Enveric Biosciences(ENVB) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, along with detailed notes Condensed Consolidated Balance Sheets Total assets and shareholders' equity increased from December 2024 to June 2025, driven by cash and equity issuances, with current liabilities decreasing | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Cash | $2,849,816 | $2,241,026 | | Total current assets | $3,307,372 | $2,734,584 | | Total assets | $3,548,454 | $3,082,543 | | Total current liabilities | $1,363,685 | $1,489,736 | | Total shareholders' equity | $2,184,769 | $1,592,807 | Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss increased for both three and six months ended June 30, 2025, primarily due to a significant rise in R&D expenses | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative expenses | $1,219,018 | $1,248,151 | $2,579,156 | $3,133,904 | | Research and development expenses | $1,260,051 | $565,001 | $2,006,422 | $1,071,156 | | Total operating expenses | $2,519,049 | $1,897,931 | $4,706,582 | $4,375,248 | | Net loss | $(2,519,181) | $(1,879,394) | $(4,704,147) | $(4,336,309) | | Net loss per share - basic and diluted | $(0.97) | $(3.72) | $(2.15) | $(11.22) | - Research and development expenses significantly increased by 123% for the three months ended June 30, 2025, and by 87% for the six months ended June 30, 2025, compared to the prior year periods[10] Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased from January to June 2025, driven by stock and warrant issuances, partially offset by net losses | Metric | January 1, 2025 | June 30, 2025 | | :-------------------------------- | :-------------- | :------------ | | Common Stock (Shares) | 678,002 | 3,026,028 | | Common Stock (Amount) | $6,780 | $30,260 | | Additional Paid-In Capital | $108,255,049 | $113,506,692 | | Accumulated Deficit | $(106,074,505) | $(110,778,652) | | Total Shareholders' Equity | $1,592,807 | $2,184,769 | - Issuance of Common Stock and warrants for cash, net of offering costs, contributed $4,244,467 to additional paid-in capital during the six months ended June 30, 2025[12] Unaudited Condensed Consolidated Statements of Cash Flows Cash increased by $608,790 for the six months ended June 30, 2025, due to financing activities offsetting operating cash outflows | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(4,281,724) | $(5,487,520) | | Net cash provided by financing activities | $4,898,010 | $6,692,699 | | Effect of foreign exchange rate on changes on cash | $(7,496) | $9,395 | | Net increase in cash | $608,790 | $1,214,574 | | Cash at end of period | $2,849,816 | $3,502,551 | - Financing activities provided $4,898,010 in cash for the six months ended June 30, 2025, primarily from the public offering and ATM agreement, a decrease from $6,692,699 in the prior year[16] Notes to Unaudited Condensed Consolidated Financial Statements These notes explain the company's business, accounting policies, financial instruments, equity transactions, and going concern uncertainty NOTE 1. BUSINESS AND LIQUIDITY AND OTHER UNCERTAINTIES Enveric Biosciences, a biotech focused on neuroplastogenic therapeutics, faces going concern uncertainty due to losses and insufficient cash - Enveric Biosciences is a biotechnology company developing novel neuroplastogenic small-molecule therapeutics for depression, anxiety, addiction, and other psychiatric disorders[18] - The lead program is the EVM301 Series, with lead drug candidate EB-003, focused on promoting neuroplasticity without inducing hallucinations[19] - The company has an accumulated deficit of $110,778,652 as of June 30, 2025, and operating cash outflows of $4,281,724 for the six months ended June 30, 2025, raising substantial doubt about its ability to continue as a going concern[21][22] NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines accounting policies including basis of presentation, estimates, reclassifications, and foreign currency translation - Financial statements are prepared in accordance with U.S. GAAP for interim information, requiring management estimates for fair value of transactions, warrants, stock-based compensation, and R&D accruals[25][27] - Certain prior period consulting expenses were reclassified from general and administrative to research and development, and investment option/warrant liabilities were reclassified to accrued expenses and other current liabilities[28] - The company's reporting currency is USD, while subsidiaries use CAD or AUD, leading to foreign currency translation adjustments recorded in accumulated other comprehensive loss[29][30] NOTE 3. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets decreased from December 2024 to June 2025, primarily due to lower prepaid VAT | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Prepaid insurance | $290,762 | $107,610 | | Prepaid other | $98,225 | $152,894 | | Prepaid product development | $65,413 | — | | Prepaid value-added taxes | $3,156 | $233,054 | | Total prepaid expenses and other current assets | $457,556 | $493,558 | NOTE 4. PROPERTY AND EQUIPMENT Net property and equipment decreased from December 2024 to June 2025, primarily due to accumulated depreciation | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Lab equipment | $811,130 | $769,105 | | Computer equipment and leasehold improvements | $27,511 | $26,073 | | Less: Accumulated depreciation | $(597,559) | $(489,401) | | Property and equipment, net | $241,082 | $305,777 | - Depreciation expense for the six months ended June 30, 2025, was $78,824, a decrease from $85,812 in the prior year[42] NOTE 5. ACCRUED LIABILITIES Total accrued liabilities significantly decreased from December 2024 to June 2025, driven by lower product development accruals and franchise taxes | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Product development | $157,337 | $350,421 | | Professional fees | $59,832 | $103,968 | | Accrued franchise taxes | $3,823 | $261,100 | | Other | $1,851 | $19,609 | | Total accrued liabilities | $222,843 | $735,098 | NOTE 6. RELATED PARTY TRANSACTIONS Current liabilities due to related parties decreased from December 2024 to June 2025, with R&D service fees from a board member also decreasing - Current liabilities due to related parties decreased by 57% from $232,891 at December 31, 2024, to $99,875 at June 30, 2025[44] - Service fees from board member Sheila DeWitt for R&D services decreased from $97,500 for the six months ended June 30, 2024, to $3,250 for the same period in 2025[45] NOTE 7. SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS This note details recent equity financing activities, including public and ATM offerings, stock options, and RSUs, increasing outstanding shares and capital Public Offering In January 2025, a public offering of common stock and warrants generated net proceeds of $4,244,467 - The public offering closed on February 3, 2025, generating net proceeds of $4,244,467[48] - The offering included 1,229,330 shares of Common Stock, 437,336 pre-funded warrants, and 1,666,666 each of Series A and Series B warrants[47] - As of June 30, 2025, 437,336 shares were issued from Pre-Funded Warrants exercises and 25,000 from Series B Warrants exercises[54] At the Market Offering An ATM Agreement in April 2025 allowed sales up to $1.85 million of common stock, yielding $555,504 net cash proceeds by June 30, 2025 - An ATM Agreement was established on April 9, 2025, to sell up to $1,854,151 of Common Stock[56] - As of June 30, 2025, 554,372 shares were issued under the ATM Agreement, resulting in $555,504 in net cash proceeds[58] Stock Options Shares available for grant under the Incentive Plan increased by 299,733 in March 2025, with $1,104 unamortized expense by June 30, 2025 - The Board approved an increase of 299,733 shares available under the Incentive Plan, totaling 90,584 shares available for grant as of June 30, 2025[59] - Stock-based compensation expense for stock options was $828 for the six months ended June 30, 2025[60] Issuance of Restricted Stock Units The company granted 234,808 RSUs, increasing non-vested RSUs to 275,511, with RSU compensation expense decreasing to $399,280 | RSU Activity | Number of shares | Weighted average fair value | | :-------------------------- | :--------------- | :-------------------------- | | Non-vested at Dec 31, 2024 | 48,017 | $24.08 | | Granted | 234,808 | $1.27 | | Vested | (7,314) | $19.00 | | Non-vested at June 30, 2025 | 275,511 | $4.77 | | RSU Stock-based Compensation Expense | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative | $102,434 | $162,042 | $195,060 | $314,471 | | Research and development | $103,412 | $207,158 | $204,220 | $412,899 | | Total | $205,846 | $369,200 | $399,280 | $727,370 | Warrants Outstanding warrants significantly increased to 3.47 million at June 30, 2025, from 56,308 at December 31, 2024, due to new issuances | Warrant Activity | Warrant shares outstanding | Weighted average exercise price | | :-------------------------- | :------------------------- | :------------------------------ | | Outstanding at Dec 31, 2024 | 56,308 | $536.70 | | Issued | 3,887,334 | $2.69 | | Exercised | (462,336) | $0.16 | | Forfeited | (4,900) | $560.85 | | Outstanding at June 30, 2025 | 3,476,406 | $10.87 | NOTE 8. LICENSING AGREEMENTS Enveric has several out-licensing agreements for various compounds, but no revenue has been earned from them as of June 30, 2025 - Akos granted Aries Science and Technology an exclusive, worldwide license for its patented radiation dermatitis topical product on July 10, 2024[66] - The company out-licensed its EVM201 Series program (EB-002) to MycoMedica Life Sciences on November 7, 2024, for potential development and milestone payments up to $62 million plus royalties[68] - Akos entered into two licensing agreements with Restoration Biologics LLC on February 3, 2025, for cannabinoid-COX-2 conjugate compounds[69] - No revenue has been earned from any of these licensing agreements as of June 30, 2025[67][69][70] NOTE 9. COMMITMENTS AND CONTINGENCIES The company is committed to approximately $2.3 million in future cash payments for consulting, clinical trial support, and testing services - The company has commitments of approximately $2.3 million for future cash payments related to consulting, clinical trial support, and testing services[73] NOTE 10. SUBSEQUENT EVENTS Subsequent to June 30, 2025, 220,256 shares of Common Stock were issued via the ATM Agreement, generating $307,151 net cash proceeds - Subsequent to June 30, 2025, 220,256 shares of Common Stock were issued via the ATM Agreement, yielding $307,151 in net cash proceeds[74] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial condition and results of operations, covering business, expenses, liquidity, and accounting estimates Business Overview Enveric Biosciences is a biotech focused on neuroplastogenic small-molecule therapeutics for psychiatric disorders, leveraging its Psybrary™ platform - Enveric Biosciences is a biotechnology company developing novel neuroplastogenic small-molecule therapeutics for depression, anxiety, addiction, and other psychiatric disorders, utilizing its Psybrary™ platform[79] - The lead program is the EVM301 Series, with lead drug candidate EB-003, aimed at promoting neuroplasticity without inducing hallucinations[80] - The EVM201 Series was out-licensed to MycoMedica Life Sciences in Q4 2024, and an EVM401 Series was unveiled in February 2025 to expand the pipeline with non-hallucinogenic molecules[80] Recent Developments The company entered an ATM offering agreement in April 2025, issuing 554,372 shares for $555,504 net cash proceeds - An ATM Agreement was signed on April 9, 2025, allowing the sale of Common Stock up to $1,854,151[86] - As of June 30, 2025, 554,372 shares were issued under the ATM Agreement, generating $555,504 in net cash proceeds[86] Results of Operations Operating expenses increased for both three and six months ended June 30, 2025, due to higher R&D expenses, resulting in increased net losses | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative expenses | $1,219,018 | $1,248,151 | $2,579,156 | $3,133,904 | | Research and development expenses | $1,260,051 | $565,001 | $2,006,422 | $1,071,156 | | Total operating expenses | $2,519,049 | $1,897,931 | $4,706,582 | $4,375,248 | | Net loss | $(2,519,181) | $(1,879,394) | $(4,704,147) | $(4,336,309) | General and Administrative Expenses (Three Months) General and administrative expenses decreased by 2% to $1,219,018 for the three months ended June 30, 2025, due to lower stock-based compensation - General and administrative expenses decreased by $29,133 (2%) to $1,219,018 for the three months ended June 30, 2025[88] - This decrease was primarily driven by decreases in stock-based compensation expense ($59,614) and insurance expense ($25,398), offset by increases in salaries and wages ($56,726)[88] Research and Development Expenses (Three Months) Research and development expenses surged by 123% to $1,260,051 for the three months ended June 30, 2025, due to increased consulting and CRO costs - Research and development expenses increased by $695,050 (123%) to $1,260,051 for the three months ended June 30, 2025[89] - This increase was mainly driven by higher consulting fees ($832,923) and CRO costs ($154,354), partially offset by decreases in salaries and wages and an Australian R&D tax incentive[89] Depreciation and Amortization Expense (Three Months) Depreciation and amortization expense decreased by 53% to $39,980 for the three months ended June 30, 2025, due to full intangible asset amortization - Depreciation and amortization expense decreased by $44,799 (53%) to $39,980 for the three months ended June 30, 2025[90] - The decrease is attributed to the full amortization of the company's intangible assets during the first quarter of 2025[90] General and Administrative Expenses (Six Months) General and administrative expenses decreased by 18% to $2,579,156 for the six months ended June 30, 2025, due to lower director fees and stock compensation - General and administrative expenses decreased by $554,748 (18%) to $2,579,156 for the six months ended June 30, 2025[91] - Key drivers for the decrease include reductions in director fees ($144,587), stock compensation expense ($112,317), and accounting fees ($58,016)[91] Research and Development Expenses (Six Months) Research and development expenses increased by 87% to $2,006,422 for the six months ended June 30, 2025, due to increased consulting fees - Research and development expense increased by $935,266 (87%) to $2,006,422 for the six months ended June 30, 2025[92] - This increase was primarily driven by a $1,136,455 increase in consulting fees and a prior year gain from the Australian R&D tax incentive ($259,591), offset by decreases in salaries and wages and CRO costs[92] Depreciation and Amortization Expense (Six Months) Depreciation and amortization expense decreased by 29% to $121,004 for the six months ended June 30, 2025, due to full intangible asset amortization - Depreciation and amortization expense decreased by $49,184 (29%) to $121,004 for the six months ended June 30, 2025[93] - The decrease is primarily related to the full amortization of the company's intangible assets in the first quarter of 2025[93] Going Concern, Liquidity and Capital Resources The company has incurred significant losses, resulting in an accumulated deficit of $110.8 million and insufficient cash, raising substantial doubt about its going concern - The company has an accumulated deficit of $110,778,652 as of June 30, 2025, and operating cash outflows of $4,281,724 for the six months ended June 30, 2025[94] - Current cash of $2,849,816 and working capital of $1,943,687 at June 30, 2025, are insufficient to cover operating cash needs for the next 12 months, indicating substantial doubt about going concern[95] - Management's plan to alleviate going concern issues includes raising additional working capital through equity or debt financings, collaborations, and disciplined cash spending[95] Cash Flows Net cash increased by $608,790 for the six months ended June 30, 2025, due to financing activities offsetting operating cash outflows | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(4,281,724) | $(5,487,520) | | Net cash provided by financing activities | $4,898,010 | $6,692,699 | | Net increase in cash | $608,790 | $1,214,574 | Operating Activities Net cash used in operating activities decreased to $4,281,724 for the six months ended June 30, 2025, from $5,487,520 in the prior year - Net cash used in operating activities was $4,281,724 for the six months ended June 30, 2025, primarily from a net loss adjusted for non-cash items of $4,185,600[98] - This represents a decrease from $5,487,520 used in operating activities for the same period in 2024[99] Financing Activities Net cash provided by financing activities was $4,898,010 for the six months ended June 30, 2025, primarily from public offering and ATM agreement - Net cash provided by financing activities was $4,898,010 for the six months ended June 30, 2025[100] - This includes $4,244,467 from the public offering and $578,499 from the ATM Agreement[100] - In the prior year, financing activities provided $6,692,699, mainly from stock subscription receivables, warrant exercises, and common stock sales under distribution and purchase agreements[101] Critical Accounting Estimates The company's critical accounting estimates involve significant uncertainty, including accruals for third-party R&D providers - The most critical accounting estimate involves determining accruals associated with third-party providers supporting research and development efforts[102] - No material changes to critical accounting estimates were reported compared to the Annual Report on Form 10-K for the year ended December 31, 2024[103] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure is foreign currency exchange rate risk from CAD and AUD fluctuations against USD - The primary market risk exposure is foreign currency exchange rate risk, stemming from transactions denominated in Canadian and Australian dollars by its subsidiaries[104] - The company has not entered into financial derivative instruments to hedge foreign currency exposures but may consider doing so in the future[105] Item 4. Controls and Procedures Management concluded disclosure controls were ineffective as of June 30, 2025, due to material weaknesses in internal controls and inadequate segregation of duties - The CEO and CFO concluded that disclosure controls and procedures were not effective as of June 30, 2025[107] - This ineffectiveness is due to material weaknesses in internal controls over financial reporting, specifically inadequate segregation of duties for transaction processing, review, and authorization[107][108] - Management is implementing a remediation plan, including evaluating the material weakness and establishing procedures for documenting disclosures and disclosure controls[109] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is periodically involved in legal proceedings, but management believes no pending litigation will significantly affect its financials - Management believes that current legal proceedings will not have a significant adverse effect on the company's financial position, results of operations, or cash flows[113] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, have occurred as of the date of this Quarterly Report[114] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the period Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities to report for the period Item 4. Mine Safety Disclosures This item is not applicable to the company's operations Item 5. Other Information There is no other information to report for the period Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, warrant forms, the ATM Agreement, and certifications - Exhibits include various corporate governance documents (Certificates of Incorporation, Bylaws), forms of warrants (Pre-Funded, Series A, Series B, Placement Agent), the At The Market Offering Agreement, and certifications (Sections 302 and 906 of Sarbanes-Oxley Act)[120]