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 Act of 1934

Forthe quarterly period ended: ### March 31, 2023

☐

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

For

the transition period from ___ to ___

Commission

File Number 001-38286

ENVERIC

BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)

Delaware	95-4484725
(State<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 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 (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large<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. ☐

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

As

of May 12, 2023, there were 2,078,271 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 March 31, 2023 (Unaudited) and December 31, 2022	1
	Unaudited<br> Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2023 and 2022	2
	Unaudited<br> Condensed Consolidated Statements of Changes in Mezzanine Equity and Shareholders’ Equity for the three months ended March 31,<br> 2023 and 2022	3
	Unaudited<br> Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	4
	Notes<br> to Unaudited Condensed Consolidated Financial Statements	5
Item<br> 2.	Management’s<br> Discussion and Analysis of Financial Condition and Results of Operations	20
Item<br> 3.	Quantitative<br> and Qualitative Disclosures About Market Risk	26
Item<br> 4.	Controls<br> and Procedures	26
	PART II - OTHER INFORMATION
Item<br> 1.	Legal<br> Proceedings	27
Item<br> 1A.	Risk<br> Factors	27
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	30

ENVERIC

BIOSCIENCES, INC. AND SUBSIDIARIES

CONDENSED

CONSOLIDATED BALANCE SHEETS

			December<br> 31, 2022

ASSETS
Current<br> assets:
Cash	12,561,813		$	17,723,884
Prepaid expenses and other current assets	2,277,187			708,053
Total<br> current assets	14,839,000			18,431,937
Other<br> assets:
Property and equipment,<br> net	638,935			677,485
Right-of-use operating<br> lease asset	37,041			63,817
Intangible assets, net	337,498			379,686
Total<br> other assets	1,013,474			1,120,988
Total<br> assets	15,852,474		$	19,552,925
LIABILITIES, MEZZANINE EQUITY,<br> AND SHAREHOLDERS’ EQUITY
Current<br> liabilities:
Accounts payable	1,792,959		$	463,275
Accrued liabilities	1,028,182			1,705,655
Current portion of right-of-use<br> operating lease obligation	37,044			63,820
Investment option liability	731,503			851,008
Warrant liability	134,558			185,215
Derivative<br> liability	714,000			727,000
Total<br> current liabilities	4,438,246		$	3,995,973
Commitments and contingencies<br> (Note 8)	-
Mezzanine equity
Series C redeemable preferred stock, 0.01<br> par value, 100,000 shares authorized, and 0 shares issued and outstanding as of March 31, 2023 and December 31, 2022	—			—
Redeemable<br> non-controlling interest	1,008,348			885,028
Total<br> mezzanine equity	1,008,348			885,028
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> March 31, 2023 and December 31, 2022	—			—
Common stock, 0.01 par value, 100,000,000<br> shares authorized, 2,078,271 shares issued and outstanding as of March 31, 2023 and December 31, 2022	20,782			20,782
Additional paid-in capital	94,805,177			94,395,662
Accumulated deficit	(83,885,313	)		(79,207,786	)
Accumulated<br> other comprehensive loss	(534,766	)		(536,734	)
Total<br> shareholders’ equity	10,405,880			14,671,924
Total<br> liabilities, mezzanine equity, and shareholders’ equity	15,852,474		$	19,552,925

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

	2023			2022
	For<br> the Three Months Ended March 31,
	2023			2022
Operating expenses
General and<br> administrative	$	2,784,191		$	2,767,866
Research and development		1,990,001			1,958,714
Depreciation<br> and amortization		86,486			69,265
Total<br> operating expenses		4,860,678			4,795,845
Loss from operations		(4,860,678	)		(4,795,845	)
Other income (expense)
Change in fair value of<br> warrant liabilities		50,657			275,969
Change in fair value of<br> investment option liability		119,505			—
Change in fair value of<br> derivative liability		13,000			—
Interest<br> expense		(11	)		(4,138	)
Total<br> other income		183,151			271,831
Net loss		(4,677,527	)		(4,524,014	)
Less preferred dividends<br> attributable to non-controlling interest		12,329			—
Less<br> deemed dividends attributable to accretion of embedded derivative at redemption value		110,991			—
Net loss attributable to<br> shareholders		(4,800,847	)		(4,524,014	)
Other comprehensive loss
Foreign currency translation		1,968			88,709
Comprehensive<br> loss	$	(4,798,879	)	$	(4,435,305	)
Net loss per share -<br> basic and diluted	$	(2.31	)	$	(5.34	)
Weighted average shares outstanding, basic<br> and diluted		2,078,271			847,136

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

	Shares		Amount		Equity				Shares		Amount		Capital			Deficit			Loss			Equity
	Redeemable<br> Non-controlling Interest				Total Mezzanine				Common<br> Stock				Additional Paid-In			Accumulated			Accumulated<br><br> <br>Other Comprehensive			Total<br><br> <br>Shareholders’
	Shares		Amount		Equity				Shares		Amount		Capital			Deficit			Loss			Equity
Balance<br> 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<br> compensation		—		—		—				—		—		532,835			—			—			532,835
Preferred<br> dividends attributable to redeemable non-controlling interest		—		12,329		12,329	-	-		—		—		(12,329	)		—			—			(12,329	)
Accretion<br> of embedded derivative to redemption value		—		110,991		110,991	-	-		—		—		(110,991	)		—			—			(110,991	)
Foreign<br> exchange translation gain		—		—		—				—		—		—			—			1,968			1,968
Net<br> loss		—		—		—	-	-		—		—		—			(4,677,527	)		—			(4,677,527	)
Balance<br> at March 31, 2023		1,000	$	1,008,348	$	1,008,348	-	-		2,078,271	$	20,782	$	94,805,177		$	(83,885,313	)	$	(534,766	)	$	10,405,880
	Shares		Amount		Capital			Deficit			Income<br> (Loss)			Total
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Common<br> Stock				Additional<br> Paid-In			Accumulated			Accumulated Other Comprehensive			Total<br><br> <br>Shareholders’
	Shares		Amount		Capital			Deficit			Income<br> (Loss)			Equity
Balance<br> at January 1, 2022		651,921	$	6,519	$	83,066,656		$	(60,736,453	)	$	(30,802	)	$	22,305,920
February<br> 2022 registered direct offering		400,000		4,000		5,798,464			—			—			5,802,464
Stock-based<br> compensation		—		—		768,619			—			—			768,619
Conversion<br> of RSUs into common shares		899		9		(9	)		—			—			—
Foreign<br> exchange translation gain		—		—		—			—			88,709			88,709
Net<br> loss		—		—		—			(4,524,014	)		—			(4,524,014	)
Balance<br> at March 31, 2022		1,052,820	$	10,528	$	89,633,730		$	(65,260,467	)	$	57,907		$	24,441,698

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

	2023			2022
	For<br> the Three Months Ended March 31,
	2023			2022
Cash Flows From Operating<br> Activities:
Net loss	$	(4,677,527	)	$	(4,524,014	)
Adjustments to reconcile<br> net loss to cash used in operating activities
Change in fair value of<br> warrant liability		(50,657	)		(275,969	)
Change in fair value of<br> investment option liability		(119,505	)		—
Change in fair value of<br> derivative liability		(13,000	)		—
Stock-based compensation		532,835			768,619
Amortization of right-of-use<br> asset		26,847			34,455
Amortization of intangible<br> assets		42,188			42,188
Depreciation expense		44,298			27,077
Change<br> in operating assets and liabilities:
Prepaid expenses and other<br> current assets		(1,549,354	)		(588,975	)
Accounts payable and accrued<br> liabilities		653,712			6,021
Right-of-use<br> operating lease liability		(26,846	)		(38,343	)
Net<br> cash used in operating activities		(5,137,009	)		(4,548,941	)
Cash Flows From Investing<br> Activities:
Purchases of property and equipment		(5,169	)		(505,507	)
Net<br> cash used in investing activities		(5,169	)		(505,507	)
Cash Flows From Financing<br> Activities:
Proceeds<br> from sale of common stock, warrants, and investment options, net of offering costs		—			9,397,884
Net<br> cash provided by financing activities		—			9,397,884
Effect of foreign exchange<br> rate on cash		(19,893	)		(4,900	)
Net (decrease) increase in cash		(5,162,071	)		4,338,536
Cash at beginning of period		17,723,884			17,355,999
Cash at end of period	$	12,561,813		$	21,694,535
Supplemental disclosure of cash and non-cash<br> transactions:
Cash paid for interest	$	11		$	4,138
Income taxes paid	$	—		$	—
Warrants issued in conjunction<br> with common stock issuance	$	—		$	3,595,420
Preferred dividends<br> attributable to redeemable non-controlling interest	$	12,329		$	—
Accretion of embedded<br> derivative to redemption value	$	110,991		$	—

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 Biosciences, Inc.” “Enveric” or the “Company”) is a pharmaceutical company developing innovative, evidence-based cannabinoid medicines. 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. (“HoldCo”), MagicMed Industries, Inc. (“MagicMed”), Enveric Canada, and Enveric Therapeutics, Pty. Ltd. (“Enveric Therapeutics”). The Company has an Amalgamation Agreement (“Amalgamation Agreement”) and tender agreement (“Tender Agreement”) with Jay Pharma, which was entered into in prior years.

MagicMed Industries develops and commercializes psychedelic-derived pharmaceutical candidates. MagicMed’s psychedelic derivatives library, the Psybrary™, is an essential building block from which the industry can develop new patented products. The initial focus of the Psybrary™ is on psilocybin and DMT derivatives, and it is then expected to be expanded to other psychedelics.

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

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.

AkosSpin-Off

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

ReverseStock Split

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

Australian Subsidiary

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

GoingConcern, Liquidity and Other Uncertainties

The

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

In

assessing the Company’s ability to continue as a going concern, the Company monitors and analyzes its cash and its ability to generate sufficient cash flow in the future to support its operating and capital expenditure commitments. At March 31, 2023, the Company had cash of $12,561,813

and

working capital of $10,400,754 . The Company’s current cash on hand is not sufficient enough 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 reducing the Company’s rate of spend, managing its cash flow, advancing its programs, and raising additional working capital through public or private equity or debt financings or other sources, which may include collaborations with third parties as well as disciplined cash spending, to increase the Company’s cash runway. See Note 9. Adequate additional financing may not be available to 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.

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

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ENVERIC

BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

In May 2023, the Company

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

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.

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 months ended March 31, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2022, and related notes thereto included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2023.

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

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 and the valuation of stock-based compensation, accruals associated with third party providers supporting research and development efforts, and estimated fair values of long lived assets used to record impairment charges related to intangible assets. Actual results could differ from those estimates.

ForeignCurrency Translation

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

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

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ENVERIC

                                        BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Adjustments that arise from exchange rate changes on transactions denominated in a currency other than the local currency are included in other comprehensive income (loss) in the condensed consolidated statements of operations and comprehensive income (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 March 31, 2023, the Company had greater than $250,000 at US financial institutions.

WarrantLiability and Investment Options

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

DerivativeLiability

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

Income Taxes

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

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                                        BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 months ended March 31, 2023, and 2022 excludes potentially dilutive securities. The computations of net loss per share for each period presented is the same for both basic and fully diluted. In accordance with ASC 260 “Earnings per Share” (“ASC 260”), penny warrants were included in the calculation of weighted average shares outstanding for the purposes of calculating basic and diluted earnings per share.

Potentially dilutive securities outlined in the table below have been excluded from the computation of diluted net loss per share the three months ended March 31, 2023, and 2022 because the effect of their inclusion would have been anti-dilutive.

SCHEDULE

OF POTENTIALLY DILUTIVE SECURITIES

	2023		2022
	For<br> the three months ended March 31,
	2023		2022
Warrants to purchase shares of<br> common stock		655,463		655,376
Restricted stock units - vested and unissued		65,312		55,717
Restricted stock units – unvested		87,733		95,863
Restricted stock awards - vested and unissued		708		843
Restricted stock awards – unvested		—		130
Investment options to purchase shares of common<br> stock		1,070,000		—
Options to purchase shares<br> of common stock		47,954		22,829
Total potentially dilutive<br> securities		1,927,170		830,758

FairValue Measurements

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

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

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

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

For certain financial instruments, including cash and accounts payable, the carrying amounts approximate their fair values as of March 31, 2023, and December 31, 2022 because of their short-term nature.

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                                        BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table provides the financial liabilities measured on a recurring basis and reported at fair value on the balance sheet as of March 31, 2023, and December 31, 2022, and indicates the fair value of the valuation inputs the Company utilized to determine such fair value of warrant liabilities, derivative liability, and investment options:

SCHEDULE

OF FAIR VALUE HIERARCHY OF VALUATION INPUTS ON RECURRING BASIS

	Level		March<br> 31, 2023		December<br> 31, 2022
	Level		March<br> 31, 2023		December<br> 31, 2022
Warrant liabilities - January 2021<br> Warrants		3	$	12	$	81
Warrant liabilities - February 2021 Warrants		3		34		79
Warrant liabilities -<br> February 2022 Warrants		3		134,512		185,055
Fair value of warrant liability			$	134,558	$	185,215
	Level		March<br> 31, 2023		December<br> 31, 2022
---	---	---	---	---	---	---
Derivative liability - May 2022		3	$	714,000	$	727,000
Fair value of derivative liability			$	714,000	$	727,000
	Level		March<br> 31, 2023		December<br> 31, 2022
---	---	---	---	---	---	---
Wainwright investment options		3	$	38,087	$	44,904
RD investment options		3		260,031		302,289
PIPE investment options		3		433,385		503,815
Fair value of investment<br> option liability			$	731,503	$	851,008

The warrant liabilities, derivative liability, and investment options are all classified as Level 3, for which there is no current market for these securities such as the determination of fair value requires significant judgment or estimation. Changes in fair value measurement categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.

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                                        BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Subsequentmeasurement

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

SCHEDULE

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

	Total Warrant<br><br> <br>Liabilities
Fair value as of December 31, 2022	$	185,215
Change in fair value		(50,657	)
Fair value as of March 31, 2023	$	134,558
	Total Derivative<br><br> <br>Liability
---	---	---	---
Fair value as of December 31, 2022	$	727,000
Change in fair value		(13,000	)
Fair value of derivative liability as<br> of March 31, 2023	$	714,000
	Total Investment<br><br> <br>Option Liability
---	---	---	---
Fair value as of December 31, 2022	$	851,008
Change in fair value		(119,505	)
Fair value of investment option liability<br> as of March 31, 2023	$	731,503

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                                        BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

SCHEDULE

OF BLACK SCHOLES VALUATION MODELS OF WARRANT LIABILITIES AND INVESTMENT OPTIONS

	January 2021<br><br> <br>Warrants			February 2021<br><br> <br>Warrants			February 2022<br><br> <br>Warrants			February 2022<br><br> <br>Post-Modification<br><br> <br>Warrants
Term (years)		2.8			2.9			3.9			4.8
Stock price	$	1.66		$	1.66		$	1.66		$	1.66
Exercise price	$	247.50		$	245.00		$	27.50		$	7.78
Dividend yield		—	%		—	%		—	%		—	%
Expected volatility		77.0	%		81.0	%		80.0	%		88.0	%
Risk free interest rate		3.90	%		3.80	%		3.70	%		3.60	%
Number of warrants		36,429			34,281			338,000			122,000
Value (per share)	$	0.00		$	0.00		$	0.15		$	0.69

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

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

The key inputs into the Black Scholes valuation model for the Level 3 valuations of the investment options as of March 31, 2023 are below:

	Wainwright<br><br> <br>Options			RD<br> Options			PIPE<br> Options
Term (years)		4.3			4.8			4.8
Stock price	$	1.66		$	1.66		$	1.66
Exercise price	$	10.00		$	7.78		$	7.78
Dividend yield		—	%		—	%		—	%
Expected volatility		88.0	%		88.0	%		88.0	%
Risk free interest rate		3.70	%		3.60	%		3.60	%
Number of investment options		70,000			375,000			625,000
Value (per share)	$	0.54		$	0.69		$	0.69

RedeemableNon-controlling Interest

In connection with the issuance of Akos Series A Preferred Stock, the Akos Purchase Agreement and certificate of designation contain a put right guaranteed by the Company as defined in Note 7. Applicable accounting guidance requires an equity instrument that is redeemable for cash or other assets to be classified outside of permanent equity if it is redeemable (a) at a fixed or determinable price on a fixed or determinable date, (b) at the option of the holder, or (c) upon the occurrence of an event that is not solely within the control of the issuer. As a result of this feature, the Company recorded the non-controlling interests as redeemable non-controlling interests and classified them in mezzanine equity within its unaudited condensed consolidated balance sheet initially at its acquisition-date estimated redemption value or fair value. In addition, the Company has elected to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument by accreting the embedded derivative at each reporting period over 12 months.

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                                        BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SegmentReporting

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

RecentAccounting Pronouncements

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

NOTE

INTANGIBLE ASSETS

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

SCHEDULE

OF FINITE LIVED INTANGIBLE ASSETS

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

For

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

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BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE

PROPERTY AND EQUIPMENT

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

SCHEDULE OF PROPERTY PLANT AND EQUIPMENT NET OF ACCUMULATED DEPRECIATION

	March<br> 31, 2023			December<br> 31, 2022
Lab equipment	$	834,274		$	831,123
Computer equipment and leasehold improvements		27,734			25,137
Property and equipment, gross		27,734			25,137
Less: Accumulated depreciation		(223,073	)		(178,775	)
Property and equipment,<br> net of accumulated depreciation	$	638,935		$	677,485

Depreciation

expense was $44,298 and $27,077 for the three months ended March 31, 2023 and 2022, respectively.

NOTE

ACCRUED LIABILITIES

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

SCHEDULE

OF ACCRUED LIABILITIES

	March<br> 31, 2023		December<br> 31, 2022
Product development	$	147,968	$	195,104
Accrued salaries and wages		397,912		1,175,963
Professional fees		246,976		83,255
Accrued franchise taxes		217,326		—
Patent costs		18,000		251,333
Total<br> accrued expenses	$	1,028,182	$	1,705,655

NOTE

SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

AuthorizedCapital

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

Common StockActivity

On February 15, 2022, the Company

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

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                                        BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On

July 22, 2022, the Company entered into a securities purchase agreement (the “Registered Direct Securities Purchase Agreement”) with an institutional investor for the purchase and sale of 116,500

shares of the Company’s common stock, pre-funded

warrants to purchase up to 258,500

shares of common stock (the “RD Pre-Funded

Warrants”), and unregistered preferred investment options (the “RD Preferred Investment Options”) to purchase up to 375,000

shares of common stock (the “RD Offering”).

The gross proceeds from the RD Offering were approximately $3,000,000

.

Subject to certain ownership limitations, the RD Pre-Funded Warrants became immediately exercisable at an exercise price equal to $0.0001 per share of common stock. On August 3, 2022, all of the issued RD Pre-Funded Warrants were exercised.

Concurrently

with the RD Offering, the Company entered into a securities purchase agreement (the “PIPE Securities Purchase Agreement”) with institutional investors for the purchase and sale of 116,000

shares of common stock, pre-funded warrants to

purchase up to 509,000

shares of common stock (the “PIPE Pre-Funded

Warrants”), and preferred investment options (the “PIPE Preferred Investment Options”) to purchase up to 625,000

shares of the common stock in a private placement

(the “PIPE Offering”). The gross proceeds from the PIPE Offering were approximately $5,000,000

.

Subject to certain ownership limitations, the PIPE Pre-Funded Warrants became immediately exercisable at an exercise price equal to $0.0001 per share of common stock. All of the issued PIPE Pre-Funded Warrants were exercised on various dates prior to August 18, 2022.

The

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

StockOptions

Amendmentto 2020 Long-Term Incentive Plan

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

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                                        BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of activity under the Company’s incentive plan for the three months ended March 31, 2023, 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, 2022	48,329		$	37.05	$	44.82	4.1	$	—
Forfeited	(375	)	$	3.07	$	2.58	—		—
Outstanding at March 31, 2023	47,954		$	37.29	$	49.79	3.9	$	—
Exercisable at March 31, 2023	26,901		$	58.37	$	78.21	2.7	$	—

The

Company’s stock based compensation expense, recorded within general and administrative expense in the condensed consolidated statement of operations and comprehensive loss, related to stock options for the three months ended March 31, 2023, and 2022 was $48,086 and $36,989, respectively. As of March 31, 2023, the Company had $192,764 in unamortized stock option expense, which will be recognized over a weighted average period of 1.7 years.

RestrictedStock Awards

For the three months ended March 31, 2023, and 2022, the Company recorded $0

and $11,863

,

respectively, in stock-based compensation expense within general and administrative expense, related to restricted stock awards. As of March 31, 2023, there were no unamortized stock-based compensation costs related to restricted share awards. There are 708 vested and unissued shares of restricted stock awards as of March 31, 2023.

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                                        BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Issuanceof Restricted Stock Units

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

SCHEDULE OF RESTRICTED STOCK UNITS AND AWARDS ACTIVITY

			Weighted<br> average fair value
Non-vested at December 31, 2022	64,053		$	92.57
Granted	26,500		$	1.88
Vested	(2,820	)	$	33.65
Non-vested at March 31, 2023	87,733		$	67.07

For

the three months ended March 31, 2023, and 2022, the Company recorded $484,749 and $719,767 respectively, in stock-based compensation expense related to restricted stock units, which is a component of both general and administrative and research and development expenses in the condensed consolidated statement of operations and comprehensive loss.

As

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

As

of March 31, 2023, 65,312

restricted

stock units are vested without shares of common stock being issued, with 1,313 of these shares due as of March 31, 2023.

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

SCHEDULE OF STOCK-BASED COMPENSATION FOR RESTRICTED STOCK UNITS

	Three<br> Months Ended March 31,
Stock-based compensation for<br> RSUs	2023		2022
General and administrative	$	252,315	$	358,818
Research and development		232,434		360,949
Total	$	484,749	$	719,767

Warrants

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

SCHEDULE

OF WARRANTS OUTSTANDING

		Weighted<br> average exercise price			Intrinsic<br> value
Outstanding at December 31, 2022	655,463	$	58.36	3.6	$	5,514
Outstanding at March 31, 2023	655,463	$	58.36	3.4	$	—
Exercisable at March 31, 2023	655,463	$	58.36	3.4	$	—

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

PreferredInvestment Options

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

SCHEDULE

OF WARRANTS AND INVESTMENT OPTIONS

		Weighted<br> average exercise price			Intrinsic<br> value
Outstanding at December 31, 2022	1,070,000	$	7.93	5.1		—
Outstanding at March 31, 2023	1,070,000	$	7.93	4.9	$	—
Exercisable at March 31, 2023	1,070,000	$	7.93	4.9	$	—

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                                        BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE

REDEEMABLE NON-CONTROLLING INTEREST

Spin-Offand Related Private Placement

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

Termsof Akos Series A Preferred Stock

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

The

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

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

As of May 12, 2023, pursuant

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

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ENVERIC

                                        BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accountingfor Akos Series A Preferred Stock

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

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

SCHEDULE OF RECONCILIATION CHANGE IN REDEEMBALE NONCONTROLLING INTEREST

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

As

of March 31, 2023, the redemption value of the redeemable non-controlling interest is $1,000,000 plus cumulative dividends which accrue at the rate of 5% annually, or approximately $1,045,000. The Company has guaranteed this redemption on behalf of Akos. See Note 9.

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.

Australian Subsidiary

On March 23, 2023, the Company issued a press release announcing the selection of Australian CRO, Avance Clinical,

in preparation for Phase 1 Study of EB-373, the Company’s lead candidate targeting the treatment of anxiety disorders. Under the agreement, Avance Clinical will manage the Phase 1 clinical trial of EB-373 in coordination with the Company’s newly established Australian subsidiary, Enveric Therapeutics Pty, Ltd. The Phase 1 clinical trial is designed as a multi-cohort, dose-ascending study to measure the safety and tolerability of EB-373. EB-373, a next-generation proprietary psilocin prodrug, has been recognized as a New Chemical Entity (NCE) by Australia’s Therapeutic Goods Administration (TGA) and is currently in preclinical development targeting the treatment of anxiety disorder. The total cost of the Avance Clinical contract is approximately 3,000,000 AUD, which translates to approximately $2,000,000 as of March 31, 2023.

Developmentand Clinical Supply Agreement

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

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

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

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

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ENVERIC

                                        BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 1 and 21 months. These agreements, in aggregate, commit the Company to approximately $1.9

million

in future cash payments. Excluded from these future cash payments is approximately $1.1 million due to Avance Clinical Pty Ltd recorded in accounts payable as of March 31, 2023.

NOTE

SUBSEQUENT EVENTS

In

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

The Company, Akos, and the Akos Investor intend to terminate the Akos Purchase Agreement in connection with the planned Spin-Off and that certain registration rights agreement in connection with the Akos Private Placement.

In May 2023, the Company

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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.

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,” “is confident that,” “may,” “plans,” “seeks,” “projects,” “targets,” and “would” or the negative of such terms or other variations on such terms or comparable terminology. Such forward-looking statements include, but are not limited to, future financial and operating results, the company’s plans, objectives, expectations and intentions and other statements that are not historical facts. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Form 10-Q and are subject to a number of risks, uncertainties, and assumptions that could cause actual results to differ materially from our historical experience and our present expectations, or projections described under the sections in this Form 10-Q entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These risks and uncertainties include, but are not limited to:

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

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

Psychedelics

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

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

Cannabinoids

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

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

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

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

On May 11, 2022, the Company announced plans to transfer and spin-off its cannabinoid clinical development pipeline assets (the “Spin-Off”) to Akos Biosciences, Inc. (formerly known as Acanna Therapeutics, Inc.), a majority owned subsidiary of the Company (“Akos”). In connection with the Spin-Off, the Company would transfer its cannabinoid clinical development pipeline assets to Akos, while retaining its psychedelics clinical development pipeline assets. The Spin-Off was subject to various conditions, including Akos meeting the qualifications for listing on the Nasdaq Stock Market, and if successful, would result in two standalone public companies. The new company resulting from the Spin-Off will be referred to as Akos. As of May 5, 2023, since the Spin-Off has not occurred, the holders of the Akos Series A Preferred Stock have the right, but not the obligation, to cause Akos to purchase all or a portion of the Akos Series A Preferred Stock. As of May 12, 2023, the holders of the Akos Series A Preferred Stock have exercised this right to force redemption of all of the Akos Series A Preferred Stock for $1,000 per share, plus accrued but unpaid dividends of approximately $50,000 for a total of approximately $1,050,000. The Company has 20 days following the receipt of the Put Exercise Notice (the “Put Exercise Notice”) to make the payment.

RecentDevelopments

AustralianSubsidiary

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

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On March 23, 2023, the Company issued a press release announcing the selection of Australian CRO, Avance Clinical, in preparation for Phase 1 Study of EB-373, the Company’s lead candidate targeting the treatment of anxiety disorders. Under the agreement, Avance Clinical will manage the Phase 1 clinical trial of EB-373 in coordination with the Company’s newly established Australian subsidiary, Enveric Therapeutics Pty, Ltd. The Phase 1 clinical trial is designed as a multi-cohort, dose-ascending study to measure the safety and tolerability of EB-373. EB-373, a next-generation proprietary psilocin prodrug, has been recognized as a New Chemical Entity (NCE) by Australia’s Therapeutic Goods Administration (TGA) and is currently in preclinical development targeting the treatment of anxiety disorder. The total cost of the Avance Clinical contract is approximately 3,000,000 AUD, which translates to approximately $2,000,000 as of March 31, 2023.

Reduction in Force

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

Resultsof Operations

	For<br> the Three Months Ended March 31,
	2023			2022
Operating expenses
General and<br> administrative		2,784,191		$	2,767,866
Research and development		1,990,001			1,958,714
Depreciation<br> and amortization		86,486			69,265
Total<br> operating expenses		4,860,678			4,795,845
Loss from operations		(4,860,678	)		(4,795,845	)
Other income (expense)
Change in fair value of<br> warrant liabilities		50,657			275,969
Change in fair value of<br> investment option liability		119,505			—
Change in fair value of<br> derivative liability		13,000			—
Interest<br> expense		(11	)		(4,138	)
Total<br> other income		183,151			271,831
Net loss	$	(4,677,527	)		(4,524,014	)

Generaland Administrative Expenses

Our general and administrative expenses increased to $2,784,191 for the three months ended March 31, 2023 from $2,767,866 for the three months ended March 31, 2022, an increase of $16,325, or 1%. This change was primarily driven by an increase of $301,934 in accounting fees, an increase of $296,736 in consulting fees, and an increase of $44,477 in audit fees, offset by a decrease of $264,350 in director and officer insurance, a decrease of $238,174 in salaries and wages, and a decrease of $106,503 in stock-based compensation during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022.

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Researchand Development Expenses

Our research and development expense for the three months ended March 31, 2023 was $1,990,001 as compared to $1,958,714 for the three months ended March 31, 2022 with an increase of $31,287, or approximately 2%. This change was primarily driven by an increase of $268,033 in salaries and wages, offset by a decrease of $100,000 in patent costs and a decrease of $128,515 in stock-based compensation during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022.

Depreciationand Amortization Expense

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

Changein Fair Value of Warrant Liabilities

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

Changein Fair Value of Investment Option Liability

Change in fair value of investment option liability for the three months ended March 31, 2023 resulted in income of $119,505. The Company did not have any outstanding investment option liabilities during the three months ended March 31, 2022. The change in fair value is due to the significant decrease in the Company’s stock price for the three months ended March 31, 2023. The Company’s stock price was $2.08 on December 31, 2022 and $1.66 on March 31, 2023, a decrease of approximately 20% during that time.

Changein Fair Value of Derivative Liability

The Company’s change in fair value of derivative liability decreased by $13,000 for the three months ended March 31, 2023, due primarily to the decreased probability of occurrence of the Akos spin-off as of March 31, 2023 as compared to December 31, 2022.

GoingConcern, Liquidity and Capital Resources

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

In assessing the Company’s ability to continue as a going concern, the Company monitors and analyzes its cash and its ability to generate sufficient cash flow in the future to support its operating and capital expenditure commitments. At March 31, 2023, the Company had cash of $12,561,813 and working capital of $10,400,754. The Company’s current cash on hand is not sufficient enough 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 reducing the Company’s rate of spend, managing its cash flow, advancing its programs, and raising additional working capital through public or private equity or debt financings or other sources, which may include collaborations with third parties as well as disciplined cash spending, to increase the Company’s cash runway. Adequate additional financing may not be available to 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.

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

CashFlows

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

CashFlows for the Three Months Ended March 31, 2023 and 2022

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

	For<br> the Three Months Ended March 31,
	2023			2022
Net cash used in operating activities	$	(5,137,009	)	$	(4,548,941	)
Net cash used in investing activities		(5,169	)		(505,507	)
Net cash provided by financing activities		—			9,397,884
Effect of foreign exchange<br> rate on cash		(19,893	)		(4,900	)
Net (decrease) increase<br> in cash	$	(5,162,071	)	$	4,338,536

OperatingActivities

Net cash used in operating activities was $5,137,009 during the three months ended March 31, 2023, which consisted primarily of a net loss adjusted for non-cash items of $4,214,521 and an increase in prepaid expenses of $1,549,354, partially offset by an increase in accounts payable and accrued liabilities of $653,712.

Net cash used in operating activities was $4,548,941 during the three months ended March 31, 2022, which consisted primarily of a net loss of $4,524,014, increase in prepaid expenses and other current assets of $588,975, and a change in fair value of warrant liabilities of $275,969 offset by stock-based compensation of $768,619.

InvestingActivities

Net cash used in investing activities was $5,169 during the three months ended March 31, 2023, which consisted of the purchase of property and equipment.

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

FinancingActivities

Net cash provided by financing activities was $0 during the three months ended March 31, 2023.

Net cash provided by financing activities was $9,397,884 during the three months ended March 31, 2022, which consisted of $9,397,884 in proceeds from the sale of common stock and warrants.

CriticalAccounting Policies and Significant Judgments and Estimates

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

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Item3. Quantitative and Qualitative Disclosures About Market Risk

From inception through March 31, 2023, the Company’s reporting currency is the United States dollar while the functional currency of certain of the Company’s subsidiaries were the Canadian dollar and Australian dollar. For the reporting periods ended March 31, 2023 and March 31, 2022, the Company engaged in a number of transactions denominated in Canadian dollars and Australian dollars. As a result, the Company is subject to exposure from changes in the exchange rates of the Canadian dollar and Australian dollar against the U.S. 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 on Form 10-K for the year ended December 31, 2022, filed on March 31, 2023, continued to exist and were still considered material weaknesses in our internal control over financial reporting at March 31, 2023.

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

Management’sRemediation Plan

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

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

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

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 March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART

II. OTHER INFORMATION

Item1. Legal Proceedings

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

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 below and in the Company’s annual report on Form 10-K as filed with the SEC on March 31, 2023. Any of these factors could result in a significant or material adverse effect on our results of operations of financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.

The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Form 10-Q. The following information should be read in conjunction with the condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.

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

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

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

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

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

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

In May 2023, pursuant to the Akos Series A Preferred Certificate of Designations, the holders of the Akos Series A Preferred Stock (the “Akos Investor”) exercised the Put Right requiring Akos to force redemption of all of the Akos Series A Preferred Stock for $1,000 per share, plus accrued but unpaid dividends of approximately $50,000 for a total of approximately $1,050,000. The Company has 20 days following the receipt of the Put Exercise Notice to make the payment. In connection with the exercise of the Put Right, the Company, Akos, and the Akos Investor intend to terminate the Akos Purchase Agreement in connection with the planned Spin-Off and that certain registration rights agreement in connection with the Akos Private Placement. The Company has delivered that certain Termination of Prior Agreements and Mutual Release, a copy of which is attached hereto as Exhibit 10.2 to this Quarterly Report on Form 10-Q and is incorporated herein by reference, as notice of termination to Akos and the Akos Investor on May 12, 2023.

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INDEX

TO EXHIBITS

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

| 28 |

| --- | | 4.8 | Form of PIPE Pre-Funded Warrant (in connection with July 2022 Offering) (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022) | | --- | --- | | 4.9 | Form of RD Preferred Investment Option (in connection with July 2022 Offering) (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022) | | 4.10 | Form of PIPE Preferred Investment Option (in connection with July 2022 Offering) (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022) | | 4.11 | Form of Wainwright Warrant (in connection with July 2022 Offering) (incorporated by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022) | | 10.1# | Employment Agreement between Kevin Coveney and the Company, effective March 13, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on February 28, 2023) | | 10.2*** | Form of Termination of Prior Agreements and Mutual Release*** | | 31.1* | Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer* | | 31.2* | Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Financial and Accounting Officer* | | 32** | Certification pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer, Principal Financial and Accounting Officer** | | 99.1 | Press release dated May 15, 2023 | | 101.INS | Inline XBRL Instance Document* | | 101.SCH | Inline XBRL Taxonomy Extension Schema* | | 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document* | | 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document* | | 101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document* | | 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document* | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | | * | Filed herewith. | | --- | --- | | ** | Furnished herewith. | | *** | Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets (“[***]”) because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed. | | # | Management contract or compensatory plan or arrangement. |

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		ENVERIC BIOSCIENCES, INC
May<br> 15, 2023	By:	/s/ Dr. Joseph Tucker
		Dr.<br> Joseph Tucker
		Chief<br> Executive Officer
		(Principal<br> Executive Officer)
May<br> 15, 2023	By:	/s/ Kevin Coveney
---	---	---
		Kevin<br> Coveney
		Chief<br> Financial Officer
		(Principal<br> Financial and Accounting Officer)

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Exhibit10.2

ExecutionVersion

CERTAININFORMATION IDENTIFIED BY “[***]” HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE OF INFORMATIONTHAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.

TERMINATIONOF PRIOR AGREEMENTS AND MUTUAL RELEASE

(THE“AGREEMENT”)

This Agreement is made as of May ___, 2023 by and between Enveric Biosciences, Inc. (“Enveric”), Akos Biosciences, Inc. (“Akos”), [***] (“Investor”), and Palladium Capital Group, LLC (formerly known as Palladium Capital Advisors, LLC) (“Palladium”). Where appropriate, this Agreement may refer to Enveric, Akos, Investor and Palladium collectively as the “Parties” or individually as a “Party”.

WHEREAS, pursuant to the Securities Purchase Agreement among Enveric, Akos and Investor dated May 5, 2022 (the “SPA”), Investor has a right to exercise a put in respect of 1,000 shares of Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”) of Akos acquired by Investor under the SPA and owned by Investor;

WHEREAS, Investor has provided notice of its exercise of the put in respect of the Series A Preferred Stock to Akos;

WHEREAS, Enveric, pursuant to its obligations under the SPA is, on the Effective Date (as defined below), making payment in an amount to Investor representing Stated Value of $1,000,000 and dividends at the annual rate of 5% from the Initial Closing Date through the date the Termination Payment is paid (“Accrued Dividends”) in full satisfaction of its and Akos’ obligations with respect to Investor’s exercise of the put; and

WHEREAS, the Parties, without any admission of liability or wrongdoing, wish to enter into this Agreement to resolve any and all potential claims between and among themselves, their successors, assigns, and affiliates, pursuant to the terms set forth in this Agreement.

NOW,THEREFORE, in consideration of the covenants and promises set forth herein, as well as other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties covenant and agree as follows:

1. Payment by Enveric. Enveric hereby agrees to pay Investor on the Effective Date the total sum of $1,000,000 plus Accrued Dividends (the “Termination Payment”) by wire transfer to a bank account designated by Investor, the receipt of such designation which is hereby acknowledged by Enveric. Investor has previously delivered to Akos any and all certificates evidencing the Series A Preferred Stock, together with an executed stock power. The Parties acknowledge and agree that they are solely responsible for paying any attorneys’ fees and costs they incurred in connection with the execution and delivery of this Agreement and the performance of their obligations hereunder and that no Party nor its attorney(s) will seek any award of attorneys’ fees or costs from any other Party.

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**Execution Version**

Termination of Agreements. Each of the Parties hereby agrees to and acknowledges the termination of the SPA and the Registration Rights Agreement dated as of May 5, 2022 among some or all of the Parties hereto (collectively, as any of the foregoing agreements may have been previously amended, the “Transaction Documents”) and the termination of all of the respective rights and obligations of the Parties under the Transaction Documents.

3. Mutual Release. Effective upon irrevocable receipt of the Termination Payment by Investor, each Party, on behalf of itself and its respective present and former parents, subsidiaries, affiliates, officers, directors, shareholders, members, interest holders, successors and assigns hereby releases, hereby waives and forever discharges each other Party hereto and its respective present and former parents, subsidiaries, affiliates, officers, directors, shareholders, members, interest holders, successors and assigns of and from any and all claims, counterclaims, contentions, debts, liabilities, rights, debts obligations, demands, promises, agreements, contracts, costs, expenses (including but not limited to attorneys’ fees), damages, actions, or any unasserted claims or defenses, and whether based on contract, tort, statutory or other legal or equitable theory of recovery, which either Party has, or may have had, against the other Party, whether or not known or unknown, or which may hereafter develop, for any acts or omissions arising from the beginning of time until the Effective Date arising in connection with the Transaction Documents. This release and waiver of claims shall not include any claims to enforce the terms of this Agreement.

4. Entire Agreement. This Agreement contains the entire agreement between the Parties relating to the subject matter contained in this Agreement. All prior or contemporaneous agreements, written or oral, between the Parties regarding the subject matter hereof are superseded by this Agreement. This Agreement may not be modified except by written document signed by an authorized representative of each Party.

5. Governing Law. This Agreement shall be construed in accordance with the internal laws of the State of Delaware, without reference to its choice of law provisions. The Parties hereby consent to jurisdiction in the City of New York, N.Y. and agree that any and all disputes arising hereunder, including, but not limited to, a claimed breach of this Agreement, shall be litigated exclusively in the state or federal courts of the State of New York, without reference to conflict laws of the State of New York.

6. Counterparts. The Parties agree that this Agreement may be executed in counterparts, and that copies or facsimiles of this Agreement shall have the same force and effect for all purposes as the original.

7. Effective Date. The terms of the Agreement will be binding and deemed effective when executed by all Parties and the Termination Payment contemplated by Section 1 hereof shall have been made (the “Effective Date”).

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**Execution Version**

IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Agreement, on the dates below indicated.

ENVERIC BIOSCIENCES, INC.	[]*
By:	By:
Title:	Title:
Date:	Date:
AKOS BIOSCIENCES, INC.	PALLADIUM CAPITAL GROUP, LLC
	Formerly known as:
By:	PALLADIUM CAPITAL ADVISORS, LLC
Title:
Date:	By:
	Title:
	Date:

| \[Signature Page of Termination of Prior Agreements and Mutual Release\] |

| --- |

Exhibit31.1

CERTIFICATIONPURSUANT TO SARBANES–OXLEY ACT OF 2002

I, Dr. Joseph Tucker, certify that:

1.	I<br> have reviewed this quarterly report on Form 10–Q of Enveric Biosciences, Inc;
2.	Based<br> on my knowledge, this report does not contain any untrue statement of a material fact or<br> omit to state a material fact necessary to make the statements made, in light of the circumstances<br> under which such statements were made, not misleading with respect to the period covered<br> by this report;
3.	Based<br> on my knowledge, the financial statements, and other financial information included in this<br> report, fairly present in all material respects the financial condition, results of operations<br> and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The<br> registrant’s other certifying officer and I are responsible for establishing and maintaining<br> disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and<br> 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act<br> Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
(a)	Designed<br> such disclosure controls and procedures, or caused such disclosure controls and procedures<br> to be designed under our supervision, to ensure that material information relating to the<br> registrant, including its consolidated subsidiaries, is made known to us by others within<br> those entities, particularly during the period in which this report is being prepared;
(b)	Designed<br> such internal control over financial reporting, or caused such internal control over financial<br> reporting to be designed under our supervision, to provide reasonable assurance regarding<br> the reliability of financial reporting and the preparation of financial statements for external<br> purposes in accordance with generally accepted accounting principles;
(c)	Evaluated<br> the effectiveness of the registrant’s disclosure controls and procedures and presented<br> in this report our conclusions about the effectiveness of the disclosure controls and procedures,<br> as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed<br> in this report any change in the registrant’s internal control over financial reporting<br> that occurred during the registrant’s most recent fiscal quarter (the registrant’s<br> fourth fiscal quarter in the case of an annual report) that has materially affected, or is<br> reasonably likely to materially affect, the registrant’s internal control over financial<br> reporting; and
5.	The<br> registrant’s other certifying officer and I have disclosed, based on our most recent<br> evaluation of internal control over financial reporting, to the registrant’s auditors<br> and the audit committee of the registrant’s board of directors (or persons performing<br> the equivalent functions):
(a)	All<br> significant deficiencies and material weaknesses in the design or operation of internal control<br> over financial reporting which are reasonably likely to adversely affect the registrant’s<br> ability to record, process, summarize and report financial information; and
(b)	Any<br> fraud, whether or not material, that involves management or other employees who have a significant<br> role in the registrant’s internal control over financial reporting.
May<br> 15, 2023	By:	/s/ Dr. Joseph Tucker
---	---	---
		Dr.<br> Joseph Tucker
		Chief<br> Executive Officer
		(Principal<br> Executive Officer)

Exhibit31.2

CERTIFICATIONPURSUANT TO SARBANES–OXLEY ACT OF 2002

I, Kevin Coveney, certify that:

1.	I<br> have reviewed this quarterly report on Form 10–Q of Enveric Biosciences, Inc;
2.	Based<br> on my knowledge, this report does not contain any untrue statement of a material fact or<br> omit to state a material fact necessary to make the statements made, in light of the circumstances<br> under which such statements were made, not misleading with respect to the period covered<br> by this report;
3.	Based<br> on my knowledge, the financial statements, and other financial information included in this<br> report, fairly present in all material respects the financial condition, results of operations<br> and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The<br> registrant’s other certifying officer and I are responsible for establishing and maintaining<br> disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and<br> 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act<br> Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
(a)	Designed<br> such disclosure controls and procedures, or caused such disclosure controls and procedures<br> to be designed under our supervision, to ensure that material information relating to the<br> registrant, including its consolidated subsidiaries, is made known to us by others within<br> those entities, particularly during the period in which this report is being prepared;
(b)	Designed<br> such internal control over financial reporting, or caused such internal control over financial<br> reporting to be designed under our supervision, to provide reasonable assurance regarding<br> the reliability of financial reporting and the preparation of financial statements for external<br> purposes in accordance with generally accepted accounting principles;
(c)	Evaluated<br> the effectiveness of the registrant’s disclosure controls and procedures and presented<br> in this report our conclusions about the effectiveness of the disclosure controls and procedures,<br> as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed<br> in this report any change in the registrant’s internal control over financial reporting<br> that occurred during the registrant’s most recent fiscal quarter (the registrant’s<br> fourth fiscal quarter in the case of an annual report) that has materially affected, or is<br> reasonably likely to materially affect, the registrant’s internal control over financial<br> reporting; and
5.	The<br> registrant’s other certifying officer and I have disclosed, based on our most recent<br> evaluation of internal control over financial reporting, to the registrant’s auditors<br> and the audit committee of the registrant’s board of directors (or persons performing<br> the equivalent functions):
(a)	All<br> significant deficiencies and material weaknesses in the design or operation of internal control<br> over financial reporting which are reasonably likely to adversely affect the registrant’s<br> ability to record, process, summarize and report financial information; and
(b)	Any<br> fraud, whether or not material, that involves management or other employees who have a significant<br> role in the registrant’s internal control over financial reporting.
May<br> 15, 2023	By:	/s/ Kevin Coveney
---	---	---
		Kevin<br> Coveney
		Chief<br> Financial Officer
		(Principal<br> Financial and Accounting Officer)

Exhibit32

CERTIFICATIONPURSUANT TO SECTION 906

OFTHE SARBANES–OXLEY ACT OF 2002

In connection with the Annual Report of Enveric Biosciences, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), 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:

(1)	the<br> Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange<br> Act of 1934; and
(2)	the<br> information contained in the Report fairly presents, in all material respects, the financial<br> condition and results of operations of the Company.
May<br> 15, 2023	By:	/s/ Dr. Joseph Tucker
---	---	---
		Dr.<br> Joseph Tucker
		Chief<br> Executive Officer
		(Principal<br> Executive Officer)
May<br> 15, 2023	By:	/s/ Kevin Coveney
---	---	---
		Kevin<br> Coveney
		Chief<br> Financial Officer
		(Principal<br> Financial and Accounting Officer)

Exhibit99.1

EnvericBiosciences Reports First Quarter 2023 Financial Results and Operational Highlights

●	Announced<br> cost reduction plan resulting in approximately 40% to 55% decrease in expenses and extension<br> of financial runway into Q1 2024
●	Continued<br> to advance pipeline of small molecule therapeutics for the treatment of mental health disorders,<br> including EB-373 for the treatment of anxiety disorder and EVM301 Series
---	---
●	Announced<br> termination of proposed spin-off of cannabinoid clinical development pipeline to publicly traded company; Enveric now<br> engaging with strategic advisors to identify and pursue alternative value-creating opportunities for cannabinoid assets
---	---

CAMBRIDGE, Mass., May 15, 2023 – Enveric Biosciences, Inc. (NASDAQ: ENVB) (“Enveric” or the “Company”), a biotechnology company dedicated to the development of novel small-molecule therapeutics for the treatment of anxiety, depression, and addiction disorders, today provided a corporate update and reported financial results for the first quarter of 2023 ended March 31, 2023.

Enveric announced a cost reduction plan to extend its financial runway into the first quarter of 2024. The operational streamlining entailed an approximately 35 percent reduction in full-time personnel, the cancelation of 7 consulting contracts focused on the cannabinoid programs and a transition from third-party service providers supporting R&D efforts to internal science teams performing this work. Separately, Enveric announced that the proposed spin-off of cannabinoid clinical development pipeline assets to Akos Biosciences, Inc. (“Akos”) is not proceeding due to the holders of the Akos Series A Preferred Stock electing to exercise their right to require Enveric to redeem all of the Akos Series A Preferred Stock due to an inability to meet listing requirements on a national exchange. Enveric now plans to engage with strategic advisors to identify and pursue alternative routes to capture value from these assets.

“Underpinning Enveric’s business and development strategy is a continued focus on maximizing the value of our novel drug development programs to produce positive returns for our shareholders. In this pursuit, the Company has been diligently working to develop a robust and differentiated pipeline of small-molecule therapeutics for the treatment of mental health disorders,” said Joseph Tucker, Ph.D., Director and CEO of Enveric Biosciences. “Today’s announcement, including the cost reduction plan and reduction in force, reflects the necessary evolution of this strategy, enabling a greater focus of resources towards Enveric’s most valuable assets, EB-373 and our EVM301 Series.”

FIRSTQUARTER AND RECENT UPDATES

During the quarter, the company has made progress in delivering on the top near-term priorities:

Priority#1 – Progressing Small Molecule Therapeutics Pipeline Targeting Unmet Needs in Mental Health

●	Advanced<br> product manufacturing and preclinical activities that support initiation of Phase 1 clinical<br> trial for lead asset, EB-373, for the treatment of anxiety disorder
●	Continued<br> in vitro and in vivo testing of novel chemical entities developed from the<br> EVM301 Series with the goal of identifying lead molecules by year-end 2023
---	---
◌	EVM301<br> Series of novel molecules are specifically designed to promote neuroplasticity and show efficacy<br> in animal models of depression and anxiety without inducing the hallmark hallucinations of<br> other psychedelic or psychedelic-inspired agents
---	---

●	Established<br> Enveric Therapeutics, an Australia-based subsidiary to manage clinical operations for EB-373<br> and additional clinical-stage candidates from the EVM201 and EVM301 Series of compounds

Priority#2 - Maximizing Operational Efficiency

●	Announced<br> cost reduction plan designed to extend financial runway into the first quarter of 2024
●	Operational<br> streamlining includes an approximately 35% reduction in full-time workforce personnel, the<br> cancelation of 7 contracts for consultants focused on the cannabinoid programs,<br> and a transition from third-party service providers supporting R&D efforts to internal<br> science teams performing this work
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Updateon Proposed Spin-off of Cannabinoid Clinical Pipeline Assets

On May 11, 2022, the Company announced plans to transfer and spin-off its cannabinoid clinical development pipeline assets (the “Spin-Off”) to Akos Biosciences, Inc. (formerly known as Acanna Therapeutics, Inc.), a majority-owned subsidiary of the Company. In connection with the Spin-Off, the Company transferred its cannabinoid clinical development pipeline assets to Akos, while retaining its psychedelics and non-hallucinogenic clinical development pipeline assets. The Spin-Off was subject to various conditions, including Akos meeting the qualifications for listing on the Nasdaq Stock Market, and if successful, would result in two standalone public companies. The new company resulting from the Spin-Off was to be referred to as Akos. As of May 5, 2023, since the Spin-Off had not occurred, the holders of the Akos Series A Preferred Stock had the right, but not the obligation, to cause Enveric to redeem all or a portion of the Akos Series A Preferred Stock. As of May 12, 2023, the holders of the Akos Series A Preferred Stock have exercised this right to require Enveric to redeem all of the Akos Series A Preferred Stock for $1,000 per share, plus accrued but unpaid dividends per share of approximately $50,000 for a total of approximately $1,050,000.

Enveric now plans to seek strategic advisors and alternative routes to capture value from these assets.

FIRSTQUARTER 2023 FINANCIAL RESULTS

Net loss attributable to shareholders was $4.80 million for the quarter ended March 31, 2023, including $0.56 million in net non-cash expenses, with a basic and diluted loss per share of $2.31, as compared to a net loss of $4.44 with basic and diluted loss per share of $5.34 per share for the quarter ended March 31, 2022.

Net cash used in operations for the quarter ended March 31, 2023, was $5.14 million consisting of a $4.68 million net loss, adjusted by a net of $0.46 million in non-cash expenses and changes in asset and liability balances of $0.92 million.

As of March 31, 2023, the Company had cash and cash equivalents of $12.56 million and working capital of $10.40 million.

AboutEnveric Biosciences

Enveric Biosciences (NASDAQ: ENVB) is a biotechnology company dedicated to the development of novel small-molecule therapeutics for the treatment of anxiety, depression, and addiction disorders. 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-373 – for the treatment of anxiety disorders. Enveric is also advancing its second program, the EVM301 Series, 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. Enveric is headquartered in Naples, FL with offices in Cambridge, MA and Calgary, AB Canada. For more information, please visit www.enveric.com.

Forward-LookingStatements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. These statements relate to future events or future performance. All statements other than statements of historical fact may be forward-looking statements or information. Generally, forward-looking statements and information may be identified by the use of forward-looking terminology such as “plans,”“ expects” or “does not expect,” “proposed,” “is expected,” “budgets,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates” or “does not anticipate,” or “believes,” or variations of such words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might occur or be achieved. Forward-looking statements may include historical statements and statements regarding beliefs, plans, expectations, or intentions regarding the future and are based on the beliefs of management as well as assumptions made by and information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including, but not limited to, the ability of Enveric to: carry out successful clinical programs in Australia; achieve the value creation contemplated by technical developments; avoid delays in planned clinical trials; establish that potential products are efficacious or safe in preclinical or clinical trials; establish or maintain collaborations on the development of therapeutic candidates; obtain appropriate or necessary governmental approvals to market potential products; obtain future funding for product development and working capital on commercially reasonable terms; scale-up manufacture of product candidates; changes in the size and nature of competitors; hire and retain key executives and scientists; secure and enforce legal rights related to Enveric’s products, including patent protection; identify and pursue alternative routes to capture value from its cannabinoid clinical development pipeline assets; the ability to continue as a going concern; manage its future growth effectively; achieve the intended benefits of the cost reduction plan to the extent or as quickly as anticipated; transition from third-party service providers supporting R&D efforts to internal science teams without any adverse impact on Enveric’s ongoing and planned clinical trials; and engage the cost reduction plan efforts without negatively impacting Enveric’s business operations and reputation.

A discussion of these and other factors, including risks and uncertainties with respect to Enveric, is set forth in Enveric’s filings with the Securities and Exchange Commission (SEC), including Enveric’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Enveric disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Contact

InvestorRelations

Tiberend Strategic Advisors, Inc.

Daniel Kontoh-Boateng

(862) 213-1398

dboateng@tiberend.com

MediaRelations

Tiberend Strategic Advisors, Inc.

Casey McDonald

(646) 577-8520

cmcdonald@tiberend.com