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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

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

For the annual period ended: December 31, 2022

OR

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

For the transition period from ___ to ___

Commission File Number 001-38286

ENVERIC BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)

Delaware |  | 95-4484725
(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)

4851 Tamiami Trail N, Suite 200 Naples, FL |  | 34103
(Address of principal executive offices) |  | (Zip code)

(239) 302-1707

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common Stock, $0.01 par value per share |  | ENVB |  | The Nasdaq Stock Market LLC

Securities registered under section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒

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

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

Indicate by check mark whether the registrant has filed a report on and attestation of its management’s assessment of the effectiveness of its internal controls over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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 June 30, 2022, the last day of the registrant’s most recently completed second fiscal quarter; the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant, based on a closing price of $10.72 per share, was approximately $11.0 million.

As of March 30, 2023, there were 2,078,271 shares outstanding of Registrant’s Common Stock (par value $0.01 per share).

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus if led pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).

None.

EXPLANATORY NOTE

This Amendment No. 1 to our Annual Report on Form 10-K (this “Amendment”) amends the Annual Report of Enveric Biosciences, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2022, which was originally filed with the Securities and Exchange Commission (“SEC”) on March 31, 2023 (the “Original Filing”). This Amendment is being filed solely to amend the reports of the Company’s independent registered public accounting firms included in the Original Filing with respect to the audited consolidated financial statements of the Company for the years ended December 31, 2022 and 2021, which inadvertently omitted which independent registered public accounting firm audited the adjustments made to the audited consolidated financial statements of the Company for the fiscal year ended December 31, 2021, to reflect the 1-for-50 reverse stock split of the shares of the Company’s common stock, which was effected on July 14, 2022.

In connection with the filing of this Amendment and pursuant to the rules of the SEC, we are including with this Amendment new certifications by our principal executive and principal financial officers. Accordingly, Item 15 of Part IV has also been amended to reflect the filing of these new certifications.

Accordingly, this Amendment consists of a cover page, this Explanatory Note, a revised Part II, Item 8, an updated Exhibit Index, new consents of the Company’s independent registered public accounting firms and new certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002.

This Amendment does not modify, amend or update in any way the financial statements and other disclosures set forth in the Original Filing and there have been no changes to the XBRL data filed in Exhibit 101 of the Original Filing. In addition, this Amendment does not reflect events occurring after the filing of the Original Filing, nor does it modify or update disclosures therein in any way other than as required to reflect the revisions described above. Among other things, forward-looking statements made in the Original Filing have not been revised to reflect events that occurred or facts that became known to us after the filing of the Original Filing, and any such forward looking statements should be read in their historical context. Accordingly, this Amendment should be read in conjunction with the Original Filing.

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

FORM 10-K

TABLE OF CONTENTS

|  | Page
EXPLANATORY NOTE |
| PART II |
Item 8. | Financial Statements and Supplementary Data | 2
| PART IV |
Item 15. | Exhibits and Financial Statement Schedules | 2
SIGNATURES | 7

1

PART II

Item 8. Financial Statements and Supplementary Data

The information required by this Item 8 is included at the end of this Annual Report on Form 10-K beginning on page F-1.

PART IV

Item 15. Exhibits and Financial Statement Schedules

The following documents are filed as part of this Annual Report on Form 10-K:

(1) Financial Statements:

Reports of Independent Registered Accounting Firm (PCAOB Firm ID : Marcum LLP #688 and Friedman LLP #711) | F-1
Consolidated Balance Sheets | F-4
Consolidated Statements of Operations and Comprehensive Loss | F-5
Consolidated Statements of Changes in Temporary Equity and Shareholders’ Equity | F-6
Consolidated Statements of Cash Flows | F-8
Notes to Consolidated Financial Statements | F-9

2

(2) Financial Statement Schedules:

None. Financial statement schedules have not been included because they are not applicable, or the information is included in the consolidated financial statements or notes thereto.

(3) Exhibits:

See “Index to Exhibits” for a description of our exhibits.

INDEX TO EXHIBITS

Exhibit No. |  | Description
2.1 |  | Share Purchase Agreement, dated January 10, 2020, by and between AMERI Holdings, Inc. and Ameri100, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the Commission on January 13, 2020)
2.2 |  | Tender Offer Support Agreement and Termination of Amalgamation Agreement, dated August 12, 2020, by and among AMERI Holdings, Inc., Jay Pharma Merger Sub, Inc., Jay Pharma Inc., 1236567 B.C. Unlimited Liability Company and Barry Kostiner, as the Ameri representative (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on August 12, 2020)
2.3 |  | Amendment No. 1 To Tender Offer Support Agreement and Termination of Amalgamation Agreement, dated December 18, 2020, by and among Ameri, Jay Pharma Merger Sub, Inc., Jay Pharma Inc., 1236567 B.C. Unlimited Liability Company and Barry Kostiner, as the Ameri representative (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on December 18, 2020)
2.4 |  | Amalgamation Agreement, dated May 24, 2021, by and among Enveric Biosciences, Inc., 1306432 B.C. LTD., 1306436 B.C. LTD., and MagicMed Industries, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the Commission on May 24, 2021)
3.1 |  | Amended and Restated Certificate of Incorporation of Enveric Biosciences, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Commission on January 6, 2021)
3.2 |  | Certificate of Amendment to Amended and Restated Certificate of Incorporation of Enveric Biosciences, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the Commission on January 6, 2021)
3.3 |  | Certificate of Designations of Series B Preferred Stock of Enveric Biosciences, Inc. (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K, filed with the Commission on January 6, 2021)
3.4 |  | Amended and Restated Bylaws of Enveric Biosciences, Inc. (incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K, filed with the Commission on January 6, 2021)
3.5 |  | Amendment to the Amended and Restated Bylaws of Enveric Biosciences, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Commission on November 18, 2021)

3

3.6 |  | Certificate of Designation of the Series C Preferred Stock of the Company, dated May 4, 2022 (incorporated by reference to Exhibit 3.1 to the 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 of Amendment of Certificate of Designation of the Series C Preferred Stock of the Company, dated May 17, 2022 (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 8-A/A, filed with the Securities and Exchange Commission on May 17, 2022, File No. 000 26460)
3.8 |  | Certificate of Amendment of Amended and Restated Certificate of Incorporation of Enveric Biosciences, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Commission on July 14, 2022)
4.1 |  | Description of Securities (incorporated by reference to Exhibit 4.1 of the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 31, 2023)
4.2 |  | Form of Pre-Funded Warrant (issued in connection with January 2021 Registered Direct Offering) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the Commission on January 12, 2021)
4.3 |  | Form of Warrant (issued in connection with January 2021 Registered Direct Offering) (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the Commission on January 12, 2021)
4.4 |  | Form of Warrant (issued in connection with February 2021 Registered Direct Offering) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the Commission on February 11, 2021)
4.5 |  | Form 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 on April 1, 2021)
4.6 |  | Form of MagicMed Warrant Certificate (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 17, 2021)
4.7 |  | Form of Common Stock Purchase Warrant (in connection with February 2022 Offering) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the Commission on February 15, 2022)
4.8 |  | Form of RD Pre-Funded Warrant (in connection with July 2022 Offering) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022)
4.9 |  | 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)
4.10 |  | 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)
4.11 |  | 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)
4.12 |  | 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 Securities Purchase Agreement (entered into in connection with the May 5, 2022 Private Placement) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on May 11, 2022)
10.3 |  | Certificate of the Designations, Preferences and Rights of Akos Series A Convertible Preferred Stock (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Commission on May 11, 2022)
10.4 |  | Form of Registration Rights Agreement (entered into in connection with the May 5, 2022 Private Placement) (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the Commission on May 11, 2022)
10.5 |  | Form of Warrant (entered into in connection with the May 5, 2022 Private Placement) (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the Commission on May 11, 2022)
10.6 |  | Form of Warrant Amendment (in connection with the July 2022 Offerings) (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022)
10.7 |  | First Amendment to the Enveric Biosciences, Inc. 2020 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on July 14, 2022)
10.8 |  | Form of Warrant Amendment (in connection with July 2022 Offering) (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022)

4

10.9 |  | Form of Securities Purchase Agreement (in connection with July 2022 Offering) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022)
10.10 |  | Form of Securities Purchase Agreement (in connection with July 2022 Offering) (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022)
10.11 |  | Form of Registration Rights Agreement (in connection with July 2022 Offering) (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the Commission on July 26, 2022)
10.12 |  | Assignment and Assumption Agreement (Non-U.S. GVHD Sublicense), dated January 10, 2020, by and among Tikkun Pharma, Inc., Jay Pharma Inc. and Tikun Olam IP Ltd. (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K filed with the Commission on April 1, 2021)
10.13 |  | Amendment No. 1 to Assignment and Assumption Agreement (Non-U.S. GVHD Sublicense), dated August 12, 2020, by and among Tikkun Pharma, Inc., Jay Pharma Inc. and Tikun Olam IP Ltd. (incorporated by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K filed with the Commission on April 1, 2021)
10.14 |  | Amendment No. 2 to Assignment and Assumption Agreement (Non-U.S. GVHD Sublicense and Skincare), dated October 2, 2020, by and among Tikkun Pharma, Inc., Jay Pharma Inc. and Tikun Olam IP Ltd. (incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K filed with the Commission on April 1, 2021)
10.15 |  | Assignment and Assumption Agreement (U.S. GVHD Sublicense and Skincare), dated January 10, 2020, by and among Tikkun Pharma, Inc., Jay Pharma Inc. and TO Pharmaceuticals USA LLC (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K filed with the Commission on April 1, 2021)
10.16 |  | Amendment No. 1 to Assignment and Assumption Agreement (U.S. GVHD Sublicense and Skincare), dated August 12, 2020, by and among Tikkun Pharma, Inc., Jay Pharma Inc. and TO Pharmaceuticals USA LLC (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K filed with the Commission on April 1, 2021)
10.17 |  | Amendment No. 2 to Assignment and Assumption Agreement (U.S. GVHD Sublicense and Skincare), dated October 2, 2020, by and among Tikkun Pharma, Inc., Jay Pharma Inc. and TO Pharmaceuticals USA LLC (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K filed with the Commission on April 1, 2021)
10.18 |  | License Agreement, dated January 10, 2020, by and among Tikun Olam LLC, Tikun Olam Hemp LLC and Jay Pharma Inc. (incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K filed with the Commission on April 1, 2021)
10.19 |  | Amendment No. 1 to License Agreement, dated August 12, 2020, by and among Tikun Olam LLC, Tikun Olam Hemp LLC and Jay Pharma Inc. (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed with the Commission on April 1, 2021)
10.20 |  | Amendment No. 2 to License Agreement, dated October 2, 2020, by and among Tikun Olam LLC, Tikun Olam Hemp LLC and Jay Pharma Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Annual Report on Form 10-K filed with the Commission on April 1, 2021)
10.21# |  | Employment Agreement, dated January 10, 2020, by and between the Company and David Johnson (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on January 6, 2021)
10.22# |  | Employment Agreement, dated December 2, 2020, by and between the Company and Avani Kanubaddi (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Commission on January 6, 2021)
10.23# |  | Employment Agreement, dated December 22, 2020, by and between the Company and Robert Wilkins (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the Commission on January 6, 2021)
10.24# |  | Consulting Agreement, dated December 29, 2020, by and between the Company and Barry Kostiner (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the Commission on January 6, 2021)
10.25 |  | Enveric Biosciences, Inc. 2020 Long-Term Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed with the Commission on January 6, 2021)

5

10.26 |  | Form of RSU Award Agreement (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K, filed with the Commission on January 6, 2021)
10.27 |  | Form of Securities Purchase Agreement, dated January 11, 2021, by and among the Company and the purchasers thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on January 12, 2021)
10.28 |  | Form of Registration Rights Agreement, dated January 11, 2021, by and among the Company and the purchasers thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Commission on January 12, 2021)
10.29 |  | Letter Agreement, dated January 11, 2021, by and between the Company and Alpha Capital Anstalt (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the Commission on January 12, 2021)
10.30 |  | Form of Securities Purchase Agreement, dated February 9, 2021, by and among the Company and the purchasers thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on February 11, 2021)
10.31 |  | Form of Registration Rights Agreement, dated February 9, 2021, by and among the Company and the purchasers thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Commission on February 11, 2021)
10.32 |  | Development and Clinical Supply Agreement, between the Company and PureForm Global, Inc., dated February 22, 2021 (incorporated by reference to Exhibit 10.5 the Company’s Quarterly Report on Form 10-Q, filed with the Commission on May 17, 2021)
10.33 |  | Exclusive License Agreement, between the Company and Diverse Biotech, Inc., dated March 5, 2021 (incorporated by reference to Exhibit 10.6 the Company’s Quarterly Report on Form 10-Q, filed with the Commission on May 17, 2021)
10.34# |  | Employment Agreement between Carter J. Ward and the Company, effective May 15, 2021 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 12, 2021)
10.35 |  | Form of Voting and Support Agreement, dated as of May 24, 2021, by and among Enveric Biosciences, Inc. and certain shareholders of MagicMed Industries Inc. named therein (incorporated by reference to Annex B-1 to the Company’s Proxy Statement/Prospectus, filed with the Commission on August 6, 2021)
10.36 |  | Form of Voting Agreement, dated as of May 24, 2021, by and among MagicMed Industries Inc. and certain shareholders of Enveric Biosciences, Inc. named therein (incorporated by reference to Annex B-2 to the Company’s Proxy Statement/Prospectus, filed with the Commission on August 6, 2021)
10.37 |  | Form of Lock-Up Agreement, dated as of May 24, 2021, by and among Enveric Biosciences, Inc. and certain shareholders of MagicMed Industries Inc. named therein (incorporated by reference to Annex C-1 to the Company’s Proxy Statement/Prospectus, filed with the Commission on August 6, 2021)
10.38 |  | Form of Lock-Up/Leak-Out Agreement, dated as of May 24, 2021, by and among Enveric Biosciences, Inc. and certain shareholders of MagicMed Industries Inc. named therein (incorporated by reference to Annex C-2 to the Company’s Proxy Statement/Prospectus, filed with the Commission on August 3, 2021)
10.39# |  | Employment Agreement between Joseph Tucker and Enveric Biosciences, Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 24, 2021)
10.40# |  | Employment Agreement between Peter Facchini and Enveric Biosciences, Inc. (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 24, 2021)
10.41# |  | Employment Agreement between Jillian Hagel and Enveric Biosciences, Inc. (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 24, 2021)
10.42 |  | MagicMed Stock Option Plan, as amended September 10, 2021 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 17, 2021)
16.1 |  | Letter dated January 6, 2021 from Ram Associates, CPA to the Securities and Exchange Commission. (incorporated by reference to Exhibit 16.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 6, 2021)
16.2 |  | Letter of Marcum LLP to the Securities and Exchange Commission, dated June 29, 2021. (incorporated by reference to Exhibit 16.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 23, 2021)
21.1 |  | Subsidiaries (incorporated by reference to Exhibit 21.1 of the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 31, 2023)
23.1 |  | Consent of independent registered public accountant – Marcum LLP relating to the Original Filing (previously filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2023)
23.2 |  | Consent of independent registered public accountant – Friedman LLP relating to the Original Filing (previously filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2023)
23.3* |  | Consent of independent registered public accountant – Marcum LLP relating to this Annual Report on Form 10-K/A
23.4* |  | Consent of independent registered public accountant – Friedman LLP relating to this Annual Report on Form 10-K/A
31.1 |  | Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer relating to the Original Filing (previously filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2023)
31.2 |  | Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Financial and Accounting Officer relating to the Original Filing (previously filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2023)
31.3* |  | Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer relating to this Annual Report on Form 10-K/A
31.4* |  | Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Financial and Accounting Officer relating to this Annual Report on Form 10-K/A
32.1 |  | Certification pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer, Principal Financial and Accounting Officer relating to the Original Filing (previously furnished with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2023)
32.2** |  | Certification pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer, Principal Financial and Accounting Officer relating to this Annual Report on Form 10-K/A
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.
# |  | Management contract or compensatory plan or arrangement.

6

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ENVERIC BIOSCIENCES, INC. |  |
June 8, 2023 | By: | /s/ Joseph Tucker
|  | Joseph Tucker
|  | Chief Executive Officer
|  | (Principal Executive Officer)

7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Enveric Biosciences, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Enveric Biosciences, Inc. (the “Company”) as of December 31, 2022, the related consolidated statements operations and comprehensive loss, changes in temporary equity and shareholders’ equity and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We also audited adjustments to the 2021 financial statements to retroactively apply the effects of the reverse stock split as described in Note 1. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the Company’s 2021 financial statements other than with respect to the reverse stock split adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2021 financial statements as a whole.

Explanatory Paragraph – Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

F-1

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Impairment of Long-lived Assets

Critical Audit Matter Description |  | As discussed in Notes 2 and 4 to the financial statements, the Company reviews goodwill on an annual basis for impairment, or when circumstances indicate the assets might be impaired. Additionally, the Company reviews long lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Due to a sustained decline in the Company’s market capitalization, the Company performed an impairment analysis and determined that an impairment of goodwill and long-lived assets existed at December 31, 2022. Auditing the Company’s accounting for impairment of goodwill and long-lived assets required a high degree of subjective auditor judgment in evaluating the estimated discounted future cash flows used to test reporting units for recoverability and the determination of fair value of the relevant assets. The high degree of auditor judgement and increased extent of effort, including the need to involve valuation specialists, was required to evaluate the reasonableness of management’s analysis related to the impairment of goodwill and long-lived assets.
How We Addressed the Matter in Our Audit |  | We obtained an understanding and evaluated the procedures over management’s impairment review process. We evaluated the reasonableness of management’s inputs inclusive of forecasts and discount rates used in the impairment analysis. With the assistance of our valuation specialists, we evaluated the reasonableness of the valuation methodology, tested the mathematical accuracy of the calculation and developed a range of independent estimates to determine reasonableness of valuation conclusions.

Redeemable Non-controlling Interest and Derivative Liability

Critical Audit Matter Description |  | As discussed in Notes 1, 2 and 8 to the financial statements, the Company announced plans to transfer and spin-off its cannabinoid clinical development pipeline assets to Akos Biosciences, Inc. (“Akos”) a majority owned subsidiary of the Company. Akos entered into a Securities Purchase Agreement, pursuant to which Akos agreed to sell to an investor 1,000 shares of Akos’ Series A Convertible Preferred Stock for $1.0 million during the year ended December 31, 2022. If the Spin-Off does not occur, the Company has guaranteed the redeemable non-controlling interest associated with the put right option as defined in the Series A Convertible Preferred Stock agreement. Fees associated with the spin-off including, but not limited to, placement agent fees, are contingent upon the spin-off occurring. Auditing the accounting conclusions for the issuance of the Series A Convertible Preferred Stock discussed above was challenging because of the complex provisions affecting classification and required extensive audit effort. The accounting for the Series A Convertible Preferred Stock involved an assessment of the particular features in the agreement and Certificate of Designation and the impact of those features on the accounting and classification of the Series A Convertible Preferred Stock. The determination of fair value requires significant judgement by management and third-party valuation specialists to develop significant estimates and assumptions including the probability of the spin off occurring. Auditing management’s judgements involved especially challenging auditor judgement due to the nature and extent of audit effort required.
How We Addressed the Matter in Our Audit |  | We obtained an understanding and evaluated the procedures over management’s technical accounting analysis and valuation process. We inspected the governing agreements for the transaction and evaluated the application of the Company’s technical accounting analyses including evaluating the terms and management’s conclusion on the interpretation and application of the relevant accounting literature. With the assistance of our valuation specialists, we evaluated the reasonableness of the valuation methodology used, we evaluated the reasonableness of the inputs subject to assumptions and verified the accuracy and completeness of those inputs to the underlying transaction data utilized in the valuation of the preferred stock and derivative liability; we performed sensitivity analyses of the significant assumptions used in the valuation model to evaluate the change in fair value resulting from changes in the significant assumptions to determine reasonableness of the valuation conclusions.

/s/ Marcum LLP

We have served as the Company’s auditor since 2021 (such date takes into account the acquisition of certain assets of Friedman LLP by Marcum LLP effective September 1, 2022).

East Hanover, New Jersey

March 31, 2023

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Enveric Biosciences, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Enveric Biosciences, Inc. (the Company) as of December 31, 2021, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review or apply any procedures to retroactively apply the effects of the reverse stock split described in Note 1, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by Marcum LLP.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Friedman LLP
We have served as the Company’s auditor from 2021 through 2022.
East Hanover, New Jersey
March 31, 2022 |

F-3

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

|  | 2022 |  |  | 2021 |
|  | As of December 31, |
|  | 2022 |  |  | 2021 |
ASSETS |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |
Cash |  | $ | 17,723,884 |  |  | $ | 17,355,999 |
Prepaid expenses and other current assets |  |  | 708,053 |  |  |  | 380,838 |
Total current assets |  |  | 18,431,937 |  |  |  | 17,736,837 |
Other assets: |  |  |  |  |  |  |  |
Property and equipment, net |  |  | 677,485 |  |  |  | 294,430 |
Right-of-use operating lease asset |  |  | 63,817 |  |  |  | 176,304 |
Intangible assets, net |  |  | 379,686 |  |  |  | 6,923,928 |
Goodwill |  |  | — |  |  |  | 1,587,634 |
Total other assets |  |  | 1,120,988 |  |  |  | 8,982,296 |
Total assets |  | $ | 19,552,925 |  |  | $ | 26,719,133 |
LIABILITIES, TEMPORARY EQUITY, AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |
Accounts payable |  | $ | 463,275 |  |  | $ | 683,393 |
Accrued liabilities |  |  | 1,705,655 |  |  |  | 1,292,721 |
Current portion of right-of-use operating lease obligation |  |  | 63,820 |  |  |  | 107,442 |
Investment option liability |  |  | 851,008 |  |  |  | — |
Warrant liability |  |  | 185,215 |  |  |  | 653,674 |
Derivative liability |  |  | 727,000 |  |  |  | — |
Total current liabilities |  |  | 3,995,973 |  |  |  | 2,737,230 |
Non-current liabilities: |  |  |  |  |  |  |  |
Non-current portion of right-of-use operating lease obligation |  |  | — |  |  |  | 68,861 |
Deferred tax liability |  |  | — |  |  |  | 1,607,122 |
Total non-current liabilities |  |  | — |  |  |  | 1,675,983 |
Total liabilities |  | $ | 3,995,973 |  |  | $ | 4,413,213 |
Commitments and contingencies (Note 9) |  |  | - |  |  |  | - |
Temporary equity |  |  |  |  |  |  |  |
Series C redeemable preferred stock, $0.01 par value, 100,000 shares authorized, and 52,684.548 and 0 shares issued and outstanding as of December 31, 2022 and 2021, respectively |  |  | — |  |  |  | — |
Redeemable non-controlling interest |  |  | 885,028 |  |  |  | — |
Total temporary equity |  |  | 885,028 |  |  |  | — |
Shareholders’ equity |  |  |  |  |  |  |  |
Preferred stock, $0.01 par value, 20,000,000 shares authorized; Series B preferred stock, $0.01 par value, 3,600,000 shares authorized, 0 shares issued and outstanding as of December 31, 2022 and 2021, respectively |  |  | — |  |  |  | — |
Common stock, $0.01 par value, 100,000,000 shares authorized, 2,078,271 and 651,921 shares issued and outstanding as of December 31, 2022 and 2021, respectively |  |  | 20,782 |  |  |  | 6,519 |
Additional paid-in capital |  |  | 94,395,662 |  |  |  | 83,066,656 |
Accumulated deficit |  |  | (79,207,786 | ) |  |  | (60,736,453 | )
Accumulated other comprehensive loss |  |  | (536,734 | ) |  |  | (30,802 | )
Total shareholders’ equity |  |  | 14,671,924 |  |  |  | 22,305,920 |
Total liabilities, temporary equity, and shareholders’ equity |  | $ | 19,552,925 |  |  | $ | 26,719,133 |

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

F-4

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

|  | 2022 |  |  | 2021 |
|  | For the Years Ended December 31, |
|  | 2022 |  |  | 2021 |
Operating expenses |  |  |  |  |  |  |  |
General and administrative |  | $ | 11,605,761 |  |  | $ | 20,499,052 |
Research and development |  |  | 8,027,773 |  |  |  | 4,788,807 |
Impairment of intangible assets and goodwill |  |  | 7,453,662 |  |  |  | 38,678,918 |
Depreciation and amortization |  |  | 327,910 |  |  |  | 656,643 |
Total operating expenses |  |  | 27,415,106 |  |  |  | 64,623,420 |
Loss from operations |  |  | (27,415,106 | ) |  |  | (64,623,420 | )
Other income (expense) |  |  |  |  |  |  |  |
Inducement expense |  |  | — |  |  |  | (1,125,291 | )
Change in fair value of warrant liabilities |  |  | 4,315,236 |  |  |  | 9,327,326 |
Change in fair value of investment option liability |  |  | 3,472,726 |  |  |  | — |
Change in fair value of derivative liability |  |  | (325,000 | ) |  |  | — |
Interest expense |  |  | (5,249 | ) |  |  | (10,316 | )
Total other income |  |  | 7,457,713 |  |  |  | 8,191,719 |
Net loss before income taxes |  |  | (19,957,393 | ) |  |  | (56,431,701 | )
Income tax benefit |  |  | 1,486,060 |  |  |  | 7,454,805 |
Net loss |  |  | (18,471,333 | ) |  |  | (48,976,896 | )
Less preferred dividends attributable to non-controlling interest |  |  | 33,014 |  |  |  | — |
Less deemed dividends attributable to accretion of embedded derivative at redemption value |  |  | 295,976 |  |  |  | — |
Net loss attributable to shareholders |  |  | (18,800,323 | ) |  |  | (48,976,896 | )
Other comprehensive loss |  |  |  |  |  |  |  |
Foreign currency translation |  |  | (505,932 | ) |  |  | 150,475 |
Comprehensive loss |  | $ | (19,306,255 | ) |  | $ | (48,826,421 | )
Net loss per share - basic and diluted |  | $ | (13.00 | ) |  | $ | (103.69 | )
Weighted average shares outstanding, basic and diluted |  |  | 1,446,007 |  |  |  | 472,343 |

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

F-5

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY

|  |  |  |  | Shares |  |  | Amount |  |  | Shares |  |  | Amount |  |  | Capital |  |  | Deficit |  |  | Income (Loss) |  |  | Total |
|  |  |  |  | Series B Preferred Stock |  |  | Common Stock |  |  | Additional Paid-In |  |  | Accumulated |  |  | Accumulated Other Comprehensive |  |  |  |
|  |  |  |  | Shares |  |  | Amount |  |  | Shares |  |  | Amount |  |  | Capital |  |  | Deficit |  |  | Income (Loss) |  |  | Total |
Balance at January 1, 2021 |  | - | - | - |  | 3,275,407 |  |  | $ | 32,754 |  |  |  | 202,249 |  |  | $ | 2,022 |  |  | $ | 15,321,699 |  |  | $ | (11,759,557 | ) |  | $ | (181,277 | ) |  | $ | 3,415,641 |
January 2021 registered direct offering, net of offering costs |  |  |  |  |  | — |  |  |  | — |  |  |  | 44,427 |  |  |  | 444 |  |  |  | 4,616,643 |  |  |  | — |  |  |  | — |  |  |  | 4,617,087 |
February 2021 registered direct offering, net of offering costs |  |  |  |  |  | — |  |  |  | — |  |  |  | 60,141 |  |  |  | 601 |  |  |  | 7,015,800 |  |  |  | — |  |  |  | — |  |  |  | 7,016,401 |
Consideration paid pursuant to amalgamation agreement |  |  |  |  |  | — |  |  |  | — |  |  |  | 199,025 |  |  |  | 1,990 |  |  |  | 39,040,292 |  |  |  | — |  |  |  | — |  |  |  | 39,042,282 |
Exercise of warrants |  |  |  |  |  | — |  |  |  | — |  |  |  | 52,861 |  |  |  | 530 |  |  |  | 3,284,641 |  |  |  | — |  |  |  | — |  |  |  | 3,285,171 |
Exercise of options |  |  |  |  |  | — |  |  |  | — |  |  |  | 2,685 |  |  |  | 27 |  |  |  | (27 | ) |  |  | — |  |  |  | — |  |  |  | — |
Induced conversion of stock options into restricted stock awards |  |  |  |  |  | — |  |  |  | — |  |  |  | 20,307 |  |  |  | 203 |  |  |  | 1,125,088 |  |  |  | — |  |  |  | — |  |  |  | 1,125,291 |
Stock-based compensation |  |  |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 12,597,001 |  |  |  | — |  |  |  | — |  |  |  | 12,597,001 |
Common stock issued in lieu of cash for services |  |  |  |  |  | — |  |  |  | — |  |  |  | 283 |  |  |  | 3 |  |  |  | 33,464 |  |  |  | — |  |  |  | — |  |  |  | 33,467 |
Common stock issued pursuant to exercise of warrant put rights |  |  |  |  |  | — |  |  |  | — |  |  |  | 4,434 |  |  |  | 44 |  |  |  | (44 | ) |  |  | — |  |  |  | — |  |  |  | — |
Conversion of Series B preferred shares |  |  |  |  |  | (3,275,407 | ) |  |  | (32,754 | ) |  |  | 65,509 |  |  |  | 655 |  |  |  | 32,099 |  |  |  | — |  |  |  | — |  |  |  | — |
Foreign exchange translation gain |  |  |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 150,475 |  |  |  | 150,475 |
Foreign exchange translation gain (loss) |  |  |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 150,475 |  |  |  | 150,475 |
Net loss |  | - | - | - |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (48,976,896 | ) |  |  | — |  |  |  | (48,976,896 | )
Balance at December 31, 2021 |  | - | - | - |  | — |  |  | $ | — |  |  |  | 651,921 |  |  | $ | 6,519 |  |  | $ | 83,066,656 |  |  | $ | (60,736,453 | ) |  | $ | (30,802 | ) |  | $ | 22,305,920 |

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

F-6

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY

|  | Shares |  |  | Amount |  |  | Shares |  |  | Amount |  |  | Equity |  |  | Shares |  |  | Amount |  |  | Capital |  |  | Deficit |  |  | Loss |  |  | Equity |
|  | Series C Redeemable Preferred Stock |  |  | Redeemable Non-controlling Interest |  |  | Total Temporary |  |  | Common Stock |  |  | Additional Paid-In |  |  | Accumulated |  |  | Accumulated Other Comprehensive |  |  | Total Shareholders’ |
|  | Shares |  |  | Amount |  |  | Shares |  |  | Amount |  |  | Equity |  |  | Shares |  |  | Amount |  |  | Capital |  |  | Deficit |  |  | Loss |  |  | Equity |
Balance at January 1, 2022 |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |  |  | $ | — |  |  |  | 651,921 |  |  | $ | 6,519 |  |  | $ | 83,066,656 |  |  | $ | (60,736,453 | ) |  | $ | (30,802 | ) |  | $ | 22,305,920 |
February 2022 registered direct offering, net of offering costs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 400,000 |  |  |  | 4,000 |  |  |  | 5,798,464 |  |  |  | — |  |  |  | — |  |  |  | 5,802,464 |
Stock-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,620,671 |  |  |  | — |  |  |  | — |  |  |  | 2,620,671 |
Conversion of RSUs into common shares |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 899 |  |  |  | 9 |  |  |  | (9 | ) |  |  | — |  |  |  | — |  |  |  | — |
Redeemable non-controlling interest, net of $402,000 embedded derivative and net of issuance costs of $41,962 |  |  | — |  |  |  | — |  |  |  | 1,000 |  |  |  | 556,038 |  |  |  | 556,038 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Issuance of redeemable Series C preferred stock |  |  | 52,685 |  |  |  | 527 |  |  |  | — |  |  |  | — |  |  |  | 527 |  |  |  | — |  |  |  | — |  |  |  | (527 | ) |  |  | — |  |  |  | — |  |  |  | (527 | )
Preferred dividends attributable to redeemable non-controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 33,014 |  |  |  | 33,014 |  |  |  | — |  |  |  | — |  |  |  | (33,014 | ) |  |  | — |  |  |  | — |  |  |  | (33,014 | )
Accretion of embedded derivative to redemption value |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 295,976 |  |  |  | 295,976 |  |  |  | — |  |  |  | — |  |  |  | (295,976 | ) |  |  | — |  |  |  | — |  |  |  | (295,976 | )
Conversion of RSAs into common shares |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,223 |  |  |  | 12 |  |  |  | (12 | ) |  |  | — |  |  |  | — |  |  |  | — |
July 2022 registered direct offering, PIPE offering, modification of warrants and exercise of pre-funded warrants, net of offering costs |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,000,000 |  |  |  | 10,000 |  |  |  | 3,239,124 |  |  |  | — |  |  |  | — |  |  |  | 3,249,124 |
Issuance of rounded shares as a result of the reverse stock split |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 24,228 |  |  |  | 242 |  |  |  | (242 | ) |  |  | — |  |  |  | — |  |  |  | — |
Redemption of Series C preferred stock |  |  | (52,685 | ) |  |  | (527 | ) |  |  | — |  |  |  | — |  |  |  | (527 | ) |  |  | — |  |  |  | — |  |  |  | 527 |  |  |  | — |  |  |  | — |  |  |  | 527 |
Foreign exchange translation loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (505,932 | ) |  |  | (505,932 | )
Net loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (18,471,333 | ) |  |  | — |  |  |  | (18,471,333 | )
Balance at December 31, 2022 |  |  | — |  |  | $ | — |  |  |  | 1,000 |  |  | $ | 885,028 |  |  | $ | 885,028 |  |  |  | 2,078,271 |  |  | $ | 20,782 |  |  | $ | 94,395,662 |  |  | $ | (79,207,786 | ) |  | $ | (536,734 | ) |  | $ | 14,671,924 |

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

F-7

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

|  | 2022 |  |  | 2021 |
|  | For the Years Ended December 31, |
|  | 2022 |  |  | 2021 |
Cash Flows From Operating Activities: |  |  |  |  |  |  |  |
Net loss |  | $ | (18,471,333 | ) |  | $ | (48,976,896 | )
Adjustments to reconcile net loss to cash used in operating activities |  |  |  |  |  |  |  |
Change in fair value of warrant liability |  |  | (4,315,236 | ) |  |  | (9,327,326 | )
Change in fair value of investment option liability |  |  | (3,472,726 | ) |  |  | — |
Change in fair value of derivative liability |  |  | 325,000 |  |  |  | — |
Stock-based compensation |  |  | 2,620,671 |  |  |  | 12,597,001 |
Stock issued in lieu of cash for services |  |  | — |  |  |  | 33,467 |
Impairment of intangible assets and goodwill |  |  | 7,453,662 |  |  |  | 38,678,918 |
Non-cash income tax benefit |  |  | (1,504,302 | ) |  |  | (7,454,805 | )
Inducement expense |  |  | — |  |  |  | 1,125,291 |
Amortization of right-of-use asset |  |  | 107,291 |  |  |  | 24,969 |
Amortization of intangible assets |  |  | 168,750 |  |  |  | 643,333 |
Depreciation expense |  |  | 159,160 |  |  |  | 13,310 |
Change in operating assets and liabilities: |  |  |  |  |  |  |  |
Prepaid expenses and other current assets |  |  | (374,058 | ) |  |  | 826,837 |
Accounts payable and accrued liabilities |  |  | 263,686 |  |  |  | 383,199 |
Right-of-use operating lease liability |  |  | (107,288 | ) |  |  | (24,969 | )
Net cash used in operating activities |  |  | (17,146,723 | ) |  |  | (11,457,671 | )
Cash Flows From Investing Activities: |  |  |  |  |  |  |  |
Purchases of property and equipment |  |  | (584,165 | ) |  |  | (189,719 | )
Purchase of Diverse Bio license agreement |  |  | — |  |  |  | (675,000 | )
Cash accretive acquisition of MagicMed |  |  | — |  |  |  | 3,055,328 |
Net cash (used in) provided by investing activities |  |  | (584,165 | ) |  |  | 2,190,609 |
Cash Flows From Financing Activities: |  |  |  |  |  |  |  |
Proceeds from sale of common stock, warrants, and investment options, net of offering costs |  |  | 17,222,099 |  |  |  | 21,614,488 |
Proceeds from the sale of redeemable non-controlling interest, net of offering costs (see Note 8) |  |  | 958,038 |  |  |  | — |
Proceeds from warrant exercises, net of fees |  |  | — |  |  |  | 3,285,171 |
Net cash provided by financing activities |  |  | 18,180,137 |  |  |  | 24,899,659 |
Effect of foreign exchange rate on cash |  |  | (81,364 | ) |  |  | 144,942 |
Net increase in cash |  |  | 367,885 |  |  |  | 15,777,539 |
Cash at beginning of year |  |  | 17,355,999 |  |  |  | 1,578,460 |
Cash at end of year |  | $ | 17,723,884 |  |  | $ | 17,355,999 |
Supplemental disclosure of cash and non-cash transactions: |  |  |  |  |  |  |  |
Cash paid for interest |  | $ | 5,249 |  |  | $ | 10,316 |
Income taxes paid |  | $ | — |  |  | $ | — |
Investment options issued in conjunction with common stock issuance |  | $ | 4,323,734 |  |  | $ | — |
Modification of warrants as part of share capital raise |  | $ | 251,357 |  |  | $ | — |
Warrants issued in conjunction with common stock issuance |  | $ | 3,595,420 |  |  | $ | — |
Issuance of embedded derivative |  | $ | 402,000 |  |  | $ | — |
Preferred dividends attributable to redeemable non-controlling interest |  | $ | 33,014 |  |  | $ | — |
Accretion of embedded derivative to redemption value |  | $ | 295,976 |  |  | $ | — |
Issuance of Common Stock pursuant to MagicMed amalgamation |  | $ | — |  |  | $ | 39,042,282 |
Deferred tax liability incurred due to MagicMed amalgamation |  | $ | — |  |  | $ | 9,061,927 |
Conversion of preferred stock to common stock |  | $ | — |  |  | $ | 32,754 |
Fair value of warrants issued |  | $ | — |  |  | $ | 9,981,000 |
Right-of-use assets obtained in exchange for lease liabilities |  | $ | — |  |  | $ | 201,653 |

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

F-8

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BUSINESS AND LIQUIDITY AND OTHER UNCERTAINTIES

Nature of 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”), and Enveric Canada. The Company has an Amalgamation Agreement (“Amalgamation Agreement”) and tender agreement (“Tender Agreement”) with Jay Pharma, which were entered into in prior years.

On May 24, 2021, the Company entered into an Amalgamation Agreement (the “Amalgamation Agreement”) with 1306432 B.C. Ltd., a corporation existing under the laws of the Province of British Columbia and a wholly-owned subsidiary of the Company (“HoldCo”), 1306436 B.C. Ltd., a corporation existing under the laws of the Province of British Columbia and a wholly-owned subsidiary of HoldCo (“Purchaser”), and MagicMed Industries Inc., a corporation existing under the laws of the Province of British Columbia (“MagicMed”), pursuant to which, among other things, the Company, indirectly through Purchaser, acquired all of the outstanding securities of MagicMed in exchange for securities of the Company by way of an amalgamation under the British Columbia Business Corporations Act, upon the terms and conditions set forth in the Amalgamation Agreement, such that, upon completion of the Amalgamation (as defined herein), the amalgamated corporation (“Amalco”) will be an indirect wholly-owned subsidiary of the Company. The Amalgamation was completed on September 16, 2021.

MagicMed Industries develops and commercializes psychedelic-derived pharmaceutical candidates. MagicMed’s psychedelic derivatives library, the Psybrary™, is an essential building block from which 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.

Akos Spin-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 will be 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 as a result of the Spin-Off will be referred to as Akos. If the Spin-Off does not occur, the Company has guaranteed the redeemable non-controlling interest (“RNCI”).

On May 5, 2022, the Company and Akos entered into a Securities Purchase Agreement (the “Akos Purchase Agreement”) with an accredited investor (the “Akos Investor”), pursuant to which Akos agreed to sell to the Akos Investor up to an aggregate of 5,000 shares of Akos’ Series A Convertible Preferred Stock (the “Akos Series A Preferred Stock”), par value $0.01 per share at a price of $1,000 per share, and warrants (the “Akos Warrants”) to purchase shares of Akos’ common stock (the “Akos Common Stock”), par value $0.01 per share, for an aggregate purchase price of up to $5,000,000 (the “Akos Private Placement”). 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 (See Note 8).

Reverse Stock Split

On July 14, 2022 the Company affected 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.

Going Concern, Liquidity and Other Uncertainties

The Company has incurred a loss since inception resulting in an accumulated deficit of $79,207,786 as of December 31, 2022 and further losses are anticipated in the development of its business. Further, the Company has operating cash outflows of $17,146,723 for the year ended December 31, 2022. For the year ended December 31, 2022, the Company had a loss from operations of $27,415,106. 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.

F-9

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In assessing the Company’s ability to continue as a going concern, the Company monitors and analyzes its cash and its ability to generate sufficient cash flow in the future to support its operating and capital expenditure commitments. At December 31, 2022, the Company had cash of $17,723,884 and working capital of $14,435,964. 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 Annual Report on Form 10-K. The Company believes that it has adequate cash on hand to cover anticipated outlays through December 31, 2023. 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, which may include collaborations with third parties as well as disciplined cash spending. Adequate additional financing may not be available to us on acceptable terms, or at all. Should the Company be unable to raise sufficient additional capital, the Company may be required to undertake cost-cutting measures including delaying or discontinuing certain operating activities.

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

Inflation Risks

The current inflationary trend existing in the North American economic environment is considered by the Company to be 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 the cost of labor and materials. In addition, there is an increased risk of the Company experiencing labor shortages as a result of a potential inability to attract and retain human resources due to increased labor costs resulting from the current inflationary environment.

Recent Developments

Nasdaq Notice

On February 18, 2022, the Company received a letter from the Listing Qualifications Department of the Nasdaq Stock Market indicating that, based upon the closing bid price of the Company’s common stock for the 30 consecutive business day period between January 5, 2022, through February 17, 2022, the Company did not meet the minimum bid price of $1.00 per share required for continued listing on the Nasdaq Capital Market (“Nasdaq”) pursuant to Nasdaq Listing Rule 5550(a)(2). The letter also indicated that the Company will be provided with a compliance period of 180 calendar days, or until August 17, 2022 (the “Compliance Period”), in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A).

On July 29, 2022, the Company received a letter from the Listing Qualifications Department of the Nasdaq Stock Market stating that for the last ten consecutive business days, from July 15 to July 28, 2022, the closing bid price of the Company’s common stock had been at $1.00 per share or greater. Accordingly, the Company has regained compliance with Listing Rule 5550(a)(2).

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principal of Consolidation

The accompanying consolidated financial statements have been prepared in accordance and in conformity with GAAP and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding consolidated financial information. All intercompany transactions have been eliminated in consolidation.

Reclassification

Certain reclassifications have been made to the prior period financial statements to conform to the current period financial statement presentation. These reclassifications had no effect on net earnings or cash flows as previously reported.

F-10

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Use of Estimates

The preparation of the 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, estimated fair values of long lives assets used to record impairment charges related to intangible assets, acquired in-process research and development (“IPR&D”), and goodwill, and allocation of purchase price in business acquisitions. Actual results could differ from those estimates.

Foreign Currency Translation

From inception through December 31, 2022, the reporting currency of the Company was the United States dollar while the functional currency of certain of the Company’s subsidiaries was the Canadian dollar. For the reporting periods ended December 31, 2022 and December 31, 2021, the Company engaged in a number of transactions denominated in Canadian dollars. As a result, the Company is subject to exposure from changes in the exchange rates of the Canadian dollar and the U.S. dollar.

The Company translates the assets and liabilities of its Canadian subsidiaries 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 consolidated statements of shareholders’ equity as a component of accumulated other comprehensive income (loss).

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

Adjustments that arise from exchange rate changes on transactions denominated in a currency other than the local currency are included in other comprehensive income (loss) in the consolidated statements of operations and comprehensive income (loss) as incurred.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2022 and 2021.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the federal depository insurance coverage of $250,000 in the United States 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 December 31, 2022, the Company had greater than $250,000 and $100,000 at US and Canadian financial institutions, respectively.

Comprehensive Loss

Comprehensive loss consists of two components, net loss and other comprehensive income (loss). Other comprehensive loss refers to revenue, expenses, gains, and losses that under GAAP are recorded as an element of shareholders’ equity but are excluded from net loss. Other comprehensive loss consists of foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency.

F-11

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Business Combinations

The Company accounts for business combinations under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations” (“ASC 805”) using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. For transactions that are business combinations, the Company evaluates the existence of goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. All acquisition costs are expensed as incurred. Upon acquisition, the accounts and results of operations are consolidated as of and subsequent to the acquisition date.

The estimated fair value of net assets acquired, including the allocation of the fair value to identifiable assets and liabilities, was determined using established valuation techniques. A fair value measurement is determined as the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. In the context of purchase accounting, the determination of fair value often involves significant judgments and estimates by management, including the selection of valuation methodologies, estimates of future revenues, costs and cash flows, discount rates, and selection of comparable companies. The estimated fair values reflected in the purchase accounting are subject to management’s judgment.

Intangible Assets

Intangible assets consist of the Psybrary™ and Patent Applications, In Process Research and Development (“IPR&D”) and license agreements. Psybrary™ and Patent Applications intangible assets are valued using the relief from royalty method. The cost of license agreements is amortized over the economic life of the license. The Company assesses the carrying value of its intangible assets for impairment each year.

IPR&D intangible assets are acquired in conjunction with the acquisition of a business and are assigned a fair value, using the multi-period excess earnings method, related to incomplete research projects which, at the time of acquisition, have not reached technological feasibility. The amounts are capitalized and are accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project, the Company will make a determination as to the then-useful life of the intangible asset, generally determined by the period in which the substantial majority of the cash flows are expected to be generated, and begin amortization. The Company tests its intangible assets for impairment at least annually and whenever events or circumstances change that indicate impairment may have occurred. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others and without limitation: a significant decline in the Company’s expected future cash flows; a sustained, significant decline in the Company’s stock price and market capitalization; a significant adverse change in legal factors or in the business climate of the Company’s segments; unanticipated competition; and slower growth rates. If the fair value determined is less than the carrying amount, an impairment loss is recognized in operating results.

Goodwill

The Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. The Company has determined that the reporting unit is the entire company, due to the integration of all of the Company’s activities. In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.

F-12

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property & Equipment

Property and equipment are recorded at cost. Major property additions, replacements, and betterments are capitalized, while maintenance and repairs that do not extend the useful lives of an asset or add new functionality are expensed as incurred. Depreciation and amortization are recorded using the straight-line method over the respective estimated useful lives of the Company’s long-lived assets. The estimated useful lives are typically 3 to 5 years for office furniture and equipment and are depreciated on a straight-line basis.

Warrant Liability 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 and FASB 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 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 consolidated balance sheet date and any change in fair value is recognized as a component of other expense on the 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.

Modification of Warrants

A change in any of the terms or conditions of warrants is accounted for as a modification. For a warrant modification accounted for under ASC 815, the effect of a modification shall be measured as the difference between the fair value of the modified warrant over the fair value of the original warrant immediately before its terms are modified, measured based on the fair value of the shares and other pertinent factors at the modification date. The accounting for incremental fair value of warrants is based on the specific facts and circumstances related to the modification. When a modification is directly attributable to equity offerings, the incremental change in fair value of the warrants are accounted for as equity issuance costs.

Derivative Liability

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 consolidated statements of operations and comprehensive loss. 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 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.

Offering Costs

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

Income Taxes

The Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse.

F-13

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liabilities. In management’s opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of December 31, 2022 and 2021, no liability for unrecognized tax benefits was required to be recorded.

The Company’s policy for recording interest and penalties associated with tax audits is to record such items as a component of operating expenses. There were no amounts accrued for penalties and interest for the years ended December 31, 2022 and 2021. The Company does not expect its uncertain tax positions to change during the next twelve months. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

The Company has identified its United States and Canadian federal tax return, its state and provincial tax returns in Florida and Ontario, CA as its “major” tax jurisdictions. The Company is in the process of filing its corporate tax returns for the years ended December 31, 2022 and 2021. Net operating losses for these periods will not be available to reduce future taxable income until the returns are filed.

Stock-Based Compensation

The Company follows ASC 718, Compensation - Stock Compensation, which addresses the accounting for stock-based payment transactions, requiring such transactions to be accounted for using the fair value method. Awards of shares for property or services are recorded at the more readily measurable of the estimated fair value of the stock award and the estimated fair value of the service. The Company uses the Black-Scholes option-pricing model to determine the grant date fair value of certain stock-based awards under ASC 718. The assumptions used in calculating the fair value of stock-based awards represent management’s reasonable estimates and involve inherent uncertainties and the application of management’s judgment. Fair value of restricted stock units or restricted stock awards is determined by the closing price per share of the Company’s common stock on the date of award grant.

The estimated fair value is amortized as a charge to earnings on a straight-line basis, for awards or portions of awards that do not require specified milestones or performance criteria as a vesting condition and also depending on the terms and conditions of the award, and the nature of the relationship of the recipient of the award to the Company. The Company records the grant date fair value in line with the period over which it was earned. For employees and consultants, this is typically considered to be the vesting period of the award. The Company accounts for forfeitures as they occur.

The estimated fair value of awards that require specified milestones or recipient performance are charged to expense when such milestones or performance criteria are probable to be met.

Restricted stock units, restricted stock awards, and stock options are granted at the discretion of the Compensation Committee of the Company’s board of directors (the “Board of Directors”). These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods, typically over a 12 to 48-month period. A significant portion of these awards may include vesting terms that include, without limitation, defined volume weighted average price levels being achieved by the Company’s Common Stock, specific performance milestones, employment, or engagement by the Company, with no assurances of achievement of any such vesting conditions, if applicable.

The value of RSU’s is equal to the product of the number of units awarded, multiplied by the closing price per share of the Company’s Common Stock on the date of the award. The terms and conditions of each RSU is defined in the RSU agreement and includes vesting terms that consist of any or all of the following: immediate vesting, vesting over a defined period of time, vesting based on achievement of a defined volume weighted average price levels at specified times, vesting based on achievement of specific performance milestones within a specific time frame, change of control, termination of the employee without cause by the Company, resignation of the employee with good cause. The value assigned to each RSU is charged to expense based on the vesting terms, as follows: value of RSU’s that vest immediately are charged to expense on the date awarded, value of RSU’s that vest based upon time, or achievement of stock price levels over a period of time are charged to expense on a straight line basis over the time frame specified in the RSU and the value of RSU’s that vest based upon achievement of specific performance milestones are charged to expense during the period that such milestone is achieved. Vested RSU’s may be converted to shares of Common Stock of an equivalent number upon either the termination of the recipient’s employment with the Company, or in the event of a change in control. If the recipient is not an employee, such person’s engagement with the Company must either be terminated prior to such conversion of RSU’s to shares of Common Stock, or in the event of a change in control. Furthermore, as required by Section 409A of the Internal Revenue Code, if the recipient is a “specified employee” (generally, certain officers and highly compensated employees of publicly traded companies), such recipient may only convert vested RSU’s into shares of Common Stock no earlier than the first day of the seventh month following such recipients termination of employment with the Company, or the event of change in control.

F-14

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The value of RSA’s is equal to the product of the number of restricted shares awarded, multiplied by the closing price per share of the Company’s Common Stock on the date of the award. The terms and conditions of each RSA is defined in the RSA agreement and includes vesting terms that consist of any or all of the following: immediate vesting, vesting over a defined period of time, or vesting based on achievement of a defined volume weighted average price levels at specified times. Upon vesting, the recipient may receive restricted stock which includes a legend prohibiting sale of the shares during a restriction period that is defined in the RSA agreement. Termination of employment by or engagement with the Company is not required for the recipient to receive restricted shares of Common Stock. The value assigned to each RSA is charged to expense based on the vesting terms, as follows: value of RSA’s that vest immediately are charged to expense on the date awarded, value of RSA’s that vest based upon time, or achievement of stock price levels over a period of time are charged to expense on a straight-line basis over the time frame specified in the RSU.

Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and warrants (using the treasury stock method). The computation of basic net loss per share for the years ended December 31, 2022 and 2021 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 260-10-45-13, penny warrants were included in the calculation of weighted average shares outstanding for purposes of calculating basic and diluted earnings per share.

During the year ended December 31, 2022 the Company issued 767,500 pre-funded common stock warrants, which were exercised on various dates during the year ended December 31, 2022. The pre-funded common stock warrants became exercisable on July 26, 2022 based on the terms and conditions of the agreements. As the pre-funded common stock warrants are exercisable for $0.0001, these shares are considered outstanding common shares and are included in the computation of basic and diluted Earnings Per Share as the exercise of the pre-funded common stock warrants is virtually assured. The Company included these pre-funded common stock warrants in basic and diluted earnings per share when all conditions were met on July 26, 2022.

Potentially dilutive securities outlined in the table below have been excluded from the computation of diluted net loss per share the years ended December 31, 2022 and 2021 because the effect of their inclusion would have been anti-dilutive.

SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES

|  | 2022 |  |  | 2021 |
|  | For the years ended December 31, |
|  | 2022 |  |  | 2021 |
Warrants to purchase shares of common stock |  |  | 655,463 |  |  |  | 195,463 |
Restricted stock units - vested and unissued |  |  | 62,492 |  |  |  | 55,717 |
Restricted stock units - unvested |  |  | 64,053 |  |  |  | 62,013 |
Restricted stock awards - vested and unissued |  |  | 708 |  |  |  | 642 |
Restricted stock awards - unvested |  |  | — |  |  |  | 1,031 |
Investment options to purchase shares of common stock |  |  | 1,070,000 |  |  |  | — |
Options to purchase shares of common stock |  |  | 48,329 |  |  |  | 23,829 |
Total potentially dilutive securities |  |  | 1,901,045 |  |  |  | 338,695 |

Fair Value 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.

F-15

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 December 31, 2022 and 2021 because of their short-term nature.

The following table provides the financial liabilities measured on a recurring basis and reported at fair value on the balance sheets as of December 31, 2022 and 2021 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 |  |  | December 31, 2022 |  |  | December 31, 2021 |
|  | Level |  |  | December 31, 2022 |  |  | December 31, 2021 |
Warrant liabilities - January 2021 Warrants |  |  | 3 |  |  | $ | 81 |  |  | $ | 333,471 |
Warrant liabilities - February 2021 Warrants |  |  | 3 |  |  |  | 79 |  |  |  | 320,203 |
Warrant liabilities - February 2022 Warrants |  |  | 3 |  |  |  | 185,055 |  |  |  | — |
Fair value of warrant liability as of December 31, 2022 |  |  |  |  |  | $ | 185,215 |  |  | $ | 653,674 |
Warrant liability - fair value |  |  |  |  |  | $ | 185,215 |  |  | $ | 653,674 |

|  | Level |  |  | December 31, 2022 |  |  | December 31, 2021 |
|  | Level |  |  | December 31, 2022 |  |  | December 31, 2021 |
Derivative liability - May 2022 |  |  | 3 |  |  | $ | 727,000 |  |  | $ | — |
Fair value of derivative liability as of December 31, 2022 |  |  |  |  |  | $ | 727,000 |  |  | $ | — |
Derivative liability - fair value |  |  |  |  |  | $ | 727,000 |  |  | $ | — |

|  | Level |  |  | December 31, 2022 |  |  | December 31, 2021 |
Wainwright investment options |  |  | 3 |  |  | $ | 44,904 |  |  | $ | — |
RD investment options |  |  | 3 |  |  |  | 302,289 |  |  |  | — |
PIPE investment options |  |  | 3 |  |  |  | 503,815 |  |  |  | — |
Fair value of investment option liability as of December 31, 2022 |  |  |  |  |  | $ | 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.

F-16

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Initial measurement

The Company established the initial fair value of its warrant liabilities at the respective dates of issuance. The Company used a Black Scholes valuation model in order to determine their value. The key inputs into the Black Scholes valuation model for the initial valuations of the warrant liabilities are below:

SCHEDULE OF BLACK SCHOLES VALUATION MODELS OF WARRANT LIABILITIES AND INVESTMENT OPTIONS

|  | February 2022 Warrants |  |  | February 2022 Post-Modification Warrants (See Note 7) |
|  | February 15, 2022 |  |  | July 26, 2022 |
Term (years) |  |  | 5.0 |  |  |  | 5.5 |
Stock price |  | $ | 15.75 |  |  | $ | 6.33 |
Exercise price |  | $ | 27.50 |  |  | $ | 7.78 |
Dividend yield |  |  | — | % |  |  | — | %
Expected volatility |  |  | 74.1 | % |  |  | 80.0 | %
Risk free interest rate |  |  | 1.9 | % |  |  | 2.9 | %
Number of warrants |  |  | 460,000 |  |  |  | 122,000 |
Value (per share) |  | $ | 8.00 |  |  | $ | 4.07 |

The Company established the initial fair value of its derivative liability at the respective date of issuance. The Company used a Weighted Expected Return valuation model in order to determine their value. The key inputs into the Weighted Expected Return valuation model for the initial valuations of the warrant liabilities are below:

|  | May 2022 Derivative Liability |
|  | May 5, 2022 |
Principal |  | $ | 1,000,000 |
Dividend rate |  |  | 5.0 | %
Market rate |  |  | 4.4 | %

F-17

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company established the initial fair value of its investment options at the respective dates of issuance. The Company used a Black Scholes valuation model in order to determine their value. The key inputs into the Black Scholes valuation model for the initial valuations of the investment options are below:

|  | Wainwright Options |  |  | RD Options |  |  | PIPE Options |
|  | July 26, 2022 |  |  | July 26, 2022 |  |  | July 26, 2022 |
Term (years) |  |  | 5.0 |  |  |  | 5.5 |  |  |  | 5.5 |
Stock price |  | $ | 6.33 |  |  | $ | 6.33 |  |  | $ | 6.33 |
Exercise price |  | $ | 10.00 |  |  | $ | 7.78 |  |  | $ | 7.78 |
Dividend yield |  |  | — | % |  |  | — | % |  |  | — | %
Expected volatility |  |  | 80.0 | % |  |  | 80.0 | % |  |  | 80.0 | %
Risk free interest rate |  |  | 2.9 | % |  |  | 2.9 | % |  |  | 2.9 | %
Number of investment options |  |  | 70,000 |  |  |  | 375,000 |  |  |  | 625,000 |
Value (per share) |  | $ | 3.60 |  |  | $ | 4.07 |  |  | $ | 4.07 |

Subsequent measurement

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 Liabilities |
Fair value as of December 31, 2020 |  | $ | — |
Initial value of warrant liability |  |  | 9,981,000 |
Change in fair value |  |  | (9,327,326 | )
Fair value as of December 31, 2021 |  | $ | 653,674 |
Issuance of February 2022 warrants |  |  | 3,595,420 |
Change in fair value due to modification of February 2022 warrants as part of July 2022 raise |  |  | 251,357 |
Change in fair value |  |  | (4,315,236 | )
Fair value of warrant liability as of December 31, 2022 |  | $ | 185,215 |

|  | Total Derivative Liability |
Fair value as of December 31, 2021 |  | $ | — |
Issuance of May 2022 convertible preferred stock |  |  | 402,000 |
Change in fair value |  |  | 325,000 |
Fair value of derivative liability as of December 31, 2022 |  | $ | 727,000 |

|  | Total Investment Options |
Fair value as of December 31, 2021 |  | $ | — |
Issuance of July 2022 investment options |  |  | 4,323,734 |
Change in fair value |  |  | (3,472,726 | )
Fair value of investment option liability as of December 31, 2022 |  | $ | 851,008 |

F-18

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The key inputs into the Black Scholes valuation model for the Level 3 valuations of the warrant liabilities as of December 31, 2022 are below:

SCHEDULE OF BLACK SCHOLES VALUATION MODELS OF WARRANT LIABILITIES AND INVESTMENT OPTIONS

|  | January 2021 Warrants |  |  | February 2021 Warrants |  |  | February 2022 Warrants |  |  | February 2022 Post-Modification Warrants |
Term (years) |  |  | 3.0 |  |  |  | 3.1 |  |  |  | 4.1 |  |  |  | 5.1 |
Stock price |  | $ | 2.08 |  |  | $ | 2.08 |  |  | $ | 2.08 |  |  | $ | 2.08 |
Exercise price |  | $ | 247.50 |  |  | $ | 245.00 |  |  | $ | 27.50 |  |  | $ | 7.78 |
Dividend yield |  |  | — | % |  |  | — | % |  |  | — | % |  |  | — | %
Expected volatility |  |  | 79.0 | % |  |  | 78.0 | % |  |  | 79.0 | % |  |  | 77.0 | %
Risk free interest rate |  |  | 4.20 | % |  |  | 4.20 | % |  |  | 4.10 | % |  |  | 4.00 | %
Number of warrants |  |  | 36,429 |  |  |  | 34,281 |  |  |  | 338,000 |  |  |  | 122,000 |
Value (per share) |  | $ | — |  |  | $ | — |  |  | $ | 0.26 |  |  | $ | 0.81 |

The key inputs into the Weighted Expected Return valuation model for the Level 3 valuations of the derivative liability as of December 31, 2022 are below:

|  | May 2022 Derivative Liability |
Principal |  | $ | 1,000,000 |
Dividend rate |  |  | 5.0 | %
Market rate |  |  | 6.1 | %

The key inputs into the Black Scholes valuation model for the Level 3 valuations of the investment options as of December 31, 2022 are below:

|  | Wainwright Options |  |  | RD Options |  |  | PIPE Options |
Term (years) |  |  | 4.6 |  |  |  | 5.1 |  |  |  | 5.1 |
Stock price |  | $ | 2.08 |  |  | $ | 2.08 |  |  | $ | 2.08 |
Exercise price |  | $ | 10.00 |  |  | $ | 7.78 |  |  | $ | 7.78 |
Dividend yield |  |  | — | % |  |  | — | % |  |  | — | %
Expected volatility |  |  | 78.0 | % |  |  | 77.0 | % |  |  | 77.0 | %
Risk free interest rate |  |  | 4.00 | % |  |  | 4.00 | % |  |  | 4.00 | %
Number of investment options |  |  | 70,000 |  |  |  | 375,000 |  |  |  | 625,000 |
Value (per share) |  | $ | 0.64 |  |  | $ | 0.81 |  |  | $ | 0.81 |

Research and Development

Research and development expenses are charged to operations as incurred. Research and development expenses include, among other things, internal and external costs associated with preclinical development, pre-commercialization manufacturing expenses, and clinical trials. The Company accrues for costs incurred as the services are being provided by monitoring the status of the trial or services provided and the invoices received from its external service providers. In the case of clinical trials, a portion of the estimated cost normally relates to the projected cost to treat a patient in the trials, and this cost is recognized based on the number of patients enrolled in the trial. As actual costs become known, the Company adjusts its accruals accordingly.

F-19

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Leases

Operating lease assets are included within right-of-use operating lease asset and operating lease liabilities are included in current portion of right-of-use operating lease obligation and non-current portion of right-of-use operating lease obligation on the consolidated balance sheets as of December 31, 2022 and 2021. The Company has elected not to present short-term leases as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that the Company is reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of the Company’s leases do not provide an implicit rate of return, the Company used an incremental borrowing rate based on the information available at adoption date in determining the present value of lease payments.

A lease qualifies as a finance lease if any of the following criteria are met at the inception of the lease: (i) there is a transfer of ownership of the leased asset to the Company by the end of the lease term, (ii) the Company holds an option to purchase the leased asset that it is reasonably certain to exercise, (iii) the lease term is for a major part of the remaining economic life of the leased asset, (iv) the present value of the sum of lease payments equals or exceeds substantially all of the fair value of the leased asset, or (v) the nature of the leased asset is specialized to the point that it is expected to provide the lessor no alternative use at the end of the lease term. All other leases are recorded as operating leases. Finance lease payments are bifurcated into (i) a portion that is recorded as interest expense and (ii) a portion that reduces the finance liability associated with the lease. The Company did not have any finance leases as of December 31, 2022 and 2021.

Redeemable Non-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 8. 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 temporary equity within its 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.

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, plus all the accrued but unpaid dividends per share. Pursuant to the Akos Purchase Agreement, the Company has guaranteed the payment of the purchase price for the shares purchased under the Put Right.

Segment Reporting

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.

Recent Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and 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, 2021 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 will adopt ASU 2020-06 effective January 1, 2024.

F-20

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. AMALGAMATION WITH MAGICMED INDUSTRIES INC.

On May 24, 2021, the Company entered into an Amalgamation Agreement (the “Amalgamation Agreement”) with 1306432 B.C. Ltd., a corporation existing under the laws of the Province of British Columbia and a wholly-owned subsidiary of the Company (“HoldCo”), 1306436 B.C. Ltd., a corporation existing under the laws of the Province of British Columbia and a wholly-owned subsidiary of HoldCo (“Purchaser”), and MagicMed Industries Inc., a corporation existing under the laws of the Province of British Columbia (“MagicMed”), pursuant to which, among other things, the Company, indirectly through Purchaser, acquired all of the outstanding securities of MagicMed in exchange for securities of the Company by way of an amalgamation under the British Columbia Business Corporations Act, upon the terms and conditions set forth in the Amalgamation Agreement, such that, upon completion of the Amalgamation (as defined herein), the amalgamated corporation (“Amalco”) will be an indirect wholly-owned subsidiary of the Company. The Amalgamation was completed on September 16, 2021.

At the effective time of the Amalgamation (the “Effective Time”), holders of outstanding common shares of MagicMed (the “MagicMed Shares”) received such number of shares of common stock of the Company (“Company Shares”) representing, together with the Company Shares issuable upon exercise of the Warrants and the Converted Options (each as defined herein), approximately 36.6% of the issued and outstanding Company Shares (on a fully diluted basis). The MagicMed Shares were initially converted into Amalco Redeemable Preferred Shares (as defined in the Amalgamation Agreement), which immediately following the Amalgamation were redeemed for 0.000001 of a Company Share. Following such redemption, the shareholders of MagicMed received additional Company Shares equal to the product of the Exchange Ratio (as defined in the Amalgamation Agreement) multiplied by the number of MagicMed Shares held by each such shareholder. Additionally, following the Effective Time (i) each outstanding MagicMed stock option was converted into and became an option to purchase (the “Converted Options”) the number of Company Shares equal to the Exchange Ratio multiplied by the number of MagicMed Shares subject to such MagicMed stock option, and (ii) each holder of an outstanding MagicMed warrant (including Company Broker Warrants (as defined in the Amalgamation Agreement), the “Warrants”) received upon exercise of such Warrant that number of Company Shares which the holder would have been entitled to receive as a result of the Amalgamation if, immediately prior to the date of the Amalgamation (the “Effective Date”), such holder had been the registered holder of the number of MagicMed Shares to which such holder would have been entitled if such holder had exercised such holder’s Warrants immediately prior to the Effective Time (the foregoing collectively, the “Amalgamation”). In aggregate, holders of MagicMed Shares received 199,025 Company Shares representing approximately 31.7% of the Company Shares following the consummation of the Amalgamation. The maximum number of Company Shares to be issued by the Company as in respect of the Warrants and Converted Options shall not exceed 148,083 Company Shares.

The aggregate number of Company Shares that the Company issued in connection with the Amalgamation (collectively, the “Share Consideration”) was in excess of 20% of the Company’s pre-transaction outstanding Company Shares. Accordingly, the Company sought and received stockholder approval of the issuance of the Share Consideration in the Amalgamation in accordance with the Nasdaq Listing Rules.

Pursuant to the terms of the Amalgamation Agreement, the Company appointed, effective as of the Effective Time two individuals selected by MagicMed to the Company Board of Directors, Dr. Joseph Tucker and Dr. Brad Thompson.

The Amalgamation Agreement contained representations and warranties, closing deliveries and indemnification provisions customary for a transaction of this nature. The closing of the Amalgamation was conditioned upon, among other things, (i) the Share Consideration being approved for listing on Nasdaq, (ii) the effectiveness of a Registration Statement on Form S-4 registering the Share Consideration (the “S-4 Registration Statement”) and (iii) the approval (a) of the MagicMed stockholders of the Amalgamation and (b) of the Company’s stockholders of each of the Amalgamation and the issuance of the Share Consideration in the Amalgamation. The closing of the Amalgamation occurred on September 16, 2021.

MagicMed Industries develops and commercializes psychedelic-derived pharmaceutical candidates. MagicMed’s psychedelic derivatives library, the Psybrary™, is an essential building block from which 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.

On September 16, 2021, the Company completed the Acquisition. In exchange for a total purchase price valued at $39,042,282 the Company acquired 37,463,673 shares of Common Stock from MagicMed, which represents 100% of the outstanding and issued shares of Common Stock of MagicMed, for equity consideration on the date of closing valued at $27,067,310. The Purchaser also agreed that it would issue Company Shares in lieu of shares of MagicMed Shares for any warrants to purchase MagicMed Shares that were exercised, with the maximum number of Company Shares issuable pursuant to such warrant exercises being 118,274. The fair value of the warrants on the closing date of the Amalgamation was $10,724,578. Additionally, the Purchaser agreed that it would issue issued Company Shares in lieu of shares of MagicMed Shares for any options to purchase MagicMed Shares that were exercised, with the maximum number of Company Shares issuable pursuant to such option exercises being 19,477. The fair value of the options on the closing date of the Amalgamation was $1,535,790, with $1,250,394 included in the purchase price and $285,396 to be recognized as expense in the post combination period.

F-21

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Aggregate goodwill of $9,834,855 was recorded in relation to the Acquisition, with $9,061,927 of this amount being related to deferred tax liabilities arising from the Company’s purchase of the MagicMed Shares and $772,928 relating to the residual intangible asset that generates earnings in excess of a normal return on all other tangible and intangible assets.

The following table represents the purchase price:

SCHEDULE OF BUSINESS ACQUISITIONS

Stock (199,025 common shares issued) |  | $ | 27,067,310 |
Fair value of warrants |  |  | 10,724,578 |
Fair value of options |  |  | 1,250,394 |
Total Purchase Price |  | $ | 39,042,282 |

The Acquisition is being accounted for as a business combination in accordance with ASC 805.

The following table summarizes the purchase price allocations relating to the Acquisition:

SCHEDULE OF RECOGNIZED IDENTIFIED ASSETS ACQUIRED AND LIABILITIES ASSUMED

Description |  | Fair Value |
Assets acquired: |  |  |  |
Cash |  | $ | 3,055,328 |
Prepaid expenses and other current assets |  |  | 471,202 |
Government remittances recoverable |  |  | 25,606 |
Property and equipment |  |  | 118,935 |
Right-of-use lease assets |  |  | 201,653 |
Other assets |  |  | 10,155 |
In process research and development |  |  | 18,900,000 |
Psybrary and patent applications |  |  | 16,600,000 |
Goodwill |  |  | 9,834,855 |
Total assets acquired |  | $ | 49,217,734 |
Liabilities assumed: |  |  |  |
Accounts payable |  | $ | 828,865 |
Accrued expenses and other liabilities |  |  | 83,007 |
Right-of-use lease liabilities |  |  | 201,653 |
Deferred tax liabilities |  |  | 9,061,927 |
Total liabilities assumed |  |  | 10,175,452 |
Estimated fair value of net assets acquired attributable to the Company |  | $ | 39,042,282 |

The goodwill represents the excess fair value after the allocation to the identifiable net assets, with $9,061,927 being specifically attributable to the deferred tax liabilities incurred and $777,928 relating to the residual intangible asset that generates earnings in excess of a normal return on all other tangible and intangible assets. The calculated goodwill is not deductible for tax purposes.

F-22

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Certain adjustments to the assessed fair values of the assets and liabilities made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income.

During the fourth quarter of 2021, the Company finalized the opening balance sheet and valuations for the assets acquired and liabilities assumed related to the acquisition of MagicMed and adjusted provisional amounts as follows:

| ● | The Company recorded a $16.6 million indefinite lived Psybrary™ and Patent Applications asset with a corresponding decrease to IPR&D;
| ● | The Company further decreased the IPR&D asset by $0.7 million with a corresponding increase to Goodwill; and,
| ● | The Company recorded a $0.2 million right of use asset, with offsetting right of use operating lease liability related to identified leases in accordance with ASC 842 – Leases.

Total acquisition-related costs for the Acquisition incurred by the Company during the year ended December 31, 2021 was approximately $650,000 and is included in general and administrative expenses in the consolidated statement of operations.

Historical and Proforma Financial Information

The amounts of MagicMed’s revenues and net loss included in the Company’s consolidated statements of operations and comprehensive loss for the period from the acquisition date to December 31, 2021 were $— and $33,556,532 respectively. The following unaudited proforma financial information presents the consolidated results of operations of the Company and MagicMed for the year ended December 31, 2021, as if the acquisition had occurred as of the beginning of the first period presented instead of on September 16, 2021. The proforma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during those periods.

SCHEDULE OF PROFORMA INFORMATION

|  | For the year ended December 31, |
|  | 2021 |
Revenues |  | $ | — |
Net loss |  | $ | (54,127,203 | )

NOTE 4. INTANGIBLE ASSETS AND GOODWILL

The Company performs an annual impairment test at the reporting unit level as of December 31 of each fiscal year. As of December 31, 2022, the Company qualitatively assessed whether it is more likely than not that the respective fair value of the Company’s reporting unit is less than its carrying amount, including goodwill. Beginning with the fourth quarter of 2021 and throughout 2022, the Company experienced a sustained decline in the quoted market price of the Company’s common stock and as a result the Company determined that as of December 31, 2022 it was more likely than not that the carrying value of these acquired intangibles exceeded their estimated fair value. Accordingly, the Company performed an impairment analysis as of December 31, 2022 using the income approach. This analysis required significant judgments, including primarily the estimation of future development costs, the probability of success in various phases of its development programs, potential post launch cash flows and a risk-adjusted weighted average cost of capital. Pursuant to ASU 2017-04, the Company recorded a goodwill and intangible asset impairment charge as of December 31, 2022 and a goodwill and intangible asset impairment charge as of December 31, 2021 for the excess of the reporting unit’s carrying value over its fair value. The following table provides the Company’s goodwill, indefinite and definite lives intangible assets as of December 31, 2022 and 2021.

F-23

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2022 and 2021, the Company’s intangible assets consisted of:

SCHEDULE OF GOODWILL INDEFINITE AND FINITE LIVED INTANGIBLE ASSETS

Goodwill |  |  |
Balance at December 31, 2020 |  | $ | — |
Acquired during the year |  |  | 9,834,855 |
Impairment losses |  |  | (8,225,862 | )
Loss on currency translation |  |  | (21,359 | )
Balance at December 31, 2021 |  | $ | 1,587,634 |
Impairment losses |  |  | (1,486,060 | )
Loss on currency translation |  |  | (101,574 | )
Balance at December 31, 2022 |  | $ | — |
Indefinite lived intangible assets |  |  |  |
Balance at December 31, 2020 |  | $ | — |
Acquired during the year |  |  | 35,500,000 |
Impairment losses |  |  | (29,048,164 | )
Loss on currency translation |  |  | (76,344 | )
Balance at December 31, 2021 |  | $ | 6,375,492 |
Impairment losses |  |  | (5,967,602 | )
Loss on currency translation |  |  | (407,890 | )
Balance at December 31, 2022 |  | $ | — |
Definite lived intangible assets |  |  |  |
Balance at December 31, 2020 |  | $ | 1,817,721 |
Acquired during the year |  |  | 675,000 |
Amortization |  |  | (643,333 | )
Impairment loss |  |  | (1,404,892 | )
Gain on currency translation |  |  | 103,940 |
Balance at December 31, 2021 |  | $ | 548,436 |
Amortization |  |  | (168,750 | )
Balance at December 31, 2022 |  | $ | 379,686 |

For goodwill, impairment losses amounted to $1,486,060 and $8,225,862 as of December 31, 2022 and 2021, respectively. For the identified indefinite lived assets, impairment losses amounted to $5,967,602 and $29,048,164 as of December 31, 2022 and 2021, respectively. For identified definite lived intangible assets, impairment losses amounted to $— and $1,404,892 as of December 31, 2022 and 2021, respectively. For identified definite lived intangible assets, amortization expense amounted to $168,750 and $643,333 during the years ended December 31, 2022 and 2021, respectively. For identified definite lived intangible assets, accumulated amortization amounted to $295,314 and $126,564 as of December 31, 2022 and 2021, respectively.

For goodwill, aggregate impairment amounted to $9,711,922 and $8,225,862 as of December 31, 2022 and 2021, respectively. For the identified indefinite lived assets, aggregate impairment amounted to $35,015,766 and $29,048,164 as of December 31, 2022 and 2021, respectively. For identified definite lived intangible assets, aggregate impairment amounted to $1,404,892 as of December 31, 2022 and 2021.

F-24

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company amortizes definite lived intangible assets on a straight-line basis over their estimated useful lives. Amortization expense of identified intangible assets based on the carrying amount as of December 31, 2022 is as follows:

SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS AMORTIZATION EXPENSE

Year ending December 31, |  |  |
2023 |  | $ | 168,750 |
2024 |  |  | 168,750 |
2025 |  |  | 42,186 |
Finite lived Assets Amortization Expense |  | $ | 379,686 |

Acquisition of Diverse Bio License Agreement

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

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

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

NOTE 5. 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

|  | December 31, 2022 |  |  | December 31, 2021 |
Lab equipment |  | $ | 831,123 |  |  | $ | 310,957 |
Computer equipment and leasehold improvements |  |  | 25,137 |  |  |  | 10,818 |
Property and Equipment, gross |  |  |  |  |  |  |  |
Less: Accumulated depreciation |  |  | (178,775 | ) |  |  | (27,345 | )
Property and equipment, net of accumulated depreciation |  | $ | 677,485 |  |  | $ | 294,430 |

Depreciation expense was $159,160 and $13,310 for the years ended December 31, 2022 and 2021, respectively.

F-25

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6. ACCRUED LIABILITIES

As of December 31, 2022 and December 31, 2021, the accrued liabilities of the Company consisted of the following:

SCHEDULE OF ACCRUED LIABILITIES

|  | December 31, 2022 |  |  | December 31, 2021 |
Product development |  | $ | 195,104 |  |  | $ | 224,536 |
Accrued salaries and wages |  |  | 1,175,963 |  |  |  | 594,784 |
Professional fees |  |  | 83,255 |  |  |  | 335,401 |
Patent costs |  |  | 251,333 |  |  |  | 138,000 |
Total accrued expenses |  | $ | 1,705,655 |  |  | $ | 1,292,721 |

NOTE 7. 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 December 31, 2022, 100,000,000 shares of common stock were authorized under the Company’s articles of incorporation.

On December 30, 2020, the Company amended its articles of incorporation to designate and authorize 20,000,000 shares of preferred stock. The Company issued Series B preferred stock (“Series B Preferred Stock), which has a certificate of designation authorizing issuance of 3,600,000 preferred shares. During the year ended December 31, 2021, holders of an aggregate of 3,275,407 shares of Series B Preferred Stock converted their shares into 65,509 shares of common stock. Following those conversions, no Series B Preferred stock shares remain outstanding.

Series C Preferred Shares

On May 3, 2022, the Board of Directors (the “Board”) declared a dividend of one one-thousandth of a share of the Company’s Series C Preferred Stock (“Series C Preferred Stock”) for each outstanding share of the Company’s Common Stock (the “Common Stock”) held of record as of 5:00 p.m. Eastern Time on May 13, 2022 (the “Record Date”). This dividend was based on the number of outstanding shares of Common Stock prior to the Reverse Stock Split. The outstanding shares of Series C Preferred Stock were entitled to vote together with the outstanding shares of the Company’s Common Stock, as a single class, exclusively with respect to a proposal giving the Board the authority, as it determines appropriate, to implement a reverse stock split within twelve months following the approval of such proposal by the Company’s stockholders (the “Reverse Stock Split Proposal”), as well as any proposal to adjourn any meeting of stockholders called for the purpose of voting on the Reverse Stock Split Proposal (the “Adjournment Proposal”).

The Company held a special meeting of stockholders on July 14, 2022 (the “Special Meeting”) for the purpose of voting on, among other proposals, a Reverse Stock Split Proposal and an Adjournment Proposal. All shares of Series C Preferred Stock that were not present in person or by proxy at the Special Meeting were automatically redeemed by the Company immediately prior to the opening of the polls at Special Meeting (the “Initial Redemption”). All shares that were not redeemed pursuant to the Initial Redemption were redeemed automatically upon the approval by the Company’s stockholders of the Reverse Stock Split Proposal at the Special Meeting (the “Subsequent Redemption” and, together with the Initial Redemption, the “Redemption”). Each share of Series C Preferred Stock was entitled to receive $0.10 in cash for each 10 whole shares of Series C Preferred Stock immediately prior to the Redemption. As of June 30, 2022, there were 52,684.548 shares of Series C Preferred Stock issued and outstanding. As of December 31, 2022, both the Initial Redemption and the Subsequent Redemption have occurred. As a result, no shares of Series C Preferred Stock remain outstanding. As of December 31, 2022, there are 100,000 shares of Series C Preferred Stock authorized for future issuances.

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.

F-26

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO 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.

During the year ended December 31, 2022, a total of 1,223 and 899 shares of Common Stock were issued pursuant to the conversion of restricted stock awards and restricted stock units, respectively.

On January 14, 2021, the Company completed an offering of 44,427 shares of Common Stock and pre-funded warrants at approximately $225.00 per share and a concurrent private placement of warrants to purchase 33,321 shares of Common Stock at $247.50 per share, exercisable immediately and terminating five years after the date of issuance for gross proceeds of approximately $10,000,000. The net proceeds to the Company after deducting financial advisory fees and other costs and expenses were approximately $8,800,087, with $4,617,087 of such amount allocated to share capital and $4,846,000 allocated to warrant liability and the remaining $663,000 recorded as an expense.

On February 11, 2021, the Company completed an offering of 60,141 shares of Common Stock and a concurrent private placement of warrants to purchase 1,503,513 shares of Common Stock at $245.00 per share, exercisable immediately and terminating five year from the date of issuance for gross proceeds of approximately $12,800,000. The net proceeds to Enveric from the offering after deducting financial advisory fees and other costs and expenses were approximately $11,624,401, with $7,016,401 of such amount allocated to share capital and $5,135,000 allocated to warrant liability and the remaining $527,000 recorded as an expense.

On September 16, 2021, the Company, in connection with the Amalgamation Agreement entered into on May 24, 2021, acquired MagicMed Industries Inc., and its wholly owned subsidiary MagicMed USA, Inc. The Company issued a total of 199,025 shares of Common Stock, valued at $39,042,282 on the date of closing. See Note 3 for further details.

During the year ended December 31, 2021, a total of 55,861 Common Shares were issued pursuant to exercise of warrants to purchase Common Stock for cash proceeds totaling $3,285,171.

During the year ended December 31, 2021, a total of 2,685 Common Shares were issued pursuant to cashless exercise of options to purchase Common Stock.

During the year ended December 31, 2021, a total of 20,307 Common Shares were issued as inducement for the conversion of certain warrants and options. The Company recognized an inducement expense of $1,125,291 in relation to these issuances.

During the year ended December 31, 2021, the Company issued 283 shares to a consultant in exchange for services valued at $33,467.

During the year ended December 31, 2021, the Company issued a total of 4,434 shares of Common Stock pursuant to exercise of put rights contained in warrants originally issued by Ameri and assumed by the Company.

Issuance and Conversion of Series B Preferred Shares

During the year ended December 31, 2021, the Company issued a total of 65,509 shares of Common Stock pursuant to the conversion of 3,275,407 shares of Series B Preferred Stock.

F-27

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

A summary of activity under the Company’s incentive plan for the years ended December 31, 2022 and 2021 is presented below:

SCHEDULE OF STOCK OPTION

|  | 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, 2020 |  |  | 18,596 |  |  | $ | 76.50 |  |  | $ | 125.00 |  |  |  | 6.1 |  |  | $ | 2,537,245 |
Granted |  |  | 2,482 |  |  | $ | 149.00 |  |  | $ | 116.00 |  |  |  | — |  |  | $ | — |
Options assumed pursuant to acquisition of MagicMed |  |  | 19,477 |  |  | $ | 67.00 |  |  | $ | 92.00 |  |  |  | — |  |  | $ | — |
Exercised |  |  | (2,876 | ) |  | $ | 11.50 |  |  | $ | 284.50 |  |  |  | — |  |  | $ | — |
Expired, forfeited, or cancelled |  |  | (13,850 | ) |  | $ | 84.50 |  |  | $ | 81.00 |  |  |  | — |  |  | $ | — |
Outstanding at December 31, 2021 |  |  | 23,829 |  |  | $ | 79.00 |  |  | $ | 103.50 |  |  |  | 5.3 |  |  | $ | 34,333 |
Granted |  |  | 25,500 |  |  | $ | 3.07 |  |  | $ | 2.58 |  |  |  | — |  |  |  | — |
Forfeited |  |  | (1,000 | ) |  | $ | 175.00 |  |  | $ | 140.50 |  |  |  | — |  |  |  | — |
Outstanding at December 31, 2022 |  |  | 48,329 |  |  | $ | 37.05 |  |  | $ | 44.82 |  |  |  | 4.1 |  |  | $ | — |
Exercisable at December 31, 2022 |  |  | 20,774 |  |  | $ | 74.65 |  |  | $ | 100.49 |  |  |  | 3.7 |  |  | $ | — |

During the years ended December 31, 2022 and 2021, — and 2,876 options were exercised via a cashless exercise resulting in the issuance of — and 2,685 shares of common stock.

Options granted during the years ended December 31, 2022 and 2021 were valued using the Black Scholes model with the following assumptions:

SCHEDULE OF STOCK OPTION ASSUMPTION

|  | December 31, 2022 |  |  | December 31, 2021 |
Term (years) |  |  | 5.5 |  |  |  | 2.5 - 7.0 |
Stock price |  | $ | 3.07 |  |  |  | $102.00 - $175.00 |
Exercise price |  | $ | 3.07 |  |  |  | $102.00 - $175.00 |
Dividend yield |  |  | — | % |  |  | — | %
Expected volatility |  |  | 112 | % |  |  | 76% - 79 | %
Risk free interest rate |  |  | 3.9 | % |  |  | 1.1% - 1.6 | %

F-28

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The above assumptions are determined by the Company as follows:

| ● | Stock price – Based on closing price of the Company’s common stock on the date of grant.

| ● | Weighted average risk-free interest rate — Based on the daily yield curve rates for U.S. Treasury obligations with maturities, which correspond to the expected term of the Company’s stock options.

| ● | Dividend yield — The Company has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future.

| ● | Expected volatility — Based on the historical volatility of comparable companies in a similar industry.

| ● | Expected term — The Company has had no stock options exercised since inception. The expected option term represents the period that stock-based awards are expected to be outstanding based on the simplified method provided in Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment, which averages an award’s weighted-average vesting period and expected term for “plain vanilla” share options.

The Company’s stock based compensation expense, recorded within general and administrative expense, related to stock options for the years ended December 31, 2022 and 2021 was $180,042 and $60,856, respectively. As of December 31, 2022, the Company had $240,850 in unamortized stock option expense, which will be recognized over a weighted average period of 1.9 years.

During the year ended December 31, 2021, the Company exchanged options to purchase 11,209 shares of common stock for 6,509 restricted stock units and 843 restricted stock awards. In connection with this exchange, the Company recognized $298,714 in inducement expense related to the increase in fair value of the new awards over the old awards, which is included in other expenses on the Company’s consolidated statement of operations and comprehensive loss.

Restricted Stock Awards

The Company’s activity in restricted common stock was as follows for the years ended December 31, 2022 and 2021:

SCHEDULE OF RESTRICTED COMMON STOCK AND AWARDS ACTIVITY

|  | Number of shares |  |  | Weighted average fair value |
Non-vested at December 31, 2020 |  |  | — |  |  | $ | — |
Granted |  |  | 2,516 |  |  | $ | 178.50 |
Vested |  |  | (1,485 | ) |  | $ | 204.50 |
Non-vested at December 31, 2021 |  |  | 1,031 |  |  | $ | 141.50 |
Forfeited |  |  | (700 | ) |  | $ | 146.50 |
Vested |  |  | (331 | ) |  | $ | 130.40 |
Non-vested at December 31, 2022 |  |  | — |  |  | $ | — |

For the years ended December 31, 2022 and 2021, the Company recorded $24,363 and $231,631, respectively, in stock-based compensation expense within general and administrative expense, related to restricted stock awards. As of December 31, 2022, there were no unamortized stock-based compensation costs related to restricted share awards. The balance of Common Shares related to the vested restricted stock awards as of December 31, 2022 will be issued during the 2023 calendar year. There are 708 vested and unissued shares of restricted stock awards as of December 31, 2022.

F-29

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Issuance of Restricted Stock Units

The Company’s activity in restricted stock units was as follows for the year ended December 31, 2022:

SCHEDULE OF RESTRICTED STOCK UNITS AND AWARDS ACTIVITY

|  | Number of shares |  |  | Weighted average fair value |
Non-vested at December 31, 2020 |  |  | — |  |  | $ | — |
Granted |  |  | 125,169 |  |  | $ | 172.00 |
Forfeited |  |  | (7,439 | ) |  | $ | 152.00 |
Vested |  |  | (55,717 | ) |  | $ | 226.00 |
Non-vested at December 31, 2021 |  |  | 62,013 |  |  | $ | 126.00 |
Granted |  |  | 37,445 |  |  | $ | 33.50 |
Forfeited |  |  | (26,772 | ) |  | $ | 79.64 |
Vested |  |  | (8,633 | ) |  | $ | 130.55 |
Non-vested at December 31, 2022 |  |  | 64,053 |  |  | $ | 92.57 |

For the years ended December 31, 2022 and 2021, the Company recorded $2,416,266 and $12,304,514, 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 consolidated statement of operations and comprehensive loss.

As of December 31, 2022, the Company had unamortized stock-based compensation costs related to restricted stock units of $3,225,701 which will be recognized over a weighted average period of 2.8 years and unamortized stock-based costs related to restricted stock units which will be recognized upon achievement of specified milestones.

As of December 31, 2022, 1,856 shares of Common Stock have been issued in relation to vested restricted stock units and 62,492 restricted stock units are vested without shares of Common Stock being issued.

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

|  | 2022 |  |  | 2021 |
|  | Year ended December 31, |
Stock-based compensation for RSUs |  | 2022 |  |  | 2021 |
General and administrative |  | $ | 1,389,359 |  |  | $ | 11,463,870 |
Research and development |  |  | 1,026,907 |  |  |  | 840,644 |
Total |  | $ | 2,416,266 |  |  | $ | 12,304,514 |

As of the end of the fiscal years ended December 31, 2022 and 2021, there were 126,545 and 117,730 shares of common stock underlying outstanding restricted stock units, of which (i) 62,492 and 55,717 shares are underlying vested restricted stock units and issuable, subject to certain conditions for settlement, which includes either termination of employment with the Company or a change of control, and (ii) 64,053 and 62,013 shares are issuable upon the vesting of such restricted stock units, subject to achievement of vesting conditions, certain conditions of settlement which includes either termination of employment with the Company or a change of control, and further subject to the increase in the number of shares authorized for issuance of awards under the Long-Term Incentive Plan upon approval by the Company’s stockholders.

F-30

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Warrants

The following table summarizes information about shares issuable under warrants outstanding at December 31, 2022 and 2021:

SCHEDULE OF WARRANTS OUTSTANDING

|  | Warrant shares outstanding |  |  | Weighted average exercise price |  |  | Weighted average remaining life |  |  | Intrinsic value |
Outstanding at December 31, 2020 |  |  | 74,617 |  |  | $ | 102.50 |  |  |  | 5.2 |  |  | $ | 8,923,797 |
Issued |  |  | 82,923 |  |  | $ | 210.00 |  |  |  | — |  |  | $ | — |
Assumed pursuant to acquisition of MagicMed |  |  | 118,274 |  |  | $ | 65.50 |  |  |  | — |  |  | $ | — |
Exercised |  |  | (64,988 | ) |  | $ | 50.50 |  |  |  | — |  |  | $ | — |
Exchanged for common stock |  |  | (15,363 | ) |  | $ | 232.50 |  |  |  | — |  |  | $ | — |
Outstanding at December 31, 2021 |  |  | 195,463 |  |  | $ | 131.00 |  |  |  | 3.4 |  |  | $ | 801,024 |
Issued |  |  | 1,227,500 |  |  | $ | 10.31 |  |  |  | — |  |  | $ | — |
Exercised |  |  | (767,500 | ) |  | $ | — |  |  |  | — |  |  | $ | — |
Exchanged for common stock |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |
Outstanding at December 31, 2022 |  |  | 655,463 |  |  | $ | 58.36 |  |  |  | 3.6 |  |  | $ | 5,514 |
Exercisable at December 31, 2022 |  |  | 655,463 |  |  | $ | 58.36 |  |  |  | 3.6 |  |  | $ | 5,514 |

On February 11, 2022, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with A.G.P./Alliance Global Partners (the “Underwriter”). Pursuant to the Underwriting Agreement, the Company agreed to sell, in a firm commitment offering, 400,000 shares of the Company’s Common Stock and accompanying warrants to purchase up to an aggregate of 400,000 shares of its common stock (“February 2022 Warrants”), as well as up to 60,000 additional shares of common stock and/or warrants to purchase an aggregate of up to 60,000 shares of its common stock that may be purchased by the Underwriter pursuant to a 45-day option granted to the Underwriter by the Company (the “Offering”). Each share of common stock was sold together with a common warrant to purchase one share of common stock, at an exercise price of $27.50 per share. Such common warrants were immediately exercisable and will expire five years from the date of issuance. There is not expected to be any trading market for the common warrants issued in the Offering. The combined public offering price of each share of common stock and accompanying common warrant sold in the Offering was $25.00. On February 14, 2022, the Underwriter exercised its option to purchase an additional 60,000 warrants.

In connection with the Registered Direct (“RD”) Offering and the Private Investment in Public Entity (“PIPE”) Offering entered into on July 22, 2022, the Company entered into Warrant Amendment (the “Warrant Amendments”) with the investors in both offerings to amend certain existing warrants to purchase up to an aggregate of 122,000 shares of Common Stock that were previously issued to the investors, with an exercise price of $27.50 per share (subsequent to the 1-for-50 reverse stock split that occurred on July 14, 2022) and expiration date of February 15, 2027. Pursuant to the Warrant Amendments, the previously issued warrants were amended, effective upon the closing of the offerings, so that the amended warrants have a reduced exercise price of $7.78 per share and expire five and one-half years following the closing of the offerings. In connection with this transaction, the Company determined the fair value of the February 2022 Warrants immediately prior to the Warrant Amendment and the fair value of the amended warrants immediately after the Warrant Amendment. The incremental change in fair value was deemed to be $251,357, which was included as equity issuance costs related to the RD and PIPE financing transactions.

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.

During the year ended December 31, 2021, warrants exchanged for Common Stock consisted of an aggregate of 4,434 shares of Common Stock being issued in exchange for an aggregate of 2,188 warrants issued by Ameri and containing put rights that were exercised by the Holder and an aggregate of 19,464 shares of Common Stock being issued in exchange for an aggregate of 13,176 warrants containing certain terms wherein management determined it to be beneficial to the Company to exchange Common Shares for these warrants.

The aggregate of 4,434 Common Shares issued in exchange for the aggregate of 2,188 warrants issued by Ameri and containing put rights were issued in lieu of cash payments, in accordance with the terms of the put rights contained in the warrants.

The aggregate of 19,464 shares of common stock issued in exchange for certain outstanding warrants to purchase an aggregate of 13,176 shares of the Company’s common stock at an exercise price of $233.00 were issued pursuant to exchange agreements with the holders of such warrants. The Company believes that these exchanges are beneficial to the Company because the reacquired warrants contained provisions that required the Company to repurchase the warrants for cash at the holder’s option and/or “full ratchet” anti-dilution adjustments that may result in a reduction in the exercise price of such warrants and an increase in the number of shares issuable upon exercise thereof under certain circumstances. The Company has cancelled all of the warrants reacquired in such exchanges and they will not be reissued. In connection with this exchange, the Company recognized $826,577 in inducement expense related to the increase in fair value of the new awards over the old awards, which is included in other expenses on the Company’s consolidated statement of operations and comprehensive loss.

F-31

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Preferred Investment Options

In connection with the Registered Direct Securities Purchase Agreement the Company issued unregistered preferred investment options to purchase up to 375,000 shares of common stock. Subject to certain ownership limitations, the RD Preferred Investment Options became immediately exercisable at an exercise price equal to $7.78 per share of common stock. The RD Preferred Investment Options are exercisable for five and one-half years from the date of issuance.

In connection with the PIPE Securities Purchase Agreement the Company issued unregistered preferred investment options to purchase up to 625,000 shares of the common stock. Subject to certain ownership limitations, PIPE Preferred Investment Options became immediately exercisable at an exercise price equal to $7.78 per share of common stock. The PIPE Preferred Investment Options are exercisable for five and one-half years from the date of issuance.

On July 26, 2022, in connection with the RD Offering and PIPE Offering, the Company issued preferred investment options (the “Placement Agent Preferred Investment Options”) to an entity to purchase up to 70,000 shares of the common stock for acting as a placement agent. The Placement Agent Preferred Investment Options have substantially the same terms as the RD Preferred Investment Options and the PIPE Preferred Investments Options, except the Placement Agent Preferred Investment Options have an exercise price of $10.00 per share. The Placement Agent Preferred Investment Options are exercisable for five years from the date of the commencement of the RD Offering and PIPE Offering.

The following table summarizes information about investment options outstanding at December 31, 2022 (there were no investment options issued for the year ended December 31, 2021):

SCHEDULE OF WARRANTS AND INVESTMENT OPTIONS

|  | Investment options outstanding |  |  | Weighted average exercise price |  |  | Weighted average remaining life |  |  | Intrinsic value |
Outstanding at January 1, 2022 |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | — |
Issued |  |  | 1,070,000 |  |  | $ | 7.93 |  |  |  | — |  |  |  | — |
Outstanding at December 31, 2022 |  |  | 1,070,000 |  |  | $ | 7.93 |  |  |  | 5.1 |  |  | $ | — |
Exercisable at December 31, 2022 |  |  | 1,070,000 |  |  | $ | 7.93 |  |  |  | 5.1 |  |  | $ | — |

F-32

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. REDEEMABLE NON-CONTROLLING INTEREST

Spin-Off and 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 December 31, 2022, there have been no accruals 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.

Terms of 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.

F-33

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounting for 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 temporary equity in the Company’s 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 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

Balance at December 31, 2021 |  | $ | — |
Redeemable non-controlling interest, net of initial value embedded derivative of $402,000 and net of issuance costs of $41,962 |  |  | 556,038 |
Preferred dividends attributable to redeemable non-controlling interest |  |  | 33,014 |
Accretion of embedded derivative and transaction costs associated with Series A Preferred Stock |  |  | 295,976 |
Balance at December 31, 2022 |  | $ | 885,028 |

As of December 31, 2022, 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 $1,033,000. The Company has guaranteed this redemption on behalf of Akos.

NOTE 9. 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.

Development and Clinical Supply Agreement

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

The initial term of the PureForm Agreement is three (3) years commencing on the effective date of the 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.

F-34

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Purchase agreement 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.

Agreement with Tikkun

License Agreement

Jay Pharma, Tikkun Olam LLC (“TO LLC”) and Tikkun Olam Hemp LLC (“TOH”) entered into a license agreement dated on January 10, 2020, pursuant to which Jay Pharma would acquire certain in-licensed and owned intellectual property rights related to the cannabis products in the United States (presently excluding the state of New York) from TO LLC and TOH, each of which is an affiliate of TO Holdings Group LLC, in exchange for royalty payments of (i) four percent (4.0%) of net sales of OTC cancer products made via consumer channels; and (ii) five percent (5.0%) of net sales of beauty products made via consumer channels; and (iii) three percent (3.0%) of net sales of OTC cancer products made via professional channels, along with a minimum net royalty payment starting in January 1, 2022 and progressively increasing up to a cap of $400,000 maximum each year for the first 10 years, then $600,000 maximum each year for the next 5 years, and an annual maximum cap of $750,000 each year thereafter during the term of the agreement. The licensed intellectual property rights relate to beauty products and OTC cancer products, and branding rights related thereto. The beauty products include any topical or transdermal cannabis-containing or cannabis-derived (including hemp-based) skin care or body care beauty products, and the OTC cancer products means any cancer-related products, in each case excluding those regulated as a drug, medicine, or controlled substance by the FDA or any other relevant governmental authority, such as the USDA.

On August 12, 2020, Jay Pharma, TO LLC and TOH entered into the First Amendment to the License Agreement, pursuant to which all references to the Original Amalgamation Agreement and the amalgamation were revised to be references to the Tender Agreement and the Offer, as applicable.

On October 2, 2020, Jay Pharma, TO LLC and TOH entered into the Second Amendment to the License Agreement, pursuant to which the effective date of the transactions was revised to occur as of October 2, 2020.

On December 30, 2022, the Tikun Olam License was formally terminated by mutual agreement between the Company and Tikun Olam.

Other Consulting 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 12 months. These agreements, in aggregate, commit the Company to approximately $0.4 million in future cash payments.

Right-of-use lease

On August 1, 2021, MagicMed entered into a lease agreement (the “LSIH Lease”) with the University of Calgary for the use and occupation of lab and office space at the University of Calgary’s Life Science Innovation Hub building located in Calgary, Alberta, Canada (the “LSIH Facility”). The Company acquired all rights and obligations contained in the LSIH Lease concurrent with its amalgamation with MagicMed.

The Company assesses whether an arrangement is a lease or contains a lease at inception. For arrangements considered leases or that contain a lease that is accounted for separately, the Company determines the classification and initial measurement of the right-of-use asset and lease liability at the lease commencement date, which is the date that the underlying asset becomes available for use. The Company has elected to account for non-lease components associated with its leases and lease components as a single lease component.

F-35

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company recognizes a right-of-use asset, which represents the Company’s right to use the underlying asset for the lease term, and a lease liability, which represents the present value of the Company’s obligation to make payments arising over the lease term. The present value of the lease payments is calculated using either the implicit interest rate in the lease or an incremental borrowing rate.

Lease assets and liabilities are classified as follows on the consolidated balance sheet:

SCHEDULE OF LEASE ASSETS AND LIABILITIES

Lease |  | Classification |  | As of December 31, 2022 |  |  | As of December 31, 2021 |
Assets |  |  |  |  |  |  |  |  |  |
Operating |  | Right of use operating lease asset, net |  | $ | 63,817 |  |  | $ | 176,304 |
Total leased assets |  |  |  | $ | 63,817 |  |  | $ | 176,304 |
Liabilities |  |  |  |  |  |  |  |  |  |
Current |  |  |  |  |  |  |  |  |  |
Operating |  | Current portion of right-of-use operating lease obligation |  | $ | 63,820 |  |  | $ | 107,442 |
Long-term |  |  |  |  |  |  |  |  |  |
Operating |  | Non-current portion of right-of-use operating lease obligation |  |  | — |  |  |  | 68,861 |
Total lease liabilities |  |  |  | $ | 63,820 |  |  | $ | 176,303 |

Rent expense is recorded on the straight-line basis. Rent expense under the LSIH Lease for the years ended December 31, 2022 and 2021 was $120,667 and $30,586, respectively. Rent expense is recorded in research and development costs on the consolidated statements of operations and comprehensive loss.

The table below shows the future minimum rental payments, exclusive of taxes, insurance, and other costs, under the LSIH Lease:

SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENT

Years ending December 31, |  | Amount |
2023 |  | $ | 64,235 |
Total future minimum lease payments |  |  | 64,235 |
Less: present value adjustment |  |  | (415 | )
Present value of lease payments |  | $ | 63,820 |

The weighted-average remaining lease term and the weighted-average discount rate of the lease was as follows:

SCHEDULE OF WEIGHTED AVERAGE REMAINING LEASE TERM

Lease Term and Discount Rate |  | December 31, 2022 |  |  | December 31, 2021 |
Remaining lease term (years) |  |  |  |  |  |  |  |
Operating leases |  |  | 0.6 |  |  |  | 1.6 |
Discount rate |  |  |  |  |  |  |  |
Operating leases |  |  | 12.0 | % |  |  | 12.0 | %

F-36

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. INCOME TAXES

The Company’s U.S. and foreign loss before income taxes are set forth below:

SCHEDULE OF EARNING (LOSS) BEFORE INCOME TAX

|  | 2022 |  |  | 2021 |
|  | December 31, |
|  | 2022 |  |  | 2021 |
United States |  | $ | (7,251,228 | ) |  | $ | (15,420,364 | )
Foreign |  |  | (12,706,165 | ) |  |  | (41,011,337 | )
Total |  | $ | (19,957,393 | ) |  | $ | (56,431,701 | )

For the years ended December 31, 2022 and 2021, the Company recorded an income tax benefit of $1,486,060 and $7,454,805, respectively. The income tax benefit is as follows:

SCHEDULE OF INCOME TAX EXPENSE BENEFITS

|  | December 31, |
|  | 2022 |  |  | 2021 |
Deferred tax benefit - United States |  | $ | — |  |  | $ | — |
Deferred tax benefit - Foreign |  |  | 1,486,060 |  |  |  | 7,454,805 |
Total income tax benefit |  | $ | 1,486,060 |  |  | $ | 7,454,805 |

The Company’s deferred tax assets and deferred tax liabilities consist of the following:

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

|  | 2022 |  |  | 2021 |
|  | December 31, |
|  | 2022 |  |  | 2021 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 8,927,330 |  |  | $ | 5,509,522 |
Stock-based compensation |  |  | 1,348,928 |  |  |  | 858,791 |
Accrued bonus |  |  | — |  |  |  | 121,051 |
Research and development capitalized expenses |  |  | 614,041 |  |  |  | — |
Intangible amortization |  |  | 54,141 |  |  |  | 23,204 |
Other |  |  | 33,453 |  |  |  | 35,456 |
Less valuation allowances |  |  | (10,977,893 | ) |  |  | (6,548,024 | )
Net deferred tax assets |  | $ | — |  |  | $ | — |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Indefinite lived intangible assets |  |  | — |  |  |  | (1,607,122 | )
Net deferred tax liabilities |  | $ | — |  |  | $ | (1,607,122 | )

The Company had the following potentially utilizable net operating loss tax carryforwards:

SCHEDULE OF OPERATING LOSS CARRY FORWARDS

|  | 2022 |  |  | 2021 |
|  | December 31, |
|  | 2022 |  |  | 2021 |
Federal |  | $ | 18,349,753 |  |  | $ | 9,411,533 |
State |  | $ | 16,892,754 |  |  | $ | 8,664,242 |
Foreign |  | $ | 16,377,435 |  |  | $ | 11,911,845 |

The Tax Cuts and Jobs Act of 2017 (the “Act”) limits the net operating loss deduction to 80% of taxable income for losses arising in tax years beginning after December 31, 2017. As of December 31, 2022, the Company had federal net operating loss carryforwards and state net operating loss carryforwards of $18,349,753 of $16,892,754, respectively, which can be carried forward indefinitely. In addition, the Company has Canadian net operating loss carryforwards of $16,377,435 which will begin to expire in 2030.

F-37

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s effective tax rate varied from the statutory rate as follows:

SCHEDULE OF EFFECTIVE STATUTORY INCOME TAX RATE

|  | December 31, |
|  | 2022 |  |  | 2021 |
Federal income tax at the statutory rate |  |  | (21.0 | )% |  |  | (21.0 | )%
State income tax rate (net of federal) |  |  | (2.6 | )% |  |  | (1.0 | )%
Foreign tax rate differential |  |  | (3.1 | )% |  |  | (4.0 | )%
Intangible asset impairment |  |  | — | % |  |  | 4.3 | %
Non-deductive expenses |  |  | (4.0 | )% |  |  | 1.4 | %
Change in valuation allowance |  |  | 23.3 | % |  |  | 7.0 | %
Effective income tax rate |  |  | (7.4 | )% |  |  | (13.3 | )%

On September 16, 2021, the Company acquired MagicMed. In connection with the acquisition, the Company recorded intangible assets from IPR&D valued at $35,500,000, which would be tested for impairment for book purposes, but without a tax basis, creating a deferred tax liability of $9,061,927. The deferred tax liability decreased to $1,607,122 due to an impairment on intangible asset of $29,048,164 and an impairment of goodwill of $8,225,862 for the year ended December 31, 2021. The deferred tax liability decreased to $— due to an impairment on goodwill and intangible assets of $7,453,662 for the year ended December 31, 2022.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The valuation allowance increased by $4,429,869 and $5,207,872 during the years ended December 31, 2022 and 2021, respectively.

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. As of March 30, 2023, the Company has not filed tax returns for the fiscal years 2022 and 2021.

Section 382

The utilization of the Company’s net operating losses may be subject to a substantial limitation in the event of any significant future changes in its ownership structure under Section 382 of the Internal Revenue Code and similar state provisions. Such limitation may result in the expiration of the net operating loss carryforwards before their utilization.

Section 174

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 (“TCJA”) eliminated the option to deduct research and development expenditures in the current year and requires taxpayers to amortize US expenses over five years and foreign expense over fifteen years pursuant to IRC Section 174. The Company has estimated and capitalized gross $2,684,319 of research and development expenditures that will be amortized primarily over five years. This did not have a material impact on the Company’s tax liability for the year ended December 31, 2022. The Company will continue to evaluate the impact of these tax law changes on the current and future periods.

Inflation Reduction Act

On August 16, 2022, President Joe Biden signed the Inflation Reduction Act of 2022 (the “Act”) into law. The Act includes a new 15% corporate minimum tax and a 1% excise tax on the value of corporate stock repurchases, net of new share issuances, after December 31, 2022. The Company does not expect these provisions to have a material impact on the Company’s consolidated financial position; however, the Company will continue to evaluate their impact as further information becomes available.

NOTE 11. SUBSEQUENT EVENTS

Australian Subsidiary

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.

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. The Phase 1 clinical trial is expected to initiate in the fourth quarter of 2023. 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 $1,500,000 as of the contract date of March 23, 2023.

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