What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-15 compared with 2021-08-16 · 646 added, 337 removed, 523 unchanged (65% of the section changed)

2 unchanged sentences

Balance Sheets

and cash equivalents

expenses and other current assets

Current assets:

and equipment, net

and stockholders’ equity (deficit)

expenses and other liabilities

payable and accrued interest

derivative on convertible notes

Cash and cash

Unbilled receivable

Right-of-use asset

expenses and other current assets

Total current assets

Property and equipment, net

Liabilities and stockholders’ deficit

Current liabilities:

and contingencies (Note 6)

Stockholders’

equity (deficit)

stock, $ 0.0001 par value, 1,500,000 shares authorized, no shares issued and outstanding at June 30, 2021 (unaudited) and December

stock, $ 0.0001 par

value, 150,000,000 shares

Accounts payable

Accrued expenses and other

Lease liability

Notes payable and accrued

derivative on convertible notes

Total current liabilities

Long-term liabilities:

Notes payable, net of current

long term liabilities

Total long-term liabilities

Total liabilities

Commitments and contingencies (Note 6)

Stockholders’ deficit

Preferred stock, $ 0.0001

par value, 1,500,000

shares authorized, no

shares issued and outstanding at September 30, 2021 (unaudited)

and December 31, 2020

Common stock, $ 0.0001

par value, 150,000,000

shares authorized;

and 15,768,725

shares issued at September 30, 2021 (unaudited) and December

31, 2020, respectively;

24,255,786 and

15,768,725 shares

issued at June 30, 2021 (unaudited) and December 31, 2020, respectively;

24,255,786 and 15,768,725 shares outstanding at June

30, 2021 (unaudited) and December 31, 2020, respectively

paid-in capital

outstanding at September 30, 2021 (unaudited) and December 31, 2020, respectively

Additional paid-in capital

( 75,005,517 )

( 55,958,716 )

Ensysce Biosciences, Inc.

stockholders’ equity (deficit)

Total Ensysce Biosciences,

stockholders’ deficit

( 6,440,802 )

1 unchanged sentence

interests in stockholders’ deficit

stockholders’ equity (deficit)

stockholders’ deficit

( 6,658,427 )

liabilities and stockholders’ equity

liabilities and stockholders’ deficit

accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

Statements of Operations

Months Ended June 30,

and development

Months Ended September 30,

Federal grants

Operating expenses:

Research and development

and administrative

1 unchanged sentence

Loss from operations

income (expense):

in fair value of derivative liability

( 16,886,795 )

( 17,863,686 )

Loss on extinguishment of debt

other income (expense), net

Other income (expense):

Adjustment to initial fair value of debt

( 1,325,804 )

Issuance costs for convertible notes

Change in fair value of

Interest expense

( 1,282,820 )

Loss on extinguishment

income and expense, net

other income (expense), net

( 1,245,091 )

income (loss)

$ ( 17,199,474 )

loss attributable to noncontrolling interests

loss attributable to common stockholders

$ ( 19,108,777 )

$ ( 179,215 )

Net loss attributable to

noncontrolling interests

Net income (loss) attributable

to common stockholders

$ ( 17,163,526 )

$ ( 19,046,801 )

loss per share, basic and diluted:

loss per share attributable to common stockholders, basic and diluted

average common shares outstanding, basic and diluted

$ ( 157,225 )

Net income (loss) per basic

Net income (loss) per

share attributable to common stockholders, basic

Weighted average common shares outstanding, basic

Net income (loss) per diluted

Net income (loss) per

share attributable to common stockholders, diluted

Weighted average common shares outstanding, diluted

accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

Stockholders’

Equity (Deficit)

Noncontrolling

on March 31, 2020

Balance on June 30, 2020

$ ( 57,743,231 )

$ ( 8,337,421 )

Settlement of convertible notes

Settlement of convertible notes, shares

Issuances of common stock for business combination, net of transaction costs

Issuance of common stock for business combination, net of transaction costs, shares

Stock-based compensation

Issuance of warrants

Warrants modification

Business combination adjustment

Exercise of stock options

Exercise of stock options, shares

on June 30, 2020

Settlement of convertible notes

Settlement of convertible notes, shares

Issuance of common stock for business combination,

net of transaction costs

Issuance of common stock for business combination,

net of transaction costs, shares

Net income (loss)

Balance on September

$ ( 56,172,711 )

$ ( 6,735,405 )

Balance on March

Balance on June 30, 2021

$ ( 57,841,991 )

$ ( 243,653 )

Stock-based compensation

Issuance of warrants

Warrants modification

( 17,163,526 )

of convertible notes

of common stock for business combination, net of transaction costs

on June 30, 2021

( 17,199,474 )

Balance on September

$ ( 75,005,517 )

$ ( 279,601 )

$ ( 385,287 )

accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

Statements of Changes in Stockholders’ EQUITY (Deficit)

Stockholders’ Deficit

Stockholders’

Equity (Deficit)

Paid-In Capital

Noncontrolling

3 unchanged sentences

Stock-based compensation

( 1,727,745 )

( 1,729,721 )

Balance on June 30, 2020

Balance on September

$ ( 56,172,711 )

4 unchanged sentences

$ ( 6,658,427 )

Beginning balance, value

$ ( 55,958,716 )

3 unchanged sentences

Settlement of convertible notes

Issuance of common stock for business combination, net of transaction costs

Issuance of common stock for business combination,

net of transaction costs

Stock-based compensation

Issuance of warrants

Warrants modification

( 19,046,801 )

( 19,108,777 )

Balance on June 30, 2021

Net income (loss)

( 19,046,801 )

( 19,108,777 )

Balance on September

$ ( 75,005,517 )

$ ( 279,601 )

$ ( 385,287 )

Ending balance, value

$ ( 75,005,517 )

$ ( 279,601 )

$ ( 385,287 )

accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

Statements of Cash Flows

Months Ended June 30,

flows from operating activities:

Months Ended September 30,

Cash flows from operating

$ ( 19,108,777 )

Adjustments to reconcile net loss to net cash

used in operating activities:

Accrued interest

Accretion of discounts

on promissory notes

Change in fair value of

embedded derivative

( 1,088,272 )

to reconcile net loss to net cash used in operating activities:

of discounts on promissory notes

in fair value of embedded derivative

Loss on extinguishment of debt

in operating assets and liabilities:

expenses and other assets

Change in fair value of

convertible debt

( 1,071,099 )

Loss on extinguishment

Stock-based compensation

Adjustment to fair value

of financial instruments

Issuance of warrants for share subscription

Commitment fee for share subscription

Warrant modification

Issuance costs for

convertible notes

Changes in operating assets

and liabilities:

Unbilled receivable

Prepaid expenses and other

Accounts payable

( 1,252,740 )

expenses and other liabilities

cash used in operating activities

flows from financing activities:

from issuance of convertible notes

from issuance of promissory notes to related parties

from exercise of stock options

from issuance of common stock for business combination

from noncontrolling interest

cash provided by financing activities

in cash and cash equivalents

( 1,305,740 )

Net cash used in operating

( 4,474,364 )

Cash flows from investing

of property and equipment

Net cash used by investing

Cash flows from financing

Proceeds from issuance

of convertible notes

Issuance costs for

convertible notes

Proceeds from issuance

of promissory notes to related parties

Repayment of promissory

notes and accrued interest

Proceeds from exercise

of stock options

Proceeds from issuance

of common stock for business combination, net of transaction costs

Repayment of financed insurance

from noncontrolling interests

Net cash provided by financing

Increase in cash and cash equivalents

and cash equivalents beginning of period

and cash equivalents end of period

cash flow information:

disclosure of non-cash investing and financing activities:

value of embedded derivative at issuance

of Convertible Notes into common stock

transaction costs for business combination offset against additional paid-in capital

assets acquired from LACQ

Supplemental cash flow information:

Income tax payments

Supplemental disclosure

of non-cash investing and financing activities:

Fair value of embedded

derivative at issuance

Settlement of convertible

notes into common stock

Net assets acquired in

business combination

Proceeds from financed

insurance premiums

Share subscription facility

transaction costs

accompanying notes are an integral part of these consolidated financial statements.

13 unchanged sentences

which will be applied to the PF614 program.

In 2019, the Company commenced development work applying its TAAP and MPAR TM

technology to a methadone prodrug for use in the treatment of Opioid Use Disorder (OUD).

The Company has also developed a delivery platform

for large biomolecules utilizing single walled carbon nanotubes (SWCNT) to produce intravenously delivered immunology and gene therapy

In 2019, the Company commenced development work applying its TAAP and MPAR TM technology

to a methadone prodrug for use in the treatment of Opioid Use Disorder (OUD).

January 31, 2021, Leisure Acquisition Corp., a Delaware corporation (“LACQ”), entered into an Agreement and Plan of Merger

7 unchanged sentences

Former Ensysce became a wholly owned subsidiary of LACQ and the stockholders of Former Ensysce, as of immediately prior to the effective

time of the Merger, received shares of LACQ and hold a portion of the shares of Common Stock, par value $ 0.0001 per share (the “Common

Stock”), of LACQ.

time of the Merger, received shares of LACQ and hold a portion of the shares of Common Stock, par value $ 0.0001

per share (the “Common Stock”), of

the Closing Date, at the effective time of the Merger, LACQ changed its name from “Leisure Acquisition Corp.” to “Ensysce

6 unchanged sentences

ratio of 0.06585 .

Immediately following the Business Combination, stockholders of Former Ensysce owned approximately 71.8 % of the outstanding

common stock of the combined company.

In addition, Former Ensysce’s existing options and warrants were exchanged for equivalent

securities in Ensysce on their existing terms (with standard adjustments to exercise price and underlying shares, consistent with the

foregoing exchange ratio).

As of July 2, 2021, Ensysce’s shares of common stock are traded on the Nasdaq Capital Market (“Nasdaq”)

under the new ticker symbol “ENSC”.

Immediately following the Business Combination, stockholders of Former Ensysce owned approximately 71.8 %

of the outstanding common stock of the combined company.

In addition, Former Ensysce’s existing options and warrants were exchanged

for equivalent securities in Ensysce on their existing terms (with standard adjustments to exercise price and underlying shares, consistent

with the foregoing exchange ratio).

As of July 2, 2021, Ensysce’s shares of common stock are traded on the Nasdaq Capital Market

(“Nasdaq”) under the new ticker symbol “ENSC”.

June 2020, the Company commenced an initiative to develop a therapeutic for the treatment of certain coronavirus infections through the

23 unchanged sentences

be negatively impacted, the extent of the impact cannot be reasonably estimated at this time.

The Company currently operates in one business

segment, which is pharmaceuticals.

The Company is not organized by market and is managed and operated as one business.

A single management

team reports to the chief operating decision maker, the Chief Executive Officer.

Company currently operates in one business segment, which is pharmaceuticals.

The Company is not organized by market and is managed and

operated as one business.

A single management team reports to the chief operating decision maker, the Chief Executive Officer.

2 - BASIS OF PRESENTATION

5 unchanged sentences

and transactions have been eliminated in the consolidation.

the opinion of management, all adjustments considered necessary for a fair presentation have been included in the consolidated

financial statements.

Operating results for the three and six months ended June 30, 2021, are not necessarily indicative of the results

that may be expected for the year ending December 31, 2021.

The interim unaudited consolidated financial statements have been prepared

under the presumption that users of the interim financial information have either read or have access to the audited consolidated financial

the opinion of management, all adjustments considered necessary for a fair presentation have been included in the consolidated financial

Operating results for the three and nine months ended September 30, 2021, are not necessarily indicative of the results that

may be expected for the year ending December 31, 2021.

The interim unaudited consolidated financial statements have been prepared under

the presumption that users of the interim financial information have either read or have access to the audited consolidated financial

statements for the fiscal year ended December 31, 2020, which may be found in the Company’s Form S-1 registration statement filed

7 unchanged sentences

by a recapitalization.

The net assets of LACQ, primarily consisting of cash of $ 7.8 million and prepaid expenses of $ 1.1 million, were

recorded at historical cost with no goodwill or other intangible assets recorded.

The shares and net loss per share prior to the reverse

recapitalization have been retroactively restated to reflect the exchange ratio of 0.06585 .

The financial statements reflect the historical

operations of Ensysce.

The net assets of LACQ, primarily consisting of cash of $ 7.8

million and prepaid expenses of $ 1.1

million, were recorded at historical cost with

goodwill or other intangible assets recorded.

The shares and net loss per share prior to the reverse recapitalization have been retroactively restated to reflect the exchange ratio

The financial statements reflect the historical operations of Ensysce.

Business Combination triggered the conversion of the 2015 convertible notes, the 2018 convertible notes and the 2021 convertible note

2 unchanged sentences

conversion of the outstanding principal and interest into shares common stock of Ensysce.

The Company had recorded $ 1.2 million of deferred

transaction costs, consisting of legal and accounting fees directly related to the Business Combination, which were offset against the

proceeds of the Business Combination within additional paid-in capital.

The Company had recorded $ 1.2

million of deferred transaction costs, consisting

of legal and accounting fees directly related to the Business Combination, which were offset against the proceeds of the Business Combination

within additional paid-in capital.

accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates,

among other things, the realization of assets and satisfaction of liabilities in the normal course of business.

Company had working capital of $ 4.3

million at June 30, 2021.

In December 2020, the Company executed

an agreement with an investment group, which agreed to provide the Company with a share subscription facility of up to

$ 60.0 million

for a 36-month term following the public listing of the Company’s common stock.

The Company will control the timing and maximum

amount of drawdown under this facility and has no minimum drawdown obligation.

On June 30, 2021, the Company consummated the

Business Combination with LACQ, resulting in the Company’s shares becoming publicly listed on Nasdaq on July 2, 2021.

the Company’s shares are now publicly traded and the Company therefore has access to its $ 60.0

million share subscription facility in addition

to its working capital, the Company believes there is not substantial doubt about its ability to continue as a going concern.

Company has not generated any product revenue and had an accumulated deficit of $ 75.0

million at September 30, 2021.

assurance that profitable operations will ever be achieved, and, if achieved, could be sustained on a continuing basis.

Product development

activities, clinical and pre-clinical testing, and commercialization of the Company’s product candidates are necessary to develop

the Company’s products and will require significant additional financing.

There can be no assurance the Company will be able to

obtain such funds.

These matters, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

December 2020, the Company executed a share subscription facility with an investment group.

Under the agreement, the investor agreed

to provide the Company with a share subscription facility of up to $ 60.0

million for a 36-month term following the public

listing of the Company’s common stock.

The Company will control the timing and maximum amount of drawdown under this facility and

has no minimum drawdown obligation.

The investor will pay, in cash, a per-share amount equal to 90% of the average daily closing price

of the Company’s stock during the 30 consecutive trading days prior to the issuance of a draw notice, which shall not exceed 400%

of the average trading volume for the 30 trading days immediately preceding the draw down date.

On June 30, 2021, the Company consummated

the Business Combination with LACQ, resulting in the Company’s shares becoming publicly listed on Nasdaq on July 2, 2021.

with the public listing of the Company’s shares, the Company issued to the investor 1,106,108

warrants with a five-year term to purchase common

stock of Ensysce at an exercise price of $ 10.01

per share (Notes 3 and 8).

must pay a commitment fee to the investor of $ 1.2

million with $ 800,000

due on the first anniversary of the public listing

date and $ 400,000

due on the 18-month anniversary of the public

listing date.

The commitment fee can be paid from the proceeds of a draw against the facility or in freely tradable common stock of the

September 2021, the Company entered into a $ 15.9

million convertible note financing agreement

with institutional investors, of which, as of September 30, 2021, the Company had drawn $ 5.0

(See Notes 7 and 11 for additional information.)

The agreement limits the Company’s ability to execute certain

debt and equity financings, including its existing $ 60.0

million share subscription facility, while the

convertible notes are outstanding.

Without the availability of proceeds through the share subscription facility, existing cash resources

are not sufficient to fund current planned operations.

While the Company believes in the viability of its strategy to ultimately realize

revenues and in its ability to raise additional funds, management cannot be certain that additional funding will be available on acceptable

terms, or at all.

The Company’s ability to continue as a going concern is dependent upon its ability to obtain adequate financing

and achieve profitable operations.

As a result, these plans do not alleviate substantial doubt about the Company’s ability to continue

as a going concern for a period of 12 months following the date these consolidated financial statements were issued.

consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as

a going concern.

3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

7 unchanged sentences

of deferred tax assets resulting from net operating losses, the valuation of common stock, warrants, options to purchase the Company’s

common stock, and the debt with embedded derivative instruments in notes payable.

common stock, and the notes payable.

and Cash Equivalents

13 unchanged sentences

Depreciation expense of $ 50

was recognized for the three and six months

ended June 30, 2021, respectively.

was recognized for the three and nine months

ended September 30, 2021, respectively.

Depreciation expense of $ 50

was recognized for the three and six months ended

June 30, 2020, respectively.

Depreciation expense is classified in general and administrative expense in the accompanying consolidated

statements of operations.

was recognized for the three and nine months

ended September 30, 2020, respectively.

Depreciation expense is classified in general and administrative expense in the accompanying

consolidated statements of operations.

and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets

7 unchanged sentences

There were no such losses for

the three and six months ended June 30, 2021 and 2020.

Financial Instrument s

the three and nine months ended September 30, 2021 and 2020.

Financial Instruments

Company does not use derivative instruments to hedge exposures to interest rate, market, or foreign currency risks.

40 unchanged sentences

a current transaction between willing parties.

As of June 30, 2021 and December 31, 2020, the recorded values of cash and cash equivalents,

As of September 30, 2021 and December 31, 2020, the recorded values of cash and cash equivalents,

prepaid expenses, accounts payable, and accrued expenses and other liabilities approximate their fair values due to the short-term nature

of these items.

carrying value of outstanding notes payable approximates the estimated aggregate fair value as the embedded contingent put option is

recognized at fair value and classified with the debt host.

The put option allows certain notes payable to be converted into common stock,

contingent upon completion of an equity financing transaction with gross proceeds above certain thresholds.

The fair value estimate of

the embedded put option is based on the probability-weighted discounted value of the put feature and represents a Level 3 measurement.

Significant assumptions used to determine the fair value of the put feature include the estimated probability of exercise of the put

option and the discount rate used to calculate fair value.

The estimated probability of exercise is based on management’s expectation

for future equity financing transactions.

The discount rate is based on the weighted average effective yield of notes payable previously

issued by the Company, adjusted for changes in market yields of healthcare sector CCC-rated debt.

As of December 31, 2020, assumptions

included a probability of exercise of the put option of 10 % and a discount rate of 42.9 %.

As noted above, all outstanding derivative

liabilities were settled upon the conversion of outstanding notes payable upon the consummation of the merger.

Refer to Note 7 for details

of the conversion.

following table presents assets and liabilities measured and recorded at fair value on the Company’s consolidated balance sheet

September 24, 2021, the Company issued convertible notes with a face value of $ 5.3 million.

The Company elected the fair value option

to account for the convertible notes as it believes the fair value option provides users of the financial statements with greater ability

to estimate the outcome of future events as facts and circumstances change, particularly with respect to changes in the fair value of

the common stock underlying the conversion option and redemption feature.

The Company uses a Monte Carlo model to estimate the fair value

of the notes, which relies on unobservable Level 3 inputs.

Changes in the fair value of the notes are recognized through earnings for

each reporting period.

Refer to Note 7 for details of the terms and conditions of the convertible notes.

carrying value of outstanding notes payable at December 31, 2020 approximates the estimated aggregate fair value as the embedded contingent

put option is recognized at fair value and classified with the debt host.

The put option allows certain notes payable to be converted

into common stock, contingent upon completion of an equity financing transaction with gross proceeds above certain thresholds.

value estimate of the embedded put option is based on the probability-weighted discounted value of the put feature and represents a Level

3 measurement.

Significant assumptions used to determine the fair value of the put feature include the estimated probability of exercise

of the put option and the discount rate used to calculate fair value.

The estimated probability of exercise is based on management’s

expectation for future equity financing transactions.

The discount rate is based on the weighted average effective yield of notes payable

previously issued by the Company, adjusted for changes in market yields of healthcare sector CCC-rated debt.

As of December 31, 2020,

As of June 30, 2021, all contingent put options were settled upon conversion of the notes at the closing of

assumptions included a probability of exercise of the put option of 10 %

and a discount rate of 42.9 %.

As noted above, all outstanding derivative liabilities were settled upon the conversion of outstanding notes payable upon the consummation

of the Business Combination.

Refer to Note 7 for details of the conversion.

September 24, 2021, the Company issued liability classified warrants in connection with the issuance of convertible notes.

uses a Black Scholes model to estimate the fair value of the warrants, which relies on unobservable Level 3 inputs.

Changes in the fair

value of the warrants are recognized through earnings for each reporting period.

Refer to Note 8.

following tables present assets and liabilities measured and recorded at fair value on the Company’s consolidated balance sheet

as of September 30, 2021 and December 31, 2020.

As of September 30, 2021, all contingent put options were settled upon conversion of

the notes at the closing of the Business Combination.

OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

December 31, 2020

Contingent put option

following table summarizes the change in fair value of the Company’s Level 3 contingent put options:

Convertible note

Liability classified warrants

following table summarizes the change in fair value of the Company’s Level 3 assets and liabilities:

OF CHANGE IN FAIR VALUE OF COMPANY’S LEVEL 3

in fair value

For the nine months ended September 30, 2021

Contingent put option

Convertible notes

Liability classified warrants

Fair value, December 31, 2020

Change in fair value

( 2,149,499 )

Note 7 for further details on the settlement of the embedded contingent put option.

( 1,071,099 )

Fair value, September 30, 2021

September 2018, the National Institutes of Health (“NIH”) through the National Institute on Drug Abuse awarded the Company

15 unchanged sentences

of its TAAP/MPAR TM abuse deterrent technology for Opioid Use Disorder (“OUD”) (the “OUD Grant”).

The total approved budget for the two-year period was approximately $ 5.4

total approved budget for the two-year period was approximately $ 5.4

Company concluded the government grants are not within the scope of Accounting Standards Codification Topic 606, Revenue from Contracts

15 unchanged sentences

OF REVENUE RECOGNIZATION UNDER GRANTS

Three months ended

Six months ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Months Ended September 30,

requested or eligible to be requested through the NIH payment management system, but for which cash has not been received, are presented

20 unchanged sentences

of management’s judgment.

For the three and six months ended June 30, 2021 and 2020, stock-based compensation costs are recorded

For the three and nine months ended September 30, 2021 and 2020, stock-based compensation costs are recorded

in general and administrative expenses in the consolidated statements of operations.

time-to-time equity classified awards may be modified.

On the modification date, the Company estimates the fair value of the awards

immediately before and immediately after modification.

The incremental increase in fair value is recognized as expense immediately

to the extent the underlying equity awards are vested and on a straight-line basis over the same remaining amortization schedule as

the unvested underlying equity awards.

taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an

15 unchanged sentences

penalties accrued related to unrecognized tax benefits as income tax expense.

Loss per Share

basic net loss per share is calculated by dividing the Company’s net loss attributable to common stockholders by the weighted average

number of common shares outstanding during the year.

The diluted net loss per share is calculated by dividing the Company’s net

loss attributable to common stockholders by the diluted weighted average number of common shares outstanding during the year.

The following

weighted average shares have been excluded from the calculations of diluted weighted average common shares outstanding because they would

have been anti-dilutive:

OF WEIGHTED AVERAGE SHARES OF ANTIDILUTIVE SECURITIES

Three Months Ended June 30,

Six Months Ended June 30,

basic earnings per share is calculated by dividing the Company’s net income or loss attributable to common stockholders by the

weighted average number of common shares outstanding during the period.

The diluted earnings per share is calculated by dividing the

Company’s net earnings attributable to common stockholders by the diluted weighted average number of common shares outstanding

during the period, determined using the treasury stock method and the average stock price during the period.

A reconciliation of the

numerators and denominators of the basic and diluted earnings per share calculations follows:

SCHEDULE OF EARNINGS PER SHARE RECONCILIATION

(loss) attributable to common stockholders

$ ( 17,163,525 )

Weighted average shares outstanding, basic

Weighted average

dilutive stock options

Weighted average

shares outstanding, diluted

Net income (loss) per share attributable

to common stockholders, basic

Net income (loss) per share attributable

to common stockholders, diluted

following weighted average shares have been excluded from the calculations of diluted weighted average common shares outstanding because

they would have been anti-dilutive:

OF WEIGHTED AVERAGE SHARES OF ANTI-DILUTIVE SECURITIES

Months Ended September 30,

Stock options

39 unchanged sentences

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

research and development

prepaid expenses

prepaid expenses and other current assets

Prepaid insurance

Prepaid research and development

Other prepaid expenses

Total prepaid expenses

and other current assets

5 – ACCRUED EXPENSES AND OTHER LIABILITIES

1 unchanged sentence

OF ACCRUED EXPENSES AND OTHER LIABILITIES

research and development

scientific advisory board fees

accrued liabilities

grant revenue

accrued expenses and other liabilities

Consultant stock compensation expenses

Share subscription facility commitment fees

Professional fees

Accrued research and development

Accrued scientific advisory board fees

Deferred grant revenue

Other accrued liabilities

Total accrued expenses

and other liabilities

long-term liabilities consisted of the following:

OF OTHER LONG-TERM LIABILITIES

Share subscription facility commitment

Liability classified warrants

Total other long-term

6 - COMMITMENTS AND CONTINGENCIES

of June 30, 2021 and December 31, 2020, there were no pending legal proceedings against the Company that are expected to have a material

adverse effect on cash flows, financial condition or results of operations.

From time to time, the Company could become involved in disputes

and various litigation matters that arise in the normal course of business.

These may include disputes and lawsuits related to intellectual

property, licensing, contract law and employee relations matters.

Periodically, the Company reviews the status of significant matters,

if any exist, and assesses its potential financial exposure.

If the potential loss from any claim or legal claim is considered probable

and the amount can be estimated, the Company accrues a liability for the estimated loss.

of September 30, 2021 and December 31, 2020, there were no pending legal proceedings against the Company that are expected to have a

material adverse effect on cash flows, financial condition or results of operations.

From time to time, the Company could become involved

in disputes and various litigation matters that arise in the normal course of business.

These may include disputes and lawsuits related

to intellectual property, licensing, contract law and employee relations matters.

Periodically, the Company reviews the status of significant

matters, if any exist, and assesses its potential financial exposure.

If the potential loss from any claim or legal claim is considered

probable and the amount can be estimated, the Company accrues a liability for the estimated loss.

Legal proceedings are subject to uncertainties,

2 unchanged sentences

As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation.

See Note 11 for additional information about legal proceedings.

the three and six months ended June 30, 2020, the Company leased office space on a month-to-month basis.

July 12, 2021, following the Business Combination with LACQ, the Company’s former financial advisor filed an action against the

Company and its Chief Executive Officer alleging that the common stock and warrants issued to the former advisor in satisfaction of its

advisory fee should have been registered and immediately tradeable.

On August 3, 2021, the parties entered into a settlement agreement

whereby the former advisor would have their common stock and the common stock underlying their warrants registered on the Company’s

resale Registration Statement on Form S-1 that it filed on August 9, 2021 (the “Resale Registration Statement”).

the warrants would be modified to allow for cashless exercise and to reduce the exercise price from $ 11.50 /share

to $ 10.00 /share.

In consideration for this, both parties agreed to release the other from any past, present, or future claims.

In addition, the

former advisor agreed to immediately stay the proceedings and inform the Superior Court of a conditional settlement and to dismiss the

lawsuit with prejudice five days following the effectiveness of the Resale Registration Statement.

See Note 11 for additional information.

the three and nine months ended September 30, 2020, the Company leased office space on a month-to-month basis.

August 2020, the Company entered into an agreement to lease office space.

1 unchanged sentence

will terminate October 31, 2021 with no option to renew.

As of June 30, 2021, the future lease payments totaled $ 10,200 .

Company recognized total rent expense of $ 7,062 and $ 14,123 in the three and six months ended June 30, 2021, respectively.

recognized total rent expense of $ 5,721 and $ 15,448 in the three and six months ended June 30, 2020, respectively.

August 2021, the Company entered into an amendment of the aforementioned lease, whereby the term of the lease was extended through October

31, 2022 with no option to renew.

The amendment resulted in a modification of the lease under ASC 842 and the Company remeasured the

lease liability as of the amendment date.

of September 30, 2021, the future lease payments totalled $ 34,068 .

Company recognized total rent expense of $ 11,781

in the three and nine months ended September

30, 2021, respectively.

The Company recognized total rent expense of $ 10,807

in the three and nine months ended September

30, 2020, respectively.

compensation subject to shareholder approval

July 2021, the Company engaged two consultants to perform certain public and investor relations services in consideration for warrants

to purchase 500,000

shares of common stock

with a five -year

term and an exercise price of $ 6.28

shares of common stock each, and 200,000

restricted stock units each.

The restricted stock

units vest over one

year with 50 %

of the vesting contingent upon certain market conditions.

These equity awards are contingent upon shareholder approval of an amended

and restated 2021 Omnibus Plan at a special shareholder meeting scheduled to occur in December 2021, whereby the warrants would

be replaced by non-qualified stock options with similar terms.

As the Company did not identify a grant date for the equity awards

as of September 30, 2021, it did not record these instruments in equity and instead recorded a liability and an expense for the

estimated value of services received during the period.

7 - NOTES PAYABLE

following table provides a summary of the Company’s outstanding debt as of June 30, 2021:

Principal balance

Accrued interest

Unamortized debt discount

Net debt balance

2020 promissory notes

2021 promissory notes

following table provides a summary of the Company’s outstanding debt as of September 30, 2021:

value adjustment

2021 convertible notes

$ ( 1,071,099 )

Financed insurance

$ ( 1,071,099 )

following table provides a summary of the Company’s outstanding debt as of December 31, 2020:

7 unchanged sentences

OF INTEREST EXPENSE DEBT

interest accrual

discount amortization

Months Ended September 30,

Stated interest accrual

Debt discount amortization

Convertible Notes Payable

38 unchanged sentences

and no gain or loss was recognized.

Promissory Notes Payable

the year ended December 31, 2020, the Company received financing totaling $ 100,000 under a series of unsecured promissory notes with

the Chief Executive Officer and a board member.

The promissory notes bear interest at a rate of 10 % per annum and mature December 31,

2021 or upon certain financing transactions, whichever is earlier.

Convertible Notes Payable

14 unchanged sentences

to be bifurcated from the debt host and measured at fair value with changes in fair value recorded in earnings (see Note 3).

Promissory Notes Payable

the year ended December 31, 2020, the Company received financing totaling $ 100,000

under a series of unsecured promissory notes

with the Chief Executive Officer and a board member.

The promissory notes bear interest at a rate of 10 %

per annum and mature December 31, 2021 or upon certain financing transactions, whichever is earlier.

The notes were repaid in full in

Convertible Note Payable

8 unchanged sentences

Promissory Notes

March and May 2021, the Company received financing totaling $ 350,000 under unsecured promissory notes issued to related parties including

the Chief Executive Officer and members of the board of directors.

The notes mature on the earlier of June 30, 2022 or the Company’s

receipt of gross proceeds of at least $ 2.0 million from the sale of common or preferred stock and bear interest at a rate of 10 % per

March and May 2021, the Company received financing totaling $ 350,000

under unsecured promissory notes issued to related

parties including the Chief Executive Officer and members of the board of directors.

The notes mature on the earlier of June 30, 2022

or the Company’s receipt of gross proceeds of at least $ 2.0

million from the sale of common or preferred

stock and bear interest at a rate of 10 %

The notes were repaid in full in July 2021.

of Convertible Notes Payable

June 30, 2021, the Company consummated the Business Combination with LACQ, which triggered the automatic conversion into common

stock of the 2015 convertible notes payable, the 2018 convertible notes payable, and the 2021 convertible notes

In connection with certain closing conditions, the 2020 convertible notes were amended to provide for automatic conversion

of the outstanding principal and interest into common stock.

The modification resulted in a loss on extinguishment of debt of $ 347,566

based on the share price on the date of

June 30, 2021, the Company consummated the Business Combination with LACQ, which triggered the automatic conversion into common stock

of the 2015 convertible notes payable, the 2018 convertible notes payable, and the 2021 convertible notes payable.

In connection with

certain closing conditions, the 2020 convertible notes were amended to provide for automatic conversion of the outstanding principal

and interest into common stock.

The modification resulted in a loss on extinguishment of debt of $ 347,566 based on the share price on

the date of conversion.

Company applied ASC 470-20-40-1 to the accounting of the conversion, which requires the accelerated recognition of unamortized debt discounts

3 unchanged sentences

table below summarizes the conversion of each class of notes payable:

OF CONVERTIBLE DEBT

Immediately prior to merger

Carrying value of debt converted

Shares of common stock issued

Outstanding debt,

June 30, 2021

SCHEDULE OF CONVERTIBLE DEBT

prior to Business Combination

value of debt converted

of common stock issued

Convertible Note

2 unchanged sentences

Convertible Note

2021 Convertible Notes Payable

September 24, 2021, the Company entered into an agreement with institutional investors to issue $ 15.9

million of convertible notes (“Convertible

The agreement provides for two closings:

the first closing for $ 5.3

million (resulting in net proceeds of $ 4.7

million) and closed on

September 24, 2021.

The second closing for $ 10.6

million was completed in the fourth quarter

of 2021 (See Note 11 for additional information).

proceeds of the sale of the securities shall be used for working capital purposes subject to certain customary restrictions and secured

by the Company’s rights to its patents and licenses.

The Company may not issue any additional debt or equity without the

prior written consent of the holders.

notes mature on June 23, 2023 and bear interest at a rate of 5 % per annum, in addition to an original issue discount of 6 % .

The interest may be settled in cash or shares at the option

of the Company and is payable together with monthly redemptions of the outstanding principal amount of the debt.

The Company recorded

$ 4,417 of interest expense in the third quarter of 2021 related to the notes.

Company elected to apply the fair value option to the measurement of the Convertible Notes and accordingly recorded a charge

to other income (expense), net for issuance costs of $ 500,158 .

The initial fair value of the debt at issuance was $ 5.3 million.

The Company remeasured the fair value of the debt as of September

30, 2021 and recognized a gain of $ 1.1 million as the fair value of the Convertible Notes had decreased to $ 4.2 million due to a

decrease in the value of the conversion option resulting from a decrease in the price of the Company's common stock.

convertible notes may be converted into the Company’s common stock at the option of the holder in whole or in part at the

conversion price of $ 5.87 ,

subject to a beneficial

ownership limitation of 4.99% (subject to adjustment).

The Company must reserve sufficient shares of authorized common stock to effect the conversion of the convertible notes and payment of

The shares were registered for public resale under a registration statement.

the Company’s option, the Company may redeem some or all of the then-outstanding principal amount of the convertible notes for

cash in an amount equal to 100% of the outstanding principal amount of the principal to be redeemed, plus accrued but unpaid interest,

plus all other amounts due with respect to the convertible notes.

January 1, 2022, and the first of each subsequent month, terminating upon the full redemption of the Convertible Notes (each a “Monthly

Redemption Date”), the Company shall redeem the Monthly Redemption Amount (defined below), payable in cash or shares.

number of shares to be settled shall be based on a conversion price equal to the lesser of (a) $5.87 and (b) 92 %

of the average of the three lowest volume-weighted average prices (“VWAP”) during the 10 consecutive trading days

prior to the applicable Monthly Redemption Date.

The Company may not pay the Monthly Redemption Amount in shares unless the applicable

conversion price is greater than or equal to $0.78 and

the Company has been in compliance with customary requirements under the agreement, unless waived in writing by the holder.

Monthly Redemption Amount is defined as 1/18 th of the original principal amount, plus accrued but unpaid interest, plus any

other amounts due to the holder with respect to the Convertible Notes.

If the Company elects to settle such redemptions in shares (with

a total maximum of 4,855,108 shares issuable), the Monthly Redemption Amount is calculated based on 92% of the average of the lowest

three VWAPs in the ten trading days prior to the Monthly Redemption Date.

If the Company elects to settle redemptions in cash, the Monthly

Redemption Amount shall include an 8% premium of the Monthly Redemption Amount.

at any time while the Convertible Notes are outstanding, the Company carries out one or more capital raises in excess of $ 5.0

million, the holder has the right to require

the Company to use up to 20 %

of the gross proceeds of such transaction to redeem all or a portion of the convertible notes for an amount in cash equal to the cash

Mandatory Redemption Amount (i.e., 108% of outstanding principal and unpaid interest).

insurance premiums

the nine months ended September 30, 2021, the Company financed its directors and officers liability insurance in the amount of $ 867,300 .

The Company will pay

a total of $ 12,078 in interest from inception through March 2022 when the note will be paid in full.

8 - STOCKHOLDERS’ EQUITY

June 2021, in connection with the Business Combination, the Company amended and restated its Certificate of Incorporation

to authorize 150,000,000

shares of common stock and 1,500,000

shares of preferred stock, both with par value

equal to $ 0.0001 .

As of June 30, 2021 and December 31, 2020, there were no

June 2021, in connection with the Business Combination, the Company amended and restated its Certificate of Incorporation to authorize

150,000,000 shares

of common stock and 1,500,000 shares

of preferred stock, both with par value equal to $ 0.0001 .

As of September 30, 2021 and December 31, 2020, there were no

shares of preferred stock issued and outstanding.

2 unchanged sentences

Former Ensysce common stock.

shares of common stock outstanding were assumed by the Company.

shares of common stock were issued in settlement of $ 5.8 million of convertible debt.

Refer to Note 7 for details of the conversion.

shares of common stock outstanding were assumed

by the Company.

shares of common stock were issued in settlement

million of convertible debt.

shares of restricted common stock were issued in

exchange for previously outstanding warrants to purchase Former Ensysce common stock.

shares of common stock were issued in settlement of a termination agreement with a strategic advisor dated January 2021.

shares of common stock were issued in settlement of deferred underwriting costs.

shares of common stock were issued in settlement

of a termination agreement with a strategic advisor dated January 2021.

shares of common stock were issued in settlement

of deferred underwriting costs.

February 2013, the Company issued 13,170

7 unchanged sentences

On June 30, 2021, the Company issued 19,755

shares of common stock in settlement

of the warrants, with such shares subject to restriction until certain conditions are met.

June 30, 2021, as a result of the Closing, the Company assumed a total of 18,901,290

shares of common stock in settlement of the warrants,

with such shares subject to restriction until certain conditions are met.

30, 2021, outstanding warrants to purchase shares of common stock are as follows:

OF OUTSTANDING WARRANT

Underlying Outstanding Warrants

Classification

LACQ warrants

Share subscription facility

Convertible note

June 30, 2021, as a result of the Closing, the Company assumed a total of 18,901,290 warrants previously issued by LACQ.

The warrants provide

holders the right to purchase common stock at a strike price of between $ 10.00 and $ 11.50 per share and expire June

30, 2026 , five years following the completion of the Business Combination.

A total of 10,000,000 of the outstanding warrants are public warrants

which trade on the OTC Pink Open Market under the ticker symbol ENSCW.

The remaining 8,901,290 warrants are private warrants with restrictions

on transfer and which have the right to a cashless exercise at the option of the holder.

On August 3, 2021, the Company

entered into an agreement with an existing warrant holder to reduce the exercise price of 500,000

warrants issued on June 30, 2021 from $ 11.50

resulting in an incremental increase in their fair value of $ 56,591 ,

recognized in general and administrative expense.

On June 30, 2021, as a result of the Closing, the Company assumed a total of 18,901,290

warrants previously issued by LACQ.

The warrants provide holders the right to purchase common stock at a strike price of $ 11.50

per share and expire June

30, 2026 , five

years following the completion of the

The warrants provide holders the right to purchase common stock at a strike price of between

share and expire June 30, 2026 ,

five years following the completion

of the Business Combination.

A total of 10,000,000

of the outstanding warrants are public warrants

which trade on the OTC Pink Open Market under the ticker symbol ENSCW.

of the outstanding warrants are public warrants which trade on the OTC Pink Open Market under the ticker symbol ENSCW.

The remaining

warrants are private warrants with restrictions

on transfer and which have the right to a cashless exercise at the option of the holder.

warrants are private warrants with restrictions on transfer and which have the right to a cashless exercise at the option of

On August 3, 2021, the Company entered into an agreement with an existing warrant holder to reduce the exercise price of

warrants issued on June 30, 2021 from $ 11.50

resulting in an incremental increase in their fair value of $ 56,591 ,

recognized in general and administrative expense.

On July 2, 2021,

upon public listing of the Company’s shares, the Company issued 1,106,108

warrants to purchase common stock pursuant to the share subscription

The warrants have a three -year

life and an exercise price of $ 10.01

The grant date fair value of the warrants, based

on the $ 14.49

stock price on the date of issuance, was $ 11.6

million, and was recognized in general and administrative

expense due to the uncertainty of future issuance of shares under the share subscription facility.

On September 24, 2021, the

Company issued 361,158

warrants in connection with the issuance of

the convertible notes.

The warrants were immediately exercisable with an exercise price of $ 7.63

and expire on September 23, 2026 .

fair value of each warrant issued has been determined using the Black-Scholes option-pricing model.

The material assumptions used in the Black-Scholes model in estimating the fair value of the warrants issued for the periods presented were as

SCHEDULE OF WARRANTS FAIR VALUE ESTIMATION ASSUMPTIONS

Liability classified warrants (grant date 9/24/2021)

Liability classified warrants (remeasured at 9/30/2021)

Exercise price

Expected term (years)

Risk free rate

9 - STOCK-BASED COMPENSATION

1 unchanged sentence

2016 Stock Incentive Plan (the “2016 Plan”).

The 2016 Plan,

as amended, allowed for the issuance of non-statutory stock options, incentive stock options and other equity awards to Former

Ensysce’s employees, directors, and consultants.

The 2016 Plan, as

amended, allowed for the issuance of non-statutory stock options, incentive stock options and other equity awards to Former Ensysce’s

employees, directors, and consultants.

March 2019, Former Ensysce adopted the 2019 Directors Plan, which was amended in August 2020.

The 2019 Directors Plan, as amended,

allowed for the issuance of shares of Former Ensysce’s common stock pursuant to the grant of non-statutory stock

The 2019 Directors Plan, as amended, allowed

for the issuance of shares of Former Ensysce’s common stock pursuant to the grant of non-statutory stock options.

addition to the 2016 Plan and the 2019 Directors Plan, the Company has two legacy equity incentive plans (the “Legacy Plans”).

1 unchanged sentence

through August 2024.

of June 30, 2021 and December 31, 2020, the options outstanding under each plan were as follows:

SCHEDULE OF STOCK OPTION OUTSTANDING

2019 Directors Plan

Total options outstanding

June 30, 2021, in connection with the Business Combination, the Company assumed the 2021 Omnibus Incentive Plan, which was approved

by LACQ’s board and subsequently LACQ’s stockholders at a special stockholder meeting on June 28, 2021.

Omnibus Incentive Plan provides for the conversion with existing terms of the 4,444,068

options outstanding under Former Ensysce

stock plans and reserves for issuance an additional 1,000,000

connection with the Business Combination, the Company assumed the 2021 Omnibus Incentive Plan (the “2021 Omnibus Plan”),

which was approved by LACQ’s board and subsequently LACQ’s stockholders at a special stockholder meeting on June 28, 2021.

The 2021 Omnibus Plan provides for the conversion with existing terms of the 4,444,068

options outstanding under Former Ensysce stock

plans and reserves for issuance an additional 1,000,000

shares for future awards under the 2021 Omnibus

Incentive Plan.

No further awards may be made under the Former Ensysce stock plans.

the three and six months ended June 30, 2020, the Company granted stock options to purchase an aggregate of 65,850 shares of common stock

to a member of the board of directors.

The options vest over three years and have an exercise price of $ 3.35 per share.

Company recognized within general and administrative expense stock-based compensation expense of $ 36,373 and $ 80,193 for the three and

six months ended June 30, 2021, respectively.

The Company recognized within general and administrative expense stock-based compensation

expense of $ 36,065 and $ 68,551 for the three and six months ended June 30, 2020, respectively.

During the three and six months ended

June 30, 2021 and 2020, there was no stock-based compensation allocated to research and development expense.

following table summarizes the Company’s stock option activity during the six months ended June 30, 2021:

SCHEDULE OF STOCK OPTION ACTIVITY

Weighted average

Exercise price

Remaining contractual life

Intrinsic value

of September 30, 2021 and December 31, 2020, the options outstanding under each plan were as follows:

OF STOCK OPTION OUTSTANDING

2019 Directors Plan

2021 Omnibus Plan

Total options outstanding

the three and nine months ended September 30, 2020, the Company granted stock options to purchase an aggregate of 65,850

shares of common stock to members of the board

of directors.

The options vest over three

years and have an exercise price of $ 3.35

Company recognized within general and administrative expense stock-based compensation expense of $ 24,833

and $ 105,026

for the three and nine months ended September

30, 2021, respectively.

The Company recognized within general and administrative expense stock-based compensation expense of $ 51,510

and $ 120,061

for the three and nine months ended September

30, 2020, respectively.

During the three and nine months ended September 30, 2021 and 2020, there was no

stock-based compensation allocated to research

and development expense.

following table summarizes the Company’s stock option activity during the nine months ended September 30, 2021:

OF STOCK OPTION ACTIVITY

contractual life

Outstanding at December 31, 2020

Expired / Forfeited

Outstanding at June 30, 2021

Exercisable at June 30, 2021

Outstanding at September 30, 2021

Exercisable at September 30, 2021

Vested and expected to vest

fair value of each stock option granted has been determined using the Black-Scholes option-pricing model.

The material factors incorporated

in the Black-Scholes model in estimating the fair value of the options granted for the periods presented were as follows:

SCHEDULE OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS

Six months ended

June 30, 2020

The material assumptions

used in the Black-Scholes model in estimating the fair value of the options granted for the periods presented were as follows:

OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS

Exercise price

22 unchanged sentences

to pay any dividends on the Company’s common stock.

weighted-average grant date fair value of options granted during the six months ended June 30, 2020 was $ 2.21 .

weighted-average grant date fair value of options granted during the nine months ended September 30, 2020 was $ 2.20 .

There were no

options granted during the six months

ended June 30, 2021.

of June 30, 2021, the Company had an aggregate of $ 79,259 of unrecognized share-based compensation cost, which is expected to be recognized

over the weighted average period of 1.9 years.

options granted during the nine months ended

September 30, 2021.

of September 30, 2021, the Company had an aggregate of $ 54,427

of unrecognized share-based compensation cost,

which is expected to be recognized over the weighted average period of 1.68

Reserved for Future Issuance

following shares of common stock are reserved for future issuance:

SCHEDULE OF COMMON STOCK FUTURE ISSUANCE

OF COMMON STOCK FUTURE ISSUANCE

Stock options outstanding

Stock options available for future grant under 2021 Omnibus Incentive Plan

Stock options available for future grant under

2021 Omnibus Incentive Plan

Convertible notes outstanding

Warrants outstanding

Total shares of common stock reserved for future issuance

Total shares of common

stock reserved for future issuance

10 - RELATED PARTIES

Company paid cash compensation during the three and six months ended

June 30, 2021 of $ 10,752

Company paid cash compensation during the three and nine months ended September 30, 2021 of $ 3,584

and $ 43,898 ,

respectively, to the Chief Executive Officer through a separate operating company with which the Chief Executive Officer is affiliated.

Such cash compensation totaled $ 38,967 for the three and six months ended June 30, 2020.

As of June 30, 2021 and December 31,

2020, the Company owed $ 3,584

Such cash compensation totalled $ 38,967

for the three and nine months ended September

As of September 30, 2021 and December 31, 2020, the Company owed $ 0

and $ 12,989 ,

respectively, in accounts payable to the separate operating company.

Company issued a series of convertible notes to the Chairman of the Board as described in Note 7, which totaled $ 2.5

Company issued a series of convertible notes to the Chairman of the Board as described in Note 7, which totalled $ 2.5

million as of December 31, 2020.

All outstanding

notes converted into common stock upon the closing of the merger on June 30, 2021.

of June 30, 2021 and December 31, 2020, the Company had promissory notes outstanding which totaled $ 450,000 and $ 100,000 , respectively,

to three members of the board of directors, including the Chief Executive Officer and Chairman of the Board, as described in Note 7.

notes converted into common stock upon the closing of the Business Combination on June 30, 2021.

of September 30, 2021 and December 31, 2020, the Company had promissory notes outstanding which totalled $ 0

and $ 100,000 ,

respectively, to three members of the board of directors, including the Chief Executive Officer and Chairman of the Board, as described

11 - SUBSEQUENT EVENTS

July 2, 2021, the Company’s shares became publicly listed on Nasdaq under the ticker symbol ENSC.

Pursuant to the

terms of a $ 60.0 million share subscription facility, the public listing caused the Company to issue to an investor

warrants with an exercise price of $ 10.01

per share and a three-year

contractual term.

In addition, on the July

2, 2021 public listing date, the Company became obligated to pay a commitment fee of $ 1.2

million, with $ 800,000 due on the first anniversary

of the public listing date and $ 400,000 due on the 18-month anniversary of the public listing date.

The commitment fee may be paid from

the proceeds of a draw against the facility or in freely tradable common stock of the Company.

July 12, 2021, following the Business Combination with LACQ, the Company’s former financial advisor filed an action against

the Company and its Chief Executive Officer alleging that the common stock and warrants issued to the former advisor in satisfaction

of its advisory fee should have been registered and immediately tradeable.

On August 3, 2021, the parties entered into a settlement agreement

whereby the former advisor would have their common stock and the common stock underlying their warrants registered on the Company’s

resale Registration Statement on Form S-1 that it filed on August 9, 2021 (the “Resale Registration Statement”).

addition, the warrants would be modified to allow for cashless exercise and to reduce the exercise price from $ 11.50 /share

to $ 10.00 /share.

In consideration for this, both parties agreed to release the other from any past, present or future claims.

In addition, the former

advisor agreed to immediately stay the proceedings and inform the Superior Court of a conditional settlement and to dismiss the lawsuit

with prejudice five days following the effectiveness of the Resale Registration Statement.

On July 15, 2021, the Company repaid the outstanding 2020

promissory notes and 2021 promissory notes in full.

July 22, 2021, the Company engaged consultants to perform certain public and investor relations services in consideration for 500,000

shares of common stock issuable upon exercise

of 500,000 warrants with a five -year

term and an exercise price of $ 6.28 ,

shares of common stock, and 200,000

restricted stock units.

The restricted stock

units vest over one

year with 50 %

of the vesting contingent upon certain market conditions.

October 6, 2021, the Superior Court dismissed with prejudice the case filed on July 12, 2021 by the Company’s former financial

advisor, as discussed in Note 6, following effectiveness of the Resale Registration Statement filed on August 9, 2021 and amended

on September 22, 2021.

November 5, 2021, the Company completed the second closing of the agreement with institutional investors for convertible notes payable

discussed in Note 7.

The Company issued $ 10.6

million in convertible notes and 722,317

warrants with a five -year term to purchase common

stock at an exercise price of $ 7.63

per share, in exchange for $ 10.0

million of cash proceeds before fees and offering

The convertible notes from the second closing have similar terms to those discussed in Note 7, except that the monthly redemption

period begins February 1, 2022 and the maturity date is August 4, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements