Enveric Biosciences Inc

Previous wording

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

Current wording

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 our periodic reports, including Part I, Item IA of the Annual Report on Form 10-K for the year ended December 31, 2023, and Part II, Item IA of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024. 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.

Previous wording

We are a biotechnology company dedicated to the development of novel neuroplastogenic small-molecule therapeutics for the treatment of depression, anxiety, and addiction disorders. Leveraging our unique discovery and development platform, The Psybrary™, we have created a robust intellectual property portfolio of new chemical entities for specific mental health indications. Our lead program, the EVM201 Series, comprises next generation synthetic prodrugs of the active metabolite, psilocin. We are developing the first product from the EVM201 Series – EB-002 – for the treatment of psychiatric disorders. We are also advancing its second program, the EVM301 Series – EB 003 – expected to offer a first-in-class, new approach to the treatment of difficult-to-address mental health disorders, mediated by the promotion of neuroplasticity without also inducing hallucinations in the patient.

Current wording

We are a biotechnology company dedicated to the development of novel neuroplastogenic small-molecule therapeutics for the treatment of depression, anxiety, and addiction disorders. Leveraging our unique discovery and development platform, the Psybrary™, we have created a robust intellectual property portfolio of new chemical entities for specific mental health indications. Our lead program, the EVM201 Series, comprises next generation synthetic prodrugs of the active metabolite, psilocin. We are developing the first product from the EVM201 Series – EB-002 – for the treatment of psychiatric disorders. We are also advancing its second program, the EVM301 Series – EB 003, a non-hallucinogenic neuroplastogen – expected to offer a first-in-class, new approach to the treatment of difficult-to-address mental health disorders, mediated by the promotion of neuroplasticity without also inducing hallucinations in the patient.

Previous wording

We have continued to pursue the development of MagicMed’s proprietary psychedelic derivatives library, the Psybrary™ which we believe will help us to identify and develop the right drug candidates needed to address mental health challenges, including anxiety. We synthesize novel versions of classic psychedelics, such as psilocybin, DMT, mescaline and MDMA, using a mixture of chemistry and synthetic biology, resulting in the expansion of the Psybrary™, which includes 15 patent families with over a million potential variations and hundreds of synthesized molecules. Within the Psybrary™ we have three different types of molecules, Generation 1 (classic psychedelics), Generation 2 (new chemical entity pro-drugs of psilocin), and Generation 3 (new chemical entity analogs). The Company has created over 1,000 novel psychedelic molecular compounds and derivatives (“Psychedelic Derivatives”) that are housed in the Psybrary™. Our current focus is develop our lead molecules EB-002 and EB-003 and to out-license other molecules from the Psybrary™.

Current wording

We have continued to pursue the development of MagicMed’s proprietary library, the Psybrary™ which we believe will help us to identify and develop the right drug candidates needed to address mental health challenges, including anxiety. We synthesize novel analogues of serotonin 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. The Company has created over 1,200 novel molecular compounds that are housed in the Psybrary™. Our current focus is develop our lead molecules EB-002 and EB-003, a non-hallucinogenic neuroplastogen, and to out-license other molecules from the Psybrary™.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

During the three and nine months ended September 30, 2024, the Company had issued 1,090,477 and 1,215,477 shares of common stock, respectively, through the Purchase Agreement for gross cash proceeds of $517,836 and $600,686, respectively. During the three and nine months ended September 30, 2024, the Company charged offering costs of $290,029 and $372,879, respectively, to additional paid in capital on the unaudited condensed consolidated balance sheet. As of September 30, 2024 and December 31, 2023, the Company has capitalized deferred offering costs of $508,599 and $395,660, respectively.

Previous wording

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

Current wording

As of July 30, 2024, there were no remaining shares available to be issued in connection with the initial registration statement. On September 4, 2024, the Company filed an amended Form S-1, which registered an additional 4,900,000 shares of common stock that are available to be issued to Lincoln Park in connection with this agreement. From July through November 12, 2024, under the initial registration statement and the amended Form S-1, the Company issued 2,040,477 shares of common stock through the Purchase Agreement with Lincoln Park for gross cash proceeds of $923,656. As of November 12, 2024, there are 3,875,000 remaining shares available to be issued in connection with the amended Form S-1.

Previous wording

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

Current wording

Our general and administrative expenses decreased to $1,235,661 for the three months ended September 30, 2024 from $2,080,644 for the three months ended September 30, 2023, a decrease of $844,983, or 41%. This change was primarily driven by decreases in consulting expenses of $138,778, salaries and wages of $263,764, and legal fees of $192,941, all a direct result of the second quarter 2023 reduction in force and no longer pursuing the transfer and spin-off its cannabinoid clinical development pipeline assets to Akos Biosciences, Inc.

Previous wording

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

Current wording

Our research and development expense for the three months ended September 30, 2024 was $762,717 as compared to $1,281,455 for the three months ended September 30, 2023 with a decrease of $518,738, or approximately 40%. This decrease was primarily driven by a decrease in CRO expense of $4,206, salaries and wages of $212,377, and product development of $208,312.

Previous wording

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

Current wording

Depreciation and amortization expense for the three months ended September 30, 2024 was $84,814 as compared to $86,296 for the three months ended September 30, 2023, with a decrease of $1,482, or approximately 2%.

Previous wording

Change in fair value of warrant liabilities for the three months ended June 30, 2024 resulted in income of $10,805 as compared to an expense of $233,821 for the three months ended June 30, 2023. The change in fair value of warrant liabilities is due to the exercise of 122,000 of warrants on December 28, 2023, resulting in less warrants outstanding and re-valued at June 30, 2024, as well as, the change in the closing price of Common Stock at the end of each period, as compared to the closing price of Common Stock at the beginning of each period with a strong inverse relationship between changes in fair value of warrant liabilities and the trading price of Common Stock.

Current wording

Change in fair value of warrant liabilities for the three months ended September 30, 2024 resulted in an expense of $122 as compared to income of $67,822 for the three months ended September 30, 2023. The change in fair value of warrant liabilities is due to the exercise of 122,000 of warrants on December 28, 2023, resulting in less warrants outstanding and re-valued at September 30, 2024, as well as, the change in the closing price of Common Stock at the end of each period, as compared to the closing price of Common Stock at the beginning of each period with a strong inverse relationship between changes in fair value of warrant liabilities and the trading price of Common Stock.

Previous wording

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

Current wording

Change in fair value of investment option liability the three months ended September 30, 2024 resulted in an expense of $501 as compared to income of $562,715 during the three months ended September 30, 2023. The change in fair value is due to the exercise of 1,000,000 investment options on December 28, 2023, resulting in less investment options re-valued at September 30, 2024 and a significant decrease in the Company’s stock price for the three months ended September 30, 2024.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

Our general and administrative expenses decreased to $4,467,065 for the nine months ended September 30, 2024 from $8,273,344 for the nine months ended September 30, 2023, a decrease of $3,806,279, or 46%. This change was primarily driven by decreases in consulting expenses of $836,437, salaries and wages of $1,305,710, stock compensation expense of $623,259, investor relations of $313,509, legal fees of $487,863, and accounting fees of $227,200, all a direct result of the second quarter 2023 reduction in force and no longer pursuing the transfer and spin-off its cannabinoid clinical development pipeline assets to Akos Biosciences, Inc., and Delaware franchise taxes of $246,144 partially offset by an increase in director fees of $107,186.

Previous wording

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

Current wording

Our research and development expense for the nine months ended September 30, 2024 was $1,736,373 as compared to $5,531,436 for the nine months ended September 30, 2023 with a decrease of $3,795,063, or approximately 69%. This decrease was primarily driven by a decrease salaries and wages of $1,542,075, research costs of $1,056,511, product development costs of $532,063, CRO costs of $128,560 and the gain realized related to the Australian R&D tax incentive of $291,439.

Previous wording

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

Current wording

Depreciation and amortization expense for the nine months ended September 30, 2024 was $255,002 as compared to $259,300 for the nine months ended September 30, 2023, with a decrease of $4,298, or approximately 2%.

Previous wording

Change in fair value of warrant liabilities for the six months ended June 30, 2024 resulted in income of $20,844 as compared to a loss of $183,164 for the six months ended June 30, 2023. The change in fair value of warrant liabilities is due to the exercise of 122,000 of warrants on December 28, 2023, resulting in less warrants outstanding and re-valued at June 30, 2024, as well as, the change in the closing price of Common Stock at the end of each period, as compared to the closing price of Common Stock at the beginning of each period with a strong inverse relationship between changes in fair value of warrant liabilities and the trading price of Common Stock.

Current wording

Change in fair value of warrant liabilities for the nine months ended September 30, 2024 resulted in income of $20,722 as compared to a loss of $115,342 for the nine months ended September 30, 2023. The change in fair value of warrant liabilities is due to the exercise of 122,000 of warrants on December 28, 2023, resulting in less warrants outstanding and re-valued at September 30, 2024, as well as, the change in the closing price of Common Stock at the end of each period, as compared to the closing price of Common Stock at the beginning of each period with a strong inverse relationship between changes in fair value of warrant liabilities and the trading price of Common Stock.

Previous wording

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

Current wording

Change in fair value of investment option liability the nine months ended September 30, 2024 resulted in income of $18,664 as compared to a loss of $399,921 during the nine months ended September 30, 2023. The change in fair value is due to the exercise of 1,000,000 investment options on December 28, 2023, resulting in less investment options re-valued at September 30, 2024 and a significant decrease in the Company’s stock price for the nine months ended September 30, 2024.

Previous wording

The Company has incurred a loss since inception resulting in an accumulated deficit of $100,835,827 as of June 30, 2024 and further losses are anticipated in the development of its business. Further, the Company had operating cash outflows of $5,487,520 for the six months ended June 30, 2024. For the six months ended June 30, 2024, the Company had a loss from operations of $4,375,248. Since inception, being a research and development company, the Company has not yet generated revenue and the Company has incurred continuing losses from its operations. The Company’s operations have been funded principally through the issuance of debt and equity. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these unaudited condensed consolidated financial statements.

Current wording

The Company has incurred a loss since inception resulting in an accumulated deficit of $102,919,859 as of September 30, 2024 and further losses are anticipated in the development of its business. Further, the Company had operating cash outflows of $6,414,590 for the nine months ended September 30, 2024. For the nine months ended September 30, 2024, the Company had a loss from operations of $6,458,440. Since inception, being a research and development company, the Company has not yet generated revenue and the Company has incurred continuing losses from its operations. The Company’s operations have been funded principally through the issuance of debt and equity. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these unaudited condensed consolidated financial statements.

Previous wording

In assessing the Company’s ability to continue as a going concern, the Company monitors and analyzes its cash and its ability to generate sufficient cash flow in the future to support its operating and capital expenditure commitments. At June 30, 2024, the Company had cash of $3,502,551 and working capital of $4,874,594. The Company’s current cash on hand is insufficient to satisfy its operating cash needs for the 12 months following the filing of this Quarterly Report on Form 10-Q. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date the financial statements are issued. Management’s plan to alleviate the conditions that raise substantial doubt include raising additional working capital through public or private equity or debt financings or other sources, and may include additional collaborations with third parties as well as disciplined cash spending. Adequate additional financing may not be available to us on acceptable terms, or at all. Should the Company be unable to raise sufficient additional capital, the Company may be required to undertake cost-cutting measures including delaying or discontinuing certain operating activities.

Current wording

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 September 30, 2024, the Company had cash of $3,111,683 and working capital of $3,499,093. The Company’s current cash on hand is insufficient to satisfy its operating cash needs for the 12 months following the filing of this Quarterly Report on Form 10-Q. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date the financial statements are issued. Management’s plan to alleviate the conditions that raise substantial doubt include raising additional working capital through public or private equity or debt financings or other sources, and may include additional collaborations with third parties as well as disciplined cash spending. Adequate additional financing may not be available to us on acceptable terms, or at all. Should the Company be unable to raise sufficient additional capital, the Company may be required to undertake cost-cutting measures including delaying or discontinuing certain operating activities.

Previous wording

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

Current wording

Cash Flows for the Nine Months Ended September 30, 2024 and 2023:

Previous wording

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

Current wording

Net cash used in operating activities was $6,414,590 during the nine months ended September 30, 2024, which consisted primarily of a net loss adjusted for non-cash items of $5,114,009 and an increase in prepaid expenses and other current assets of $3,674 and a decrease in accounts payable and accrued liabilities of $1,296,907.

Previous wording

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

Current wording

Net cash used in operating activities was $12,343,363 during the nine months ended September 30, 2023, which consisted primarily of a net loss adjusted for non-cash items of $11,962,774, an increase in prepaid expenses and other current assets of $746,033, offset by an increase in accounts payable and accrued liabilities of $429,688.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

Net cash provided by investing activities was $11,705 during the nine months ended September 30, 2023, which consisted of proceeds from disposal of property and equipment of $16,900, offset by the purchase of property and equipment of $5,195.

Previous wording

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

Current wording

Net cash provided by financing activities was $7,210,386 during the nine months ended September 30, 2024, which consisted of $1,804,819 from the proceeds received from the stock subscription receivable, $2,676,980 for the exercise of the Inducement Warrants, $2,290,186 for the common stock sold under the Distribution agreement, net of offering costs, and $599,862 for the common stock sold under the Purchase Agreement, offset by $161,461 offering costs previously accrued for the Inducement Warrants.

Previous wording

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

Current wording

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