What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-11-15 compared with 2021-08-16 · 145 added, 119 removed, 2307 unchanged (10% of the section changed)

15 unchanged sentences

require substantial additional funding.

may incur additional dilution from repayment of the Investor Notes in Common Stock or re-setting the Conversion Price of the Investor

Notes or reduced proceeds to Ensysce from a reduction in the exercise price of the Investor Warrants;

must obtain stockholder approval of the Securities Purchase Agreement;

price of our common stock on the Nasdaq and Public Warrants on the OTC Pink Open Market may be volatile.

81 unchanged sentences

identified material weaknesses in our internal control over financial reporting as of December 31, 2020 and 2019.

Our predecessor identified material weaknesses in

its internal control over financial reporting as of December 31, 2020.

predecessor identified material weaknesses in its internal control over financial reporting as of December 31, 2020

are an emerging growth company and a smaller reporting company within the meaning of the Securities Act.

19 unchanged sentences

to have, an adverse effect on our stockholders’ equity and working capital.

Our net loss was $1.9 million for the six

months ended June 30, 2021.

As of June 30, 2021, we had an accumulated deficit of $57.8 million.

We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we continues

our research and development of, and seek regulatory approvals for, our product candidates.

Our net loss was $18.4 million for the nine months

ended September 30, 2021.

As of September 30, 2021, we had an accumulated deficit of $74.3 million.

We expect to continue to incur significant

losses for the foreseeable future, and we expect these losses to increase as we continues our research and development of, and seek regulatory

approvals for, our product candidates.

we continue to suffer losses as we have since inception, investors may not receive any return on their investment and may lose their

90 unchanged sentences

Stock and Financial Reporting .”

believe that the net proceeds from the Business Combination, together with our existing cash and cash equivalents, including subsequent

draw downs, if, to the extent, available, under the Share Purchase Agreement between us, GEM Global Yield LLC SCS (“ GEM Global ”)

and GEM Yield Bahamas Limited (“ GYBL ”), dated as of December 29, 2020, including a Registration Rights Agreement between

the same parties and dated as of the same date (the “ GEM Agreement ”) (as described in the following risk factor),

will enable us to fund our operating expenses and capital expenditure requirements through the end of 2021, while advancing our main

product candidates such as, PF614 and PF614 MPAR™ and nafamostat through their respective next phases of clinical development.

Our estimate may prove to be wrong, and we could use our available capital resources, if any, sooner than we currently expect.

changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently

anticipate, and we may need to seek additional funds sooner than planned.

To the extent this occurs, it could impose significant dilution

on our stockholders.

believe that the net proceeds from the Merger, together with our existing cash and cash equivalents, net proceeds from the sale of Investor

Notes and possible exercise of Investor Warrants, will enable us to fund our operating expenses and capital expenditure requirements

into the third quarter of 2022, while advancing our main product candidates such as, PF614 and PF614 MPAR™ and nafamostat through

their respective next phases of clinical development.

Our estimate may prove to be wrong, and we could use our available capital resources,

if any, sooner than we currently expect.

Further, changing circumstances, some of which may be beyond our control, could cause us to

consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.

extent this occurs, it could impose significant dilution on our stockholders.

may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds

5 unchanged sentences

reduce the scope of, suspend or eliminate one or more of our platforms, programs, planned clinical trials or future commercialization

may incur additional dilution upon repayment of the Investor Notes with Common Stock.

the terms of the Securities Purchase Agreement, we are permitted to repay principal and interest on the Investor Notes by issuing additional

shares of Common Stock.

In addition, the Conversion Price of the Investor Notes, and the Exercise Price of the Investor Warrants, are

subject to downward revision in the event we make certain issuances of our Common Stock at prices below the Conversion Price.

registered additional shares of Common Stock under this Registration Statement in the event either of these events occur.

In such case,

stockholders will have dilution in amounts exceeding the straight conversion of the Convertible Notes or, with respect to the Investor

Warrants, the Company will receive a reduced level of proceeds from the exercise of the Investor Warrants.

Company must obtain stockholder approval of the Securities Purchase Agreement to satisfy Nasdaq requirements

the conversion of the Investor Notes and exercise of the Investor Warrants may potentially result in an issuance of greater than 20%

of the currently outstanding Common Stock, the Company is required under Nasdaq rules to obtain stockholder approval from a stockholders

holding a majority of its outstanding shares for approval the Securities Purchase Agreement.

The Company intends to obtain this approval

as soon as practicable pursuant to a proxy solicitation.

As part of the Securities Purchase Agreement, the Company entered into Voting

Agreements with stockholders owning 68.1% of its outstanding common stock to approve the Securities Purchase Agreement, so the Company

believes it has the requisite vote required to approve the transaction.

price of our Common Stock on the Nasdaq and Public Warrants on the OTC Pink Open Market may be volatile.

33 unchanged sentences

reimbursements of legal and other expenses and other compensation thereby diverting our time and resources.

are entitled to draw down up to $60 million of gross proceeds from GEM Global in exchange for shares of our common stock at a price equal

to 90% of the average closing bid price of the shares of our common stock on Nasdaq for a 30 day period, subject to meeting the terms

and conditions of the GEM Agreement.

This equity line facility is available for a period of 36 months from the closing date of the Merger.

a Share Purchase Agreement between us, GEM Global Yield LLC SCS (“ GEM Global ”) and GEM Yield Bahamas Limited (“ GYBL ”),

dated as of December 29, 2020, including a Registration Rights Agreement between the same parties and dated as of the same date (the

“ GEM Agreement ”), we are entitled to draw down up to $60 million of gross proceeds from GEM Global in exchange for

shares of our common stock at a price equal to 90% of the average closing bid price of the shares of our common stock on Nasdaq for a

30 day period, subject to meeting the terms and conditions of the GEM Agreement.

This equity line facility is available for a period

of 36 months from the closing date of the Merger.

Please see the section entitled “ Business ” for additional information.

The limitations on the amount and frequency

of the draws that we can make under the GEM facility, which include the requirement that (i) there be an effective registration statement

and (ii) size restrictions relating to our trading volume, may affect the ability to draw under the GEM Agreement and result in proceeds

that are less than anticipated.

addition, the occurrence of the Business Combination triggered (i) payment of a commitment fee of $1.2 million to GEM Global payable

in either our common stock or cash and (ii) the issuance of a warrant granting GYBL the right to purchase 1,106,108 shares of our common

stock, at a strike price per share of $10.01, the closing bid price for such common shares on the Closing of the Business Combination.

The number of shares underlying the warrant as well as the strike price is subject to adjustments for recapitalizations, reorganizations,

change of control, stock split, stock dividend, reverse stock splits and certain issuances of additional shares of our common stock.

The limitations on the amount and frequency of the draws that we can make under the GEM facility, which include the requirement that

(i) there be an effective registration statement and (ii) size restrictions relating to our trading volume, may affect the ability to

draw under the GEM Agreement and result in proceeds that are less than anticipated.

addition, the occurrence of the Merger triggered (i) payment of a commitment fee of $1.2 million to GEM Global payable in either our

common stock or cash and (ii) the issuance of a warrant granting GYBL the right to purchase 1,106,108 shares of our common stock, at

a strike price per share of $10.01, the closing bid price for such common shares on the closing date of the Merger.

The number of shares

underlying the warrant as well as the strike price is subject to adjustments for recapitalizations, reorganizations, change of control,

stock split, stock dividend, reverse stock splits and certain issuances of additional shares of our common stock.

issuances of shares at discount under the GEM Agreement and the anti-dilution protection granted to GEM Global in connection with issuances

1793 unchanged sentences

ability to oversee the development of our product candidates.

Further, we may incur additional dilution from repayment of the Investor

Notes in Common Stock or re-setting the Conversion Price of the Investor Notes if we issue equity at a price below the Conversion Price

of the Investor Notes.

Also, we will receive reduced proceeds if the exercise price of the Investor Warrants is reduced.

we raise additional capital through collaborations or marketing, distribution or licensing arrangements with third parties, we may have

23 unchanged sentences

we may not be successful in remediating such weaknesses.

the Business Combination, our management has significant requirements for enhanced financial reporting and internal controls as

a public company.

The process of designing and implementing effective internal controls is a continuous effort that will require us to

anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain

a system of internal controls that is adequate to satisfy our reporting obligations as a public company.

If we are unable to establish

or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations

on a timely basis or result in material misstatements in our consolidated financial statements, which could harm our operating results.

In addition, we are required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things,

the effectiveness of our internal controls over financial reporting.

This assessment needs to include disclosure of any material weaknesses

identified by our management in our internal control over financial reporting.

The rules governing the standards that must be met for

our management to assess our internal control over financial reporting are complex and require significant documentation, testing, and

possible remediation.

Testing and maintaining internal controls may divert management’s attention from other matters that are important

to our business.

Our independent registered public accounting firm is required to attest to the effectiveness of our internal control

over financial reporting on an annual basis.

However, while we remain an emerging growth company, we are not be required to include an

attestation report on internal control over financial reporting issued by our independent registered public accounting firm.

not able to complete an initial assessment of our internal controls and otherwise implement the requirements of Section 404 of the Sarbanes-Oxley

Act in a timely manner or with adequate compliance, our independent registered public accounting firm may not be able to certify as to

the adequacy of our internal controls over financial reporting.

the Business Combination, our management has significant requirements for enhanced financial reporting and internal controls as a public

The process of designing and implementing effective internal controls is a continuous effort that will require us to anticipate

and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system

of internal controls that is adequate to satisfy our reporting obligations as a public company.

If we are unable to establish or maintain

appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely

basis or result in material misstatements in our consolidated financial statements, which could harm our operating results.

we are required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness

of our internal controls over financial reporting.

This assessment needs to include disclosure of any material weaknesses identified

by our management in our internal control over financial reporting.

The rules governing the standards that must be met for our management

to assess our internal control over financial reporting are complex and require significant documentation, testing, and possible remediation.

Testing and maintaining internal controls may divert management’s attention from other matters that are important to our business.

Our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting

on an annual basis.

However, while we remain an emerging growth company, we are not be required to include an attestation report on internal

control over financial reporting issued by our independent registered public accounting firm.

If we are not able to complete an initial

assessment of our internal controls and otherwise implement the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner

or with adequate compliance, our independent registered public accounting firm may not be able to certify as to the adequacy of our internal

controls over financial reporting.

impacting our internal controls may cause us to be unable to report our financial information on a timely basis and thereby subject us

126 unchanged sentences

that these sales could occur.

Immediately after the Business Combination, a significant portion of our shares of common stock

or Warrants exercisable for our shares of common stock were held by persons who had been affiliated with our predecessor prior

to the Business Combination but did not remain so with respect to us after the Business Combination.

In addition, we may

soon register shares of common stock that we may issue under our 2021 Omnibus Incentive Plan.

Shares of our common stock held

by our directors, executive officers and other affiliates are subject to restrictions on resale under the Securities Act and may be subject

to various vesting agreements.

Immediately after the Merger, a significant portion of our shares of common stock or Warrants exercisable

for our shares of common stock were held by persons who had been affiliated with LACQ prior to the Merger but did not remain so with

respect to us after the Merger.

In addition, we may soon register shares of common stock that we may issue under our 2021 Omnibus Incentive

Shares held by our directors, executive officers and other affiliates are subject to restrictions on resale under the Securities

Act and may be subject to various vesting agreements.

of our initial stockholders have agreed, subject to certain exceptions, not to transfer, pledge, assign, sell or otherwise dispose of

any of our common stock held by them immediately after the Business Combination until the earlier to occur of (a) one year after

the Business Combination and (b) the date on which we complete a liquidation, merger, share exchange or other similar transaction

after closing that results in all of our stockholders having the right to exchange their common shares for cash, securities or other

However, if the closing price of our common shares equals or exceeds $12.00 per share (as adjusted for share splits, share

capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing

at least 150 days after the Business Combination, the shares of those initial stockholders will be released from the lock-up.

any of our common stock held by them immediately after the Merger until the earlier to occur of (a) one year after the Merger and (b)

the date on which we complete a liquidation, merger, share exchange or other similar transaction after closing that results in all of

our stockholders having the right to exchange their common shares for cash, securities or other property.

However, if the closing price

of our common shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations

and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Merger, the shares of those

initial stockholders will be released from the lock-up.

market price of the shares of our common stock could decline as a result of the sale of a substantial number of our shares of common

stock in the public market or the perception in the market that the holders of a large number of such shares intend to sell their shares.

issuance of additional capital stock in connection with financings, acquisitions, investments, our 2021 Omnibus Incentive Plan or otherwise

will dilute all other stockholders.

issuance of additional capital stock in connection with financings, acquisitions, investments, our 2021 Omnibus Incentive Plan and to

repay interest or principal on the Investor Notes or otherwise will dilute all other stockholders.

expect to issue additional capital stock in the future that will result in dilution to all other stockholders.

1 unchanged sentence

awards to employees, directors, and consultants under our 2021 Omnibus Incentive Plan.

We may also raise capital through equity financings

in the future.

As part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies

and issue equity securities to pay for any such acquisition or investment.

We may use our common stock to make repayment

of some or all of the principal and interest on the Investor Notes.

We may also raise capital through equity financings in the future.

As part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies and issue

equity securities to pay for any such acquisition or investment.

Any such issuances of additional capital stock may cause stockholders

13 unchanged sentences

and other risks as a result of the material weakness in our internal control over financial reporting.

this issuance of the SEC Statement, on May 13, 2021, after consultation with its independent registered public accounting firm, our

predecessor’s management and audit committee concluded that, in light of the SEC Statement, it was appropriate to restate its

previously issued audited financial statements as of and for the period ended December 31, 2020 (the “ Restatement ”).

See “ —Certain of our warrants are accounted for as liabilities and the changes in value of our warrants could have a material

effect on our financial results.

” As part of such process, it identified a material weakness in its internal controls over

financial reporting.

this issuance of the SEC Statement, on May 13, 2021, after consultation with its independent registered public accounting firm, our predecessor’s

management and audit committee concluded that, in light of the SEC Statement, it was appropriate to restate its previously issued audited

financial statements as of and for the period ended December 31, 2020 (the “ Restatement ”).

See “ —Certain

of our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial

” As part of such process, it identified a material weakness in its internal controls over financial reporting.

material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is

11 unchanged sentences

results of operations and financial condition.

our predecessor determined that its Public Warrants should be classified as equity and its private warrants will be treated as

equity on a pro forma basis, due to the uncertainty with respect to classification of warrants issued by SPACs as equity or indebtedness,

there can be no assurance that future guidance might not require us to change its position and restate our financial statements and have

other adverse consequences.

our predecessor’s financial statements have been restated to classify its private warrants as liabilities, we have determined

that it is appropriate to continue to classify its Public Warrants as equity.

LACQ reviewed the terms of the warrant agreement

related to its Public Warrants and concluded that they do not include any provision requiring the Public Warrants to be classified as

In this respect, it should be noted that the warrant agreement included a provision that in the event of a tender or exchange

offer made to and accepted by holders of more than 50% of the outstanding shares of a single class of common shares, all holders of the

warrants could be entitled to receive cash for their warrants (the “ tender offer provision ”).

This tender offer provision

was similar to one of the examples referred to in the SEC Statement as a basis for concluding that warrants issued by a SPAC should be

classified as liabilities and not equity.

Our predecessor concluded that, while the SEC Statement did not expressly refer to a

multi-class structure (such as a structure where a SPAC had two classes of common stock), the SEC Statement with respect to a tender

offer provision in a warrant agreement applied to a multi-class structure (such as a Class A and Class B structure) and not a single

class structure like our predecessor’s.

Certain other SPACs, including those with single class structures, have taken different

approaches in their recent public filings with the SEC and have classified similar warrants as liabilities.

predecessor classified its private warrants as liabilities because

they provided for potential changes to the settlement amounts dependent upon the characteristics of the holder of the warrant (i.e.,

certain rights differ if the warrants are held by the original holder and its permitted transferees or by a subsequent transferee).

predecessor entered into agreements with the holders of its private warrants under which each holder will exchange its private warrants

for warrants on the same terms as the private warrants, except that they are non-transferable except to certain permitted transferees.

Our predecessor believed that as a result of the exchange, the private warrants would be appropriately classified as equity and

not liabilities subsequent to the date of such agreements.

LACQ determined that its Public Warrants should be classified as equity and its private warrants will be treated as equity on a pro forma

basis, due to the uncertainty with respect to classification of warrants issued by SPACs as equity or indebtedness, there can be no assurance

that future guidance might not require us to change its position and restate our financial statements and have other adverse consequences.

LACQ’s financial statements have been restated to classify its private warrants as liabilities, we have determined that it is appropriate

to continue to classify its Public Warrants as equity.

LACQ reviewed the terms of the warrant agreement related to its Public Warrants

and concluded that they do not include any provision requiring the Public Warrants to be classified as liabilities.

In this respect,

it should be noted that the warrant agreement included a provision that in the event of a tender or exchange offer made to and accepted

by holders of more than 50% of the outstanding shares of a single class of common shares, all holders of the warrants could be entitled

to receive cash for their warrants (the “ tender offer provision ”).

This tender offer provision was similar to one

of the examples referred to in the SEC Statement as a basis for concluding that warrants issued by a SPAC should be classified as liabilities

and not equity.

LACQ concluded that, while the SEC Statement did not expressly refer to a multi-class structure (such as a structure

where a SPAC had two classes of common stock), the SEC Statement with respect to a tender offer provision in a warrant agreement applied

to a multi-class structure (such as a Class A and Class B structure) and not a single class structure like LACQ’s.

Certain other

SPACs, including those with single class structures, have taken different approaches in their recent public filings with the SEC and

have classified similar warrants as liabilities.

classified its private warrants as liabilities because they provided for potential changes to the settlement amounts dependent upon the

characteristics of the holder of the warrant (i.e., certain rights differ if the warrants are held by the original holder and its permitted

transferees or by a subsequent transferee).

LACQ entered into agreements with the holders of its private warrants under which each holder

will exchange its private warrants for warrants on the same terms as the private warrants, except that they are non-transferable except

to certain permitted transferees.

LACQ believed that as a result of the exchange, the private warrants would be appropriately classified

as equity and not liabilities subsequent to the date of such agreements.

accounting treatment of warrants issued by SPACs is subject to substantial uncertainty and there can be no assurance that future guidance

might not require us to change this position and restate our financial statements or treat private warrants as liabilities, which

could have a material adverse effect on us.

might not require us to change LACQ’s position and restate our financial statements or treat private warrants as liabilities, which

could have a material adverse effect us.

Common Stock could be delisted from Nasdaq and may become subject to “penny stock” rules, which could damage our reputation

20 unchanged sentences

matters subject to stockholder approval.

of August 6, 2021, our executive officers and directors beneficially owned approximately 52.7% of our common stock.

of October 28, 2021, our executive officers and directors beneficially owned approximately 52.7% of our common stock.

These stockholders,

1 unchanged sentence

For example, they may be able to control elections of

directors, amendments of our organizational documents or approval of any merger, sale of assets or other major corporate transactions.

This concentration of ownership control may delay, discourage or prevent a change of control, including unsolicited acquisition proposals

or offers for our common stock that you may feel are in your best interest as one of our stockholders, entrench our management and board

of directors or delay or prevent a merger, consolidation, takeover or other business combination involving us that other stockholders

The interests of this group of stockholders may not always coincide with your interests or the interests of other stockholders

and they may act in a manner that advances their best interests and not necessarily those of other stockholders, including seeking a

premium value for their common stock, and might affect the prevailing market price for our common stock.

directors, changes to equity incentive plans, amendments of our organizational documents or approval of any merger, sale of assets or

other major corporate transactions.

This concentration of ownership control may delay, discourage or prevent a change of control, including

unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders,

entrench our management and board of directors or delay or prevent a merger, consolidation, takeover or other business combination involving

us that other stockholders may desire.

The interests of this group of stockholders may not always coincide with your interests or the

interests of other stockholders and they may act in a manner that advances their best interests and not necessarily those of other stockholders,

including seeking a premium value for their common stock, and might affect the prevailing market price for our common stock.

law and provisions in our certificate of incorporation and bylaws could make a takeover proposal more difficult.

43 unchanged sentences

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 1A. Risk Factors