SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

NOTE 5 - SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

Offerings

On January 14, 2021, the Company completed an offering of 2,221,334 shares of Common Stock and pre-funded warrants at approximately $4.50 per share and a concurrent private placement of warrants to purchase 1,666,019 shares of Common Stock at $4.95 per share, exercisable immediately and terminating five years after the date of issuance for gross proceeds of approximately $10,000,000. The net proceeds to the Company after deducting financial advisory fees and other costs and expenses were approximately $8,800,087, with $4,617,087 of such amount allocated to share capital and $4,846,000 allocated to warrant liability and the remaining $663,000 recorded as an expense.

On February 11, 2021, the Company completed an offering of 3,007,026 shares of Common Stock and a concurrent private placement of warrants to purchase 1,503,513 shares of Common Stock at $4.90 per share, exercisable immediately and terminating five year from the date of issuance for gross proceeds of approximately $12,800,000. The net proceeds to Enveric from the offering after deducting financial advisory fees and other costs and expenses were approximately $11,624,401, with $7,016,401 of such amount allocated to share capital and $5,135,000 allocated to warrant liability and the remaining $527,000 recorded as an expense.

Stock Options

	Number of Shares			Weighted Average Exercise Price		Weighted Average Fair Value		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (USD)
Outstanding – January 1, 2021		929,765		$	1.53	$	2.50
Granted		80,000		$	3.50	$	2.81
Options assumed pursuant to acquisition of MagicMed		973,840		$	1.34	$	1.83
Exercised		(143,796	)	$	0.23	$	5.69
Expired forfeited, or cancelled		(692,475	)	$	1.69	$	1.98
Outstanding – September 30, 2021		1,147,334		$	1.57	$	2.09		5.7	$	730,438
Exercisable at September 30, 2021		931,810		$	1.52	$	2.00		4.9	$	550,191

Options granted during the three months ended September 30, 2021 were valued using the Black Scholes model and the following assumptions:

Term (years)		7.0
Stock price	$	3.50
Exercise price	$	3.50
Dividend yield		0	%
Expected volatility		79	%
Risk free interest rate		1.3	%

The Company’s stock based compensation expense related to stock options for the three months ended September 30, 2021 and 2020 was $4,683 and $0, respectively. The Company’s stock based compensation expense related to stock options for the nine months ended September 30, 2021 and 2020 was $4,683 and $0, respectively. As of September 30, 2021, the Company had $504,903 in unamortized stock option expense with a weighted average amortization period equal to 2.9 years

During the first quarter 2021, the Company exchanged options to purchase 560,404 shares of common stock for 325,410 restricted stock units and 42,125 restricted stock awards. In connection with this exchange, the Company recognized $298,714 in inducement expense related to the increase in fair value of the new awards over the old awards, which is included in other expenses on the Company’s unaudited condensed consolidated statement of operations and comprehensive loss.

Restricted Stock Awards

The Company’s activity in restricted common stock was as follows for the nine months ended September 30, 2021:

	Number of shares			Weighted average fair value
Non–vested at January 1, 2021		-		$	-
Granted		70,986		$	3.84
Vested		(64,334	)	$	4.24
Non–vested at September 30, 2021		6,652		$	2.50

For the three months ended September 30, 2021 and 2020, the Company recorded $23,995 and $0, in stock-based compensation expense related to restricted stock awards, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded $80,109 and $0, in stock-based compensation expense related to restricted stock awards, respectively. As of September 30, 2021, unamortized stock-based compensation costs related to restricted share awards was $24,012, which will be recognized over a weighted average period of 0.25 years.

Enveric Biosciences, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Issuance of Restricted Stock Units

The Company’s activity in restricted stock units was as follows for the nine months ended September 30, 2021:

	Number of shares			Weighted average fair value
Non–vested at January 1, 2021		-		$	-
Granted		5,775,171		$	3.65
Vested		(1,207,825	)	$	4.46
Non–vested at September 30, 2021		4,567,346		$	3.43

For the three months ended September 30, 2021 and 2020, the Company recorded $458,308 and $0, respectively, in stock-based compensation expense related to restricted stock units, with $315,929 included as a component of general and administrative expenses and $118,474 included as a component of research and development costs in the unaudited condensed consolidated statement of operations. For the nine months ended September 30, 2021 and 2020, the Company recorded $4,710,225 and $0, respectively, in stock-based compensation expense related to restricted stock units, with $4,592,748 included as a component of general and administrative expenses and $118,474 included as a component of research and development expenses in the unaudited condensed consolidated statement of operations. As of September 30, 2021, the Company had unamortized stock-based compensation costs related to restricted stock units of $7,908,006 which will be recognized over a weighted average period of 3.57 years and unamortized stock based costs related to restricted stock units of $6,966,721 which will be recognized upon achievement of specified milestones.

Warrants

The following table summarizes information about shares issuable under warrants outstanding at September 30, 2021:

	Warrant shares outstanding			Weighted average exercise price (USD)		Weighted average remaining life		Intrinsic value
Outstanding at January 1, 2021		3,770,550		$	2.13		5.0	$	8,040,836
Issued		4,146,146		$	4.90
Assumed pursuant to acquisition of MagicMed		5,913,672		$	1.31
Exercised		(3,253,714	)	$	1.10
Outstanding at September 30, 2021		10,576,654		$	2.76		3.6	$	5,115,080
Exercisable at September 30, 2021		10,576,654		$	2.76		3.6	$	5,115,080

The warrants assumed pursuant to the acquisition of MagicMed contain certain down round features that would require adjustment to the exercise price upon certain events when the offering price is less than the stated exercise price.