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SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS
 6 Months Ended
Jun. 30, 2023
Equity [Abstract]  
SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

NOTE 7. SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS

 

Authorized Capital

 

The holders of the Company’s common stock are entitled to one vote per share. Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of legally available funds. Upon the liquidation, dissolution, or winding up of the Company, holders of common stock are entitled to share ratably in all assets of the Company that are legally available for distribution. As of June 30, 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.

 

Common Stock Activity

 

On February 15, 2022, the Company completed a public offering of 400,000 shares of Common Stock and warrants to purchase up to 400,000 shares of Common Stock for gross proceeds of approximately $10 million, before deducting underwriting discounts and commissions and other offering expenses. A.G.P./Alliance Global Partners acted as sole book-running manager for the offering. In addition, Enveric granted the underwriter a 45-day option to purchase up to an additional 60,000 shares of Common Stock and/or warrants to purchase up to an additional 60,000 shares of Common Stock at the public offering price, which the underwriter has partially exercised for warrants to purchase up to 60,000 shares of common stock. At closing, Enveric received net proceeds from the offering of approximately $9.1 million, after deducting underwriting discounts and commissions and estimated offering expenses with $5.8 million allocated to equity, $3.6 million to warrant liability and the remaining $0.3 million recorded as an expense.

 

On July 22, 2022, the Company entered into a securities purchase agreement (the “Registered Direct Securities Purchase Agreement”) with an institutional investor for the purchase and sale of 116,500 shares of the Company’s common stock, pre-funded warrants to purchase up to 258,500 shares of common stock (the “RD Pre-Funded Warrants”), and unregistered preferred investment options (the “RD Preferred Investment Options”) to purchase up to 375,000 shares of common stock (the “RD Offering”). The gross proceeds from the RD Offering were approximately $3,000,000. Subject to certain ownership limitations, the RD Pre-Funded Warrants became immediately exercisable at an exercise price equal to $0.0001 per share of common stock. On August 3, 2022, all of the issued RD Pre-Funded Warrants were exercised.

 

Concurrently with the RD Offering, the Company entered into a securities purchase agreement (the “PIPE Securities Purchase Agreement”) with institutional investors for the purchase and sale of 116,000 shares of common stock, pre-funded warrants to purchase up to 509,000 shares of common stock (the “PIPE Pre-Funded Warrants”), and preferred investment options (the “PIPE Preferred Investment Options”) to purchase up to 625,000 shares of the common stock in a private placement (the “PIPE Offering”). The gross proceeds from the PIPE Offering were approximately $5,000,000. Subject to certain ownership limitations, the PIPE Pre-Funded Warrants became immediately exercisable at an exercise price equal to $0.0001 per share of common stock. All of the issued PIPE Pre-Funded Warrants were exercised on various dates prior to August 18, 2022.

 

The RD Offering and PIPE Offering closed on July 26, 2022, with aggregate gross proceeds of approximately $8 million. The aggregate net proceeds from the offerings, after deducting the placement agent fees and other estimated offering expenses, were approximately $7.1 million, with $3.2 million allocated to equity, $4.3 million to investment option liability, and the remaining $0.4 million recorded as an expense.

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

During the six months ended June 30, 2023, a total of 63,511 shares of Common Stock were issued pursuant to the conversion of restricted stock units. During the six months ended June 30, 2022, a total of 2,122 shares of Common Stock were issued pursuant to the conversion of restricted stock units.

 

Stock Options

 

Amendment to 2020 Long-Term Incentive Plan

On May 3, 2022, our 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 146,083 shares to a total of 200,000 shares, and (ii) add an “evergreen” provision whereby the number of shares authorized for issuance pursuant to awards under the Incentive Plan will be automatically increased on the first trading date immediately following the date the Company issues any share of Common Stock (defined below) to any person or entity, to the extent necessary so that the number of shares of the Company’s Common Stock authorized for issuance under the Incentive Plan will equal the greater of (x) 200,000 shares, and (y) 15% of the total number of shares of the Company’s Common Stock outstanding as of such issuance date. The Plan Amendment was approved by the Company’s shareholders at a special meeting of the Company’s shareholders held on July 14, 2022.

 

A summary of activity under the Company’s incentive plan for the six months ended June 30, 2023, is presented below:

 

    Number of Shares   Weighted Average Exercise Price   Weighted Average Grant Date Fair Value   Weighted Average Remaining Contractual Term (years)   Aggregate Intrinsic Value 
Outstanding at December 31, 2022    48,329   $37.05   $44.82    4.1   $— 
Forfeited    (11,750)  $3.07   $2.58    —   $— 
Outstanding at June 30, 2023    36,579   $47.93   $64.47    3.6   $— 
Exercisable at June 30, 2023    28,265   $56.59   $76.86    3.2   $— 

 

The Company’s stock-based compensation expense, recorded within general and administrative expense in the condensed consolidated statement of operations and comprehensive loss, related to stock options for the three months ended June 30, 2023, and 2022 was $54,375 and $48,697, respectively. The Company’s stock-based compensation expense, recorded within general and administrative expense, related to stock options for the six months ended June 30, 2023 and 2022 was $102,461 and $85,686, respectively. As of June 30, 2023, the Company had $138,388 in unamortized stock option expense, which will be recognized over a weighted average period of 1.5 years.

 

Restricted Stock Awards

 

For the three months ended June 30, 2023, and 2022, the Company recorded $0 and $6,250, respectively, in stock-based compensation expense within general and administrative expense, related to restricted stock awards. For the six months ended June 30, 2023 and 2022, the Company recorded $0 and $18,113, respectively, in stock-based compensation expense within general and administrative expense, related to restricted stock awards. As of June 30, 2023, there were no unamortized stock-based compensation costs related to restricted share awards. There are 708 vested and unissued shares of restricted stock awards as of June 30, 2023.

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Issuance of Restricted Stock Units

 

The Company’s activity in restricted stock units was as follows for the six months ended June 30, 2023:

 

    Number of shares   Weighted average fair value 
Non-vested at December 31, 2022    64,053   $92.57 
Granted    182,500   $2.73 
Vested    (57,280)  $8.93 
Forfeited    (9,158)  $44.69 
Non-vested at June 30, 2023    180,115   $30.57 

 

For the three months ended June 30, 2023, and 2022, the Company recorded $825,363 and $622,596, respectively, in stock-based compensation expense related to restricted stock units. For the six months ended June 30, 2023 and 2022, the Company recorded $1,310,112 and $1,342,363 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 condensed consolidated statement of operations and comprehensive loss. As of June 30, 2023, the Company had unamortized stock-based compensation costs related to restricted stock units of $2,157,127 which will be recognized over a weighted average period of 2.5 years and unamortized stock-based costs related to restricted stock units which will be recognized upon achievement of specified milestones. As of June 30, 2023, 55,622 restricted stock units are vested without shares of common stock being issued, with 38,382 of these shares due as of June 30, 2023.

 

The following table summarizes the Company’s recognition of stock-based compensation for restricted stock units for the following periods:

  

   2023   2022   2023   2022 
   Three months ended June 30,   Six months ended June 30, 
   2023   2022   2023   2022 
Stock-based compensation expense for RSUs:                    
General and administrative  $592,929   $358,818   $845,244   $717,636 
Research and development   232,434    263,778    464,868    624,727 
Total  $825,363   $622,596   $1,310,112   $1,342,363 

 

Warrants

 

The following table summarizes information about shares issuable under warrants outstanding on June 30, 2023:

 

   Warrant shares outstanding   Weighted average exercise price   Weighted average remaining life   Intrinsic value 
Outstanding at December 31, 2022   655,463   $58.36    3.6   $5,514 
Outstanding at June 30, 2023   655,463   $58.36    3.1   $— 
Exercisable at June 30, 2023   655,463   $58.36    3.1   $— 

 

The warrants assumed pursuant to the acquisition of MagicMed contain certain down round features, which were not triggered by the February 2022 public offering and July 2022 RD Offering, that would require adjustment to the exercise price upon certain events when the offering price is less than the stated exercise price.

 

Preferred Investment Options

 

The following table summarizes information about investment options outstanding on June 30, 2023:

 

 

ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

   Investment options outstanding   Weighted average exercise price   Weighted average remaining life   Intrinsic value 
Outstanding at December 31, 2022   1,070,000   $7.93    5.1   $— 
Outstanding at June 30, 2023   1,070,000   $7.93    4.6   $— 
Exercisable at June 30, 2023   1,070,000   $7.93    4.6   $—