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Item 5. Market for Registrant’s Common Equity

2021-04-01 compared with 2020-03-25 · 637 added, 21 removed, 1 unchanged (100% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock Information

Our shares of common stock trade on The Nasdaq Capital Market under the ticker symbol “AMRH.” .

A 1-for-25 reverse share split of our outstanding common stock was effected on November 25, 2019 as approved by our Board of Directors and a majority of our shareholders.

The reverse share split reduced

the number of common shares issued and outstanding from approximately 62.8 million to 2.5 million as of December 31, 2019.

As such, all references to share and per share amounts in this Annual Report on Form 10-K have been retroactively restated to

reflect the 1-for-25 reverse share split, except for the authorized number of shares of our common stock and the par value per share, which were not affected.

As of March 1, 2020, we had 579 stockholders of record of our common stock.

This number does not include beneficial owners whose shares are held in the names of various securities

brokers, dealers and registered clearing agencies.

Dividend Policy

Holders of our common stock are entitled to receive ratably such dividends, if any, as may be declared by our board of directors out of funds legally available.

We have not paid

any dividends since our inception, and we presently anticipate that all earnings, if any, will be retained for development of our business.

The Certificate of Designation for our Series A Preferred Stock prohibits the payment of dividends at any

time that we are not current in the payment of dividends with respect to the Series A Preferred Stock.

There are no other restrictions in our certificate of incorporation or by-laws that prevent us from declaring dividends.

Any future disposition

of dividends will be at the discretion of our board of directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements and other factors.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer’s Purchases of Equity Securities

common stock is traded on NASDAQ Capital Markets under the symbol “ENVB”.

March 30, 2021 the Company had 87 stockholders of record.

Company has never declared or paid cash dividends on its common stock and has no intention to do so in the foreseeable future.

Recent Sales of Unregistered Securities

Issuer Purchases of Equity Securities

Selected Financial Data

Not applicable.

On November 19, 2020,

the SEC issued final rules to amend Regulation S-K.

These changes are effective for annual filings for the first fiscal year ending

on or after August 9, 2021, and early adoption is permitted.

We elected to adopt the amendments to Item 301 of Regulation S-K

in their entirety, which remove the requirement to furnish selected financial data for each of the last five fiscal years.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

to the “Company,”

“our,”

“us,”

or “we”

in this section titled “Management’s

Discussion and Analysis of Financial Condition and Results of Operations of Enveric”

refer to Enveric Biosciences, Inc.

The following

discussion and analysis of our financial condition and results of operations should be read together with our financial statements and

related notes appearing elsewhere in this Annual Report on Form 10-K.

Some of the information contained in this discussion and analysis

or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business

and related financing, includes forward-looking statements involving risks and uncertainties and should be read together with the “Risk

Factors”

and the “Cautionary Statement Regarding Forward-Looking Statements”

sections of this Annual Report on Form

Such risks and uncertainties could cause actual results to differ materially from the results described in or implied by the forward-looking

statements contained in the following discussion and analysis.

are an early-development-stage biosciences company that is developing innovative, evidence-based prescription products and combination

therapies containing cannabinoids to address unmet needs in cancer care.

We seek to improve the lives of patients suffering from cancer,

initially by developing palliative and supportive care products for people suffering from certain side effects of cancer and cancer treatment

such as pain or skin irritation.

We currently intend to offer such palliative and supportive care products in the United States, following

approval through established regulatory pathways.

are also aiming to advance a pipeline of novel cannabinoid combination therapies for hard-to-treat cancers, including glioblastoma multiforme

(GBM) and several other indications, which are currently being researched.

intend to bring together leading oncology clinicians and researchers, academic and industry partners so as to develop both external proprietary

products and a robust internal pipeline of product candidates aimed at improving quality of life and outcomes for cancer patients.

intend to evaluate options to out-license its proprietary technology as it moves along the regulatory pathway as well as evaluating building

a small, targeted selling organization and will potentially utilize a hybrid approach based on the product indication and the market

developing its product candidates, we intend to focus on cannabinoids derived from hemp, other botanical sources, and synthetic materials

containing no tetrahydrocannabinol (THC) in order to comply with U.S.

federal regulations.

Of the potential cannabinoids to be used in

therapeutic formulations, THC, which is responsible for the psychoactive properties of marijuana, can result in undesirable mood effects.

Cannabidiol (CBD) and cannabigerol (CBG), on the other hand, are not psychotropic and are therefore more attractive candidates for translation

into therapeutic practice.

In the future, we may utilize cannabinoids that are derived from cannabis plants, which may contain THC;

we only intend to do so in jurisdictions where THC is legal.

These product candidates will then be studied through a typical FDA drug

approval process.

Agreement, Reverse Stock Split and Related Transactions

December 30, 2020, pursuant to the previously announced Tender Offer Support Agreement and Termination of Amalgamation Agreement

dated August 12, 2020 (“Original Amalgamation Agreement”), as amended by that certain Amendment No.

1 to the Tender

Offer Support Agreement and Termination of Amalgamation Agreement dated December 18, 2020 (as amended the “Tender Agreement”),

the Company completed a tender offer (“Offer”) to purchase all of the outstanding common shares of Jay Pharma, Inc.,

a Canada corporation and a wholly-owned subsidiary of the Company (“Jay Pharma”), for the number of shares of Company

common stock, par value $0.01 per share (“Common Stock”) or Series B Preferred Stock, as applicable, equal to the

exchange ratio of 0.8849 (the “Exchange Ratio”), and Jay Pharma became a wholly-owned subsidiary of the Company, on

the terms and conditions set forth in the Tender Agreement.

In connection with the Offer, the Company changed its name from AMERI

Holdings, Inc.

to Enveric Biosciences, Inc.

The Offer has been accounted for as a “reverse merger”

the acquisition method of accounting for business combinations with Jay Pharma treated as the accounting acquirer of Ameri.

such, the historical financial statements of Jay Pharma have become the historical financial statements of Ameri, or the combined

company, and are included in this filing labeled “Enveric Biosciences, Inc.”

As a result of the Offer, historical

common stock, stock options and additional paid-in capital, including share and per share amounts, have been retroactively adjusted

to reflect the equity structure of the combined company, including the effect of the Exchange Ratio and the Common Stock.

following the completion of the Offer, on December 30, 2020, the Company effected a 1-for-4 reverse stock split of the issued

and outstanding Common Stock (the “Reverse Stock Split”).

As a result of the Reverse Stock Split, the per share exercise

price of, and the number of shares of Company Common Stock underlying, our stock options and warrants outstanding immediately

prior to the Reverse Stock Split were automatically proportionally adjusted based on the 1-for-4 split ratio in accordance with

the terms of such options and warrants, as the case may be.

Share and per-share amounts of Common Stock, options and warrants

included herein have been adjusted to give effect to the Reverse Stock Split.

The Reverse Stock Split did not alter the par value

of the Common Stock, $0.01 per share, or modify any voting rights or other terms of the Common Stock.

Unless otherwise noted,

the accompanying financial statements and notes thereto, including the Exchange Ratio applied to historical Jay Pharma common

stock and stock options, give retroactive effect to the Reverse Stock Split for all periods presented.

completion of the Offer, (i) holders of outstanding common shares of Jay Pharma (referred to herein as the Jay Pharma equity holders)

other than Alpha Capital Anstalt (“Alpha”) and Bezalel Partners, LLC (“Bezalel”) received the number of shares

of Common Stock in accordance with the Exchange Ratio of 0.8849, as calculated in accordance with the Tender Agreement, (ii) each of

Alpha and Bezalel, as an investor who would have beneficially owned more than 10.0% of the Company if it received Common Stock, received

shares of Series B Preferred Stock, which are convertible into shares of Common Stock subject to a 9.99% beneficial ownership blocker,

pursuant to the terms of the respective exchange agreement entered into by and between Ameri and such stockholder.

Each outstanding Jay

Pharma option, whether vested or unvested, and warrant that had not previously been exercised was exchanged for Company stock options

and Company warrants, in each case convertible into the number of shares of Common Stock equal to the Exchange Ratio.

share of Series B Preferred Stock is non-voting and is convertible into one share of Common Stock (subject to adjustment) at any time

at the option of the holder, provided that each holder would be prohibited from converting Series B Preferred Stock into shares of Common

Stock if, as a result of such conversion, any such holder, together with its affiliates, would own more than 9.99% of the total number

of shares of Common Stock then issued and outstanding.

This limitation may be waived with respect to a holder upon such holder’s

provision of not less than 61 days’

prior written notice to the Company.

Shares of Series B Preferred Stock are not entitled to

receive any dividends, unless and until specifically declared by the Board.

However, holders of Series B Preferred Stock are entitled

to receive dividends on shares of Series B Preferred Stock equal (on an as-if-converted-to-Common Stock basis) to and in the same form

as dividends actually paid on shares of the Common Stock when such dividends are specifically declared by the Board.

The Company will

have no right to require a holder to surrender its Series B Preferred Stock for redemption.

Shares of Series B Preferred Stock will not

otherwise be entitled to any redemption rights, or mandatory sinking fund or analogous fund provisions.

completion of the Offer and the transactions contemplated in the Tender Agreement, but without giving effect to the issuance of the Series

B Warrants to purchase 1,791,923 shares of Common Stock at an exercise price of $0.01 per share to Alpha following the completion of

the Offer, (i) Jay Pharma equity holders, including those who received Series B Preferred Stock in the Offer, own approximately 82.3%

of the outstanding equity of the Company, assuming conversion of the Series B Preferred Stock, (ii) the Ameri equity holders at the time

of the completion of the Offer own approximately 14.5% of the outstanding equity of the Company, and (iii) the financial advisor to Jay

Pharma and Ameri owns approximately 3.2% of the outstanding equity of the Company.

a significant investor in Jay Pharma, Alpha received Series B Preferred Stock in the Offer instead of Common Stock, as well as Series

B Warrants with a nominal exercise price, which were issued to Alpha following the completion of the Offer to account for an adjustment

in pricing of the transactions in light of global economic conditions.

Because the Series B Preferred Stock is convertible into Common

Stock at any time for no consideration, such shares have been included in basic earnings per share.

The Series B Warrants are accounted

for as a cost of equity as part of the capital issuance.

The estimated fair value implied for shares of the Company based on the series

of transactions with Alpha is $1.62 per share, which is equal to the $5,300,000 investment made by Alpha divided by 3,262,907, or the

number of post-Reverse Stock Split shares of Series B Preferred Stock (convertible into Common Stock) that Alpha received in the Offer.

Simultaneously

with the execution of the Original Amalgamation Agreement, Jay Pharma issued a Secured Promissory Note, dated January 10, 2020 (the “Original

Note”), to Alpha, pursuant to which, on January 10, 2020, Jay Pharma received a $1,500,000 loan from Alpha.

The Original Note was

amended to reflect an additional investment of $500,000, resulting in a total principal amount of $2,000,000.

The Original Note was further

amended on August 12, 2020, to account for the termination of the Original Amalgamation Agreement and the change in the structure of

the transaction from an amalgamation to a stock-for-stock exchange offer (as amended, the “Note”).

Upon the closing of the

Offer, the Note was converted into the right to receive 2,473,848 common shares of Jay Pharma and warrants to purchase 2,333,970 common

shares of Jay Pharma at an exercise price of $1.03 per share immediately prior to the Offer.

In connection with the Offer, such common

shares and warrants of Jay Pharma acquired by Alpha upon conversion of the Note were converted into the right to receive (i) 547,278

shares of Series B Preferred Stock that are convertible into up to 547,278 shares of Common Stock, after giving effect to the Reverse

Stock Split, and (ii) warrants to purchase up to 516,333 shares of Common Stock at an exercise price of $4.64 per share, after giving

effect to the Reverse Stock Split.

also acquired 3,500,954 common shares of Jay Pharma and warrants to purchase 3,500,954 common shares of Jay Pharma at an exercise price

of $1.03 per share, immediately prior to the Offer, in connection with the $3 million private placement completed prior to the completion

of the Offer (the “Alpha Investment”).

In connection with the Offer, such common shares and warrants of Jay Pharma acquired

by Alpha in the Alpha Investment were converted into, as applicable, the right to receive (i) 774,499 shares of Series B Preferred Stock

that are convertible into up to 774,499 shares of Common Stock, after giving effect to the Reverse Stock Split, and (ii) warrants to

purchase up to 774,499 shares of Common Stock at an exercise price of $4.64 per share, after giving effect to the Reverse Stock Split.

December 4, 2020, Jay Pharma and Alpha executed a securities purchase agreement whereby Alpha purchased an additional 1,000,000 common

shares of Jay Pharma and warrants to purchase 500,000 common shares of Jay Pharma at an exercise price of $0.30 per share for an aggregate

purchase price of $300,000 (the “Alpha December Investment”).

In connection with the Offer, such shares were exchanged for

221,225 shares of Common Stock, and such warrants were exchanged for warrants to purchase 110,613 shares of Common Stock at $1.36 per

Additionally,

at the effective time of the Offer, the Company issued five-year warrants (the “Series B Warrants”) to purchase 1,791,923

shares of Common Stock at an exercise price of $0.01 to Alpha, after giving effect to the Reverse Stock Split.

The number of shares of

Common Stock issuable upon the exercise of the Series B Warrants is equal to the product of (i) 8,100,000 and (ii) the Exchange Ratio

of 0.8849, post-Reverse Stock Split.

giving effect to the conversion of its Series B Preferred Stock, the warrants issued to Alpha in connection with the Alpha Investment

and the Alpha Bridge Loan and the Series B Warrants, Alpha’s total ownership interest in the Company will be 5,008,078 common shares,

or 33.9%, without giving effect to the beneficial ownership limitations in its Series B Preferred Stock.

However, under the terms of

each of such securities, Alpha may not convert such security to the extent such conversion would cause Alpha, together with its affiliates,

to beneficially own a number of shares of Common Stock which would exceed 9.99% of the Common Stock then issued and outstanding following

such exercise.

Property Acquisition

connection with the Offer, Jay Pharma entered into a series of assignment and assumption agreements with affiliates of a third party,

Tikkun Pharma, Inc.

(“Tikkun”), pursuant to which, on October 2, 2020, Tikkun assigned to Jay Pharma all of Tikkun’s

(i) rights to certain skin care treatment assets and (ii) intellectual property rights to certain formulations for the development of

therapeutic candidates for the prevention, management and treatment of graft versus host disease (GVHD) in exchange for an aggregate

of 10,360,007 common shares of Jay Pharma.

Alpha required additional shares of the Company, at no or a nominal cost, for Alpha to consummate the Alpha Bridge Loan and the Alpha

Investment at the planned valuation, Alpha entered into an agreement with Tikkun pursuant to which, immediately following such assignment,

Tikkun sold 7,774,463 of these common shares of Jay Pharma to Alpha for the nominal aggregate purchase price of $10.00 (the “Alpha

Nominal Shares”), leaving Tikkun with 2,585,544 common shares of Jay Pharma (the “Tikkun Shares”).

In connection with

the Offer, the Tikkun Shares were exchanged for 571,987 shares of Common Stock, after giving effect to the Reverse Stock Split, and the

Alpha Nominal Shares were exchanged for 1,719,906 shares of Series B Preferred Stock that are convertible into up to 1,719,906 shares

of Common Stock, after giving effect to the Reverse Stock Split.

to the completion of the Offer, on December 30, 2020, pursuant to the previously announced Ameri SharePurchase Agreement, Ameri and Private

Ameri completed the Spin-Off, pursuant to which Ameri contributed, transferred and conveyed to Private Ameri all of the issued and outstanding

equity interests of the existing subsidiaries of Ameri, constituting the entire business and operations of Ameri and its subsidiaries,

and Private Ameri assumed the liabilities of such subsidiaries, and all of the issued and outstanding shares of Series A preferred stock

of Ameri were redeemed for an equal number of shares of Series A preferred stock of Private Ameri.

to the Tender Agreement, on December 31, 2020, we issued Series B Warrants (the “Series B Warrants”) to purchase 1,791,923

shares of common stock at an exercise price of $0.01 to Alpha Capital Anstalt (“Alpha”).

We were obligated, among

other things, to file a registration statement with SEC for purposes of registering the resale of the shares of common stock issuable

upon exercise of the Series B Warrants by the investors.

The issuance of the Series B Warrants was exempt from the registration

requirements of the Securities Act pursuant to an exemption provided by Section 4(a)(2) thereof as a transaction by an issuer

not involving a public offering.

As described below under “

Letter Agreement with Alpha ”, on January 12, 2021,

we have waived the lock-up restrictions on Alpha with respect to dispositions of the shares of common stock issuable upon exercise

of the Series B Warrants (the “Series B Warrant Shares”), and Alpha agreed to limit its sales of shares of our common

stock on each trading day to no more than 10% of the daily reported trading volume of common stock on the Nasdaq Stock Market

for such trading day, provided, such limitation shall terminate if the closing price of our shares of common stock on the Nasdaq

Stock Market exceeds $5.29 per share for five consecutive trading days.

and Officer Resignations and Appointments

upon completion of the Offer, Srinidhi “Dev”

Devanur, our former Executive Chairman and a former director of the board

of directors, Brent Kelton, our former Chief Executive Officer, Barry Kostiner, our former Chief Financial Officer, Carmo Martella,

a former director of the board of directors, Thoranath Sukumaran, a former director of the board of directors and Dimitrios Angelis,

a former director of the board of directors, all tendered their resignations from their respective positions as officers and directors

of our company.

to the terms of the Tender Agreement, and as disclosed in the Form S-4, the board of directors appointed David Johnson, George

Kegler, Sol Mayer and Marcus Schabacker to the board of directors at the effective time of the Offer.

upon the completion of the Offer, the board of directors appointed David Johnson as our Chief Executive Officer and Chairman,

Avani Kanubaddi as our Chief Operating Officer, John Van Buiten as our Chief Financial Officer, and Robert Wilkins as our Chief

Medical Officer.

December 29, 2020 at the special meeting of Ameri stockholders held to approve the Tender Agreement, the shareholders ratified

the Bonus Shares Proposal, as described in the Form S-4, resulting in the issuance of shares previously awarded by Ameri’s

board of directors to Mr.

Kostiner and Brandon Gordon, our Executive Vice President, Business Development

in lieu of cash bonuses, with a total of 156,318 post-split shares being awarded on December 30, 2020.

these shares, 67,635 had originally been awarded, subject to Ameri’s shareholders’

approval, on January 9, 2020, representing

aggregate bonus payments of $675,000 divided by a price of $9.98, the closing price on the day immediately preceding board approval.

A further 88,683 shares had been awarded, subject to Ameri’s shareholders’

approval, and subject to continued service

through the end of 2020, on October 19, 2020, represent aggregate bonus payments of $525,000 divided by a price of $5.92, the

closing price on the day immediately preceding board approval, resulting in a total of 156,318 shares granted to officers and

issuance of these shares was exempt from the registration requirements of the Securities Act pursuant to an exemption provided

by Section 4(a)(2) thereof as a transaction by an issuer not involving a public offering.

Components of Our Results of Operations

operating expenses include financial statement preparation services, tax compliance, various consulting and director fees, legal services,

auditing fees, and stock-based compensation.

These expenses have increased in connection with the Company’s product development

and the Company’s management expects these expenses to continue to increase as the Company continues to develop its potential product

of Operations

following table sets forth information comparing the components of net loss for the years ended December 31, 2020 and the comparable

period in 2019:

Year Ended December 31,

General and Administrative

Research and Development

Operating expenses

Loss from operations

Other expense

Extinguishment of note payable

Interest Expense

Inducement Expense

Total other expense

$ (6,864,676 )

$ (2,410,673 )

Other comprehensive loss

Foreign exchange loss

Comprehensive loss

$ (7,034,331 )

$ (2,417,340 )

Net loss per share - basic and diluted

Weighted average shares outstanding, basic and diluted

operating expenses increased to $5,617,317, for the year ended December 31, 2020 from $2,296,534 for the year ended December 31,

2019, with an increase of $3,320,783, or 145%.

This change was primarily driven by an increase in stock-based compensation

of $1,440,583, an increase in legal and professional fees of $1,147,381, and an increase in research and development costs

interest expense for the year ended December 31, 2020 was $445,250 compared to $81,823 for the year ended December 31, 2019.

increase was primarily driven by promissory notes that were entered into by the Company during 2020, with an aggregate

principal amount of $2,143,925, which it did not have during 2019.

Inducement Expense

Our inducement expense

was $802,109 for the year December 31, 2020 as compared to $0 for the year ended December 31, 2019.

The expense is related

to inducement incurred related to the conversion of warrants, resulting in a charge of $802,109.

foreign exchange loss was $169,655 for the year December 31, 2020 as compared to $6,667 for the year ended December 31, 2019, for an

increase in $162,988.

The increase in foreign exchange loss is primarily due to the U.S.

Dollar weakening against the Canadian Dollar

and the conversion of the Canadian Dollars into United States Dollars for payment of United States Dollar denominated expenses.

and Capital Resources

Company has incurred continuing losses from its operations.

As of December 31, 2020, the Company has had an accumulated deficit of $11,759,557

and working capital of $1,597,920.

Since inception, the Company’s operations have been funded principally through the issuance

of debt and equity.

February 2019 Note

On February 7,

2019, Jay Pharma received $60,000 in exchange for a promissory note to David Stefansky with an aggregate face value of $66,000,

including an original issue discount of $6,000 (the “February 2019 Note”).

The February 2019 Note bore no stated interest

On July 21, 2020, Jay Pharma converted the February 2019 Note into common shares.

March 2019 Note

On February 1,

2019, Jay Pharma entered into a consulting agreement with David Stefansky.

In connection with the consulting agreement, on March

5, 2019, Jay Pharma issued a note payable to its executive director for $150,000 (the “March 2019 Note”).

bore no interest.

On July 21, 2020, Jay Pharma converted the March 2019 Note into common shares.

April 2019 Note

During April 2019,

Jay Pharma received $300,000 in exchange for convertible notes in an aggregate principal amount of $300,000 (the “April

2019 Convertible Notes”) and warrants to purchase 250,000 common shares of Jay Pharma.

The April 2019 Convertible Notes

bore interest at a rate of 6% per annum.

On December 30, 2020, the April 2019 Notes were converted into common shares.

July 2019 Note

On July 8, 2019,

Jay Pharma entered into a note agreement (the “July 2019 Note”) to a limited liability company (the “Lender”).

The Note’s face value was $157,714 and the original issue discount was $19,714 for total gross proceeds of $138,000, implying

an interest rate of 12.5% per annum.

Jay Pharma could, without premium or penalty, at any time and from time to time, prepay all

or any portion of the Note.

The maturity date of the Note was September 8, 2019.

On September 20, 2019, Jay Pharma entered into

an amendment to the July 2019 Note (the “Amendment”).

The Amendment extended the maturity date for the Note until

the earlier of (a) the completion of a bridge financing of greater than or equal to $1,500,000, or (b) November 7, 2019.

21, 2019, Jay Pharma entered into an amendment for the July 2019 Note that extended the maturity date for the Note until the earlier

of (a) the completion of a bridge financing of greater than or equal to $1,500,000, or (b) December 9, 2019.

In consideration

for this amendment, Jay Pharma agreed to pay an aggregate extension fee of $33,926, which was added to the principal balance of

On December 9, 2019, Jay Pharma entered into an additional amendment for the July 2019 Note that extended the maturity

date for the Note until the earlier of (a) the completion of a bridge financing of greater than or equal to $1,500,000, or (b)

January 7, 2020.

Jay Pharma also agreed to pay the previously outstanding extension fees of $33,926 on or before March 1, 2020.

On January 8,

2020, Jay Pharma entered into an amendment to the July 2019 Note (the “January 8 Amendment”).

The January 8 Amendment

extended the maturity date for the July 2019 Note until the (a) the completion of a bridge financing of greater than or equal

to $1,500,000, or (b) April 1, 2020.

In consideration for the January 8 Amendment, Jay Pharma granted 55,000 shares of the Company’s

common stock to the Lender.

On May 6, 2020, Jay Pharma entered into an amendment (the “May 2020 Amendment”) whereby

both parties agreed to extend the maturity date of the July 2019 Note to September 30, 2020.

On January 12, 2020, Jay Pharma repaid

$157,714 of the July 2019 Note.

On December 31, 2020 the Company paid the remaining unpaid balance of the July 2019 Note.

December 2019 Note

On December 12,

2019, Jay Pharma received $40,000 in exchange for a promissory note with a lender, including an original issue discount of $4,000

(the “December 2019 Note”).

The December 2019 Note bore interest at a rate of ten percent (10%) on its face value

In the case of an event of default, the interest rate would increase to 24% per year.

The December 2019 Note matured

on January 31, 2020.

The promissory note with the lender and Jay Pharma was converted into 170,333 shares of common stock on December

February 2020 Note

On February 24,

2020, Jay Pharma received $50,000 in exchange for a promissory note with a lender (the “February 2020 Note”).

February 2020 Note bore interest at a rate of 10% on its face value per annum.

In the case of an event of default, the interest

rate would increase to 24% per year.

The note matured on July 31, 2020.

The February 2020 Note was convertible into common shares

of Jay Pharma at any time at a conversion price of $0.38 per share.

On December 30, 2020, the February 2020 Note was converted

into 190,004 shares of the Company’s common stock.

Simultaneously

with the execution of the Original Amalgamation Agreement, Jay Pharma issued the Original Note, dated January 10, 2020, to Alpha,

pursuant to which, on January 10, 2020, Jay Pharma received a $1,500,000 loan from Alpha.

The Original Note was amended to reflect

an additional investment of $500,000, resulting in a total principal amount of $2,000,000.

The Original Note was further amended

on August 12, 2020, to account for the termination of the Original Amalgamation Agreement and the change in the structure of the

transaction from an amalgamation to a stock-for-stock exchange offer.

Upon the closing of the Offer, the Note was converted into

the right to receive 2,473,848 common shares of Jay Pharma and warrants to purchase 2,333,970 common shares of Jay Pharma at an

exercise price of $1.03 per share immediately prior to the Offer.

In connection with the Offer, such common shares and warrants

of Jay Pharma acquired by Alpha upon conversion of the Note were converted into the right to receive (i) 547,278 shares of Series

B Preferred Stock that are convertible into up to 547,278 shares of Common Stock, after giving effect to the Reverse Stock Split,

and (ii) warrants to purchase up to 516,333 shares of Common Stock at an exercise price of $4.64 per share, after giving effect

to the Reverse Stock Split.

Alpha Investment

Alpha also acquired

3,500,954 common shares of Jay Pharma and warrants to purchase 3,500,954 common shares of Jay Pharma at an exercise price of $1.03

per share, immediately prior to the Offer, in connection with the $3 million private placement completed prior to the completion

of the Offer.

In connection with the Offer, such common shares and warrants of Jay Pharma acquired by Alpha in the Alpha Investment

were converted into, as applicable, the right to receive (i) 774,499 shares of Series B Preferred Stock that are convertible into

up to 774,499 shares of Common Stock, after giving effect to the Reverse Stock Split, and (ii) warrants to purchase up to 774,499

shares of Common Stock at an exercise price of $4.64 per share, after giving effect to the Reverse Stock Split.

Alpha December Investment

On December 4,

2020, Jay Pharma and Alpha executed a securities purchase agreement whereby Alpha purchased an additional 1,000,000 common shares

of Jay Pharma and warrants to purchase 500,000 common shares of Jay Pharma at an exercise price of $0.30 per share for an aggregate

purchase price of $300,000 (the “Alpha December Investment”).

In connection with the Offer, such shares were exchanged

for 221,225 shares of Common Stock, and such warrants were exchanged for warrants to purchase 110,613 shares of Common Stock at

$1.36 per share.

Series B Warrants

Additionally,

at the effective time of the Offer, the Company issued five-year warrants (the “Series B Warrants”) to purchase 1,791,923

shares of Common Stock at an exercise price of $0.01 to Alpha, after giving effect to the Reverse Stock Split.

The number of shares

of Common Stock issuable upon the exercise of the Series B Warrants is equal to the product of (i) 8,100,000 and (ii) the Exchange

Ratio of 0.8849, post-Reverse Stock Split.

Registered Direct Offerings

January 14, 2021, the Company completed a registered direct offering of 2,221,458 shares of Common Stock at approximately $4.50 per share

for gross proceeds of approximately $10,000,000.

On February 11, 2021, the Company completed a registered direct offering of 3,007,026

shares of Common Stock for gross proceeds of approximately $12.8 million.

As of March 30, 2021, the Company had cash on hand of approximately

$22.9 million.

believe that, as a result of these transactions, we currently have sufficient cash and financing commitments to meet our

funding requirements over the next year.

Notwithstanding, we expects that we will need to raise additional financing to accomplish

our development plan over the next several years.

We may seek to obtain additional funding through debt or equity financing

in the future.

There are no assurances that we will be able to raise capital on terms acceptable to us or at all, or that cash

flows generated from our operations will be sufficient to meet our current operating costs.

Our ability to obtain additional capital

may depend on prevailing economic conditions and financial, business and other factors beyond our control.

The COVID-19 pandemic

has caused an unstable economic environment globally.

Disruptions in the global financial markets may adversely impact the availability

and cost of credit, as well as our ability to raise money in the capital markets.

Current economic conditions have been and continue

to be volatile.

Continued instability in these market conditions may limit our ability to access the capital necessary to fund

and grow our business.

If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope

of our planned development, which could harm our financial condition and operating results.

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

Flows for the Years Ended December 31, 2020 and 2019

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

Year Ended December 31,

Net cash used in operating activities

$ (3,888,785 )

Net cash used in investing activities

Net cash provided by financing activities

Effect of foreign exchange rate on cash

Net increase (decrease) in cash

cash used in operating activities was $3,888,785 during the year ended December 31, 2020, which consisted primarily of a net loss

of $6,864,676, offset by amortization of note discount of $288,631, stock-based compensation of $1,977,155, induced conversion

of warrants of $802,109, amortization of intangible assets of $120,872, increases in prepaid expenses and other current

assets for $636,497, and increases in accounts payable and accrued liabilities of $267,002.

cash used in operating activities was $647,860 during the year ended December 31, 2019, which consisted primarily of a net loss of $2,410,673,

offset by amortization of note discount of $68,453, increases in stock-based compensation of $624,052, increases in prepaid expenses

and other current assets of $104,340, and increases in accounts payable and accrued liabilities of $919,968.

Net cash used in investing

activities was $44,143 during the year ended December 31, 2020, which consisted of the acquisition of intellectual property

from Tikkun Pharma.

Company did not have any investing activities during the year ended December 31, 2019.

cash provided by financing activities was $5,531,270 during the year ended December 31, 2020, which consisted primarily of $50,000 in

proceeds from convertible notes payable, $1,812,410 in proceeds from note payable, proceeds from the offering and reverse merger of $3,372,500,

September 2020 private placement of $227,500, December 2020 private placement of $260,500 and a decrease of $191,640 in repayment of

note payable.

cash provided by financing activities was $560,000 during the year ended December 31, 2019, which consisted of $300,000 in proceeds

from convertible notes payable, $238,000 in proceeds from notes payable and $22,000 in advances from a related

Sheet Arrangements

Company did not have any off-balance sheet financing arrangements or liabilities, guarantee contracts, retained or contingent interests

in transferred assets, or any obligation arising out of a material variable interest in an unconsolidated entity.

The Company does not

have any subsidiaries to include or otherwise consolidate into the financial statements.

Additionally, the Company does not have interests

in, nor relationships with, any special purpose entities.

Accounting Policies and Significant Judgments and Estimates

Company’s accounting policies are fundamental to understanding its management’s discussion and analysis.

The Company’s

significant accounting policies are presented in Note 3 to its financial statements for the year ended December 31, 2020, which

are included elsewhere in this annual report.

The Company’s financial statements have been prepared in accordance and

in conformity with the accounting principles generally accepted in the United States of America (“U.S.

and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding consolidated

financial information.

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates

and assumptions that affect the report 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.

Actual results could differ from estimates.

Accounting Standards

does not believe that any recently issued, but not yet effective accounting standards, when adopted, will have a material effect on the

accompanying financial statements, other than those disclosed below.

February 25, 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2016-02, Leases (Topic 842).

This update will require organizations that lease assets to recognize on the balance sheet the assets

and liabilities for the rights and obligations created by those leases.

The new guidance will also require additional disclosures

about the amount, timing and uncertainty of cash flows arising from leases.

The provisions of this update are effective for annual

and interim periods beginning after December 15, 2019.

On January 1, 2020, the Company adopted this ASU, which

will did not have a material impact on the Company’s financial position and results of operations.

July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic, 842, Leases”, which clarifies how to apply certain

aspects of the new leases standard, ASC 842.

The amendments address the rate implicit in the lease, impairment of the net investment

in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments

that depend on an index or rate and certain transition adjustments, among other things.

July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842):

Targeted Improvements”, which provides entities with relief

from the costs of implementing certain aspects of the new leasing standard, ASC 842.

Specifically, under the amendments in ASU 2018-11,

(1) entities may elect not to recast the comparative periods presented when transitioning to ASC 842 and (2) lessors may elect not to

separate lease and non-lease components when certain conditions are met.

Concentration

of Credit Risk

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.

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, 2020, the Company did not have greater than $250,000 at any US or Canadian financial institutions.

Currency Risk

inception through December 31, 2020, the reporting currency of the Company is the United States dollar while the functional currency

of the Company is the Canadian dollar.

As a result, the Company is subject to exposure from changes in the exchange rates of the Canadian

dollar and the U.S.

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.

in Certifying Accountant

January 5, 2021, our Audit Committee of the board of directors approved the dismissal of Ram Associates, CPA (“Ram”) as our

independent registered public accounting firm, effective December 31, 2020, and engaged Marcum LLP (“Marcum”) as our independent

registered public accounting firm for the year ending December 31, 2020.

Prior to the completion of the Offer, Marcum served as the independent

registered public accounting firm of Jay Pharma, and we believe the change in auditors will be more efficient for reporting purposes.

2021 Registered Direct Offering

January 12, 2021, we entered into a Securities Purchase Agreement (the “January 2021 Purchase Agreement”) with Alpha, The

Hewlett Fund LP, Alto Opportunity Master Fund, SPC –

Segregated Master Portfolio B (“Alto”), Iroquois Master Fund Ltd.,

Iroquois Capital Investment Group LLC and Hudson Bay Master Fund Ltd (collectively, the “Subsequent Investors”), pursuant

to which the Company issued and sold in a registered direct offering (the “January 2021 Direct Offering”) an aggregate of

2,221,334 shares of our Common Stock at an offering price of $4.5018 per share, for gross proceeds of approximately $10,000,000 before

the deduction of fees and offering expenses.

Under the January 2021 Purchase Agreement, the Subsequent Investors could choose to purchase

pre-funded warrants (the “Pre-funded Warrants”) in lieu of shares of Common Stock.

The offering closed on January 14, 2021.

Pre-funded Warrants have an exercise price of $0.01 per share.

The Pre-funded Warrants are immediately exercisable and may be exercised

at any time after their original issuance until such Pre-funded Warrants are exercised in full.

A holder of a Pre-funded Warrant may

not exercise any portion of such holder’s Pre-funded Warrants to the extent that the holder, together with its affiliates, would

beneficially own more than 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding shares of Common Stock

immediately after exercise (the “Beneficial Ownership Limitation”), except that upon at least 61 days’

from the holder to the Company, the holder may increase the Beneficial Ownership Limitation to up to 9.99% of the number of shares of

Common Stock outstanding immediately after giving effect to the exercise.

shares, the Pre-funded Warrants, and the shares of Common Stock issuable upon the exercise of the Pre-funded Warrants (the “Pre-funded

Warrant Shares”) were offered by the Company pursuant to a shelf registration statement on Form S-3 (File No.

333-233260), previously

filed with the SEC on August 14, 2019, and declared effective by the SEC on November 19, 2019.

to the January 2021 Purchase Agreement, in a concurrent private placement (the “January 2021 Private Placement”) that also

closed on January 14, 2021, the Company issued to the Subsequent Investors, unregistered warrants to purchase up to 1,666,018 shares

of Common Stock (the “January 2021 Warrants”).

The January 2021 Warrants are exercisable immediately upon issuance and terminate

five years following issuance and are exercisable at an exercise price of $4.9519 per share, subject to adjustment as set forth therein.

A holder of January 2021 Warrants will not have the right to exercise any portion of its January 2021 Warrants if the holder, together

with its affiliates, would beneficially own in excess of the Beneficial Ownership Limitation;

provided, however, that upon 61 days’

prior notice to the Company, the holder may increase or decrease the Beneficial Ownership Limitation, provided that in no event shall

the Beneficial Ownership Limitation exceed 9.99%.

January 2021 Warrants and the shares of our Common Stock issuable upon the exercise of the January 2021 Warrants (the “January

2021 Warrant Shares”) were not registered under the Securities Act, were not offered pursuant to the shelf registration statement,

and were offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and Rule 506(b) promulgated thereunder

as a transaction by the issuer not involving a public offering.

induce the Subsequent Investors into the January 2021 Purchase Agreement, the Company also entered into a registration rights agreement,

dated January 12, 2021 (the “January Registration Rights Agreement”), with the Subsequent Investors, pursuant to which, among

other things, the Company agreed to prepare and file with the Securities and Exchange Commission this Registration Statement to register

for resale of all of the January 2021 Warrant Shares.

Agreement with Alpha

January 12, 2021 we entered into a letter agreement (the “Letter Agreement”) with Alpha.

Under the Letter Agreement, (i)

we agreed to register 1,791,923 of the Series B Warrant Shares issuable upon the exercise of Series B Warrants, (ii) the Series B Warrant

Shares will not be subject to an existing lock-up agreement between us and Alpha, and Alpha will no longer be subject to any limitations

on its ability to dispose of the Series B Warrant Shares that are imposed by us to the extent permitted by applicable rules and regulations,

(iii) Alpha agreed to limit its sales of Common Stock on each trading day to no more than 10% of the daily reported trading volume of

Common Stock on the Nasdaq Stock Market for such trading day, provided, such limitation shall terminate if the closing price of our shares

of Common Stock on the Nasdaq Stock Market exceeds $5.29 per share for five consecutive trading days and (iv) we will be free to waive

the terms and conditions of any lock-up agreement between us and any of the former shareholders of Jay Pharma Inc.

without the consent

of, or notice to, Alpha once this registration statement registering the Series B Warrant Shares is declared effective by the SEC.

Stockholder Demand Letter

On January 21, 2021,

we received a stockholder litigation demand letter from the law firm of Purcell Julie & Lefkowitz LLP, on behalf of James

Self, a purported stockholder of our Company.

The letter demands that we (i) deem ineffective the December 30, 2020 amendment

to our Amended and Restated Certificate of Incorporation in which we effected a one-for-four reverse stock split of our common

stock due to the manner in which non-votes by brokers were tabulated, (ii) seek appropriate relief for damages allegedly suffered

by the company and its stockholders or seek a valid stockholder approval of the amendment and reverse stock split, and (iii) adopt

adequate internal controls to prevent a recurrence of the alleged misconduct.

We dispute that the amendment was ineffective or

that there were any inadequate internal controls related to the same.

However, to eliminate any questions about the amendment,

we intend to seek to ratify the amendment at a special stockholders’

meeting pursuant to Section 204 of the Delaware General

Corporation Law.

This special stockholders’

meeting is scheduled to occur on May 14, 2021.

2021 Registered Direct Offering

February 8, 2021, we entered into a Securities Purchase Agreement (the “February 2021 Purchase Agreement”) with the Subsequent

Investors, pursuant to which the Company issued and sold in a registered direct offering (the “February 2021 Direct Offering”)

an aggregate of 3,007,026 shares of our Common Stock at an offering price of $4.27 per share, for gross proceeds of approximately $12,800,000

before the deduction of fees and offering expenses.

The offering closed on February 11, 2021.

shares were offered by the Company pursuant to a shelf registration statement on Form S-3 (File No.

333-233260), previously filed with

the SEC on August 14, 2019, and declared effective by the SEC on November 19, 2019.

to the February 2021 Purchase Agreement, in a concurrent private placement (the “February 2021 Private Placement”) that also

closed on February 11, 2021, the Company issued to the Subsequent Investors, unregistered warrants to purchase up to 1,503,513 shares

of Common Stock (the “February 2021 Warrants”).

The February 2021 Warrants are exercisable immediately upon issuance and

terminate five years following issuance and are exercisable at an exercise price of $4.90 per share, subject to adjustment as set forth

A holder of February 2021 Warrants will not have the right to exercise any portion of its February 2021 Warrants if the holder,

together with its affiliates, would beneficially own in excess of the Beneficial Ownership Limitation;

provided, however, that upon 61

prior notice to the Company, the holder may increase or decrease the Beneficial Ownership Limitation, provided that in no

event shall the Beneficial Ownership Limitation exceed 9.99%.

February 2021 Warrants and the shares of our Common Stock issuable upon the exercise of the February 2021 Warrants (the “February

2021 Warrant Shares”) were not registered under the Securities Act, were not offered pursuant to the shelf registration statement,

and were offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and Rule 506(b) promulgated thereunder

as a transaction by the issuer not involving a public offering.

induce the Subsequent Investors into the February 2021 Purchase Agreement, the Company also entered into a registration rights agreement,

dated February 8, 2021 (the “February Registration Rights Agreement”), with the Subsequent Investors, pursuant to which,

among other things, the Company agreed to prepare and file with the Securities and Exchange Commission this Registration Statement to

connection with its role as financial advisor to the Company in the January 2021 Direct Offering, the January 2021 Private Placement,

the February 2021 Direct Offering and the February 2021 Private Placement, the Company issued Palladium 155,493 warrants with an exercise

price of $4.9519 and 210,492 warrants with an exercise price of $4.90 (the “Palladium Warrants”) on February 11, 2021.

Palladium Warrants and the shares of our Common Stock issuable upon the exercise of the Palladium Warrants (the “Palladium Warrant

Shares”) were not registered under the Securities Act and were offered pursuant to the exemption provided in Section 4(a)(2) under

the Securities Act and Rule 506(b) promulgated thereunder as a transaction by the issuer not involving a public offering.

Resale Registration Statement

On February 16, 2021,

we filed a resale registration statement on Form S-3 (File No.

333-253196) (the “Resale Registration Statement”) registering

5,497,878 shares of our common stock, consisting of the Series B Warrant Shares, the January 2021 Warrant Shares, the February

2021 Warrant Shares, the Palladium Warrant Shares, 156,318 shares issued to former directors and officers of Ameri and 14,121

shares issued to a former consultant of the Company.

We expect the Resale Registration Statement to be declared effective shortly

following the filing of this Annual Report on Form 10-K.

Quantitative and Qualitative Disclosure About Market Risk

Financial Statements and Supplementary Data

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

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity