Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's discussion and analysis of financial condition and results of operations

References to the "Company", "Enveric," "our," "us," or "we" in this section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations of Enveric" refer to Enveric Biosciences, Inc. The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes appearing elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements involving risks and uncertainties and should be read together with the "Risk Factors" and the "Cautionary Statement Regarding Forward-Looking Statements" sections of this Annual Report. Such risks and uncertainties could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Business Overview

We are a biotechnology company focused on developing next-generation, small-molecule neuroplastogenic therapeutics that address unmet needs in psychiatric and neurological disorders. By leveraging a differentiated drug discovery platform and a growing library of patent protected chemical structures, we are advancing a pipeline of novel compounds designed to promote neuroplasticity without hallucinogenic effects. Our lead candidate, EB-003, is the first known compound designed to selectively engage both 5-HT_2A and 5-HT_1B receptors with the potential to deliver fast-acting, durable antidepressant and anxiolytic effects with outpatient convenience.

Our lead program, the EVM301 Series, and our 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. EB-003 is a novel derivative of DMT. It is currently advancing through preclinical studies with the aim of initiating first-in-human studies to assess safety and tolerability including non-hallucinogenic properties, followed by clinical trials targeting the treatment of depression or other neuropsychiatric disorders.

We intend to assemble a team of clinical experts and principal investigators with experience across multiple mental health and central nervous system indications to be responsible for the management, monitoring, and integrity of the clinical research. We plan to submit filings including IND applications and, eventually, NDAs to seek approval with the FDA and with responsible regulatory agencies in other jurisdictions, in connection with our product candidates. The selection, timing, duration, and design of any prospective studies are subject to regulatory filings, approval and finalization of commercial plans. Our EB-003 program has completed short-term dose-range finding toxicology studies and is now ready to advance into IND-enabling, GLP compliant safety pharmacology, ADMET and longer-term toxicology studies.

We unveiled the EVM401 Series on February 25, 2025, which is intended to broaden its pipeline with additional non-hallucinogenic molecules and strengthen our ability to target addiction and neuropsychiatric disorders for patients with limited options. While we intend to pursue development of the EVM401 Series, our primary focus is to develop our lead asset EB-003 in the EVM301 Series.

Recent Developments

At the Market Offering

On April 9, 2025, we entered into an At the Market Offering Agreement ("ATM Agreement"), with H.C. Wainwright & Co., LLC, acting as sales agent. As of December 31, 2025, we had issued 110,242 shares under the ATM Agreement for net cash proceeds of $1,636,799. On February 6, 2026, we filed a prospectus supplement so that we may additionally issue and sell our common stock having an aggregate sales proceeds of up to $1,346,000 from time to time pursuant to the ATM Agreement. On February 19, 2026, the Company issued 497,200 shares of our common stock for net cash proceeds of $1,303,415.

Registered Direct Offering and Concurrent Private Placement

On January 27, 2026, we entered into a securities purchase agreement with certain institutional investors, pursuant to which we agreed to issue and sell to the investors in a registered direct offering (the "Registered Direct Offering"), an aggregate of 328,802 shares (the "RD Shares") of our common stock at a price of $4.41 per share for gross proceeds of approximately $1.5 million before the deduction of placement agent fees and offering expenses. The closing of the Registered Direct Offering occurred on January 28, 2026.

In the concurrent private placement we also agreed to issue and sell to the Investors the Series G Warrants to purchase up to an aggregate of 328,802 shares of common stock and the Series H Warrants purchase up to an aggregate of 328,802 shares of common stock, each at an exercise price of $4.16 per share.

We issued H.C. Wainwright & Co., LLC, as placement agent, warrants to purchase up to 23,016 shares of common stock with an exercise price of $5.5125 per share. We also incurred legal and other offering-related fees in connection with this offering.

December 2025 Inducement Warrant Transaction

On December 11, 2025, we entered into warrant exercise inducement offer letters (the "December Inducement Letters") with certain institutional investors that held certain outstanding warrants to purchase up to an aggregate of 426,390 shares originally issued in February 2025 and September 2025, having exercise prices of $36.00 and $10.98 per share, respectively (collectively, the "December Existing Warrants").

Pursuant to the December Inducement Letters, the investors agreed to exercise for cash their December Existing Warrants at a reduced exercise price of $7.05 per share and pay a purchase price of $0.125 per share in consideration for our agreement to issue in a private placement (x) new Series E Common Stock Purchase Warrants to purchase up to 426,390 shares of common stock and (y) new Series F Common Stock Purchase Warrants to purchase up to 426,390 shares of common stock. We received aggregate gross proceeds of approximately $3.1 million from the exercise of the December Existing Warrants by the investors and payment of the purchase price of $0.125 per share, before deducting placement agent fees and other offering expenses payable by us. The closing of the transactions occurred on December 12, 2025.

We issued H.C. Wainwright & Co., LLC, as placement agent, warrants to purchase up to 29,847 shares of common stock with an exercise price of $9.125 per share. We also incurred legal and other offering-related fees in connection with this warrant inducement transaction.

Nasdaq Compliance on Minimum Bid Price Deficiency

By way of background, on October 22, 2025, we received written notice from the Listing Qualifications Department of Nasdaq notifying the Company that, because the closing price of our common stock had fallen below $1.00 per share for 30 consecutive trading days, we were no longer in compliance with the requirement for continued listing on Nasdaq under Nasdaq Listing Rule 5550(a)(2). On November 12, 2025, we received a letter from the Nasdaq Listing Qualifications Department of Nasdaq notifying us that we regained compliance with the minimum bid price requirement set forth in in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market.

October 2025 Reverse Stock Split

On October 23, 2025, we effected a 1-for-12 reverse stock split (the "October 2025 Reverse Stock Split"), which began trading on a split-adjusted basis on October 28, 2025, pursuant to which every 12 shares of our issued and outstanding shares of common stock were reclassified as one share of common stock. The October 2025 Reverse Stock Split had no impact on the par value of our common stock or the authorized number of shares of common stock. Unless otherwise indicated, all share and per share information prior to the October 2025 Reverse Stock Split date of October 28, 2025 in this Annual Report are retroactively adjusted to reflect the October 2025 Reverse Stock Split.

Nasdaq Compliance on Stockholders' Equity Deficiency

On October 23, 2025, we notified Nasdaq that we believed we had regained compliance with the stockholders' equity requirements set forth in Nasdaq Listing Rule 5550(b)(1) for continued listing on The Nasdaq Capital Market. On October 24, 2025, we received a letter from Nasdaq determining that we regained conditional compliance subject to evidencing compliance upon filing our next periodic report. As detailed in our Quarterly Report for the quarter ended September 30, 2025, filed with the SEC on November 14, 2025, we reported stockholders' equity in excess of the required $2.5 million and, as a result, regained compliance with the stockholders' equity requirement. On August 26, 2025, we had received a deficiency letter from the Listing Qualifications Department of Nasdaq notifying the Company that it was not in compliance with the minimum stockholders' equity requirement for continued listing on Nasdaq pursuant to Nasdaq Listing Rule 5550(b)(1).

September 2025 Inducement Warrant Transaction

On September 17, 2025, we entered into warrant exercise inducement offer letters (the "September Inducement Letters") with certain holders of our Series A Warrants and Series B Warrants originally issued in February 2025 (the "September Existing Warrants"), which closed on September 18, 2025. Pursuant to the September Inducement Letters, the holders agreed to exercise for cash their September Existing Warrants to purchase 202,083 shares of our common sock, in the aggregate, at a reduced exercise price of $10.98 per share (from an original exercise price of $36.00 per share), in exchange for our agreement to issue new warrants Series C Warrants and Series D Warrants to purchase up to 404,166 shares of the our common stock under each series, each at an exercise price of $10.98 per share.

We received aggregate gross proceeds of $2,218,873 from the exercise of the Existing Warrants. We issued H.C. Wainwright & Co., LLC, as placement agent warrants to purchase up to 14,146 shares of common stock with an exercise price of $13.7256 per share. The grant date fair value of these placement agent warrants was estimated to be $90,000 on September 18, 2025 and was charged to additional paid-in capital as issuance costs. We also incurred legal and other offering-related fees of $334,659, which were similarly charged to additional paid-in capital.

January 2025 Public Offering

On January 30, 2025, we commenced a best efforts public offering (the "Public Offering") of an aggregate of (i) 102,444 shares of common stock, (ii) 36,444 pre-funded warrants to purchase 36,444 shares of common stock , (iii) 138,889 Series A warrants to purchase 138,889 shares of common stock, and (iv) 138,889 Series B warrants to purchase 138,889 shares of common stock. Each share of common stock 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 Series A and Series B Warrants was $36.00, and the offering price for each re-funded warrant and accompanying warrants was $35.9988. The pre-funded warrants have an exercise price of $0.0012 per share, are exercisable immediately and expire when exercised in full. Each warrant has an exercise price of $36.00 per share and are exercisable immediately upon issuance. The Series A Warrants expire five years after issuance. The Series B Warrants expire 18-months after issuance.

The Public Offering closed on February 3, 2025. The net proceeds of the Public Offering, after deducting the fees and expenses of the H.C. Wainwright & Co., LLC, as placement agent, and other offering expenses payable by us, but excluding the net proceeds, if any, from the exercise of the warrants, was approximately $4.2 million.

Financial Overview

We are a pre-revenue biotech company that has to date, not generated any revenues. During the year ended December 31, 2025, we raised approximately $10.5 million from the sales of our common stock and warrants to purchase our common stock. These amounts were the primary source of funds upon which our operations were financed during the year ended December 31, 2025.

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for the research and development of our preclinical product candidates, and include, without limitation:

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employee-related expenses, including salaries, benefits and share-based compensation expense;

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expenses incurred under agreements with contract research organizations, contract manufacturing organizations, and consultants and other entities engaged to support our product research and development activities;

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the cost of acquiring, developing and manufacturing materials and lab supplies used in research and development activities;

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facility, equipment, depreciation and other expenses, which include, without limitation direct and allocated expenses for rent, maintenance of our facilities and equipment, insurance and other supplies;

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costs associated with preclinical activities and regulatory operations, including, without limitation, patent related costs;

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consulting and professional fees associated with research and development activities.

We expense research and development costs to operations as incurred. Research and development activities are central to our business model. We utilize a combination of internal and external efforts to advance product development from early-stage work to future clinical trial manufacturing and clinical trial support. External efforts include work with consultants and increasingly substantial work at CROs and CMOs. We support an internal research and development team in Calgary, Alberta, Canada. To move these programs forward along our development timelines, a large portion (approximately 75%) of our staff are research and development employees. In January 2024, the Company reduced its discovery team in Calgary and was primarily focused on the development of EB-002 and EB-003 pipeline assets (until we out-licensed EB-002 to MycoMedica Lifesciences in November of 2024). Because of the numerous risks and uncertainties associated with product development, however, we cannot determine with certainty the duration and completion costs of these or other current or future preclinical studies and clinical trials. The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including the uncertainties of future clinical and preclinical studies, uncertainties in clinical trial enrollment rates and significant and changing government regulation. In addition, the probability of success for each product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability.

General and Administrative Expenses

General and administrative expenses consist principally of salaries, benefits and related costs such as stock-based compensation for personnel and consultants in executive, finance, business development, corporate communications and human resource functions, facility costs not otherwise included in research and development expenses, accounting and audit costs, tax compliance costs, SEC compliance costs, investor relation costs, training and conference costs, insurance costs and legal fees.

Stock-Based Compensation

A significant portion of our operating expenses is related to stock-based compensation costs. Stock-based compensation costs were approximately $0.8 million and $1.6 million for the years ended December 31, 2025 and 2024, respectively.

Stock-based compensation consists of restricted stock units ("RSU"), restricted stock awards ("RSA") and options to purchase shares of the Company's common stock. The Company follows Accounting Standards Codification ("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. The fair value of RSU or RSA awards is determined by the closing price per share of the Company's common stock on the date of the award. The Company uses the Black-Scholes option pricing model to determine the grant date fair value of options issued.

RSA's and RSU's may contain vesting conditions that include, without limitation, any or all of the following: immediate vesting, vesting over a defined time period, vesting based on specific volume weighted average price levels being achieved by the Company's common stock as publicly traded within specified measurement periods, and vesting based on the achievement of specific performance milestones. RSUs may also contain certain delivery conditions including, without limitation, delivery conditioned on change in control or termination of services for any reason other than for cause. Options contain vesting conditions that provide for vesting over a defined time period.

The fair value of RSA's and RSU's and options, is charged to expense, on a straight line basis over the vesting periods defined in the award agreements, except for the fair value which is attributable to achievement of a specific performance milestones, which are charged to expense upon achievement of such milestones.

Results of Operations

The following table sets forth information comparing the components of net loss for the years ended December 31, 2025 and 2024:

		For the Years Ended December 31,
		2025				2024
Operating expenses
General and administrative		$	5,792,573			$	6,453,505
Research and development			2,781,017				2,841,272
Depreciation and amortization			200,858				337,489
Total operating expenses			8,774,448				9,632,266
Loss from operations			(8,774,448	)			(9,632,266	)
Other income (expense)
Other income			2,567				65,990
Interest (expense) income, net			(106	)			219
Total other income			2,461				66,209
Net loss before income taxes		$	(8,771,987	)		$	(9,566,057	)
Income tax expense			-				(8,930	)
Net loss		$	(8,771,987	)		$	(9,574,987	)

General and Administrative Expenses

Our general and administrative expenses decreased to $5,792,573 for the year ended December 31, 2025 from $6,453,505 for the year ended December 31, 2024, a decrease of $660,932, or 10%. This change was primarily driven by decreases in legal fees of $262,077, director fees of $253,719, stock compensation expense of $215,306, Delaware Franchise Tax expenses of $133,612, insurance expenses of $101,428, and consulting expenses of $70,179. This is offset by an increase in marketing expenses of $433,654.

The decrease in legal fees was due to deferred offering costs that were expensed during the year ended December 31, 2024 related to the Lincoln Park equity line. The decrease in director fees was primarily due the mix of cash versus equity compensation, including the issuance of full equity awards in 2025 rather than cash payments in lieu of shares. The decrease in stock compensation expense was primarily to a reduction in expense related to restricted stock units as a result of decreased value of new grants as a result of lower stock prices. The decrease in Delaware Franchise Tax expense was primarily due to higher expense in 2024 due to the Company filing an amended 2023 return during 2024. The decrease in insurance expense was due to lower premiums as a result of lower payroll costs. The decrease in consulting expense was due to decreased outsourcing to contractors. The increase in marketing expenses was due to increased digital marketing campaigns.

Research and Development Expenses

Our research and development expense for the year ended December 31, 2025 was $2,781,017 as compared to $2,841,272 for the year ended December 31, 2024 with a decrease of $60,255, or approximately 2%. This decrease was primarily driven by decreased salaries and wages of $633,549, CRO costs, net of tax incentives of $205,018, research costs of $380,159, lab expenses of $59,090, product development costs of $33,620, and rent of $28,143. This is offset by an increase in consulting expenses of $1,311,430.

The decrease in salaries and wages was due to the reduction in force as a result of the Company's cost reduction plan. The decrease in CRO costs and research costs was due to the completion of the Australia research and development project during the second quarter of 2024. The decrease in lab expenses and product development costs was due to a reduction in research and development that began in 2024. The decrease in rent was due to the expiration of the Company's Canadian lease during 2024. The increase in consulting fees was due to certain employees that were hired on a part-time consultant basis to perform certain research and development activities. The increase in tax incentives was due to a tax credit received during 2024.

Depreciation and Amortization Expense

Depreciation and amortization expense for the year ended December 31, 2025 was $200,858 as compared to $337,489 for the year ended December 31, 2024, with a decrease of $136,631, or approximately 40%, primarily related to full amortization of the Company's intangible assets in the first quarter of 2025.

Going Concern, Liquidity and Capital Resources

We have incurred a loss since inception resulting in an accumulated deficit of $114,846,492 as of December 31, 2025 and further losses are anticipated in the development of its business. Further, we had operating cash outflows of $8,141,543 for the year ended December 31, 2025. For the year ended December 31, 2025, we had a loss from operations of $8,774,448. Since inception, being a research and development company, we have not yet generated revenue and have incurred continuing losses from our operations. Our operations have been funded principally through the issuance of debt and equity. These factors raise substantial doubt about tour ability to continue as a going concern for a period of one year from the issuance of these financial statements.

In assessing our ability to continue as a going concern, we monitor and analyze our cash and our ability to generate sufficient cash flow in the future to support its operating and capital expenditure commitments. At December 31, 2025, we had cash of $4,677,491 and working capital of $4,018,307. Our current cash on hand is insufficient to satisfy its operating cash needs for the 12 months following the filing of this Annual Report. These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of one year after the date the 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 us on acceptable terms, or at all. Should we be unable to raise sufficient additional capital, we may be required to undertake cost-cutting measures including delaying or discontinuing certain operating activities. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Cash Flows

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

Cash Flows for the Years Ended December 31, 2025 and 2024

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

		For the Years Ended December 31,
		2025				2024
Net cash used in operating activities		$	(8,141,543	)		$	(7,726,139	)
Net cash provided by investing activities			-				-
Net cash provided by financing activities			10,579,507				7,673,834
Effect of foreign exchange rate on changes on cash			(1,499	)			5,354
Net increase (decrease) in cash		$	2,436,465			$	(46,951	)

Operating Activities

Net cash used in operating activities was $8,141,543 during the year ended December 31, 2025, which consisted primarily of a net loss adjusted for non-cash items of $7,845,601, a decrease in accounts payable, accrued expenses and other liabilities of $413,864, a decrease in due to related parties of $133,016, and a decrease in prepaid expenses and other current assets of $250,938.

Net cash used in operating activities was $7,726,139 during the year ended December 31, 2024, which consisted primarily of a net loss adjusted for non-cash items of $7,302,896, a decrease in prepaid expenses and other current assets of $178,496, an increase in due to related parties of $232,891, and a decrease in accounts payable, accrued expenses and other liabilities of $834,630.

Investing Activities

Net cash provided by investing activities was $0 during the years ended December 31, 2025 and 2024.

Financing Activities

Net cash provided by financing activities was $10,579,507 during the year ended December 31, 2025, which consisted of $4,698,241 in net proceeds from the exercise and inducement of warrants, $4,244,467 in net proceeds from the exercise of Common Stock and warrants, net of offering costs, and $1,636,799 in net proceeds from Common Stock sold for cash pursuant to the ATM Agreement, net of offering costs.

Net cash provided by financing activities was $7,673,834 during the year ended December 31, 2024, which consisted of $1,804,819 in net proceeds from the subscription receivable related to issuance of Inducement Warrants and the exercise of warrants and preferred investment options, $2,676,980 in net proceeds from the exercise of Inducement Warrants, $2,290,186 in net proceeds from commons stock sold under the Distribution Agreement, net of offering costs, $1,083,706 in net proceeds from common stock sold under the Purchase Agreement, net of offering costs, offset by the payment of offering costs previously accrued of $181,857.

Critical Accounting Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The preparation of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, costs and expenses and related disclosures. Our critical accounting estimates are those estimates that involve a significant level of uncertainty at the time the estimate was made, and changes in them have had or are reasonably likely to have a material effect on our financial condition or results of operations. Accordingly, actual results could differ materially from our estimates. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Significant areas requiring management's estimates and assumptions include determining the fair value of transactions involving common stock, and the valuation of warrants. Actual results could differ from those estimates.

The Company did not have any critical accounting estimates for the year ended December 31, 2025.