Item
1.01 Entry Into a Material Definitive Agreement
On
January 11, 2021, Enveric Biosciences, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with certain institutional and accredited investors (the “Purchasers”), pursuant to which the Company
agreed to issue and sell in a registered direct offering (the “Offering”) an aggregate of 2,221,334 shares (the “Shares”)
of common stock of the Company, par value $0.01 per share, at an offering price of $4.5018 per share, for gross proceeds of approximately
$10,000,000 before the deduction of fees and offering expenses. In addition, under the Purchase Agreement, the Purchasers may
choose to purchase pre-funded warrants (the “Pre-funded Warrants”) in lieu of shares of Common Stock.
As
of January 11, 2021, the Company had outstanding shares of common stock (without giving effect to the issuance and sale of the
Shares pursuant to the Purchase Agreement) of 11,595,109.
The
Pre-funded Warrants have an exercise price of $0.01 per share. The Pre-funded Warrants are immediately exercisable and may be
exercised at any time after their original issuance until such Pre-funded Warrants are exercised in full. A holder of a Pre-funded
Warrant may not exercise any portion of such holder’s Pre-funded Warrants to the extent that the holder, together with its
affiliates, would beneficially own more than 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding
shares of Common Stock immediately after exercise (the “Beneficial Ownership Limitation”), except that upon at least
61 days’ prior notice from the holder to the Company, the holder may increase the beneficial ownership limitation to up
to 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise.
The
Shares, the Pre-funded Warrants, and the shares of Common Stock issuable upon the exercise of the Pre-funded Warrants (the “Pre-funded
Warrant Shares”) are being offered by the Company pursuant to a shelf registration statement on Form S-3 (File No. 333-233260)
(the “Shelf Registration Statement”), previously filed with the Securities and Exchange Commission (the “SEC”)
on August 14, 2019, and declared effective by the SEC on November 19, 2019.
Pursuant
to the Purchase Agreement, in a concurrent private placement (the “Private Placement”), the Company agreed to issue
to the Purchasers, unregistered warrants to purchase up to 1,666,019 shares of Common Stock (the “Warrants”). The
Warrants are exercisable immediately upon issuance and terminate five years following issuance and are exercisable at an exercise
price of $4.9519 per share, subject to adjustment as set forth therein. A holder of Warrants will not have the right to exercise
any portion of its Warrants if the holder, together with its affiliates, would beneficially own in excess of the Beneficial Ownership
Limitation; provided, however, that upon 61 days’ prior notice to the Company, the holder may increase or decrease the Beneficial
Ownership Limitation, provided that in no event shall the Beneficial Ownership Limitation exceed 9.99%.
The
Warrants and the shares of our Common Stock issuable upon the exercise of the Warrants (the “Warrant Shares”) are
not being registered under the Securities Act of 1933, as amended (the “Securities Act”), are not being offered pursuant
to the Shelf Registration Statement, and are being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities
Act and Rule 506(b) promulgated thereunder.
To
induce the Purchasers into the Purchase Agreement, the Company also entered into a registration rights agreement, dated January
11, 2021 (the “Registration Statement”), with the Purchasers, pursuant to which, among other things, the Company has
agreed to prepare and file with the Securities and Exchange Commission a registration statement to register for resale
of all of the Warrant Shares.
In
addition, the Company entered into a letter agreement (the “Letter Agreement”) with Alpha Capital Anstalt (“Alpha”).
Under the Letter Agreement, (i) the Company agreed to register 1,791,923 shares of Common Stock (the “Series B Warrant Shares”)
issuable upon the exercise of certain Series B Warrants issued to Alpha on December 31, 2020, which have an exercise price
of $0.01 per share, (ii) the Series B Warrant Shares will not be subject to an existing lock-up agreement between the Company
and Alpha and Alpha will no longer be subject to any limitations on its ability to dispose of the Series B Warrant Shares that
are imposed by the Company to the extent permitted by applicable rules and regulations, (iii) Alpha agreed to limit its sales
of Common Stock on each trading day to no more than 10% of the daily reported trading volume of Common Stock on the Nasdaq Stock
Market for such trading day, provided, such limitation shall terminate if the closing price of the Company’s shares of common
stock on the Nasdaq Stock Market exceeds $5.29 for five consecutive trading days and (iv) the Company will be free to waive the
terms and conditions of any lock-up agreement between the Company and any of the former shareholders of Jay Pharma Inc. without
the consent of, or notice to, Alpha once the registration statement registering the Series B Warrant Shares is declared
effective by the SEC.
The
Purchase Agreement and the Registration Rights Agreement contain customary representations, warranties and covenants by the Company,
customary conditions to closing, indemnification obligations of the Company and the Purchasers, other obligations of the parties
and termination provisions. The representations, warranties and covenants contained in the Purchase Agreement and the Registration
Rights Agreement were made only for purposes of such agreements and as of specific dates, were solely for the benefit of the parties
to such agreements, and may be subject to limitations agreed upon by the contracting parties.
The
net proceeds to the Company from the Offering, after deducting fees and expenses and the Company’s estimated offering expenses,
and excluding the proceeds, if any, from the exercise of the Pre-funded Warrants and Warrants, are expected to be approximately
$9,000,000. The Company currently intends to use these net proceeds for working capital purposes.
The
description of the terms and conditions of the Purchase Agreement, the Pre-funded Warrants, the Warrants, the Registration Rights
Agreement, and the Letter Agreement set forth herein do not purport to be complete and are qualified in their entirety by the
full text of the Purchase Agreement, the Pre-funded Warrants, the Warrants, the Registration Rights Agreement, and the Letter
Agreement, copies of which are filed as Exhibits 10.1, 4.1, 4.2, 10.2, and 10.3, respectively, to this Current Report on Form
8-K and are incorporated herein by reference.