SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

NOTE 6. SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

Authorized Capital

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 Stock Activity

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.

ENVERIC 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.

Stock Options

Amendment to 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.

ENVERIC 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:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at December 31, 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.

Restricted Stock 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.

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Issuance of Restricted Stock Units

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

	Number of shares			Weighted 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:

	Three Months Ended March 31,
Stock-based compensation for 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:

	Warrant shares outstanding		Weighted average exercise price		Weighted average remaining life		Intrinsic 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.

Preferred Investment Options

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

	Investment options outstanding		Weighted average exercise price		Weighted average remaining life		Intrinsic 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	$	—

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS