Complex sentence: Encoding refers to the ability to alter information into a usable form by the brain (in this case, verbal encoding); storage refers to the ability to hold information in one's mind and retrieval is the ability to recall previously stored memories.
Split into simpler sentences: Encoding refers to the ability to alter information into a usable form by the brain (in this case, verbal encoding). Storage refers to the ability to hold information in one's mind and retrieval is the ability to recall previously stored memories.