Enveric Biosciences, Inc. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - Enveric Biosciences, Inc.	Financial_Report.xls
EX-31.1 - CERTIFICATION - Enveric Biosciences, Inc.	spzr_ex311.htm
EX-31.2 - CERTIFICATION - Enveric Biosciences, Inc.	spzr_ex312.htm
EX-32.1 - CERTIFICATION - Enveric Biosciences, Inc.	spzr_ex321.htm
EX-32.2 - CERTIFICATION - Enveric Biosciences, Inc.	spzr_ex322.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


x		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: September 30, 2011


o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 000-26460

SPATIALIZER AUDIO LABORATORIES, INC.

(Exact name of Registrant as specified in its charter)

Delaware		95-4484725
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

410 Park Avenue--15th Floor New York, New York 10022

(Address of principal corporate offices)

Telephone Number: (212) 231-8359

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes x No o

As of October 31, 2011, there were 12,142,000 shares of the Registrant’s Common Stock outstanding.

TABLE OF CONTENTS

		PAGE
PART I. FINANCIAL INFORMATION
Item 1.	FINANCIAL STATEMENTS		3-7
Item 2.	MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS		8-11
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		12
Item 4.	CONTROLS AND PROCEDURES		12
PART II. OTHER INFORMATION
Item 1.	LEGAL PROCEEDINGS		13
Item 1A.	RISK FACTORS		13
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		13
Item 3.	DEFAULTS UPON SENIOR SECURITIES		13
Item 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		13
Item 5.	OTHER INFORMATION		13
Item 6.	EXHIBITS		14
	SIGNATURES		15
	EXHIBIT 31.1
	EXHIBIT 31.2
	EXHIBIT 32.1
	EXHIBIT 32.1

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

SPATIALIZER AUDIO LABORATORIES, INC.

CONDENSED BALANCE SHEETS

	September 30,			December 31,
	2011			2010
	(unaudited)
ASSETS

Current Assets:
Cash and Cash Equivalents	$	20,158		$	1,126

Other Current Assets		4,219			-

Total Current Assets		24,377			1,126

Total Assets	$	24,377		$	1,126

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Accounts Payable	$	7,698		$	2,642

Accrued Professional Fees		-			8,000

Loans from Shareholders		-			40,000

Total Current Liabilities		7,698			50,642

Shareholders’ Equity:
Preferred shares, $.01 par value, 1,000,000 shares authorized, none issued and outstanding		-			-
Common shares, $.01 par value, 300,000,000 shares authorized, 12,142,000 and 6,500,000 shares issued and outstanding		121,420			65,000
Additional Paid-In Capital		47,250,887			47,219,856
Less receivable from shareholder		(2,853	)		-
Accumulated Deficit		(47,352,775	)		(47,334,372	)
Total Shareholders’ Equity		16,679			(49,516	)
Total Liabilities and Shareholders’ Equity	$	24,377		$	1,126

The accompanying notes are an integral part of these Statements

SPATIALIZER AUDIO LABORATORIES, INC.

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

	For the Three Month Period Ended						For the Nine Month Period Ended
	Sept 30, 2011			Sept 30, 2010			Sept 30, 2011			Sept 30, 2010

Revenues	$	-		$	-		$	-		$	-
Operating Expenses :
General and Administrative		3,687			5,613			18,403			24,478
Total expenses		3,687			5,613			18,403			24,478

Operating Loss		(3,687	)		(5,613	)		(18,403	)		(24,478	)
Loss Before Income Taxes		(3,687	)		(5,613	)		(18,403	)		(24,478	)
Income Taxes		0			0			0			(1,450	)

Net (Loss)	$	(3,687	)	$	(5,613	)	$	(18,403	)	$	(25,928	)
Basic and Diluted Earnings Per Share	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.01	)
Weighted Average Shares Outstanding		8,484,000			6,500,000			7,161,333			6,500,000

The accompanying notes are an integral part of these Statements

SPATIALIZER AUDIO LABORATORIES, INC.

CONDENSED STATEMENT OF CASH FLOWS

(unaudited)

	Nine Months Ended
	September 30,
	2011			2010
Cash Flows from Operating Activities:
Net Loss	$	(18,403	)	$	(25,928	)
Adjustments to reconcile net loss to net cash used in operating activities:
Net Change in Assets and Liabilities:
Other Current Assets		(4,219)
Accounts Payable		5,056			(11,704	)
Accrued Professional Fees		(8000	)		-
Net Cash Used In Operating Activities		(25,566	)		(37,632	)
Cash Flows From Financing Activities:
Issuance of Common Stock		20,000			-
Loans From Shareholders		24,598			40,000
Net Cash Provided by Financing Activities		44,598			40,000
Increase in Cash and Cash Equivalents		19,032			2,368
Cash and Cash Equivalents, Beginning of Period		1,126			1,792
Cash and Cash Equivalents, End of Period	$	20,158		$	4,160
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	-		$	-
Income Taxes	$	-		$	1,450



Supplemental disclosure of non-cash financing activity:
Repayment of loans from shareholders through issuance of common stock	$	64,598

The accompanying notes are an integral part of these Statements.

SPATIALIZER AUDIO LABORATORIES, INC.

Notes to Financial Statements

(1) Ability to Continue as a Going Concern, Sale of All or Substantially All of the Assets of Spatializer Audio Laboratories, Inc.

Spatializer was a developer, licensor and marketer of next generation technologies for the consumer electronics, personal computing, entertainment and cellular telephone markets. Our technology was incorporated into products offered by our licensees and customers on various economic and business terms. We were incorporated in the State of Delaware in February 1994 and are the successor company in a Plan of Arrangement pursuant to which the outstanding shares of Spatializer Audio Laboratories, Inc., a publicly held Yukon, Canada corporation, were exchanged for an equal number of shares of our common stock. Our corporate office is located at 410 Park Avenue--15th Floor, New York, New York 10022.

The foregoing interim financial information is unaudited and has been prepared from the books and records of the Company. The financial information reflects all adjustments necessary for a fair presentation of the financial condition, results of operations and cash flows of the Company in conformity with generally accepted accounting principles. All such adjustments were of a normal recurring nature for interim financial reporting. Operating results for the three and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. Accordingly, your attention is directed to footnote disclosures found in the December 31, 2010 Annual Report and particularly to Note 2 thereof, which includes a summary of significant accounting policies.

The foregoing financial information has been prepared assuming that the Company will continue as a going concern. As discussed above, the Company’s current circumstances, including significant operating losses, raise substantial doubt about the likelihood that the Company will continue as a going concern. The foregoing financial information does not include any adjustments that might result from the outcome of this uncertainty. Prior to the transactions described below, two of the Company's stockholders, who also serve as its principal officers, had advanced cash to the Company to pay for ongoing expenses.

On August 25, 2011 the Company issued 4,351,677 shares of common stock at the 8/19/11 closing price of $0.0155 per share to repay $64,598 of loans from two of the Company’s Directors (Jay Gottlieb and Gregg Schneider). In addition, 1,290,323 shares were issued to Mr. Schneider at the same price in exchange for $20,000.

We are quoted on the OTCQB of the OTC Marketplace under the symbol “SPZR”.

(2) Significant Accounting Policies

Cash and Cash Equivalents — Cash equivalents consist of highly liquid investments with original maturities of three months or less.

Earnings Per Share — Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Income Taxes — Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Use of Estimates — Management of the Company has made estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.

Fair Value of Financial Instruments — The carrying values of the Company’s current assets and liabilities at December 31, 2010 and September 30, 2011 approximated fair value due to their short-term maturity or nature.

(3) Net Operating Loss Carryforwards

At September 30, 2011, we had net operating loss carry-forwards for Federal income tax purposes of approximately $9,500,000 which were available to offset future Federal taxable income, if any, through 2030. These net operating loss carry forwards are subject to an annual limitation of approximately $1,000,000. Utilization of these loss carryforwards is subject to further limitation in the event of a change in ownership of the Company, as defined by Federal tax law.

(4) Subsequent Events

No material subsequent events have occurred since September 30, 2011 that require recognition or disclosure in the financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This information should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, the audited consolidated financial statements and the notes thereto included in the Form 10-K and the unaudited interim consolidated financial statements and notes thereto included in this report. The Company plans to continue as a public entity and continues to seek merger, acquisition and business combination opportunities with other operating businesses or other appropriate financial transactions. Until such an acquisition or business combination is effected, the Company does not expect to have significant operations.

This report contains forward-looking statements, within the meaning of the Private Securities Reform Act of 1995, which are subject to a variety of risks and uncertainties. Our actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in such forward-looking statements.

Executive Overview

Revenues were $0 for the quarter ended September 30, 2011, compared to $0 for the quarter ended September 30, 2010.

Net loss was $3,687 for the quarter ended September 30, 2011, ($0.00) basic and diluted per share, compared to a net loss of $5,613 $(0.00) per share for the quarter ended September 30, 2010.

At September 30, 2011, we had $20,158 in cash and cash equivalents as compared to $1,126 at December 31, 2010. The increase in cash resulted primarily from the sale of stock to one of our directors. We had working capital of $16,679 at September 30, 2011, as compared with negative working capital of ($49,516) at December 31, 2010.

We ceased commercial operations in 2006.

Approach to MD&A

The purpose of MD&A is to provide our shareholders and other interested parties with information necessary to gain an understanding of our financial condition, changes in financial condition and results of operations. As such, we seek to satisfy three principal objectives:

·	To provide a narrative explanation of a company’s financial statements “in plain English” that enables the average investor to see the company through the eyes of management.

·	To enhance the overall financial disclosure and provide the context within which financial information should be analyzed; and

·	To provide information about the quality of, and potential variability of, a company’s earnings and cash flow, so that investors can ascertain the likelihood and relationship of past performance being indicative of future performance.

We believe the best way to achieve this is to give the reader:

·	An understanding of our operating environment and its risks (see below and Item 1A of Part II of this Form 10-Q)

·	An outline of critical accounting policies

·	A review of our corporate governance structure

·	A review of the key components of the financial statements and our cash position and capital resources

·	A review of the important trends in the financial statements and our cash flow

·	Disclosure on our internal controls and procedures

Operating Environment

·	The market for our stock may not remain liquid and the stock price may be subject to volatility

Certain other risk factors are set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 on file with the Securities and Exchange Commission.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Our financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s current circumstances, including significant operating losses, raise substantial doubt about the likelihood that the Company will continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Key Components of the Financial Statements and Important Trends

The Company’s financial statements, including the Balance Sheets, Statements of Operations, and Statements of Cash Flows, should be read in conjunction with the Notes thereto included elsewhere in this report. MD&A explains the key components of each of these financial statements, key trends and reasons for reporting period-to-period fluctuations.

The Balance Sheet provides a snapshot view of our financial condition at the end of our current fiscal period. A balance sheet helps management and our stockholders understand the financial strength and capabilities of our business. Balance sheets can help identify and analyze trends, particularly in the area of receivables and payables. A review of cash balances compared to the prior years and in relation to ongoing profit or loss can show the ability of the Company to withstand business variations. The difference between Current Assets and Current Liabilities is referred to as Working Capital and measures how much liquid assets a company has available to build its business. This is addressed further in MD&A under Liquidity and Capital Resources.

The Statement of Operations tells the reader whether the Company had a profit or loss. It shows key sources of revenue and major expense categories. It is important to note period-to-period comparisons of each line item of this statement, reasons for any fluctuation and how costs are managed in relation to the overall revenue trend of the business. These statements are prepared using accrual accounting under generally accepted accounting standards in the United States.

The Statement of Cash Flows explains the actual sources and uses of cash.

Results of Operations

Net Loss

Our net loss for the three months ended September 30, 2011 was $3,687, compared to a net loss of $5,613 in the comparable period last year.

Operating Expenses

Operating expenses in the three months ended September 30, 2011 were $3,687, compared to operating expenses of $5,613 in the comparable period last year.

Liquidity and Capital Resources

At September 30, 2011, we had $20,158 in cash and cash equivalents as compared to $1,126 at December 31, 2010. The increase in resulted primarily from the sale of stock. We had working capital of $16,679 at September 30, 2011, as compared with negative working capital of ($49,516) at December 31, 2010.

Based on current and projected operating levels, we believe that we can maintain our liquidity position at a consistent level, on a short-term basis. However, we do not believe our current cash reserves are sufficient for us to meet our operating obligations beyond 6 -9 months without raising additional capital. There is no current source of future cash flow for the Company.

Net Operating Loss Carry forwards

At September 30, 2011, we had net operating loss carry-forwards for Federal income tax purposes of approximately $9,500,000 which were available to offset future Federal taxable income, if any, through 2030. These net operating loss carry forwards were subject to an annual limitation of approximately $1,000,000. Utilization of these loss carryforwards is subject to further limitation in the event of a change in ownership of the Company, as defined by Federal tax law.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4T. Controls and Procedures

After current management gained control of the Company in April 2008, the Company appointed a Chief Financial Officer so that the respective duties of the principal executive officer and principal financial officer are segregated and there are four functioning directors. There are three people involved in any Company financial transactions. Specifically, all bills are sent to the bookkeeper and the President/CEO authorizes all expenditures, checks are then drawn by the bookkeeper for payment based on such authorization and, finally, the CFO actually signs the check and distributes. The President/CEO has never signed a check, the CFO can not sign a check unless the bookkeeper has prepared and the bookkeeper has no check signing authority.

With regard to revenues, since the Company has discontinued operations, its only function being to find a merger partner, revenues are minimal and the foregoing internal process should reflect a substantive improvement over that of recent prior years. Consequently, as of the date of this report, the Chairman of the Board and President, acting as the principal executive officer and its principal financial officer of the Company, have concluded that our system of internal control over financial reporting and disclosure controls and procedures were effective.

As of September 30, 2011, the Company carried out an evaluation, under the supervision and with the participation of management, including the Company’s Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934. Based on that evaluation, the Company’s Principal Executive Officer and Principal Financial Officer have concluded that the Company’s disclosure controls and procedures as of the end of the period covered by this report were effective.

As of September 30, 2011, the Company carried out an evaluation, under the supervision and with the participation of management, including the Company’s Principal Executive Officer and Principal Financial Officer, and concluded that there were no changes in the Company’s internal control over financial reporting during the quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control, as compared with the assessment described in Form 10-K for the year ended December 31, 2010.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may be involved in various disputes and litigation matters arising in the normal course of business. As of November 14, 2011, we are not involved in any legal proceedings that are expected to have a material adverse effect on our financial position, results of operations or cash flows. However, litigation is subject to inherent uncertainties. Were an unfavorable ruling to occur, given the size of our Company, there exists the possibility of a material adverse impact on our results of operations of the period in which the ruling occurs. Our estimate of the potential impact on our financial position or overall results of operations for new legal proceedings could change in the future.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report, stockholders should carefully consider the factors discussed in Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2010, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the quarter ended September, 2011, 5,642,000 shares were issued to retire debt and raise capital for ongoing operations. On August 25, 2011, the Company converted $64,598 of debt owed to two of the Company’s Directors (Jay Gottlieb and Gregg Schneider) at the 8/19/11 closing price of $0.0155 per share. In addition, an investment of $20,000 at the same price per share was made by Mr. Schneider. The net effect of these transactions extinguished approximately $84,000 of negative book value, returned the balance sheet to positive net worth, and provided working capital that will be necessary to finance expenses through the end of the year. The aggregate shares issued in this Private Offering are the following: 2,334,516 shares to Gregg Schneider, CFO and 3,307,484 shares to Jay Gottlieb. CEO.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5. SUBSEQUENT EVENTS

No material subsequent events have occurred since September 30, 2011 that require recognition or disclosure in the financial statements

ITEM 6. EXHIBITS

31		Rule 13a-14(a)/15d-14(a) Certification

32		Section 1350 Certification

101.INS **		XBRL INSTANCE DOCUMENT

101.SCH **		XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

101.CAL **		XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT

101.DEF **		XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT

101.LAB **		XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT

101.PRE **		XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

	SPATIALIZER AUDIO LABORATORIES, INC. (Registrant)

Dated: November 14, 2011	By:	/s/ Jay Gottlieb
		Jay Gottlieb,
		Chairman of the Board, President, Secretary, Treasurer and Principal Executive Officer

	By:	/s/ GREGGORY SCHNEIDER
		Greggory Schneider,
		Director, Chief Financial and Principal Financial Officer

Enveric Biosciences, Inc. - FORM 10-Q - November 14, 2011

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