822	)		(1,111,913	)
Accounts payable and accrued<br> liabilities		(1,458,670	)		542,397
Right-of-use operating<br> lease asset and obligation		—			(54,702	)
Net cash used in operating<br> activities		(5,487,520	)		(9,602,930	)
Cash Flows From Investing<br> Activities:
Purchases of property and<br> equipment		—			(5,187	)
Proceeds from disposal<br> of property and equipment		—			16,872
Net cash provided by investing<br> activities		—			11,685
Cash Flows From Financing<br> Activities:
Proceeds from the subscription<br> receivable related to the issuance of Inducement Warrants and the exercise of warrants and preferred investment options		1,804,819			—
Proceeds from exercise<br> of Inducement Warrants		2,676,980			—
Proceeds from common stock<br> sold under the Equity Distribution Agreement, net of offering costs		2,290,186			—
Proceeds from common stock<br> sold under the Purchase Agreement, net of offering costs		82,026			—
Payment for offering costs<br> previously accrued		(161,312	)		—
Redemption of Series A<br> Preferred Stock		—			(1,052,057	)
Net cash provided by (used<br> in) financing activities		6,692,699			(1,052,057	)
Effect of Foreign Exchange<br> 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<br> not paid	$	149		$	—
Deferred offering costs<br> charged to offering costs	$	240,969			—
Issuance of common shares<br> for offering costs	$	771,293		$	—
Preferred dividends<br> attributable to redeemable non-controlling interest	$	—		$	19,041
Accretion of embedded<br> derivative to redemption value	$	—		$	147,988

See

the accompanying notes to the unaudited condensed consolidated financial statements.

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ENVERIC

BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE

BUSINESS AND LIQUIDITY AND OTHER UNCERTAINTIES

Natureof 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.

GoingConcern, 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.

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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.

InflationRisks

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.

NasdaqNotice

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basisof 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.

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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.

Useof 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.

ForeignCurrency 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.

Concentrationof 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.

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NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Researchand 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.

IncomeTaxes

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.

Researchand 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.

NetLoss 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


Warrants to purchase shares of<br> 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<br> stock	70,000	1,070,000
Options to purchase<br> shares of common stock	23,082	36,579
Total potentially dilutive<br> securities	1,336,312	1,998,487

RecentAccounting 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.

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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

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:

SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

	June<br> 30, 2024		December<br> 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<br> receivable		261,058		145,349
Total<br> prepaid expenses and other current assets	$	2,017,383	$	1,293,554

NOTE

INTANGIBLE ASSETS

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

SCHEDULE OF INTANGIBLE ASSETS

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

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:

SCHEDULE OF PROPERTY PLANT AND EQUIPMENT NET OF ACCUMULATED DEPRECIATION

	June<br> 30, 2024			December<br> 31, 2023
Lab equipment	$	808,523		$	836,709
Computer equipment and leasehold improvements		27,422			28,379
Property and equipment, gross		27,422			28,379
Less: Accumulated depreciation		(430,831	)		(357,711	)
Property<br> 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.

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NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE

ACCRUED LIABILITIES

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

SCHEDULE OF ACCRUED LIABILITIES

	June<br> 30, 2024		December<br> 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<br> accrued expenses	$	176,373	$	1,075,643

NOTE

SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

EquityDistribution 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.

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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.

LincolnPark 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.

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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.

StockOptions

Amendmentto 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:

SCHEDULE OF STOCK OPTION

			Weighted<br> Average Exercise Price		Weighted<br> Average Grant Date Fair Value			Aggregate<br> Intrinsic Value
Outstanding at December 31,<br> 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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NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Issuanceof Restricted Stock Units

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

SCHEDULE OF RESTRICTED STOCK UNITS AND AWARDS ACTIVITY

			Weighted<br> 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:

SCHEDULE OF STOCK-BASED COMPENSATION FOR RESTRICTED STOCK UNITS

	2024		2023		2024		2023
	Three<br> Months Ended June 30,				Six<br> 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
Stock-based compensation<br> expense for RSUs	$	369,200	$	825,363	$	727,370	$	1,310,112

Warrantsand Preferred Investment Options

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

SCHEDULE OF WARRANTS OUTSTANDING

			Weighted<br> average exercise price			Intrinsic<br> value
Outstanding at December 31,<br> 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:

SCHEDULE OF WARRANTS AND INVESTMENT OPTIONS

		Weighted<br> average exercise price			Intrinsic<br> value
Outstanding at December 31,<br> 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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NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE

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.

AustralianSubsidiary 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.

Purchaseagreement 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.

OtherConsulting 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.

Reductionin 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.

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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:

SCHEDULE OF REDUCTION IN FORCE/RESTRUCTURING ACTIVITY

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

NOTE

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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Item2. Management’s discussion and analysis of financial condition and results of operations

Theinformation set forth below should be read in conjunction with the unaudited condensed consolidated financial statements and notes theretoincluded 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.

CautionaryNote 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<br> dependence on the success of our prospective product candidates, which are in the early stages of development and may not reach a<br> particular stage in development, receive regulatory approval, or be successfully commercialized;
●	potential<br> difficulties that may delay, suspend, or scale back our efforts to advance additional early research programs through preclinical<br> development and investigational new drug (“IND”) application filings and into clinical development;
●	the<br> limited study on the effects of medical psychedelics, and the chance that future clinical research studies may lead to conclusions<br> that dispute or conflict with our understanding and belief regarding the medical benefits, viability, safety, efficacy, dosing, and<br> social acceptance of psychedelics;
●	the<br> expensive, time-consuming, and uncertain nature of clinical trials, which are susceptible to change, delays, termination, and differing<br> interpretations;
●	the<br> ability to establish that potential products are efficacious or safe in preclinical or clinical trials;
●	the<br> fact that our current and future preclinical and clinical studies may be conducted outside the United States, and the United States<br> Food and Drug Administration may not accept data from such studies to support any new drug applications we may submit after completing<br> the applicable developmental and regulatory prerequisites;
●	our<br> ability to effectively and efficiently build, maintain and legally protect our molecular derivatives library so that it can be an<br> essential building block from which those in the biotech industry can develop new patented products;
●	our<br> ability to establish or maintain collaborations on the development of therapeutic candidates;
●	our<br> ability to obtain appropriate or necessary governmental approvals to market potential products;
●	our<br> ability to manufacture product candidates on a commercial scale or in collaborations with third parties;

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| --- | | ● | 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.

BusinessOverview

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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RecentDevelopments

EquityDistribution 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 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.

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LincolnPark 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.

InducementWarrants

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.

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Resultsof Operations

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

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

Generaland 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.

Researchand 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.

Depreciationand 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%.

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Changein 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.

Changein 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.

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

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Generaland 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.

Researchand 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.

Depreciationand 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%.

Changein 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.

Changein 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.

Changein Fair Value of Derivative Liability

GoingConcern, 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.

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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.

CashFlows

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

CashFlows 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<br> 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<br> Rate on Changes on Cash		9,395			826
Net increase (decrease)<br> in cash	$	1,214,574		$	(10,642,476	)

OperatingActivities

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.

InvestingActivities

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.

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FinancingActivities

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.

CriticalAccounting 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.

Item3. 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.

Item4. Controls and Procedures

Evaluationof 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.

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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’sRemediation 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.

Changesin 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

Item1. 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.

Item1A. 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.

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Inthe event that we fail to regain compliance with the listing requirements of The Nasdaq Capital Market or satisfy any of the listingrequirements 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<br> limited availability of market quotations for our securities;
●	a<br> determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere<br> to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
●	a<br> limited amount of news and analyst coverage for our Company; and
●	a<br> decreased ability to issue additional securities (including pursuant to short-form registration statements on Form S-3 or obtain<br> additional financing in the future).

Item2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item3. Defaults Upon Senior Securities

None.

Item4. Mine Safety Disclosures

Not applicable.

Item5. Other Information

None.

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Item6. 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<br> pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer
31.2	Certification<br> pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Financial and Accounting Officer
32.1	Certification<br> pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer, Principal Financial and Accounting<br> Officer
101.INS	Inline<br> XBRL Instance Document
101.SCH	Inline<br> XBRL Taxonomy Extension Schema
101.CAL	Inline<br> XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline<br> XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline<br> XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	Inline<br> XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover<br> Page Interactive Data File (embedded within the Inline XBRL document)

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| --- |

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<br> 12, 2024	By:	/s/ Dr. Joseph Tucker
		Joseph<br> Tucker, Ph.D
		Chief<br> Executive Officer
		(Principal<br> Executive Officer)

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

| 29 |

| --- |

EXHIBIT31.1

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

Pursuant to Section 302 of the Sarbanes-OxleyAct 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:<br> August 12, 2024	/s/ Dr. Joseph Tucker
	Joseph<br> Tucker, Ph.D.
	Chief<br> Executive Officer (Principal Executive Officer)

EXHIBIT31.2

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

Pursuant to Section 302 of the Sarbanes-OxleyAct 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”);

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:

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

EXHIBIT32.1

CERTIFICATIONPURSUANT TO 18 U.S.C. SECTION 1350,

ASADOPTED PURSUANT TO

SECTION906 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<br> Tucker, Ph.D.
	Chief<br> Executive Officer
	(Principal<br> Executive Officer)
By:	/s/ Kevin Coveney
	Kevin<br> Coveney
	Chief<br> Financial Officer
	(Principal<br> Financial and Accounting Officer)