Enveric Biosciences, Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures designed to ensure that the information we are required to disclose in reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified under the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer (our principal executive) and Chief Financial Officer (our principal financial officer and principal accounting officer) carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2024. Based on this evaluation, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in paragraph (e) of Rules 13a-15 and 15d-15 under the Exchange Act) were not effective as of December 31, 2024. Limitations on Internal Control over Financial Reporting An internal control system over financial reporting has inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process used to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles in the United States. Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles in the United States, and that our receipts and expenditures are being made only in accordance with the authorization of our board of directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Under the supervision and with the participation of our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer and principal accounting officer), we performed an assessment of the Company’s significant processes and key controls. Based on this assessment, management concluded that our internal control over financial reporting was not effective as of December 31, 2024 due to the material weaknesses described below. 55 A material weakness in internal control over financial reporting is a deficiency or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. We determined that our internal control over financial reporting had the following material weaknesses: ● We were unable to document, formalize, implement and revise where necessary controls, policies and procedure documentation to evidence a system of controls, inclusive of IT controls, including testing of such controls that is consistent with our current personnel and available resources; ● We failed to document, maintain and test effective control activities over our control environment, risk assessment, information technology and monitoring components; ● We had insufficient segregation of duties, oversight of work performed and lack of compensating controls in our finance and accounting functions, including, without limitation, the processing, review and authorization of all routine and non-routine transactions, due to limited personnel and resources. The Company is evaluating these weaknesses to determine the appropriate remedy. Because disclosure controls and procedures include those components of internal control over financial reporting that provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, management also determined that its disclosure controls and procedures were not effective as a result of the foregoing material weaknesses in its internal control over financial reporting. Changes in Internal Control over Financial Reporting As of December 31, 2024, the Company is in process of remediating its material weaknesses and designing an effective internal control environment, however it has not yet remediated its material weaknesses. Remediation efforts to address material weaknesses in internal controls ● We engaged information technology experts who designed and implemented a secure, cloud based, server and IT environment with controlled access, monitoring, help desk and a user training protocol; ● We installed and implemented third party software that provides improved control, approvals and segregation of duties over the purchase to pay operation cycle; ● We engaged third party subject matter experts who are providing independent supervision of accounting staff, transaction processing, reconciliations and financial statement preparation, resulting in improved segregation of duties; ● We engaged third party subject matter experts who are assisting in the financial reporting function, with such activities, including, without limitation, preparation, review and reconciliation of financial reports, research of technical accounting issues/transactions, performing various checklists to ensure compliance with GAAP and SEC requirements, with all such activities resulting in improved segregation of duties. ● Previously, we engaged third party subject matter experts to assist in the design and documentation of an internal control environment meeting those requirements and criteria established in the COSO 2013 Internal Control Integrated Framework, but as of December 31, 2024 we did not have any third party subject matter experts engaged. Item 9B. Other Information None . Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. 56 PART III Item 10. Directors, Executive Officers and Corporate Governance We incorporate by reference the information responsive to this Item appearing in our definitive Proxy Statement on Schedule 14A for our 2025 Annual Meeting of Stockholders (“Proxy Statement”), which will be filed no later than 120 days after December 31, 2024. Item 11. Executive Compensation We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, which will be filed no later than 120 days after December 31, 2024. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, which will be filed no later than 120 days after December 31, 2024. Item 13. Certain Relationships and Related Transactions and Director Independence We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, which will be filed no later than 120 days after December 31, 2024. Item 14. Principal Accountant Fees and Services We incorporate by reference the information responsive to this Item appearing in our Proxy Statement, which will be filed no later than 120 days after December 31, 2024. 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: Report of Independent Registered Accounting Firm (PCAOB Firm ID: Marcum LLP # 688 ) F-1 Consolidated Balance Sheets F-2 Consolidated Statements of Operations and Comprehensive Loss F-3 Consolidated Statements of Changes in Mezzanine Equity and Shareholders’ Equity F-4 Consolidated Statements of Cash Flows F-6 Notes to Consolidated Financial Statements F-7 (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. Item 16. Form 10–K Summary Not applicable. 57 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 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) 3.4 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 January 21, 2025) 3.5 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) 3.6 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) 3.7 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) 3.8 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) 3.9 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) 58 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) 4.1 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) 4.13 Form of Inducement Warrant (in connection with December 2023 Offering) (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the Commission on December 29, 2023) 4.14 Form of Pre-Funded Warrant (in connection with January 2025 Offering) (incorporated by reference to Exhibit 4.14 to the Company’s Registration Statement on Form S-1/A, filed with the Commission on January 30, 2025) 4.15 Form of Series A Warrant (in connection with January 2025 Offering) (incorporated by reference to Exhibit 4.15 to the Company’s Registration Statement on Form S-1/A, filed with the Commission on January 30, 2025) 4.16 Form of Series B Warrant (in connection with January 2025 Offering) (incorporated by reference to Exhibit 4.16 to the Company’s Registration Statement on Form S-1/A, filed with the Commission on January 30, 2025) 4.17 Form of Placement Agent Warrant (in connection with January 2025 Offering) (incorporated by reference to Exhibit 4.17 to the Company’s Registration Statement on Form S-1/A, filed with the Commission on January 30, 2025) 59 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) 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# 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) 10.13# 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) 10.14# Form of RSA Award Agreement* 10.15 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) 10.16 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) 10.17 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) 60 10.18 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) 10.19 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) 10.20 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) 10.21 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) 10.22 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) 10.23 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) 10.24 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) 10.25# 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) 10.26# 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) 10.27# 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) 10.28*** Form of Termination of Prior Agreements and Mutual Release (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on May 15, 2023) 10.29 Equity Distribution Agreement, dated September 1, 20123, by and among the Company and Canaccord Genuity, LLC (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed with the Commission on September 1, 2023) 10.30 Purchase Agreement, dated November 3, 2023, by and among the Company and Lincoln Park Capital Fund, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Commission on November 6, 2023) 10.31 Registration Rights Agreement, dated November 3, 2023, by and among the Company and Lincoln Park Capital Fund, LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the Commission on November 6, 2023) 10.32 Form of Inducement Warrant, dated December 28, 2023, by and among the investors thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on December 29, 2023) 61 10.33 Form of Common Stock Purchase Agreement, dated March 8, 2024, between Enveric Biosciences, Inc. and the investors set forth therein (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on March 11, 2024) 10.34 Form of Common Stock Purchase Agreement, dated May 3, 2024, between Enveric Biosciences, Inc. and the investors set forth therein (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the Commission on May 3, 2024) 10.35 Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.33 to the Company’s Registration Statement on Form S-1/A, filed with the Commission on January 30, 2025) 10.36*** Exclusive License Agreement, dated July 10, 2024, between Akos Biosciences, Inc. and Aries Science and Technology, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on November 14, 2024) 10.37*** Exclusive License Agreement, dated November 7, 2024, between Enveric Biosciences, Inc. and MycoMedica Life Sciences, PBC* 14 Code of Ethics (incorporated by reference to Exhibit 14 to the Company’s Annual Report on Form 10-K, filed with the Commission on March 26, 2024) 19 Policy on Insider Trading (incorporated by reference to Exhibit 19 to the Company’s Annual Report on Form 10-K, filed with the Commission on March 26, 2024) 21 Subsidiaries* 23.1 Consent of independent registered public accountant – Marcum LLP* 31.1 Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer* 31.2 Certification pursuant to Section 302 of the Sarbanes–Oxley Act of 2002 of Principal Financial and Accounting Officer* 32 Certification pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 of Principal Executive Officer, Principal Financial and Accounting Officer** 97 Clawback Policy (incorporated by reference to Exhibit 97 to the Company’s Annual Report on Form 10-K, filed with the Commission on March 26, 2024) 101.INS Inline XBRL Instance Document* 101.SCH Inline XBRL Taxonomy Extension Schema* 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document* 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document* 101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document* 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document* 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith. ** Furnished herewith. *** Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets (“[***]”) because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed. # Management contract or compensatory plan or arrangement. 62 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. March 28, 2025 By: /s/ Joseph Tucker Joseph Tucker, Ph.D. Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. March 28, 2025 By: /s/ Joseph Tucker Joseph Tucker, Ph.D. Chief Executive Officer (Principal Executive Officer) March 28, 2025 By: /s/ Kevin Coveney Kevin Coveney Chief Financial Officer (Principal Financial and Accounting Officer) March 28, 2025 By: /s/ Michael Webb Michael Webb Director March 28, 2025 By: /s/ George Kegler George Kegler Director March 28, 2025 By: /s/ Marcus Schabacker Marcus Schabacker, Ph.D., M.D. Director March 28, 2025 By: /s/ Frank Pasqualone Frank Pasqualone Director March 28, 2025 By: /s/ Sheila DeWitt Sheila DeWitt, Ph.D. Director 63 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 sheets of Enveric Biosciences, Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, changes in mezzanine equity and shareholders’ equity and cash flows for the years ended December 31, 2024 and 2023, 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, 2024 and 2023, and the results of its operations and its cash flows for the years ended December 31, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America. 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 1, the Company 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 1. 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 audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits 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 audits, 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 audits 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 audits 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 audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters 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. We determined that there are no critical audit matters. /s/ Marcum LLP We have served as the Company’s auditor since 2021. Morristown, New Jersey March 28, 2025 F- 1 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS 2024 2023 As of December 31, 2024 2023 ASSETS Current assets: Cash $ 2,241,026 $ 2,287,977 Prepaid expenses and other current assets 493,558 1,293,554 Total current assets 2,734,584 3,581,531 Other assets: Property and equipment, net 305,777 507,377 Intangible assets, net 42,182 210,932 Total other assets 347,959 718,309 Total assets $ 3,082,543 $ 4,299,840 LIABILITIES, MEZZANINE EQUITY, AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 521,747 $ 1,218,783 Due to related parties 232,891 — Accrued liabilities 732,010 1,075,643 Investment option liability 1,988 23,608 Warrant liability 1,100 25,470 Total current liabilities 1,489,736 2,343,504 Commitments and contingencies (Note 12) - - Mezzanine equity Series C redeemable preferred stock, $ 0.01 par value, 100,000 shares authorized, and 0 shares issued and outstanding as of December 31, 2024 and 2023, respectively — — Redeemable non-controlling interest — — Total mezzanine equity — — 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, 2024 and 2023, respectively — — Common stock, $ 0.01 par value, 100,000,000 shares authorized, 678,002 and 182,625 shares issued and outstanding as of December 31, 2024 and 2023, respectively 6,780 1,827 Additional paid-in capital 108,255,049 100,841,416 Stock subscription receivable — ( 1,817,640 ) Accumulated deficit ( 106,074,505 ) ( 96,499,518 ) Accumulated other comprehensive loss ( 594,517 ) ( 569,749 ) Total shareholders’ equity 1,592,807 1,956,336 Total liabilities, mezzanine equity, and shareholders’ equity $ 3,082,543 $ 4,299,840 The accompanying notes are an integral part of these consolidated financial statements. F- 2 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 2024 2023 For the Years Ended December 31, 2024 2023 Operating expenses General and administrative $ 6,453,505 $ 8,852,021 Research and development 2,841,272 7,252,437 Depreciation and amortization 337,489 343,982 Total operating expenses 9,632,266 16,448,440 Loss from operations ( 9,632,266 ) ( 16,448,440 ) Other income (expense) Inducement expense, net — ( 1,848,235 ) Change in fair value of warrant liabilities 24,370 94,396 Change in fair value of investment option liability 21,620 208,752 Change in fair value of derivative liability — 727,000 Other income 20,000 — Interest income, net 219 3,708 Total other income (expense) 66,209 ( 814,379 ) Net loss before income taxes ( 9,566,057 ) ( 17,262,819 ) Income tax expense ( 8,930 ) ( 28,913 ) Net loss ( 9,574,987 ) ( 17,291,732 ) Less preferred dividends attributable to non-controlling interest — 19,041 Less deemed dividends attributable to accretion of embedded derivative at redemption value — 147,988 Net loss attributable to shareholders ( 9,574,987 ) ( 17,458,761 ) Other comprehensive loss Foreign currency translation ( 24,768 ) ( 33,015 ) Comprehensive loss $ ( 9,599,755 ) $ ( 17,491,776 ) Net loss per share - basic and diluted $ ( 19.04 ) $ ( 121.29 ) Weighted average shares outstanding, basic and diluted 502,900 143,938 The accompanying notes are an integral part of these consolidated financial statements. F- 3 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY - - Shares Amount Capital Receivable Deficit Loss Equity FOR THE YEAR ENDED DECEMBER 31, 2024 Common Stock Additional Paid-In Subscription Accumulated Accumulated Other Comprehensive Total Shareholders’ Shares Amount Capital Receivable Deficit Loss Equity Balance at January 1, 2024 - - 182,625 $ 1,827 $ 100,841,416 $ ( 1,817,640 ) $ ( 96,499,518 ) $ ( 569,749 ) $ 1,956,336 Common stock sold under the Equity Distribution Agreement, net of offering costs of $ 583,713 111,200 1,112 1,807,677 — — — 1,808,789 Issuance of direct offering shares (see Note 8) 45,780 458 770,835 — — — 771,293 Exercise of Inducement Warrants for common stock 130,267 1,303 2,675,677 — — — 2,676,980 Stock-based compensation — — 1,562,392 — — — 1,562,392 Issuance of common shares for vested RSU 1,830 18 ( 18 ) — — — — Proceeds from the subscription receivable related to the issuance of Inducement Warrants, net of offering costs of $ 12,821 — — ( 12,821 ) 280,500 — — 267,679 Proceeds from the subscription receivable related to the exercise of warrants and preferred investment options and issuance of common stock in abeyance 46,934 469 ( 469 ) 1,537,140 — — 1,537,140 Common stock sold under the Purchase Agreement, net of offering costs of $ 471,756 159,366 1,593 610,360 — — — 611,953 Foreign exchange translation loss — — — — — ( 24,768 ) ( 24,768 ) Net loss - - — — — — ( 9,574,987 ) — ( 9,574,987 ) Balance at December 31, 2024 - - 678,002 $ 6,780 $ 108,255,049 $ — $ ( 106,074,505 ) $ ( 594,517 ) $ 1,592,807 The accompanying notes are an integral part of these consolidated financial statements. F- 4 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY Shares Amount Equity Shares Amount Capital Receivable Deficit Loss Equity FOR THE YEAR ENDED DECEMBER 31, 2023 Redeemable Non-controlling Interest Total Mezzanine Common Stock Additional Paid-In Subscription Accumulated Accumulated Other Comprehensive Total Shareholders’ Shares Amount Equity Shares Amount Capital Receivable Deficit Loss Equity Balance at January 1, 2023 1,000 $ 885,028 $ 885,028 138,554 $ 1,386 $ 94,415,058 $ — $ ( 79,207,786 ) $ ( 536,734 ) $ 14,671,924 Balance 1,000 $ 885,028 $ 885,028 138,554 $ 1,386 $ 94,415,058 $ — $ ( 79,207,786 ) $ ( 536,734 ) $ 14,671,924 Preferred dividends attributable to redeemable non-controlling interest — 19,041 19,041 — — ( 19,041 ) — — — ( 19,041 ) Accretion of embedded derivative to redemption value — 147,988 147,988 — — ( 147,988 ) — — — ( 147,988 ) Redemption of Series A preferred stock ( 1,000 ) ( 1,052,057 ) ( 1,052,057 ) — — — — — — — Stock-based compensation — — — — — 2,150,160 — — — 2,150,160 Issuance of common shares for vested RSU — — — 6,910 69 ( 69 ) — — — — Issuance of common shares for deferred offering costs — — — 9,294 93 255,014 — — — 255,107 Issuance of Inducement Warrants, net of offering costs of $ 239,302 — — — — — 1,967,424 ( 280,500 ) — — 1,686,924 Induced conversion of warrants and preferred investment options — — — — — 683,997 — — — 683,997 Exercise of warrants and preferred investment options — — — 27,867 279 1,536,861 ( 1,537,140 ) — — — Foreign exchange translation loss — — — — — — — — ( 33,015 ) ( 33,015 ) Net loss — — — — — — — ( 17,291,732 ) — ( 17,291,732 ) Balance at December 31, 2023 — $ — $ — 182,625 $ 1,827 $ 100,841,416 $ ( 1,817,640 ) $ ( 96,499,518 ) $ ( 569,749 ) $ 1,956,336 Balance — $ — $ — 182,625 $ 1,827 $ 100,841,416 $ ( 1,817,640 ) $ ( 96,499,518 ) $ ( 569,749 ) $ 1,956,336 The accompanying notes are an integral part of these consolidated financial statements. F- 5 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS 2024 2023 For the Years Ended December 31, 2024 2023 Cash Flows From Operating Activities: Net loss $ ( 9,574,987 ) $ ( 17,291,732 ) Adjustments to reconcile net loss to cash used in operating activities Change in fair value of warrant liability ( 24,370 ) ( 94,396 ) Change in fair value of investment option liability ( 21,620 ) ( 208,752 ) Change in fair value of derivative liability — ( 727,000 ) Stock-based compensation 1,562,392 2,150,160 Inducement expense — 1,848,235 Deferred offering costs expensed 418,200 — Amortization of right of use asset — 64,048 Amortization of intangibles 168,750 168,754 Depreciation expense 168,739 175,228 Gain on disposal of property and equipment — ( 4,206 ) Change in operating assets and liabilities: Prepaid expenses and other current assets 178,496 ( 6,857 ) Accounts payable and accrued liabilities ( 834,630 ) ( 103,848 ) Due to related parties 232,891 — Right-of-use operating lease asset and obligation — ( 64,045 ) Net cash used in operating activities ( 7,726,139 ) ( 14,094,411 ) Cash Flows From Investing Activities: Purchases of property and equipment — ( 5,180 ) Proceeds from disposal of property and equipment — 16,847 Net cash provided by investing activities — 11,667 Cash Flows From Financing Activities: Proceeds from the subscription receivable related to the issuance of Inducement Warrants and the exercise of warrants and preferred investment options 1,804,819 — Proceeds from exercise of Inducement Warrants 2,676,980 — Proceeds from common stock sold under the Equity Distribution Agreement, net of offering costs 2,290,186 — Proceeds from common stock sold under the Purchase Agreement, net of offering costs 1,083,706 — Payment for offering costs previously accrued ( 181,857 ) — Payment for equity distribution offering costs — ( 291,084 ) Redemption of Series A Preferred Stock — ( 1,052,057 ) Net cash provided by (used in) financing activities 7,673,834 ( 1,343,141 ) Effect of foreign exchange rate on changes on cash 5,354 ( 10,022 ) Net decrease in cash ( 46,951 ) ( 15,435,907 ) Cash at beginning of year 2,287,977 17,723,884 Cash at end of year $ 2,241,026 $ 2,287,977 Supplemental disclosure of cash flow transactions: Cash paid for interest $ — $ — Income taxes paid $ 5,000 $ 9,507 Non-cash financing and investing activities: Stock subscription receivable $ — $ 1,817,640 Offering costs accrued not paid $ — $ 182,724 Warrants issued for offering costs $ — $ 77,991 Issuance of common shares for offering costs $ 771,293 $ 255,107 Deferred offering costs charged to offering costs $ 612,000 $ — Induced conversion of warrants and preferred investment options $ — $ 683,997 Preferred dividends attributable to redeemable non-controlling interest $ — $ 19,041 Accretion of embedded derivative to redemption value $ — $ 147,988 The accompanying notes are an integral part of these consolidated financial statements. F- 6 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” or the “Company”) is a biotechnology company dedicated to the development of novel neuroplastogenic small-molecule therapeutics for the treatment of depression, anxiety, addiction, and other psychiatric disorders. 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., 1236567 B.C. Unlimited Liability Company, MagicMed Industries, Inc. (“MagicMed”), Enveric Biosciences Canada Inc., Akos Biosciences, Inc. (“Akos”), and Enveric Therapeutics, Pty. Ltd. (“Enveric Therapeutics”). Enveric’s lead program, the EVM301 Series, and its lead drug candidate, EB-003, are intended to offer a first-in-class, new approach to the treatment of difficult-to-address mental health disorders, mediated by the promotion of neuroplasticity and without also inducing hallucinations in the patient. Previously, Enveric was developing the EVM201 Series, and its lead drug candidate EB-002 (formerly EB-373), for the treatment of neuropsychiatric disorders. The EVM201 series comprised next generation synthetic prodrugs of the active metabolite, psilocin. Recently, Enveric out-licensed the EVM201 Series program to MycoMedica Life Sciences, who will seek to develop, manufacture, and commercialize EB-002, in exchange for certain development and milestone payments to Enveric. Our primary focus is to develop our lead asset EB-003 in the EVM301 Series. Reverse Stock Split The Company effected a 1-for-15 reverse stock split (“Reverse Stock Split”) on January 27, 2025, which began trading on a split-adjusted basis on January 29, 2025, pursuant to which every 15 shares of the Company’s issued and outstanding common stock were reclassified as one share of common stock. The Reverse Stock Split had no impact on the par value of the Company’s common stock or the authorized number of shares of common stock. Unless otherwise indicated, all share and per share information in these consolidated financial statements are retroactively adjusted to reflect the Reverse Stock Split, prior to the rounding of any fractional shares. Any fractional share resulting from the Reverse Stock Split were rounded up to the next whole number of shares, upon which 87,131 roundup shares were issued in January 2025. Going Concern, Liquidity and Other Uncertainties The Company has incurred losses since inception resulting in an accumulated deficit of $ 106,074,505 as of December 31, 2024 and further losses are anticipated in the development of its business. Further, the Company has operating cash outflows of $ 7,726,139 for the year ended December 31, 2024. For the year ended December 31, 2024, the Company had a loss from operations of $ 9,632,266 . 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 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 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, 2024, the Company had cash of $ 2,241,026 and working capital of $ 1,244,848 . In January 2025, the Company raised net proceeds of approximately $ 4.2 million from a public stock offering. See Note 14. 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. 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 consolidated financial statements are issued. Management’s plan to alleviate the conditions that raise substantial doubt include raising additional working capital through public or private equity or debt financings or other sources, and may include additional collaborations with third parties as well as disciplined cash spending. Adequate additional financing may not be available to the Company on acceptable terms, or at all. Should the Company be unable to raise sufficient additional capital, the Company may be required to undertake further 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 consolidated financial statements are issued. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. F- 7 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Nasdaq Notice On May 16, 2024, the Company received a letter from Nasdaq notifying the Company that for the prior 30 consecutive business days the bid price for the Company’s common stock had closed below the minimum $ 1.00 per share requirement for continued inclusion on Nasdaq pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). The deficiency letter did not result in the immediate delisting of the Company’s common stock from Nasdaq. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided an initial period of 180 calendar days, until November 12, 2024, to regain compliance with the Bid Price Rule. On November 20, 2024, Nasdaq issued a delisting notice, indicating that the Company did not satisfy the Bid Price Rule by the compliance date and that unless the Company requested an appeal of this determination before Nasdaq’s listing qualifications panel, the Company’s common stock would be scheduled for delisting from Nasdaq and trading suspended. The Company appealed the determination before Nasdaq’s listing qualifications panel and on December 30, 2024, the Company received an extension until May 19, 2025, to regain compliance with Bid Price Rule. The Company has applied for a second 180-day compliance period. The Company conducted the Reverse Stock Split on January 27, 2025, which became effective January 29, 2025, in order to regain compliance with the Minimum Bid Price Requirement. The Company has notified NASDAQ on February 11, 2025 that the Company has completed steps to cure the deficiency and regain compliance. On March 4, 2025, the Company received notice from the Nasdaq Office of General Counsel that the Company regained compliance with the Bid Price Rule. 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 U.S. generally accepted accounting principles (“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. 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, the valuation of warrants and preferred investment options, the valuation of stock-based compensation and accruals associated with third party providers supporting research and development efforts. Actual results could differ from those estimates. Foreign Currency Translation From inception through December 31, 2024, 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 or the Australian dollar. For the years ended December 31, 2024 and 2023, the Company engaged in a number of transactions denominated in Canadian dollars and Australian dollars. As a result, the Company is subject to exposure from changes in the exchange rates of the Canadian dollar and Australian dollar against the United States dollar. The Company translates the assets and liabilities of its Canadian subsidiaries and Australian subsidiary into the United States 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 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 loss in the consolidated statements of operations and comprehensive 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, 2024 and 2023. F- 8 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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, AUD$ 250,000 in Australia and C$ 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, 2024, the Company had greater than $ 250,000 at United States financial institutions, less than AUD$ 250,000 at Australian financial institutions, and less than C$ 100,000 at Canadian financial institutions. As of December 31, 2023, the Company had greater than $ 250,000 at United States financial institutions, less than AUD$ 250,000 at Australian financial institutions, and greater than C$ 100,000 at Canadian financial institutions. Comprehensive Loss Comprehensive loss consists of two components, net loss and other comprehensive 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. Intangible Assets Intangible assets consist of a license agreement. 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. 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. Deferred 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. The Company complies with the requirements of ASC Topic 340, Other Assets and Deferred Costs (“ASC 340”) and SAB 5A - Expenses of Offering . Offering costs, which consist mainly of legal, accounting and consulting fees directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity. For the year ended December 31, 2024, the Company incurred $ 494,292 in deferred offering costs in connection with the Equity Distribution Agreement (the “Distribution Agreement”), with Canaccord Genuity LLC (“Canaccord”) and the Purchase Agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”). These deferred offering costs were proportionately offset against the total proceeds from the issuance of common stock available under the agreements and the Company expensed any remaining balance of deferred offering costs when the agreements were terminated. As of December 31, 2024, the Company expensed the remaining balance of deferred offering costs related to Lincoln Park as the Company no longer intends to use this purchase agreement, reflected in general and administration expenses in the accompanying consolidated statement of operations. As of December 31, 2024, the balance of deferred offering costs is $ 0 . For the year ended December 31, 2023, the Company incurred $ 567,603 in deferred offering costs in connection with the Distribution Agreement, with Canaccord and the Purchase Agreement with Lincoln Park. These deferred offering costs will be proportionately offset against the total proceeds from the issuance of common stock available under the agreements and the Company will expense any remaining balance of deferred offering costs if the agreements are terminated. For the year ended December 31, 2023, there were no issuances of common stock under the agreements resulting in the deferral of offering costs. 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 “Distinguishing Liabilities from Equity” (“ASC 480”) and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The Company accounts for warrants and investment options for shares of the Company’s common stock that are not indexed to its own stock as derivative liabilities at fair value on the 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. F- 9 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Modification and Inducement of Warrants and Investment Options 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. The Company accounts for the inducement to exercise warrants in accordance with ASC Subtopic 470-20-40 “Debt with Conversion and Other Options” (“ASC 470-20-40”). ASC 470-20-40 requires the recognition through earnings of an inducement charge equal to the fair value of the consideration delivered in excess of the consideration issuable under the original conversion terms. Therefore, the Company recognized a loss on the warrant inducement for the incremental change of the warrants related to the reduced exercise price and the issuance of new warrants as these components induced the holders to exercise the warrants. 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. 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. 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. Research and Development Tax Incentive Receivable The Company, through its wholly-owned subsidiary in Australia, participates in the Australian research and development tax incentive program, such that a percentage of the Company’s qualifying research and development expenditures are reimbursed by the Australian government, and such incentives are reflected as a reduction of research and development expense. The Australian research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. At each period end, management estimates the reimbursement available to the Company based on available information at the time. 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. 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, 2024 and 2023, no liability for unrecognized tax benefits was required to be recorded. F- 10 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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, 2024 and 2023. 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, Canadian and Australian federal tax returns, and its state and provincial tax returns in Florida, Massachusetts, New Jersey, Pennsylvania, and Ontario, CA as its “major” tax jurisdictions. The Company is in the process of filing its United States federal and state, Australian federal, and Canadian corporate tax returns for the year ended December 31, 2024. 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- 11 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 RSA. 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 loss 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, 2024 and 2023 excludes potentially dilutive securities. The computations of net loss per share for each period presented is the same for both basic and fully diluted. In accordance with ASC 260 “Earnings per Share” (“ASC 260”), penny warrants were included in the calculation of weighted average shares outstanding for the purposes of calculating basic and diluted earnings per share. In accordance with ASC 260, 14,586 RSAs that were fully vested on December 31, 2024 were included in basic and dilutive earnings per share as there were no remaining contingencies for these shares to be issued as of December 31, 2024. The shares were issued during January 2025. 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, 2024 and 2023 because the effect of their inclusion would have been anti-dilutive. SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES 2024 2023 For the years ended December 31, 2024 2023 Warrants to purchase shares of common stock 56,308 186,614 Restricted stock units - vested and unissued 1,369 1,390 Restricted stock units - unvested 48,017 9,366 Common stock in abeyance — 46,934 Investment options to purchase shares of common stock 4,667 4,667 Options to purchase shares of common stock 1,538 2,022 Total potentially dilutive securities 111,899 250,993 Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), approximates the carrying amounts in the balance sheets, excluding the warrants and preferred investment option liabilities, primarily due to their short-term nature. 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. 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 the Company’s 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, 2024 and 2023 because of their short-term nature. F- 12 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, 2024 and 2023. 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. Lease payments for short-term leases are recognized on a straight-line basis over the term of the lease. 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. 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. 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 . The Company did not have any operating leases as of December 31, 2024 and 2023. 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, 2024 and 2023. 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 operates as one operating segment with a focus on developing novel neuroplastogenic small-molecule therapeutics for the treatment of depression, anxiety, and addiction disorders. The Company’s Chief Executive Officer (“CEO”) as the Chief Operating Decision Maker (“CODM”), manages and allocates resources to the operations of the Company on a consolidated basis. Consolidated loss from operations, which is reported in the accompanying consolidated statements of operations, is the measure of segment profit or loss that is regularly reviewed by the CODM. This enables the CEO to assess the overall level of available resources and determine how best to deploy these resources across research and development projects in line with the long-term company-wide strategic goals. Refer to the accompanying consolidated statements of operations for the presentation of consolidated loss from operations for the years ended December 31, 2024 and 2023. The measure of segment assets is reported in the accompanying consolidated balance sheets as “Total assets.” There are no significant segment expenses as the expenses that are included in consolidated loss from operations are general and administrative and research and development. Recent Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . ASU 2023-07 updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for all entities for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company has adopted ASU 2023-07, and this guidance did not have a material impact on the Company’s consolidated financial statements. F- 13 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which amends the disclosure to address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information and includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted. The Company has adopted ASU 2023-09 effective January 1, 2025. The Company is in the process of evaluating the impact of ASU 2023-09 on the Company’s consolidated financial statements which will be reflected in the December 31, 2025 financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement (Topic 220): Reporting Comprehensive Income - Expense Disaggregation Disclosures, Disaggregation of Income Statement Expenses , that requires public companies to disclose, in interim and reporting periods, additional information about certain expenses in the financial statements. In January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective basis or retrospective basis. The Company is currently assessing the potential impacts of ASU 2024-03. NOTE 3. PREPAID EXPENSES AND OTHER CURRENT ASSETS As of December 31, 2024 and 2023, the prepaid expenses and other current assets of the Company consisted of the following: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS December 31, 2024 December 31, 2023 Prepaid value-added taxes $ 233,054 $ 243,429 Prepaid other 152,894 62,036 Prepaid insurance 107,610 149,559 Prepaid research and development — 46,320 Deferred offering costs (see Note 8) — 567,603 Franchise tax receivable — 79,258 R&D tax incentive receivable — 145,349 Total prepaid expenses and other current assets $ 493,558 $ 1,293,554 NOTE 4. INTANGIBLE ASSETS As of December 31, 2024 and 2023, the Company’s intangible assets, which are located in the United States, consisted of: SCHEDULE OF INTANGIBLE ASSETS Definite lived intangible assets Balance at January 1, 2023 $ 379,686 Amortization ( 168,754 ) Balance at December 31, 2023 $ 210,932 Amortization ( 168,750 ) Balance at December 31, 2024 $ 42,182 For identified definite lived intangible assets, there was no impairment expense during the years ended December 31, 2024 and 2023. For identified definite lived intangible assets, amortization expense amounted to $ 168,750 and $ 168,754 during the years ended December 31, 2024 and 2023, respectively. F- 14 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, 2024 is as follows: SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS AMORTIZATION EXPENSE Year ending December 31, 2025 $ 42,182 Finite lived assets amortization expense $ 42,182 NOTE 5. PROPERTY AND EQUIPMENT Property and equipment consists of the following assets which are located in Calgary, Canada, with all amounts translated into U.S. dollars: SCHEDULE OF PROPERTY AND EQUIPMENT NET OF ACCUMULATED DEPRECIATION December 31, 2024 December 31, 2023 Lab equipment $ 769,105 $ 836,709 Computer equipment and leasehold improvements 26,073 28,379 Property and equipment, gross 26,073 28,379 Less: Accumulated depreciation ( 489,401 ) ( 357,711 ) Property and equipment, net of accumulated depreciation $ 305,777 $ 507,377 Depreciation expense was $ 168,739 and $ 175,228 for the years ended December 31, 2024 and 2023, respectively. NOTE 6. ACCRUED LIABILITIES As of December 31, 2024 and December 31, 2023, the accrued liabilities of the Company consisted of the following: SCHEDULE OF ACCRUED LIABILITIES December 31, 2024 December 31, 2023 Product development $ 332,421 $ 139,981 Accrued salaries, wages, and bonuses 1,327 8,889 Professional fees 103,968 584,810 Accrued restructuring costs — 301,645 Accrued franchise taxes 261,100 22,318 Patent costs 18,000 18,000 Other 15,194 — Total accrued expenses $ 732,010 $ 1,075,643 NOTE 7. RELATED PARTY TRANSACTIONS As of December 31, 2024, there was $ 232,891 due to related parties. This balance is related to payments due to board members of the Company. Board member Sheila DeWitt has provided research and development services as an advisory consultant to the Company since May 2022. These services are provided as needed on an hourly basis. During the year ended December 31, 2024, the Company incurred $ 189,125 in service fees related to these services. Of these fees, $ 176,125 has been paid and $ 13,000 is included in due to related parties on the consolidated balance sheet as of December 31, 2024. There was no balance outstanding at December 31, 2023. NOTE 8. 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, 2024 and December 31, 2023, 100,000,000 shares of common stock and 20,000,000 shares of Preferred Stock were authorized under the Company’s articles of incorporation. Equity Distribution Agreement On September 1, 2023, the Company entered into the Equity Distribution Agreement (the “Distribution Agreement”), with Canaccord, Genuity LLC (“Canaccord”) pursuant to which the Company may offer and sell from time to time, through Canaccord as sales agent and/or principal, shares of common stock of the Company having an aggregate offering price of up to $ 10.0 million. Due to the offering limitations applicable to the Company and in accordance with the terms of the Distribution Agreement, the Company may offer Common Stock having an aggregate gross sales price of up to $ 2,392,514 pursuant to the prospectus supplement dated September 1, 2023 (the “Prospectus Supplement”). Subject to the terms and conditions of the Distribution Agreement, Canaccord may sell the Common Stock by any method permitted by law deemed to be an “at-the-market offering”. The Company will pay Canaccord a commission equal to 3.0 % of the gross sales price of the Common Stock sold through Canaccord under the Distribution Agreement and has also agreed to reimburse Canaccord for certain expenses. The Company may also sell Common Stock to Canaccord as principal for Canaccord’s own account at a price agreed upon at the time of sale. Any sale of Common Stock to Canaccord as principal would be pursuant to the terms of a separate terms agreement between the Company and Canaccord. F- 15 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On December 28, 2023, the Company entered into warrant exercise inducement offer letters (the “Inducement Letters”) with certain holders (the “Holders”) of the warrants that were modified in July 2022 (the “February 2022 Post-Modification Warrants”) and registered direct (“RD”) and the private investment in public equity (“PIPE”) preferred investment options to purchase shares of the Company’s common stock (the “Existing Warrants and Investment Options”) pursuant to which the Holders agreed to exercise for cash their Existing Warrants and Investment Options to purchase 74,800 shares of the Company’s common stock, in the aggregate, at a reduced exercised price of $ 20.55 per share (from an original exercise price of $ 116.70 per share), in exchange for the Company’s agreement to issue new warrants (the “Inducement Warrants”) to purchase up to 149,600 shares of the Company’s common stock (the “Inducement Warrant Shares”), and the Holders to make a cash payment of $ 1.88 per Inducement Warrant share for total proceeds of $ 280,500 . In January 2024, the Company received aggregate gross proceeds of $ 1,817,640 from the exercise of the Existing Warrants and Investment Options by the Holders and the sale of the Inducement Warrants. Because the Existing Warrants and Investment Options by the Holders and the sale of the Inducement Warrants that exercised on December 28, 2023 and unsettled until January 2024, the proceeds are included in the consolidated balance sheet as a subscription receivable as of December 31, 2023. As of December 31, 2023, 27,867 shares of the Existing Warrants and Investment Options exercised were considered issued as the Company had the enforceable right to obtain the cash proceeds, which were in-transit, and the Holders were no longer able to rescind the exercise election. Due to the beneficial ownership limitation provisions, 46,934 shares of the Existing Warrants and Investment Options exercised were initially unissued and held in abeyance for the benefit of the Holder until notice is received from the Holder that the shares may be issued in compliance with such limitation. During the year ended December 31, 2024, the Company issued all 46,934 shares of common stock of the 46,934 shares of Existing Warrants and Investment Options exercised that were held in abeyance due to the beneficial ownership limitation provisions. On December 28, 2023, the Company entered into warrant exercise inducement offer letters (the “Inducement Letters”) with certain holders of warrants and preferred investment options. The Inducement Letters prohibit the Company from entering into any variable rate transaction as defined in the Inducement Letters, including the issuance of (1) any variable priced debt or equity securities or (2) transactions whereby the Company may issue securities at a future determined price, such as through an at-the-market offering or an equity line of credit. The variable rate transaction restriction would have expired after six-months from the closing date of December 28, 2023 for the Inducement Letters for an issuance through an at-the-market offering, and one-year for the remaining variable rate transactions, however the restriction was waived for the at-the-market offering on March 8, 2024 and the equity line on May 3, 2024. On March 8, 2024, the Company entered into a series of common stock purchase agreements for the issuance in a registered direct offering of 15,246 shares of the Company’s common stock to the Holders of the Inducement Warrants. The issuance was made in exchange for the permanent and irrevocable waiver of the variable rate transaction limitation solely with respect to the entry into and/or issuance of shares of common stock in an at the market offering contained in the Inducement Letters. The fair value of the shares issued for consideration of waiving the variable rate transaction limitation was $ 322,453 and was charged to additional paid in capital, as it is direct and incremental to the Distribution Agreement, on the consolidated balance sheet as an offering cost related to the Distribution Agreement. During the year ended December 31, 2024, the Company issued 111,200 shares of common stock for gross proceeds of $ 2,392,502 under the Distribution Agreement, and charged offering costs of $ 583,713 to additional paid in capital on the consolidated balance sheet. As of December 31, 2024 and December 31, 2023, there were deferred offering costs related to the Distribution Agreement of $ 0 and $ 171,944 , respectively. As of December 31, 2024, there is $ 0 available under the Distribution Agreement. Lincoln Park Equity Line On November 3, 2023, the Company entered into a Purchase Agreement (the “Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”), with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park has committed to purchase up to $ 10.0 million of the Company’s common stock, subject to certain limitations and satisfaction of the conditions set forth in the Purchase Agreement. F- 16 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Under the terms and subject to the conditions of the Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase up to $ 10.0 million of the Company’s Common Stock (the “Purchase Shares”). However, such sales of Common Stock by the Company, if any, will be subject to important limitations set forth in the Purchase Agreement, including limitations on number of shares that may be sold. Sales may occur from time to time, at the Company’s sole discretion, over the 24-month period commencing on the date that the conditions to Lincoln Park’s purchase obligation set forth in the Purchase Agreement are satisfied, including that a registration statement on Form S-1 covering the resale of the shares of the Company’s Common Stock that have been and may be issued to Lincoln Park under the Purchase Agreement, which the Company has filed with the SEC pursuant to the Registration Rights Agreement, is declared effective by the SEC and a final prospectus relating thereto is filed with the SEC. As required under the Purchase Agreement, the Company registered a resale of 76,032 shares of the Company’s common stock, plus the 9,294 commitment shares, by Lincoln Park on a registration statement on Form S-1 dated November 8, 2023, which was declared effective by the SEC on December 5, 2023. As of July 30, 2024, there were no remaining shares available to be issued in connection with this registration statement. On September 4, 2024, the Company filed an amended Form S-1, which was declared effective by the SEC on September 11, 2024. The amended Form S-1 registered an additional 326,667 shares of common stock that are available to be issued to Lincoln Park in connection with this agreement. Because the purchase price per share to be paid by Lincoln Park for the shares of Common Stock that the Company may elect to sell to Lincoln Park under the Purchase Agreement, if any, will fluctuate based on the market prices of the Company’s Common Stock at the time the Company elects to sell shares to Lincoln Park pursuant to the Purchase Agreement, if any, it is not possible for the Company to predict the number of shares of Common Stock that the Company will sell to Lincoln Park under the Purchase Agreement, the purchase price per share that Lincoln Park will pay for shares purchased from the Company under the Purchase Agreement, or the aggregate gross proceeds that the Company will receive from those purchases by Lincoln Park under the Purchase Agreement. On May 3, 2024, the Company entered into a series of common stock purchase agreements for the issuance in a registered direct offering of an aggregate of 30,534 shares of the Company’s common stock, to certain institutional investors. The issuance was made in exchange for the permanent and irrevocable waiver of the variable rate transaction limitation with respect to any existing or future agreement by the Company to effect any issuance of shares and issue such shares thereunder, as contained in those certain Inducement Offer Letters, dated December 28, 2023, between the Company and those certain institutional investors. The Company will not receive any net proceeds in connection with the offering. The fair value of the shares issued for consideration of waiving the variable rate transaction limitation was $ 448,840 and was recorded as deferred offering costs, as direct and incremental to the Purchase Agreement, within prepaid expenses and other current assets on the consolidated balance sheet related to the Purchase Agreement. The common stock purchase agreements contain customary representations and warranties and certain indemnification obligations of the Company. The common stock purchase agreements also restrict the Company from issuing, entering into any agreement to issue, or announcing the issuance of the Company’s common stock from the date of the common stock purchase agreements until the earlier of 30 days after entering into the agreements or at such time as one million ( 1,000,000 ) shares of the Company’s common stock have traded in the open market. The closing of the issuance of the Shares pursuant to the common stock purchase agreements closed on May 3, 2024. During the year ended December 31, 2024, the Company had issued 159,366 shares of common stock, through the Purchase Agreement for gross cash proceeds of $ 1,083,709 . During the year ended December 31, 2024, the Company charged offering costs of $ 471,756 to additional paid in capital on the consolidated balance sheet. As of December 31, 2024 and 2023, the Company has capitalized deferred offering costs of $ 0 and $ 395,660 , respectively. As of December 31, 2024, there were 243,334 shares available to be issued in connection with the Purchase Agreement. The Company engaged in a best efforts public offering in the first quarter of 2025 (described below), which restricts the use of the Lincoln Park Equity Line for a period of one year from February 3, 2025. Common Stock Activity During the year ended December 31, 2024 a total of 1,830 shares of common stock were issued pursuant to the vesting of restricted stock units. During the year ended December 31, 2023 a total of 6,910 shares of common stock were issued pursuant to the vesting of restricted stock units. Stock Options Amendment to 2020 Long-Term Incentive Plan On May 3, 2022, the board of directors (“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 9,739 shares to a total of 13,334 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) 13,334 shares, and (y) 15% of the total number of shares of the Company’s common stock outstanding as of such issuance date (the “Evergreen Provision”). The Plan Amendment was approved by the Company’s shareholders at a special meeting of the Company’s shareholders held on July 14, 2022. F- 17 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On November 2, 2023, the stockholders approved the amendments to the 2020 Long-Term Incentive Plan, which was approved by the Board on August 8, 2023 (the “Amended Incentive Plan”). The Amended Incentive Plan (i) increased the number of authorized shares reserved for issuance under the Amended Incentive Plan to a maximum of 23,334 , subject to equitable adjustment, and (ii) removed the Evergreen Provision implemented in the Plan Amendment. During the first quarter of 2024, the Board approved an equitable adjustment to increase the number of shares available under the Plan by 8,986 shares. Effective October 9, 2024, the Board approved an equitable adjustment to increase the number of shares available under the Incentive Plan by 64,402 shares, which increased the total number of authorized shares under the Incentive Plan to 96,721 shares. As of December 31, 2024, the total number of shares available for grant under the Incentive Plan was 25,659 . A summary of the stock option activity under the Company’s incentive plan for the years ended December 31, 2024 and 2023 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 January 1, 2023 3,222 $ 555.75 $ 672.30 4.1 $ — Granted — — — — Forfeited ( 1,200 ) 46.05 38.70 — Outstanding at December 31, 2023 2,022 857.55 1,158.30 3.4 — Granted — — — — Forfeited ( 484 ) 590.25 810.30 — Outstanding at December 31, 2024 1,538 $ 941.55 $ 1,267.65 2.3 $ — Exercisable at December 31, 2024 1,487 $ 972.42 $ 1,310.20 2.0 $ — The Company’s stock based compensation expense, recorded within general and administrative expense in the consolidated statement of operations and comprehensive loss, related to stock options for the years ended December 31, 2024 and 2023 was $( 5,441 ) and $ 156,075 , respectively. As of December 31, 2024, the Company had $ 1,932 in unamortized stock option expense, which will be recognized over a weighted average period of 1.15 years. Issuance of Restricted Stock Units The Company’s activity in restricted stock units was as follows for the year ended December 31, 2024: SCHEDULE OF RESTRICTED STOCK UNITS Number of shares Weighted average fair value Non-vested at January 1, 2023 4,271 $ 1,388.55 Granted 12,167 40.95 Forfeited ( 2,896 ) 385.80 Vested ( 4,176 ) 297.00 Non-vested at December 31, 2023 9,366 434.55 Granted 42,543 8.84 Forfeited ( 1,850 ) 43.05 Vested ( 2,042 ) 333.30 Non-vested at December 31, 2024 48,017 $ 24.08 For the years ended December 31, 2024 and 2023, the Company recorded $ 1,475,947 and $ 1,994,085 , 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, 2024, the Company had unamortized stock-based compensation costs related to restricted stock units of $ 892,536 which will be recognized over a weighted average period of 1.91 years. As of December 31, 2024, 1,369 restricted stock units are vested without shares of common stock being issued, with all of these shares due as of December 31, 2024. F- 18 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 2024 2023 Year ended December 31, 2024 2023 Stock-based compensation expense for RSUs: General and administrative $ 646,636 $ 1,085,791 Research and development 829,311 908,294 Total $ 1,475,947 $ 1,994,085 Stock-based compensation expense for RSUs $ 1,475,947 $ 1,994,085 Restricted Stock Awards The Company’s activity in restricted common stock was as follows for the years ended December 31, 2024: SCHEDULE OF RESTRICTED STOCK UNITS Number of shares Weighted average fair value Non-vested at January 1, 2024 — — Granted 14,586 $ 6.30 Vested ( 14,586 ) $ 6.30 Non-vested at December 31, 2024 — $ — For the years ended December 31, 2024 and 2023, the Company recorded $ 91,886 and $ 0 , respectively, in stock-based compensation expense within general and administrative expense, related to restricted stock awards. As of December 31, 2024, 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, 2024 will be issued during the 2025 calendar year. There are 14,586 vested and unissued shares of restricted stock awards as of December 31, 2024. These shares were issued during the first quarter of 2025. Warrants and Preferred Investment Options The following table summarizes information about shares issuable under warrants outstanding at December 31, 2024 and 2023: SCHEDULE OF WARRANTS OUTSTANDING Warrant shares outstanding Weighted average exercise price Weighted average remaining life Intrinsic value Outstanding at January 1, 2023 43,698 $ 875.40 3.6 $ 5,514 Issued 154,088 20.55 — — Exercised ( 8,134 ) 20.55 — — Forfeited ( 3,038 ) 1,672.50 — Outstanding at December 31, 2023 186,614 176.85 4.6 — Issued — — — — Expired ( 39 ) 2,400.00 — — Exercised ( 130,267 ) 20.55 — — Outstanding at December 31, 2024 56,308 $ 536.70 2.7 $ — Exercisable at December 31, 2024 56,308 $ 536.70 2.7 $ — F- 19 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes information about investment options outstanding at December 31, 2024 and 2023: SCHEDULE OF INVESTMENT OPTIONS Investment options outstanding Weighted average exercise price Weighted average remaining life Intrinsic value Outstanding at January 1, 2023 71,334 $ 118.95 5.1 $ — Exercised ( 66,667 ) 20.55 — — Outstanding at December 31, 2023 4,667 150.00 4.1 $ — Exercised — — — — Outstanding at December 31, 2024 4,667 $ 150.00 2.6 $ — Exercisable at December 31, 2024 4,667 $ 150.00 2.6 $ — On December 28, 2023, the Company entered into warrant exercise inducement offer letters (the “Inducement Letters”) with certain holders (the “Holders”) of the February 2022 Post-Modification Warrant and RD and PIPE preferred investment options to purchase shares of the Company’s common stock (the “Existing Warrants and Investment Options”) pursuant to which the Holders agreed to exercise for cash their Existing Warrants and Investment Options to purchase 74,800 shares of the Company’s common stock, in the aggregate, at a reduced exercised price of $ 20.55 per share (from an original exercise price of $ 116.70 per share), in exchange for the Company’s agreement to issue new warrants (the “Inducement Warrants”) to purchase up to 149,600 shares of the Company’s common stock (the “Inducement Warrant Shares”), and the Holders to make a cash payment of $ 1.88 per Inducement Warrant share for total proceeds of $ 280,500 . In January 2024, the Company received aggregate gross proceeds of $ 1,817,640 from the exercise of the Existing Warrants and Investment Options by the Holders and the sale of the Inducement Warrants. Because the Existing Warrants and Investment Options by the Holders and the sale of the Inducement Warrants that exercised on December 28, 2023 and unsettled until January 2024, the proceeds are included in the consolidated balance sheet as a subscription receivable as of December 31, 2023. As of December 31, 2023, 27,867 shares of the Existing Warrants and Investment Options exercised were considered issued as the Company had the enforceable right to the obtain the cash proceeds, which were in-transit, and the Holders were no longer able to rescind the exercise election. Due to the beneficial ownership limitation provisions, 46,934 shares of the Existing Warrants and Investment Options exercised were initially unissued and held in abeyance for the benefit of the Holder until notice is received from the Holder that the shares may be issued in compliance with such limitation. The Company engaged Roth Capital Partners, LLC (“Roth”) to act as its financial advisor in connection with the transactions summarized above and has paid Roth approximately $144,000 for its services, in addition to reimbursement for certain expenses. Roth was also issued warrants to purchase up to 4,488 shares of common stock. The Roth Warrants have the same terms as the Inducement Warrants. The grant date fair value of these Roth Warrants was estimated to be $77,991 on December 28, 2023 and were charged to additional paid in capital as issuance costs. The Company also incurred legal fees of $17,254 related to the transactions above that were charged to additional paid in capital as issuance costs. The Company also agreed to file a registration statement on Form S-3 covering the resale of the Inducement Warrant Shares issued or issuable upon the exercise of the Inducement Warrants (the “Resale Registration Statement”) by January 8, 2024 (filed January 11, 2024). In the Inducement Letters, the Company agreed not to issue any shares of common stock or common stock equivalents or to file any other registration statement with the SEC (in each case, subject to certain exceptions) for a period ending on February 26, 2024. The Company also agreed not to effect or agree to effect any variable rate transaction (as defined in the Inducement Letters) until December 28, 2024. See the Equity Distribution Agreement section of this Note. In connection with this transaction, the Company determined the fair value of the Existing Warrants and Investment Options immediately prior to the Inducement Letters and the fair value of the amended warrants and investment options immediately after the Inducement Letters. The pre-modification measurement of fair value of the Existing Warrants and Investment Options were determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of modification (i.e. for the Existing Warrants share price of $ 23.40 , exercise price of $ 116.70 , term of 3.6 years, volatility of 94 %, risk-free rate of 3.96 %, and expected dividend rate of 0 %, resulting in a fair value per share of $ 8.10 and for the Investment Options share price of $ 23.40 , exercise price of $ 116.70 , term of 4.1 years, volatility of 95 %, risk-free rate of 3.90 %, and expected dividend rate of 0 %, resulting in a fair value per share of $ 9.30 ). The total fair value of the 8,134 Existing Warrants and 66,667 Investment Options was $ 65,349 and $ 618,648 , respectively. The post-modification fair value was determined using the intrinsic value of $ 2.85 due to the inducement and totaled $ 23,180 and $ 190,000 for the Existing Warrants and Investment Options, respectively. The change in fair value from the date of the modification prior to modification and the fair value on the date of the modification after the modification, but prior to exercise was $ 470,817 , which was reflected as an inducement gain, within other expenses on the Company’s consolidated statement of operations and comprehensive loss. F- 20 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The grant date fair value of these Inducement Warrants was estimated to be $ 2,599,552 on December 28, 2023 and the proceeds of $ 280,500 , which were received on January 2, 2024, for the issuance of the Inducement Warrants is reflected as inducement expense, within other expenses on the Company’s consolidated statement of operations and comprehensive loss. The Company established the initial fair value of its equity classified Inducement Warrants at the date of issuance on December 28, 2023. 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 valuation of the warrants are below: SCHEDULE OF BLACK SCHOLES VALUATION MODEL FOR VALUATION OF WARRANTS Roth and Inducement Warrants December 28, 2023 Term (years) 5.0 Stock price $ 23.40 Exercise price $ 20.55 Dividend yield — % Expected volatility 92.0 % Risk free interest rate 3.80 % Number of warrants 154,088 Value (per share) $ 17.40 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 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 had occurred. As a result, no shares of Series C Preferred Stock remain outstanding. As of December 31, 2024 and 2023, there are 100,000 shares of Series C Preferred Stock authorized for future issuances. NOTE 9. REDEEMABLE NON-CONTROLLING INTEREST Spin-Off and Related Private Placement In connection with the Spin-Off, on May 5, 2022, Akos and the Company entered into into a Securities Purchase Agreement (the “Akos Purchase Agreement”) with an accredited investor (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 warrants (the “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 Private Placement ” ). The Akos Purchase Agreement was guaranteed by the Company. Pursuant to the Akos Purchase Agreement, Akos 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 was to 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 had 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 to be paid to Palladium in the form of convertible preferred stock and warrants was on similar terms to the securities issued in the Akos Private Placement. Palladium was 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. As of December 31, 2023, no accruals are required to be recorded for the fees or warrants since the Akos Series A Preferred Stock has been redeemed. F- 21 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 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 provided 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. Redemption of Akos Series A Preferred Stock In May 2023, pursuant to the Akos Series A Preferred Certificate of Designations, the holders of the Akos Series A Preferred Stock exercised the Put Right requiring Akos to force redemption of all of the Akos Series A Preferred Stock for $ 1,000  per share, plus accrued but unpaid dividends of approximately $ 52,000  for a total of approximately $ 1,052,000 . The Company had 20 days following the receipt of the Put Exercise Notice to make the payment and made payment on May 19, 2023. Upon redemption in May 2023, the Company revalued the derivative liability and the Company recognized a change in fair value of the derivative liability on the Company’s consolidated statement of operations during the second quarter of 2023 of $ 714,000 . The Company, Akos, and the Akos Investor have terminated the Akos Purchase Agreement in connection with the planned Spin-Off and certain registration rights agreement in connection with the Akos Private Placement. Accounting for Akos Series A Preferred Stock Since the shares of Akos Series A Preferred Stock were 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 were accounted for as a redeemable non-controlling interest and classified within mezzanine 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 were 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 REDEEMABLE NONCONTROLLING INTEREST Balance at December 31, 2022 $ 885,028 Preferred dividends attributable to redeemable non-controlling interest 19,041 Accretion of embedded derivative and transaction costs associated with Akos Series A Preferred Stock to redemption value 147,988 Redemption of Akos Series A Preferred Stock ( 1,052,057 ) Balance at December 31, 2023 $ — In May 2023, the Akos Series A Preferred Stock was redeemed for a total of $ 1,052,057 , and the balance of the redeemable non-controlling interest is $ 0 as of December 31, 2023. F- 22 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10. LICENSING AGREEMENTS On July 10, 2024, Akos entered into an Exclusive License Agreement (the “License Agreement”) with Aries Science and Technology, LLC, an Ohio limited liability company (“Aries”), pursuant to which Akos granted Aries a license of Akos’s patented radiation dermatitis topical product. The license allows Akos to use the patented formulation to develop pharmaceutical or non-pharmaceutical products for treating radiation dermatitis suitable for administration to humans or animals. The license is exclusive (subject to certain exceptions contained in the License Agreement), worldwide, royalty-bearing, and includes the right to sublicense. Akos is entitled to potential license payments, milestone payments and royalties based on net revenues of the Licensed Product on a licensed product-by-licensed product and country-by-country basis pursuant to the terms of the Agreement. Aries has the option during the license term, to purchase the rights to each licensed product (on a licensed product-by-licensed product basis) in the form of an exclusive (as to the applicable licensed product), fully paid, transferable right and license to the licensed product. The Company has not earned any revenue related to this agreement as of December 31, 2024. On November 7, 2024, the Company entered into an Out-Licensing Agreement (the “Agreement”) with MycoMedica Life Sciences, PBC, a Delaware public benefit corporation (“MycoMedica”), pursuant to which the Company will out-license EB-002 and its EVM201 series to MycoMedica for further development and sales of the product in treatment of neuropsychiatric disorders. MycoMedica will receive an exclusive, global license to the formulations, drugs, method of use, and medical devices developed by Enveric to utilize the compound. As part of the Agreement, the Company will receive a $ 20,000 upfront payment, and if certain conditions are met, will receive development and sales milestone payments of up to $ 62 million and tiered single-digit royalties based on future sales. MycoMedica has the option during the license term to buyout its milestone and royalty payment obligations at a predetermined amount depending upon the stage of product development and commercialization at the time of the buyout. Further, MycoMedica has the right to purchase the licensed patents at a nominal amount upon a change of control of the Company, although doing so does not relieve MycoMedica of any of its payment obligations. During the year ended December 31, 2024, the Company received $ 20,000 from MycoMedica as a licensing fee, which is recorded as other income in the consolidated statements of operations. NOTE 11. FAIR VALUE The following table provides the financial liabilities measured on a recurring basis and reported at fair value on the balance sheet as of December 31, 2024 and 2023, and indicates the fair value of the valuation inputs the Company utilized to determine such fair value of warrant liabilities and investment options: SCHEDULE OF FAIR VALUE HIERARCHY OF VALUATION INPUTS ON RECURRING BASIS Level December 31, 2024 December 31, 2023 Warrant liabilities - January 2021 Warrants 3 $ — $ 4 Warrant liabilities - February 2021 Warrants 3 — 4 Warrant liabilities - February 2022 Warrants 3 1,100 25,462 Fair value of warrant liability $ 1,100 $ 25,470 Level December 31, 2024 December 31, 2023 Wainwright investment options 3 $ 1,988 $ 23,608 Fair value of investment option liability $ 1,988 $ 23,608 The warrant liabilities 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 within other income (expense) on the consolidated statements of operations and comprehensive loss F- 23 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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, 2022 $ 185,215 Exercise of warrants ( 65,349 ) Change in fair value ( 94,396 ) Fair value as of December 31, 2023 $ 25,470 Change in fair value ( 24,370 ) Fair value as of December 31, 2024 $ 1,100 Total Derivative Liability Fair value as of December 31, 2022 $ 727,000 Change in fair value arising from redemption of Akos Series A Preferred Stock - See Note 9 ( 727,000 ) Redemption of Series A Preferred Stock — Fair value as of December 31, 2023 $ — There was no activity related to the derivative liability during the year ended December 31, 2024. Total Investment Options Fair value as of December 31, 2022 $ 851,008 Change in fair value ( 208,752 ) Exercise of investment options ( 618,648 ) Fair value of investment option liability as of December 31, 2023 $ 23,608 Change in fair value ( 21,620 ) Fair value of investment option liability as of December 31, 2024 $ 1,988 The key inputs into the Black Scholes valuation model for the Level 3 valuations of the warrant liabilities as of December 31, 2024 are below: SCHEDULE OF BLACK SCHOLES VALUATION MODELS OF WARRANT LIABILITIES AND INVESTMENT OPTIONS January 2021 Warrants February 2021 Warrants February 2022 Warrants Term (years) 1.0 1.1 2.1 Stock price $ 5.38 $ 5.38 $ 5.38 Exercise price $ 3,712.50 $ 3,675.00 $ 412.50 Dividend yield — % — % — % Expected volatility 90.0 % 90.0 % 106.0 % Risk free interest rate 4.20 % 4.20 % 4.30 % Number of warrants 2,429 2,286 22,534 Value (per share) $ — $ — $ 0.003 F- 24 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, 2023 are below: January 2021 Warrants February 2021 Warrants February 2022 Warrants Unmodified Term (years) 2.0 2.1 3.1 Stock price $ 19.50 $ 19.50 $ 19.50 Exercise price $ 3,712.50 $ 3,675.00 $ 412.50 Dividend yield — % — % — % Expected volatility 89.0 % 88.0 % 87.0 % Risk free interest rate 4.20 % 4.20 % 4.00 % Number of warrants 2,429 2,286 22,534 Value (per share) $ 0.00 $ 0.00 $ 1.20 The key inputs into the Black Scholes valuation model for the Level 3 valuations of the investment options as of December 31, 2024 are below: H.C. Wainwright & Co., LLC Options Term (years) 2.6 Stock price $ 5.38 Exercise price $ 150.00 Dividend yield — % Expected volatility 108.0 % Risk free interest rate 4.30 % Number of investment options 4,667 Value (per share) $ 0.03 The key inputs into the Black Scholes valuation model for the Level 3 valuations of the investment options as of December 31, 2023 are below: H.C. Wainwright & Co., LLC Options Term (years) 3.6 Stock price $ 19.50 Exercise price $ 150.00 Dividend yield — % Expected volatility 94.0 % Risk free interest rate 4.0 % Number of investment options 4,667 Value (per share) $ 5.10 F- 25 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 12. COMMITMENTS AND CONTINGENCIES The Company is periodically involved in legal proceedings, legal actions and claims arising in the normal course of business. Management believes that the outcome of such legal proceedings, legal actions and claims will not have a significant adverse effect on the Company’s financial position, results of operations or cash flows. Australian Subsidiary Research and Development On March 23, 2023, the Company issued a press release announcing the selection of Australian CRO, Avance Clinical, in preparation for Phase 1 Study of EB-373, the Company’s lead candidate targeting the treatment of anxiety disorders. Under the agreement, Avance Clinical will manage the Phase 1 clinical trial of EB-373 in coordination with the Company’s newly established Australian subsidiary, Enveric Therapeutics Pty, Ltd. The Phase 1 clinical trial is designed as a multi-cohort, dose-ascending study to measure the safety and tolerability of EB-373. EB-373, a next-generation proprietary psilocin prodrug, has been recognized as a New Chemical Entity (NCE) by Australia’s Therapeutic Goods Administration (TGA) and is currently in preclinical development targeting the treatment of anxiety disorder. The total cost of the Avance Clinical contract is approximately 3,400,000 AUD, which translates to approximately $ 2,114,000 USD as of December 31, 2024. The Company has terminated the agreement as of December 31, 2024. Total project costs were 3,300,000 AUD and the Company will not incur any future costs associated with the agreement. Accordingly, the Company has $ 0 recorded as prepaid assets within prepaid and other current assets, accrued $ 0 recorded as accrued liabilities and $ 0 as accounts payable on the accompanying consolidated balance sheet. For the years ended December 31, 2024 and 2023, the Company has expensed $ 495,465 and $ 1,751,444 , respectively, in research and development expenses within the accompanying consolidated statement of operations. As of December 31, 2024, the project is completed. According to Australian tax law, the Company is allowed an R&D tax credit that reduces a company’s tax bill in Australia for expenses incurred in R&D subject to certain requirements. The Company’s Australian subsidiary submits R&D tax credit requests annually for research and development expenses incurred. At December 31, 2024 and 2023, the Company had a research and development tax credit receivable of $ 0 and $ 145,349 , respectively, for R&D expenses incurred in Australia, included in prepaid and other current assets within the accompanying consolidated statement of operations. The Company received the amount due in relation to the research and development tax credit of $ 290,447 during the year ended December 31, 2024. 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 patent portfolio acquired and developed under the Vogel-Nathan Purchase Agreement was sold to undisclosed buyers for an amount not material to these financials in the first quarter of 2024. No additional financial or other obligations exist regarding the Vogel-Nathan Purchase Agreement. 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 one and 12 months. These agreements, in aggregate, commit the Company to approximately $ 0.3 million in future cash payments. Reduction in Force/Restructuring In May 2023, the Company entered into a cost reduction plan, including a reduction in force (“RIF”) of approximately 35 % of its full-time employees to streamline its operations and conserve cash resources. Additionally, contracts with seven consultants that were focused on the Akos cannabinoid spin-out were terminated. The plan included a focus on progressing the Company’s existing non-cannabinoid pipeline while reducing the rate of spend and managing cash flow. In June 2023, the Company completed the reduction in force, with such severance expenses recorded in general and administrative accounts. In June 2023, the Company entered into a separation agreement with Avani Kanubaddi, the Company’s President and Chief Operating Officer (the “Kanubaddi Separation Agreement”). In accordance with the Kanubaddi Separation Agreement, Mr. Kanubaddi received salary and benefits that is paid out in twelve monthly installments beginning in July 2023, was eligible for his 2023 performance bonus, which was not achieved, and any outstanding restricted stock units retained their vesting conditions. The following table summarizes the Reduction in Force/Restructuring activity and ending balance at December 31, 2024 and 2023 for the remaining severance payments included in accrued expenses in the consolidated balance sheet: SCHEDULE OF REDUCTION IN FORCE/RESTRUCTURING ACTIVITY Accrued Restructuring Costs January 1, 2023 Beginning balance $ — Restructuring costs incurred 1,004,033 Restructuring costs paid ( 572,628 ) Restructuring costs reversed ( 129,760 ) December 31, 2023 ending balance $ 301,645 Restructuring costs paid ( 301,645 ) December 31, 2024 ending balance $ — F- 26 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 13. INCOME TAXES The Company’s U.S. and foreign loss before income taxes are set forth below: SCHEDULE OF EARNING (LOSS) BEFORE INCOME TAX 2024 2023 December 31, 2024 2023 United States $ ( 7,465,630 ) $ ( 10,205,116 ) Foreign ( 2,100,427 ) ( 7,057,703 ) Total $ ( 9,566,057 ) $ ( 17,262,819 ) For the years ended December 31, 2024 and 2023, the Company recorded income tax expense of $ 8,930 and $ 28,913 , respectively. The income tax expense is as follows: SCHEDULE OF INCOME TAX EXPENSE BENEFITS December 31, Current: 2024 2023 Federal $ — $ — State ( 8,930 ) ( 28,913 ) Foreign — $ — Total current income tax (expense) benefit $ ( 8,930 ) $ ( 28,913 ) Deferred: Federal $ — $ — State — — Foreign — — Total deferred income tax (expense) benefit $ — $ — Total income tax expense $ ( 8,930 ) $ ( 28,913 ) The Company’s deferred tax assets and deferred tax liabilities consist of the following: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2024 2023 December 31, 2024 2023 Deferred tax assets: Net operating loss carryforwards $ 12,010,882 $ 10,889,863 Stock-based compensation 938,457 1,185,399 Research and development capitalized expenses 563,389 611,245 Intangible amortization 111,471 80,518 Other 31,376 70,730 Less valuation allowances ( 13,655,575 ) ( 12,837,755 ) Net deferred tax assets $ — $ — The Company had the following potentially utilizable net operating loss tax carryforwards: SCHEDULE OF OPERATING LOSS CARRY FORWARDS 2024 2023 December 31, 2024 2023 Federal $ 30,086,333 $ 24,268,692 State $ 14,467,439 $ 11,220,065 Foreign $ 17,543,639 $ 17,672,420 Net operating loss tax carryforwards $ 17,543,639 $ 17,672,420 F- 27 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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, 2024, the Company had federal net operating loss carryforwards of $ 30,086,333 which can be carried forward indefinitely, state net operating losses carryforwards of $ 14,467,439 , of which $ 6,407,050 can be carried forward indefinitely and remainder can be carried 20 years and Canadian net operating loss carryforwards of $ 17,543,639 , of which $ 16,215,951 will begin to expire in 2040 and the remainder is carried forward indefinitely. The Company’s effective tax rate varied from the statutory rate as follows: SCHEDULE OF EFFECTIVE STATUTORY INCOME TAX RATE 2024 2023 December 31, 2024 2023 Federal income tax at the statutory rate ( 21.0 )% ( 21.0 )% State income tax rate (net of federal) ( 2.1 )% ( 1.2 )% Foreign tax rate differential 2.1 % ( 3.0 )% Non-deductible expenses 1.0 % 1.4 % Deferred true-up 11.6 % 13.2 % Change in valuation allowance 8.5 % 10.8 % Effective income tax rate 0.1 % 0.2 % 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 $ 817,820 and $ 1,859,862 during the years ended December 31, 2024 and 2023, 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. 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. We have not conducted any studies to determine annual limitations, if any, that could result from such changes in ownership. 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. During the years ended December 31, 2024 and 2023, the Company has estimated and capitalized gross $ 202,147 and $ 463,696 , respectively, 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 years ended December 31, 2024 and 2023. The Company will continue to evaluate the impact of these tax law changes on the current and future periods. NOTE 14. SUBSEQUENT EVENTS On January 30, 2025, the Company commenced a best efforts public offering (the “Offering”) of an aggregate of (i) 1,229,330 shares (the “Shares”) of Common Stock of the Company, (ii) 437,336 pre-funded warrants (the “Pre-Funded Warrants”) to purchase 437,336 shares of Common Stock (the “Pre-Funded Warrant Shares”), (iii) 1,666,666 Series A warrants (the “Series A Warrants”) to purchase 1,666,666 shares of Common Stock (the “Series A Warrant Shares”), and (iv) 1,666,666 Series B warrants (the “Series B Warrants,” and together with the Series A Warrants, the “Warrants”) to purchase 1,666,666 shares of Common Stock (the “Series B Warrant Shares”). Each Share or Pre-Funded Warrant was sold together with one Series A Warrant to purchase one share of Common Stock and one Series B Warrant to purchase one share of Common Stock. The offering price for each Share and accompanying Warrants was $ 3.00 , and the offering price for each Pre-Funded Warrant and accompanying Warrants was $ 2.9999 . The Pre-Funded Warrants have an exercise price of $ 0.0001 per share, are exercisable immediately and will expire when exercised in full. Each Warrant has an exercise price of $ 3.00 per share and will be exercisable immediately upon issuance (“Initial Exercise Date”). The Series A Warrants expire on the five-year anniversary of the Initial Exercise Date. The Series B Warrants expire on the 18-month anniversary of the Initial Exercise Date. The Offering closed on February 3, 2025. The net proceeds of the Offering, after deducting the fees and expenses of the Placement Agent (as defined below), described in more detail below, and other offering expenses payable by the Company, but excluding the net proceeds, if any, from the exercise of the Warrants, is approximately $ 4.2 million. The Company intends to use the net proceeds from the Offering for working capital, EB-003 development, and general corporate purposes. F- 28 ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In connection with the Offering, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with a certain institutional investor. Pursuant to the Purchase Agreement, the Company agreed not to issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock or file any registration statement or prospectus, or any amendment or supplement thereto for 60 days after the closing date of the Offering, subject to certain exceptions. In addition, the Company has agreed not to effect or enter into an agreement to effect any issuance of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock involving a variable rate transaction (as defined in the Purchase Agreement) until the one-year anniversary of the closing date of the Offering, subject to an exception. A holder will not have the right to exercise any portion of the Warrants or Pre-Funded Warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99% or 9.99%, as applicable, of the number of shares of Common Stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Warrants or the Pre-Funded Warrants, respectively. Pursuant to an engagement agreement, as amended, (the “Engagement Agreement”) with H.C. Wainwright & Co., LLC (the “Placement Agent”), the Company agreed to pay the Placement Agent in connection with the Offering (i) a cash fee equal to 7.0% of the aggregate gross proceeds received in the Offering, (ii) a management fee equal to 1.0% of the aggregate gross proceeds received in the Offering, (iii) a non-accountable expense allowance of $ 25,000 , (iv) reimbursement of up to $ 100,000 for legal fees and expenses and other out of pocket expenses and (v) up to $ 15,950 for the clearing expenses. Also pursuant to the Engagement Agreement, the Company, in connection with the Offering, agreed to issue to the Placement Agent or its designees warrants (the “Placement Agent Warrants”) to purchase up to an aggregate of 116,666 shares of Common Stock (the “Placement Agent Warrant Shares”) (which represents 7.0 % of the Shares and Pre-Funded Warrants sold in the Offering). The Placement Agent Warrants have an exercise price of $ 3.75 per share (which represents 125 % of the public offering price per Share and accompanying Warrants), expire on January 30, 2030, and are exercisable following the Initial Exercise Date. During February 2025, a total of 437,336 shares of Common Stock have been issued due to exercises of the Pre-Funded Warrants and 25,000 shares of Common Stock have been issued due to exercises of Series B Warrants. On February 3, 2025, Akos entered into two licensing agreements with Restoration Biologics LLC (“Restoration Biologics”), a biotechnology company focused on the treatment of joint disease. The companies have executed two licenses for Akos’ cannabinoid-COX-2 conjugate compounds, for pharmaceutical and potential non-pharmaceutical applications. F- 29