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Item 1. Business

2022-03-31 compared with 2021-03-15 · 1376 added, 935 removed, 0 unchanged (100% of the section changed)

We are a blank check company incorporated

on September 11, 2017 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset

acquisition, stock purchase, reorganization or similar Business Combination with one or more businesses (a “Business Combination”).

We have neither engaged in any operations nor generated any revenue to date.

Based on our business activities, we are a “shell

company” as defined under the Securities Exchange Act of 1934 (the “Exchange Act”) because we have no operations

and nominal assets consisting solely of cash and/or cash equivalents.

On January 31, 2021, we entered into an

Agreement and Plan of Merger (the “Merger Agreement”), by and among us, Ensysce, and EB Merger Sub, Inc., a Delaware

corporation and wholly owned subsidiary of LACQ (“Merger Sub”), relating to a proposed business combination transaction

between our company and Ensysce (the transactions contemplated thereunder referred to as the “Transactions”).

is a clinical stage pharmaceutical company with innovative solutions for severe pain relief while reducing the fear of and the

potential for addiction, opioid misuse, abuse and overdose.

Ensysce has also incorporated a 79.2%-owned subsidiary, Covistat Inc.

(“Covistat”), a clinical stage pharmaceutical company that is developing a compound utilized in Ensysce’s overdose

protection program for the treatment of COVID-19.

The Transactions are described in more detail under the section “Our Proposed

Business Combination with Ensysce” below.

Consummation of the Transactions contemplated

by the Merger Agreement is subject to customary conditions of the respective parties, including the approval of the Business Combination

by our stockholders.

The Merger Agreement and related agreements

are further described in the Form 8-K filed by us on February 2, 2021.

For additional information regarding the Merger Agreement

and the Transactions, see the Registration Statement on Form S-4 , as may be amended from time to time, and the Definitive

Proxy Statement on Schedule 14A, each when filed by us with the Securities and Exchange Commission.

Because the period of time we have to complete our Business

Combination (the “Combination Period”) will expire on June 30, 2021, it is likely that, if the proposed Business Combination

with Ensysce is not consummated, we will not be able to seek another Business Combination and we will be required to liquidate.

See “Redemption of Public Shares and Liquidation if No Business Combination.”

In addition, we

received a notice from Nasdaq as to our continued listing on Nasdaq due, in part, to our not meeting the requirement that a special

purpose acquisition company complete one or more business combinations within 36 months of the effectiveness of its registration

We were granted an extension, subject to certain milestones, through June 1, 2021 for completion of a business combination

and we could be delisted from Nasdaq if we do not complete a business combination by that date.

See “ Item 1A.

— The Nasdaq may not continue to list our securities, which could limit investors’ ability to make transactions in

our securities and subject us to additional trading restrictions” .

Other than as specifically discussed,

this report does not assume the closing of the Business Combination.

On December 5, 2017, we consummated

our initial public offering of 20,000,000 units (“Units”), with each unit consisting of one share of our common stock,

and one-half (1/2) of one warrant, each whole warrant entitling the holder to purchase one share of common stock at a price of

Simultaneously with the closing of the initial public offering, we consummated a private placement of 6,825,000 Private

Placement Warrants at a price of $1.00 per warrant to affiliates of our sponsors, our strategic investor and certain members of

our management team (the “Concurrent Private Placement”), which generated gross proceeds of $6,825,000.

Immediately following the closing of our

initial public offering and the Concurrent Private Placement, $200,000,000 of the gross proceeds from the initial public offering

and the Concurrent Private Placement was deposited in a U.S.-based Trust Account (the “Trust Account”) with Continental

Stock Transfer and Trust Company acting as trustee (the “Trustee”).

Since the completion of the initial public offering,

our activity has been limited to the evaluation of business combination candidates and seeking to complete an initial business

In connection with special stockholders

meetings at which the completion window was extended, an aggregate of 18,775,732 public shares were redeemed for cash from the

trust account, for an aggregate redemption amount of approximately $196.4 million.

As of December 31, 2020, there was approximately

$12,628,170 held in the trust account.

Our charter, as amended, currently provides

that it will have until June 30, 2021 to complete a business combination.

Our Units, Common Stock and Warrants are

listed on Nasdaq Capital Market under the symbols “LACQU,” “LACQ,” and “LACQW,” respectively.

Our Proposed Business Combination with

Ensysce is a clinical stage pharmaceutical

company with innovative solutions for severe pain relief while reducing the fear of and the potential for addiction, opioid misuse,

abuse and overdose.

Ensysce has also incorporated a 79.2%-owned subsidiary, Covistat, a clinical stage pharmaceutical company

that is developing a compound utilized in Ensysce’s overdose protection program for the treatment of COVID-19.

On January 31, 2021, we entered into the

Merger Agreement with Merger Sub, our wholly-owned subsidiary, and Ensysce, providing for, among other things, and subject to

the terms and conditions therein, a business combination between Ensysce and LACQ pursuant to the proposed merger of Merger Sub

with and into Ensysce, with Ensysce continuing as the surviving entity providing for, subject to the terms of the Merger Agreement,

total Merger consideration of no more than (i) 17,500,000 shares of our common stock (includes shares issuable on conversion of

the Ensysce convertible notes (other than up to $5,000,000 of newly issued Ensysce convertible notes (which are convertible notes

issued after the date of the Merger Agreement) and the shares underlying the Ensysce options and Ensysce warrants) plus (ii) up

to 500,000 shares of our common stock issuable in respect of the newly issued Ensysce Convertible Notes.

At the reference price of $10.00 per share

of LACQ common stock, the total Merger consideration of 17,051,830 shares of LACQ common stock (based on the number of shares

of Ensysce common stock outstanding at January 31, 2021) (excluding the shares underlying outstanding options and warrants of

Ensysce which will be automatically converted into options and warrants to acquire shares of LACQ common stock at closing of the

business combination and excluding up to 500,00 shares of LACQ common stock which may be issuable with respect to the newly issued

Ensysce convertible notes would have a value of $170,518,300.

In connection with the Merger Agreement,

officers and directors of Ensysce entered Lock-up Agreements pursuant to which they have agreed not to sell, transfer, pledge

or otherwise dispose of shares of LACQ common stock they hold or receive for certain time periods specified therein.

Further, we and sponsors entered into

a Warrant Surrender Agreement pursuant to which each of the Hydra sponsor and the Matthews Lane sponsor agreed to irrevocably

forfeit and surrender 250,000 LACQ warrants immediately prior to, and contingent upon, the closing of the Merger Agreement.

The Company is incurring significant costs

in the pursuit of its acquisition plans.

LACQ may be required to seek additional resources in the future to fund general corporate

LACQ cannot assure you that its plans to complete the Transactions will be successful.

Our Acquisition Process

In evaluating a prospective target business,

our process involves conducting a thorough due diligence review that encompasses, among other things, meetings with incumbent

management and employees, document reviews, as well as a review of financial, operational, legal and other information made available

We will also utilize our operational and capital planning experience.

In connection with the proposed Business Combination

with Ensysce, our officers and directors primary industry experience relates to the leisure sector and they do not have experience

with companies in the biotechnology sector

We are not prohibited from pursuing a

business combination with a company that is affiliated with our sponsors, strategic investor, officers or directors.

we seek to complete our Business Combination with a company that is affiliated with our sponsors, strategic investor, officers

or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm

that is a member of Financial Industry Regulatory Authority, or FINRA, or an independent accounting firm that our Business Combination

is fair to our company from a financial point of view.

Members of our management team and our

independent directors directly or indirectly own founder shares and/or private placement warrants and, accordingly, may have a

conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our

Business Combination.

Further, each of our officers and directors may have a conflict of interest with respect to evaluating a

particular Business Combination if the retention or resignation of any such officers and directors was included by a target business

as a condition to any agreement with respect to our Business Combination.

Each of our officers and directors presently

has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which

such officer or director is or will be required to present a Business Combination opportunity.

Accordingly, if any of our officers

or directors becomes aware of a Business Combination opportunity which is suitable for an entity to which he or she has then-current

fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity

to such entity and not to us.

We do not believe, however, that the fiduciary duties or contractual obligations of our officers

or directors will materially affect our ability to complete our Business Combination.

Our amended and restated certificate of

incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such

opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such

opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.

In addition to the above, our executive

officers, including our Executive Chairman and our Chief Executive Officer, have certain duties to Inspired Entertainment, Inc.

(“Inspired”), a global gaming technology company, including but not limited to fiduciary and/or contractual duties.

As a result, our executive officers will have certain duties to offer acquisition opportunities to Inspired before we can pursue

such opportunities.

However, we do not expect these duties to present a significant conflict of interest with our search for a

Business Combination.

In addition, our executive officers are not required to commit any specified amount of time to our affairs,

and, accordingly, will have conflicts of interest in allocating management time among various business activities, including identifying

potential business combinations and monitoring the related due diligence.

Moreover, our executive officers have time and attention

requirements with respect to their duties to Inspired.

Our officers and directors have agreed

not to participate in the formation of, or become an officer or director of, any other blank check company until we have entered

into a definitive agreement regarding our Business Combination or we have failed to complete our Business Combination within the

required timeframe.

Business Combination

The Nasdaq rules require that our Business

Combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of

the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on

the Trust Account) at the time of the agreement to enter into the Business Combination.

If our board is not able to independently

determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment

banking firm that is a member of FINRA or an independent accounting firm with respect to the satisfaction of such criteria.

We anticipate structuring our Business

Combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity

interests or assets of the target business or businesses.

We may, however, structure our Business Combination such that the post-transaction

company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives

of the target management team or stockholders or for other reasons, but we will only complete such Business Combination if the

post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires

a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment

Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders

prior to the Business Combination may collectively own a minority interest in the post-transaction company, depending on valuations

ascribed to the target and us in the Business Combination transaction.

For example, we could pursue a transaction in which we

issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target.

In this case, we would

acquire a 100% controlling interest in the target.

However, as a result of the issuance of a substantial number of new shares,

our stockholders immediately prior to our Business Combination could own less than a majority of our outstanding shares subsequent

to our Business Combination.

If less than 100% of the equity interests or assets of a target business or businesses are owned

or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will

be valued for purposes of the 80% of net assets test.

If the Business Combination involves more than one target business, the

80% of net assets test will be based on the aggregate value of all of the target businesses and we will treat the target businesses

together as the Business Combination for purposes of a tender offer or for seeking stockholder approval, as applicable.

Our Management Team

Members of our management team are not

obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary

to our affairs until we have completed our Business Combination.

The amount of time that any member of our management team will

devote in any time period will vary based on whether a target business has been selected for our Business Combination and the

current stage of the Business Combination process.

Status as a Public Company

We believe our structure makes us an attractive

business combination partner to target businesses.

As an existing public company, we offer a target business an alternative to

the traditional initial public offering through a merger or other business combination.

In this situation, the owners of the target

business would exchange their shares of stock in the target business for shares of our stock or for a combination of shares of

our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers.

Although there are various costs

and obligations associated with being a public company, we believe target businesses will find this method a more certain and

cost effective method to becoming a public company than the typical initial public offering.

In a typical initial public offering,

there are additional expenses incurred in marketing, road show and public reporting efforts that may not be present to the same

extent in connection with a Business Combination with us.

Furthermore, once a proposed business

combination is completed, the target business will have effectively become public, whereas an initial public offering is always

subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could delay or

prevent the offering from occurring or could have negative valuation consequences.

Once public, we believe the target business

would then have greater access to capital and an additional means of providing management incentives consistent with stockholders’

It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and

aid in attracting talented employees.

We are an “emerging growth company,”

as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart

Our Business Startups Act (the “JOBS Act”).

We will remain an emerging growth company until the earlier of (1) the

last day of the fiscal year (a) following the fifth anniversary of the IPO Closing Date, (b) in which we have total annual gross

revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value

of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we

have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

Contingent Forward Purchase Contract

On December 1, 2017, our strategic investor

entered into a Contingent Forward Purchase Contract with us to purchase, in a private placement for gross proceeds of approximately

$62,500,000 to occur concurrently with the consummation of the business combination, 6,250,000 units on substantially the same

terms as the sale of units in our initial public offering at $10.00 per unit.

The Contingent Forward Purchase Contract was waived

by our strategic investor in the connection with the proposed Business Combination with Ensysce.

Effecting our Business Combination

We are not presently engaged in, and we

will not engage in, any operations for an indefinite period of time.

We intend to effectuate our Business Combination using cash

held in the Trust Account from the proceeds of our Initial Public Offering.

We may also use our capital stock, debt or a combination

of these to provide capital in connection with our Business Combination.

We may seek to complete our Business Combination with

a company or business that may be financially unstable or in its early stages of development or growth, which would subject us

to the numerous risks inherent in such companies and businesses.

If our Business Combination is paid for

using equity or debt securities, or not all of the funds released from the Trust Account are used for payment of the consideration

in connection with our Business Combination or used for redemptions of purchases of our common stock, we may apply the balance

of the cash released to us from the Trust Account, for general corporate purposes, including for maintenance or expansion of operations

of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our Business

Combination or for working capital.

We may seek to raise additional funds

through a private offering of debt or equity securities in connection with the completion of our Business Combination.

Subject to compliance with applicable

securities laws, we would expect to complete such financing only simultaneously with the completion of our Business Combination.

In the case of any financing in connection with closing of a Business Combination funded our tender offer documents or proxy materials

disclosing the Business Combination would disclose the terms of the financing and, only if required by law, we would seek stockholder

approval of such financing.

There are no prohibitions on our ability to raise funds privately or through loans in connection with

our Business Combination.

At this time, we are not a party to any arrangement or understanding with any third party with respect

to raising any additional funds through the sale of securities or otherwise.

Sources of Target Businesses

We are not prohibited from pursuing our

Business Combination with a target that is affiliated with our sponsors, strategic investor, officers or directors or making the

acquisition through a joint venture or other form of shared ownership with our sponsors, strategic investor, officers or directors.

In the event we seek to complete our Business Combination with a target that is affiliated with our sponsors, strategic investor,

officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking

firm that is a member of FINRA or an independent accounting firm that such an initial Business Combination is fair to our company

from a financial point of view.

We are not required to obtain such an opinion in any other context.

If any of our officers or directors becomes

aware of a Business Combination opportunity that falls within the line of business of any entity to which he or she has pre-existing

fiduciary or contractual obligations, he or she may be required to present such Business Combination opportunity to such entity

prior to presenting such Business Combination opportunity to us.

Our officers and directors currently have certain relevant fiduciary

duties or contractual obligations that may take priority over their duties to us.

If any of our officers or directors becomes

aware of a Business Combination opportunity that is suitable for one of these entities to which he has a fiduciary or contractual

obligation, he will honor such obligation to present such opportunity to such entity rather than to us.

Our directors and officers

will only have an obligation to present an opportunity to us if such opportunity is expressly offered to such person solely in

his capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to

undertake and would otherwise be reasonable for us to pursue.

Selection of a Target Business and Structuring of our Initial

Business Combination

The Nasdaq rules require that our Business

Combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of

our assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on

the Trust Account) at the time of the agreement to enter into the Business Combination.

The fair market value of the target or

targets will be determined by our board of directors based upon one or more standards generally accepted by the financial community,

such as discounted cash flow valuation or value of comparable businesses.

If our board is not able to independently determine

the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm

that is a member of FINRA, or from an independent accounting firm, with respect to the satisfaction of such criteria.

to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective

target businesses, although we will not be permitted to effectuate our Business Combination with another blank check company or

a similar company with nominal operations.

In any case, we will only complete a Business

Combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire a controlling

interest in the target sufficient for it not to be required to register as an investment company under the Investment Company

If we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of

such business or businesses that are owned or acquired by the post-transaction company is what will be valued for purposes of

the 80% of net assets test.

To the extent we effect our Business Combination

with a company or business that may be financially unstable or in its early stages of development or growth we may be affected

by numerous risks inherent in such company or business.

Although our management will endeavor to evaluate the risks inherent in

a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.

In evaluating a prospective target business,

we expect to conduct a thorough due diligence review, which will encompass, among other things, meetings with incumbent management

and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial,

operational, legal and other information that will be made available to us.

The time required to select and evaluate

a target business and to structure and complete our Business Combination, and the costs associated with this process, are not

currently ascertainable with any degree of certainty.

Any costs incurred with respect to the identification and evaluation of

a prospective target business with which our Business Combination is not ultimately completed will result in our incurring losses

and will reduce the funds we can use to complete another Business Combination.

Lack of Business Diversification

For an indefinite period of time after

the completion of our Business Combination, the prospects for our success will depend entirely on the future performance of a

single business.

Unlike other entities that have the resources to complete Business Combinations with multiple entities in one

or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of

being in a single line of business.

By completing our Business Combination with only a single entity, our lack of diversification

subject us to negative

economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular

industry in which we operate after our Business Combination;

cause us to depend

on the marketing and sale of a single product or limited number of products or services.

Limited Ability to Evaluate the Target’s Management Team

Although as part of our process in reviewing

potential Business Combinations, including the proposed Business Combination with Ensysce, we scrutinize the management of a prospective

target business when evaluating the desirability of effecting our Business Combination with that business, our assessment of the

target business’ management may not prove to be correct.

In addition, the future management may not have the necessary skills,

qualifications or abilities to manage a public company.

Furthermore, the future role of members of our management team, if any,

in the target business cannot presently be stated with any certainty.

While it is possible that one or more of our directors will

remain associated in some capacity with us following our Business Combination, it is unlikely that any of them will devote their

full efforts to our affairs subsequent to our Business Combination.

Moreover, we cannot assure you that members of our management

team will have significant experience or knowledge relating to the operations of the particular target business and, in connection

with the proposed Business Combination with Ensysce, our officers and directors do not have experience in connection with the

biotechnology sector.

We cannot assure you that any of our key

personnel will remain in senior management or advisory positions with the combined company.

The determination as to whether any

of our key personnel will remain with the combined company will be made at the time of our initial Business Combination.

Following a Business Combination, we may

seek to recruit additional managers to supplement the incumbent management of the target business.

We cannot assure you that we

will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or

experience necessary to enhance the incumbent management.

Stockholders May Not Have the Ability to Approve Our Combination

We may conduct redemptions without a stockholder

vote pursuant to the tender offer rules of the SEC.

However, we will seek stockholder approval if it is required by law or applicable

stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons.

In connection with the

proposed Business Combination with Ensysce, we have determined to seek stockholder approval and stockholder approval would be

required to comply with Nasdaq rules.

Our initial stockholders and their respective affiliates, including the sponsors and the

strategic investor and directors and officers, have agreed to vote in favor of the Business Combination and have sufficient votes

to approve the Business Combination without the vote of other stockholders.

Presented in the table below is a graphic explanation

of the types of initial Business Combinations we may consider and whether stockholder approval is currently required under Delaware

law for each such transaction.

Type of Transaction

Whether Stockholder

Approval is Required

Purchase of assets

Purchase of stock of target not involving a merger with the company

Merger of target into a subsidiary of the company

Merger of the company with a target

Under Nasdaq’s listing rules, stockholder approval would

be required for our Business Combination if, for example:

we issue shares

of common stock that will be equal to or in excess of 20% of the number of shares of our common stock then outstanding;

any of our directors,

officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such persons collectively

have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and

the present or potential issuance of common stock could result in an increase in outstanding common shares or voting power

of 5% or more;

the issuance or

potential issuance of common stock will result in our undergoing a change of control.

Permitted Purchases of our Securities

In the event we seek stockholder approval

of our Business Combination and we do not conduct redemptions in connection with our Business Combination pursuant to the tender

offer rules, our sponsors, strategic investor, directors, officers, advisors or their affiliates may purchase shares in privately

negotiated transactions or in the open market either prior to or following the completion of our Business Combination.

they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions

for any such transactions.

They will not make any such purchases when they are in possession of any material non-public information

not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act.

Such a purchase may include

a contractual acknowledgement that such stockholder, although still the record holder of our shares is no longer the beneficial

owner thereof and therefore agrees not to exercise its redemption rights.

We have adopted an insider trading policy which requires

refrain from purchasing shares during certain blackout periods and when they are in possession of any material nonpublic

information and to clear all trades with our legal counsel prior to execution.

We cannot currently determine whether our insiders

will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including but not limited

to, the timing and size of such purchases.

Depending on such circumstances, our insiders may either make such purchases pursuant

to a Rule 10b5-1 plan or determine that such a plan is not necessary.

In the event that our sponsors, strategic

investor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders

who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior

elections to redeem their shares.

We do not currently anticipate that such purchases, if any, would constitute a tender offer

subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under

the Exchange Act;

however, if the purchasers determine at the time of any such purchases that the purchases are subject to such

rules, the purchasers will comply with such rules.

The purpose of such purchases would be

to (i) vote such shares in favor of the Business Combination and thereby increase the likelihood of obtaining stockholder approval

of the Business Combination or (ii) to satisfy a closing condition in an agreement with a target that requires us to have a minimum

net worth or a certain amount of cash at the closing of our Business Combination, where it appears that such requirement would

otherwise not be met.

This may result in the completion of our Business Combination that may not otherwise have been possible.

In addition, if such purchases are made,

the public “float” of our common stock may be reduced and the number of beneficial holders of our securities may be

reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities

Our sponsors, strategic investor, officers,

directors and/or their affiliates anticipate that they may identify the stockholders with whom our sponsors, strategic investor,

officers, directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly

or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with

our Business Combination.

To the extent that our sponsors, strategic investor, officers, directors, advisors or their affiliates

enter into a private purchase, they would identify and contact only potential selling stockholders who have expressed their election

to redeem their shares for a pro rata share of the Trust Account or vote against the Business Combination.

Our sponsors, strategic

investor, officers, directors, advisors or their affiliates will only purchase shares if such purchases comply with Regulation

M under the Exchange Act and the other federal securities laws.

Any purchases by our sponsors, strategic

investor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will

only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability

for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act.

Rule 10b-18 has certain technical requirements that

must be complied with in order for the safe harbor to be available to the purchaser.

Our sponsors, strategic investor, officers,

directors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule

10b-5 of the Exchange Act.

None of the funds in the Trust Account

will be used to purchase shares in such transactions.

Redemption Rights for Public Stockholders

Upon Completion of our Business Combination

We will provide our public stockholders

with the opportunity to redeem all or a portion of their shares of common stock upon the completion of our Business Combination

at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of two business days

prior to the consummation of the Business Combination including interest earned on the funds held in the trust account and not

previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares, subject

to the limitations described herein.

The amount initially held in the Trust Account was $10.00 per public share and is expected

to increase to the extent that interest accrues in the Trust Account.

The per-share amount we will distribute to public stockholders

who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters.

Manner of Conducting Redemptions

We will provide our public stockholders

with the opportunity to redeem all or a portion of their shares of common stock upon the completion of our Business Combination

either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer.

The decision as to whether we will seek stockholder approval of a proposed Business Combination or conduct a tender offer will

be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether

the terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirement.

Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company

where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our

amended and restated certificate of incorporation would require stockholder approval.

If we structure a Business Combination transaction

with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to seek a stockholder

vote to approve the proposed business combination.

We intend to conduct redemptions without a stockholder vote pursuant to the

tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements or we choose

to seek stockholder approval for business or other legal reasons.

If a stockholder vote is not required

and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated

certificate of incorporation:

conduct the redemptions

pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers;

file tender offer

documents with the SEC prior to completing our Business Combination which contain substantially the same financial and other

information about the Business Combination and the redemption rights as is required under Regulation 14A of the Exchange Act,

which regulates the solicitation of proxies.

Upon the public announcement of our Business

Combination, we or our sponsors will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our common

stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under the Exchange

In the event we conduct redemptions pursuant

to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a)

under the Exchange Act, and we will not be permitted to complete our Business Combination until the expiration of the tender offer

In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of

public shares which are not purchased by our sponsors or strategic investor, which number will be based on the requirement that

we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we are

not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may

be contained in the agreement relating to our Business Combination.

If public stockholders tender more shares than we have offered

to purchase, we will withdraw the tender offer and not complete the Business Combination.

If, however, stockholder approval of the

transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business

or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:

conduct the redemptions

in conjunction with a proxy solicitation pursuant to Regulation 14A under the Exchange Act, which regulates the solicitation

of proxies, and not pursuant to the tender offer rules;

file proxy materials

with the SEC.

In the event that we seek stockholder

approval of our Business Combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders

with the redemption rights described above upon completion of the Business Combination.

If we seek stockholder approval, we will

complete our Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the

Business Combination.

A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding

capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company

entitled to vote at such meeting.

Our initial stockholders will count toward this quorum and have agreed, after approval of our

board, to vote their founder shares and any public shares purchased during or after our Initial Public Offering in favor of our

Business Combination.

For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes

will have no effect on the approval of our Business Combination once a quorum is obtained.

There are currently 6,224,268 shares

of our common stock outstanding so at least 3,112,135 shares must be voted in favor to pass the Transactions contemplated by the

Merger Agreement.

Our Board, officers and other initial stockholders and their respective affiliates (including the Sponsors and

Strategic Investor) own of record and are entitled to vote an aggregate of 6,000,000 shares and have agreed to vote in favor of

Transaction so no additional public shares are required to be voted in favor of the Transactions for it to be approved.

to give not less than 10 days nor more than 60 days prior written notice of any such meeting, if required, at which a vote shall

be taken to approve our Business Combination.

These quorum and voting thresholds, and the voting agreements of our initial stockholders,

may make it more likely that we will consummate our Business Combination.

Each public stockholder may elect to redeem its public

shares irrespective of whether they vote for or against the proposed transaction.

Our initial stockholders and their respective

affiliates, including the sponsors and the strategic investor and directors and officers, have agreed to vote in favor of the

Business Combination and have sufficient votes to approve the Business Combination without the vote of other stockholders

Our amended and restated certificate of

incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets

to be less than $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules) or any greater net

tangible asset or cash requirement which may be contained in the agreement relating to our Business Combination.

the proposed Business Combination may require:

(i) cash consideration to be paid to the target or its owners, (ii) cash to be

transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other

conditions in accordance with the terms of the proposed Business Combination.

In the event the aggregate cash consideration we

would be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required to

satisfy cash conditions pursuant to the terms of the proposed Business Combination exceed the aggregate amount of cash available

to us, we will not complete the Business Combination or redeem any shares, and all shares of common stock submitted for redemption

will be returned to the holders thereof.

Limitation on Redemption Upon Completion of our Business

Combination if We Seek Stockholder Approval

Notwithstanding the foregoing, if we seek

stockholder approval of our Business Combination and we do not conduct redemptions in connection with our Business Combination

pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder,

together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”

(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than

an aggregate of 20% of the shares sold in our Initial Public Offering, which we refer to as the “Excess Shares.” We

believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such

holders to use their ability to exercise their redemption rights against a proposed Business Combination as a means to force us

or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms.

Absent this provision, a public stockholder holding more than an aggregate of 20% of the shares sold in our Initial Public Offering

could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our management at a

premium to the then-current market price or on other undesirable terms.

By limiting our stockholders’ ability to redeem

no more than 20% of the shares sold in our Initial Public Offering, we believe we will limit the ability of a small group of stockholders

to unreasonably attempt to block our ability to complete our Business Combination, particularly in connection with a business

combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash.

we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against

our Business Combination.

Tendering Stock Certificates in Connection with a Tender

Offer or Redemption Rights

We may require our public stockholders

seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,”

to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials

mailed to such holders, or up to two business days prior to the vote on the proposal to approve the Business Combination in the

event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using Depository Trust Company’s

DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option.

The tender offer or proxy materials, as applicable,

that we will furnish to holders of our public shares in connection with our Business Combination will indicate whether we are

requiring public stockholders to satisfy such delivery requirements.

Accordingly, a public stockholder would have from the time

we send out our tender offer materials until the close of the tender offer period, or up to two days prior to the vote on the

Business Combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its

redemption rights.

Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of

their public shares.

There is a nominal cost associated with

the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System.

transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this

cost on to the redeeming holder.

However, this fee would be incurred regardless of whether or not we require holders seeking to

exercise redemption rights to tender their shares.

The need to deliver shares is a requirement of exercising redemption rights

regardless of the timing of when such delivery must be effectuated.

The foregoing is different from the procedures

used by many blank check companies.

In order to perfect redemption rights in connection with their business combinations, many

blank check companies would distribute proxy materials for the stockholders’ vote on a Business Combination, and a holder

could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking

to exercise his or her redemption rights.

After the business combination was approved, the company would contact such stockholder

to arrange for him or her to deliver his or her certificate to verify ownership.

As a result, the stockholder then had an “option

window” after the completion of the business combination during which he or she could monitor the price of the company’s

stock in the market.

If the price rose above the redemption price, he or she could sell his or her shares in the open market before

actually delivering his or her shares to the company for cancellation.

As a result, the redemption rights, to which stockholders

were aware they needed to commit before the stockholder meeting, would become “option” rights surviving past the completion

of the business combination until the redeeming holder delivered its certificate.

The requirement for physical or electronic delivery

prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the business combination is

Any request to redeem such shares, once

made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder meeting

set forth in our proxy materials, as applicable.

Furthermore, if a holder of a public share delivered its certificate in connection

with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights,

such holder may simply request that the transfer agent return the certificate (physically or electronically).

It is anticipated

that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly

after the completion of our business combination.

If our Business Combination is not approved

or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled

to redeem their shares for the applicable pro rata share of the Trust Account.

In such case, we will promptly return any certificates

delivered by public stockholders who elected to redeem their shares.

If our initial proposed Business Combination

is not completed, we may continue to try to complete a Business Combination with a different target during the Combination Period.

Redemption of Public Shares and Liquidation

if No Business Combination

Our sponsors, strategic investor, officers

and directors have agreed that we will have to complete our Business Combination during the Combination Period.

If we are unable

to complete our Business Combination within such period, we will:

(i) cease all operations except for the purpose of winding up,

(ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share

price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds

held in the Trust Account and not previously released to us to pay our franchise and income taxes (less up to $75,000 of interest

to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish

public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any),

subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of

our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware

law to provide for claims of creditors and the requirements of other applicable law.

There will be no redemption rights or liquidating

distributions with respect to our warrants, which will expire worthless if we fail to complete our Business Combination during

the Combination Period.

Our initial stockholders have entered

into letter agreements with us, pursuant to which they have waived their rights to liquidating distributions from the Trust Account

with respect to any founder shares held by them if we fail to complete our Business Combination during the Combination Period.

However, our initial stockholders will be entitled to liquidating distributions from the Trust Account with respect to any public

shares they hold if we fail to complete our Business Combination during the Combination Period.

Our sponsors, strategic investor, officers

and directors have agreed, pursuant to written letter agreements with us, that they will not propose any amendment to our amended

and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public

shares if we do not complete our Business Combination during the Combination Period, unless we provide our public stockholders

with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable

in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the

Trust Account and not previously released to us to pay our franchise and income taxes divided by the number of then outstanding

public shares.

However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than

$5,000,001 (so that we are not subject to the SEC’s “penny stock” rules).

Pursuant to our amended and restated

certificate of incorporation such an amendment would need to be approved by holders of 65% of our common stock entitled to vote

We expect that all costs and expenses associated

with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts held outside the Trust

Account ($49,202 as of December 31, 2020), or through advances available for drawdown from our sponsors and strategic investor

under our Expense Advancement Agreement ($75,000 as of December 31, 2020), although we cannot assure you that there will be sufficient

funds for such purpose.

However, if those funds are not sufficient to cover the costs and expenses associated with implementing

our plan of dissolution, to the extent that there is any interest accrued in the Trust Account not required to pay franchise and

income taxes on interest income earned on the Trust Account balance, we may request the trustee to release to us an additional

amount of up to $75,000 of such accrued interest to pay those costs and expenses.

If we were to expend all of the net proceeds

of our Initial Public Offering and the Concurrent Private Placement, other than the proceeds deposited in the Trust Account, and

without taking into account interest, if any, earned on the Trust Account, the per-share redemption amount received by stockholders

upon our dissolution would be approximately $10.00.

The proceeds deposited in the Trust Account could, however, become subject

to the claims of our creditors that would have higher priority than the claims of our public stockholders.

We cannot assure you

that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00.

Under Section

281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments

to be made in full, as applicable, if there are sufficient assets.

These claims must be paid or provided for before we make any

distribution of our remaining assets to our stockholders.

While we intend to pay such amounts, if any, we cannot assure you that

we will have funds sufficient to pay or provide for all creditors’ claims.

Although we will seek to have all vendors,

service providers (other than our independent auditors), prospective target businesses or other entities with which we do business

execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account

for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute

such agreements that they would be prevented from bringing claims against the Trust Account including but not limited to fraudulent

inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the

waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the

Trust Account.

If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account,

our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third

party that has not executed a waiver if management believes that such third party’s engagement would be significantly more

beneficial to us than any alternative.

Examples of possible instances where we may engage a third party that refuses to execute

a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to

be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable

to find a service provider willing to execute a waiver.

In addition, there is no guarantee that

such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations,

contracts or agreements with us and will not seek recourse against the Trust Account for any reason.

Each sponsor has agreed that

it will be liable to us, jointly and severally, if and to the extent any claims by a vendor (other than our independent public

accountants) for services rendered or products sold to us, or a prospective target business with which we have discussed entering

into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per public share or (ii) such

lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions

in value of the trust assets, in each case net, of the amount of interest which may be withdrawn to pay our franchise and income

tax obligations, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust

Account and except as to any claims under our indemnity of the underwriters of our Initial Public Offering against certain liabilities,

including liabilities under the Securities Act.

In the event that an executed waiver is deemed to be unenforceable against a third

party, then our sponsors will not be responsible to the extent of any liability for such third party claims We have not independently

verified whether each sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsors’ only

substantive assets are securities of our company.

We have not asked our sponsors to reserve for such indemnification obligations.

Therefore, we cannot assure you that our sponsors would be able to satisfy those obligations.

As a result, if any such claims

were successfully made against the Trust Account, the funds available for our Business Combination and redemptions could be reduced

to less than $10.00 per public share.

In such event, we may not be able to complete our Business Combination, and you would receive

such lesser amount per share in connection with any redemption of your public shares.

None of our officers or directors will indemnify

us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

In the event that the proceeds in the

Trust Account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the Trust Account

as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets, in each case net of the

amount of interest which may be withdrawn to pay our franchise and income tax obligations and each sponsor asserts that it is

unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim,

our independent directors would determine whether to take legal action against our sponsors to enforce its indemnification obligations.

While we currently expect that our independent directors would take legal action on our behalf against our sponsors to enforce

its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may

choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative

to the amount recoverable or if the independent directors determine that a favorable outcome is not likely.

We have not asked

our sponsors to reserve for such indemnification obligations and we cannot assure you that our sponsors would be able to satisfy

those obligations.

Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption

price will not be less than $10.00 per public share.

We will seek to reduce the possibility

that our sponsors will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service

providers (other than our independent auditors), prospective target businesses or other entities with which we do business execute

agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

will also not be liable as to any claims under our indemnity of the underwriters of our Initial Public Offering against certain

liabilities, including liabilities under the Securities Act.

As of December 31, 2020, we have approximately $49,000 available

to us outside the Trust Account with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently

estimated to be no more than approximately $75,000).

In the event that we liquidate and it is subsequently determined that the

reserve for claims and liabilities is insufficient, stockholders who received funds from our Trust Account could be liable for

claims made by creditors.

Under the DGCL, stockholders may be held

liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.

pro rata portion of our Trust Account distributed to our public stockholders upon the redemption of our public shares in the event

we do not complete our Business Combination during the Combination Period may be considered a liquidating distribution under Delaware

If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes

reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought

against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day

waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a

liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed

to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.

Furthermore, if the pro rata portion of

our Trust Account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete

our Business Combination during the Combination Period, is not considered a liquidating distribution under Delaware law and such

redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims

of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating

distribution.

If we are unable to complete our Business Combination during the Combination Period, we will:

(i) cease all operations

except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter,

redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account

including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income

taxes (less up to $75,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which

redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further

liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,

subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case

to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

it is our intention to redeem our public shares as soon as reasonably possible following the Combination Period and, therefore,

we do not intend to comply with those procedures.

As such, our stockholders could potentially be liable for any claims to the

extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third

anniversary of such date.

Because we will not be complying with

Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide

for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent

However, because we are a blank check company, rather than an operating company, and our operations will be limited

to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as

lawyers, investment bankers, etc.) or prospective target businesses.

As described above, pursuant to the obligation contained

in our underwriting agreement, we will seek to have all vendors, service providers (other than our independent auditors), prospective

target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or

claim of any kind in or to any monies held in the Trust Account.

As a result of this obligation, the claims that could be made

against us are significantly limited and the likelihood that any claim that would result in any liability extending to the Trust

Account is remote.

Further, our sponsors may be liable only to the extent necessary to ensure that the amounts in the Trust Account

are not reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the Trust Account as of

the date of the liquidation of the Trust Account, due to reductions in value of the trust assets, in each case net of the amount

of interest withdrawn to pay our franchise and income tax obligations and will not be liable as to any claims under our indemnity

of the underwriters of our Initial Public Offering against certain liabilities, including liabilities under the Securities Act.

In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsors will not be responsible

to the extent of any liability for such third-party claims.

If we file a bankruptcy petition or an

involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject

to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority

over the claims of our stockholders.

To the extent any bankruptcy claims deplete the Trust Account, we cannot assure you we will

be able to return $10.00 per share to our public stockholders.

Additionally, if we file a bankruptcy petition or an involuntary

bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under

applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”

As a result, a bankruptcy court could seek to recover all amounts received by our stockholders.

Furthermore, our board may be

viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself

and our company to claims of punitive damages, by paying public stockholders from the Trust Account prior to addressing the claims

of creditors.

We cannot assure you that claims will not be brought against us for these reasons.

Our public stockholders will be entitled

to receive funds from the Trust Account only in the event of the redemption of our public shares if we do not complete our Business

Combination during the Combination Period or if they redeem their respective shares for cash upon the completion of the Business

In no other circumstances will a stockholder have any right or interest of any kind to or in the Trust Account.

the event we seek stockholder approval in connection with our Business Combination, a stockholder’s voting in connection

with the Business Combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro

rata share of the Trust Account.

Such stockholder must have also exercised its redemption rights described above.

Amended and Restated Certificate of Incorporation

Our amended and restated certificate of

incorporation contains certain requirements and restrictions relating to our Initial Public Offering that will apply to us until

the consummation of our Business Combination.

If we seek to amend any provisions of our amended and restated certificate of incorporation

relating to stockholders’ rights or pre-Business Combination activity, we will provide dissenting public stockholders with

the opportunity to redeem their public shares in connection with any such vote.

Our initial stockholders have agreed to waive

any redemption rights with respect to their founder shares and public shares in connection with the completion of our Business

Specifically, our amended and restated certificate of incorporation provides, among other things, that:

prior to the consummation

of our Business Combination, we shall either (1) seek stockholder approval of our Business Combination at a meeting called

for such purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or against the

proposed Business Combination, into their pro rata share of the aggregate amount then on deposit in our Trust Account, including

interest (which interest shall be net of taxes payable) or (2) provide our public stockholders with the opportunity to tender

their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their

pro rata share of the aggregate amount then on deposit in our Trust Account, including interest (which interest shall be net

of taxes payable) in each case subject to the limitations described herein;

we will consummate

our Business Combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if

we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the Business

if our Business

Combination is not consummated during the Combination Period, then our existence will terminate and we will distribute all

amounts in our Trust Account;

prior to our Business

Combination, we may not issue additional shares of capital stock that would entitle the holders thereof to (i) receive funds

from our Trust Account or (ii) vote on any Business Combination.

These provisions cannot be amended without

the approval of holders of 65% of our common stock.

In the event we seek stockholder approval in connection with our Business

Combination, our amended and restated certificate of incorporation provides that we may consummate our Business Combination only

if approved by a majority of the shares of Capital Stock voted by our stockholders voting at a duly held stockholders meeting.

In identifying, evaluating and selecting

a target business for our Business Combination, we may encounter intense competition from other entities having a business objective

similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses

seeking strategic acquisitions.

Many of these entities are well established and have extensive experience identifying and effecting

business combinations directly or through affiliates.

Moreover, many of these competitors possess greater financial, technical,

human and other resources than we do.

Our ability to acquire larger target businesses will be limited by our available financial

This inherent limitation gives others an advantage in pursuing the acquisition of a target business.

Furthermore, our

obligation to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources

available to us for our Business Commination and our outstanding warrants, and the future dilution they potentially represent,

may not be viewed favorably by certain target businesses.

Either of these factors may place us at a competitive disadvantage in

successfully negotiating a Business Combination.

If we succeed in effecting our Business

Combination, there will be, in all likelihood, intense competition from competitors of the target business.

Subsequent to our

Business Combination, we may not have the resources or ability to compete effectively.

We currently have four officers.

of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote as much

of their time as they deem necessary to our affairs until we have completed our Business Combination.

The amount of time that

any such person will devote in any time period will vary based on whether a target business has been selected for our Business

Combination and the current stage of the Business Combination process.

Periodic Reporting and Financial Information

Our Units, Common Stock and Warrants are

registered under the Exchange Act and as a result we have reporting obligations, including the requirement that we file annual,

quarterly and current reports with the SEC.

Such reports and other information filed by the Company with the SEC are available

free of charge through the Investors link on our website at www.leisureacq.com and on the SEC’s website at www.sec.gov.

The contents of these websites are not incorporated into this filing.

Further, our references to the website URLs are intended

to be inactive textual references only.

We are an “emerging growth company,”

as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act.

As such, we are eligible to take advantage of certain

exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth

companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section

404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy

statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder

approval of any golden parachute payments not previously approved.

If some investors find our securities less attractive as a

result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.

In addition, Section 107 of the JOBS Act

also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section

7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

In other words, an “emerging growth

company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We intend to take advantage of the benefits of this extended transition period.

We will remain an emerging growth company

until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the IPO Closing Date, (b) in which

we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which

means the market value of Common Stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2)

the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.

Additionally, we are a “smaller

reporting company” as defined in Item 10(f)(1) of Regulation S-K.

Smaller reporting companies may take advantage of certain

reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.

remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held

by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter, or (ii) our annual revenues exceeded

$100 million during such completed fiscal year and the market value of common stock held by non-affiliates exceeds $700 million

as of the end of that year’s second fiscal quarter.

We will provide stockholders with audited

financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials

sent to stockholders to assist them in assessing the target business.

In all likelihood, these financial statements will need

to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America

(“GAAP”) or international financing reporting standards (“IFRS”) as promulgated by the International Accounting

Standards Board (“IASB”) depending on the circumstances and the historical financial statements may be required to

be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”).

We cannot assure you that any particular target business identified by us as a potential acquisition candidate will have financial

statements prepared in accordance with GAAP or IFRS or that the potential target business will be able to prepare its financial

statements in accordance with GAAP or IFRS.

To the extent that this requirement cannot be met, we may not be able to acquire the

proposed target business.

While this may limit the pool of potential acquisition candidates, we do not believe that this limitation

will be material.

We are required to evaluate our internal

control procedures beginning with the fiscal year ended December 31, 2019 as required by the Sarbanes-Oxley Act.

As long as we

maintain our status as an “emerging growth company,” we will not be required to comply with the independent registered

public accounting firm attestation requirement on our internal control over financial reporting.

The fact that we are a blank

check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other

public companies because a target company with which we seek to complete our business combination may not be in compliance with

the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls.

A target company’s ability to achieve

compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.

were originally incorporated in the State of Delaware in April 2003 as PharmacoFore, Inc.

and, in January 2012, we changed our name from

PharmacoFore, Inc.

to Signature Therapeutics Inc.

(“ Signature ”).

On December 28, 2015, Signature, Signature Acquisition

Corp., a wholly-owned subsidiary of Signature (“ SAQ ”), and Ensysce Biosciences, Inc.

(“ EB ”) entered

into an Agreement and Plan of Merger (“ EB-ST Agreement ”).

Pursuant to the EB-ST Agreement, SAQ merged with and into

EB with EB surviving the merger as a wholly-owned subsidiary of Signature.

As part of the transaction, Signature changed its name to

“Ensysce Biosciences, Inc.” (“ Former Ensysce ”) and changed EB’s name to EBI Operating Inc.

31, 2021, LACQ, Former Ensysce, and Merger Sub entered into the Merger Agreement.

On June 30, 2021, pursuant to the Merger Agreement,

Merger Sub merged with and into Former Ensysce, with Former Ensysce surviving the transaction as a wholly-owned subsidiary of LACQ.

part of the transaction, LACQ changed its name to “Ensysce Biosciences, Inc.” and Former Ensysce changed its name to EBI

(the “ Merger ”).

mailing address of our principal executive office is 7946 Ivanhoe Avenue, Suite 201, La Jolla, California 92037.

Our corporate telephone

number is (858) 263-4196.

Our website address is www.ensysce.com.

Information contained on our website, or connected thereto, does not

constitute part of, and is not incorporated by reference into, this Annual Report on Form 10-K.

for Disclosure of Information

the media, and others should note that we announce material information to the public through filings with the SEC, the investor relations

page on our website, blog posts on our website, press releases, public conference calls, webcasts, and our twitter feed (@EnsysceBio).

information disclosed by the foregoing channels could be deemed to be material information.

As such, we encourage investors, the media,

and others to follow the channels listed above and to review the information disclosed through such channels.

updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on

are a clinical stage pharmaceutical company seeking to develop innovative solutions for severe pain relief while reducing the fear of

and the potential for misuse, abuse, and overdose.

We have also incorporated a 79.2%-owned subsidiary, Covistat, a clinical stage pharmaceutical

company that is developing a compound utilized in our overdose protection program for the treatment of COVID-19 and cystic fibrosis.

Certain of our affiliates own the remaining portions of Covistat.

See “ Certain Relationships and Related Person Transactions ”

for additional information.

are currently developing product candidates designed to improve the safety and performance of prescription drugs.

Our primary focus has

been on opioid pain products and opioid use disorder products.

Prescription opioid abuse and addiction present major burdens to society,

resulting in significant costs, illnesses, and deaths, many of which we believe could be prevented through the use of our proprietary

technologies.

We believe the intertwined issues of (1) the widespread abuse of prescription opioids and (2) the resultant reluctance

of many prescribers to write prescriptions for opioid analgesics, have resulted in the persistent under-treatment of patients with moderate-to-severe

Our platforms utilize a novel molecular delivery technology designed to deter prescription opioid abuse at the molecular level.

current development pipeline includes two new drug platforms - an abuse-resistant opioid prodrug technology – the Trypsin

Activated Abuse Protection, or the TAAP platform, and an over-dose protection opioid prodrug technology - the Multi-Pill Abuse Resistant,

or the MPAR™ platform.

The TAAP platform is designed to seek to improve the care of patients with moderate to severe acute or chronic

pain while reducing the human and economic costs associated with prescription opioid drug abuse.

Our development pipeline of TAAP prodrugs

is summarized in the table below.

The MPAR™ platform when combined with our TAAP prodrugs is designed not only to seek to prevent

abuse of prescription drugs but also to reduce overdose occurrences.

Each prodrug is intended to be able to be combined with our MPAR™

technology for overdose protection.

Additionally, nafamostat di-mesylate (“ nafamostat ”), which is an ingredient in

our overdose protection combination products, is also being developed for the intended purpose of treating infection and pulmonary lung

technology under the TAAP platform when applied to opioid drugs is designed to release clinically effective opioid drugs only when exposed

to specific physiological conditions (i.e., when the drug is ingested and exposed to the digestive enzyme trypsin).

Our lead product

candidate, PF614, is a TAAP oxycodone prodrug that is a biologically inactive compound which can be metabolized in the body to produce

a drug with demonstrable features aimed at resisting both oral and non-oral modes of prescription drug abuse.

This approach differs from

current formulation-based strategies such as OxyContin OP which uses Intac® Technology (crush-resistant polymers) and Extampza®ER

which uses DETERx™ (insoluble fatty acid salts in polymers), in a number of ways.

the TAAP technology seeks to remove the ability of a user to abuse PF614 intravenously or intra-nasally.

This is based on preclinical

studies that show PF614 does not readily convert into oxycodone in the blood stream and trypsin is not present in the nasal passage.

Accordingly, PF614 would not convert to oxycodone in the nose.

Furthermore, the chemically modified and abuse-resistance TAAP opioid

drug is unaffected by simple physical manipulations designed to extract abusable amounts of opioid, such as through kitchen chemistry.

portfolio of TAAP product candidates is based on a differentiated understanding of chemical reactivity and metabolism, as well as the

key pillars of our unique approach which focuses on:

(1) enzyme mediated metabolic activation localized in the gastrointestinal tract;

(2) rearrangement chemistry to achieve ideal pharmacokinetic release of active drug products;

and (3) robust packages of preclinical

data that set forth the metabolic and chemical activation profile for each of our clinical candidates.

This approach led to the filing

of an Investigational New Drug application, or IND (116794), and a Phase 1 clinical trial for PF614, which was completed in February

In addition, the clinical data from the Phase 1 trial demonstrated that oxycodone is released from PF614 as chemically designed,

and that it was absorbed following oral administration of the TAAP PF614, given blood levels that matched the same release profile as

the extended release oxycodone product, OxyContin OP.

MPAR™ technology is a combination of TAAP prodrug and trypsin inhibitor nafamostat.

It is designed to provide overdose protection

to all TAAP prodrugs.

MPAR™ applied to TAAP opioids enables the release of active opioid following ingestion of multiple doses,

whether inadvertent or intentional.

Nafamostat is a small molecule, highly potent protease inhibitor (trypsin inhibitor) with a steep

dose response curve.

MPAR™ at prescribed doses is designed to release of the active pharmaceutical ingredient.

However, if the

TAAP prodrug nafamostat combination (MPAR™) is taken in larger quantities than intended, the excess nafamostat is present to inhibit

trypsin, thereby preventing metabolic activation of TAAP and averting a drug overdose.

We believe the potential benefits to society of

an opioid that resists both oral and parenteral abuse are considerable.

pipeline, developed over the course of 15 years of research and investment, includes three clinical-stage product candidates.

principal focus and lead product candidates are geared towards combating abuse and overdose of opioid drugs, we have, over the years

of research and development, discovered and recognized qualities and unique features of certain product candidates that may be useful

in addressing other treatments.

For example, we discovered the ability of nafamostat in inhibiting the action of enzymes associated with

the COVID-19 infection, and, as such, have devoted efforts to develop an oral and inhalation drug product of nafamostat, for use against

coronaviral infections and other pulmonary diseases such as cystic fibrosis.

is our lead TAAP prodrug candidate under development for the treatment of acute or chronic pain.

PF614 is a delayed release TAAP prodrug

designed to release oxycodone under certain specific physiological circumstances when taken orally.

PF164 was evaluated for safety and

pharmacokinetic release of oxycodone in a Phase 1 single ascending dose clinical trial in 64 healthy subjects.

The trial showed that

PF614 was well tolerated with no serious adverse events.

The study also showed pharmacokinetics had a maximum blood concentration of

oxycodone at 4 to 6 hours after swallowing PF614, demonstrating its delayed release profile.

A second Phase 1b study was initiated in

2021 to evaluate PF614 delivered to healthy subjects twice daily for 4.5 days.

This study evaluated both safety and PK, with a second

part to evaluate the bioequivalence of PF614 versus OxyContin.

Final data from this trial will be available in the second quarter of

2022.We believe PF614 has the potential to provide a safer alternative to the abuse deterrent formulated opioid products that are currently

commercially available.

a combination product of PF614 and nafamostat has been designed to limit abuse potential by providing resistance to use through injection

or inhalation and to provide overdose protection against excessive oral ingestion.

Our IND application (150966) for PF614-MPAR™

received FDA allowance and we initiated a Phase 1 clinical trial to evaluate safety and PK in healthy subjects in December 2021.

from this trial will be available in the second half of 2022.

is an enzyme inhibitor (protease inhibitor) used in our combination overdose protection technology, MPAR™.

Due to its ability to

inhibit the action of enzymes associated with the COVID-19 infection, we are also developing an oral and inhalation drug product for

use against coronaviral infections and other pulmonary diseases such as cystic fibrosis.

An IND was submitted (149877) for the evaluation

of oral nafamostat in coronaviral infections.

A Phase 1 trial to evaluate safety and PK was completed in 2021.

intend to undertake additional clinical studies in 2022.

Two human abuse liability studies of PF614 will be initiated in the second and

third quarter of 2022 to understand the tendency for drug abusers to like the effects achieved from taking PF614 either orally or nasally

as compared to that of a comparator product such as crushed OxyContin.

We are also exploring pain indications to evaluate PF614 for efficacy

and safety which we are seeking to initiate by end of 2022.

We are also planning to evaluate nafamostat in COVID-19 subjects when delivered

as an oral drug product.

The ability to undertake these studies will depend on additional financing.

We have funded our operations to

date primarily with proceeds from the sale of equity and borrowings under convertible promissory notes and federal grants.

See “Convertible

Promissory Notes” and “ Government Grants ” for additional information.

seek to become a leading specialty pharmaceutical company focused on addressing the safe use of pharmaceuticals by developing a broad

portfolio of TAAP and MPAR™ products with enhanced safety features and benefits.

Specifically, we intend to:

on our management team’s collective experience and expertise in the development and approval process of innovative drug delivery

technologies that address medication safety .

We have received fast track designation for PF614, our lead drug candidate, from

However, fast track designation does not guaranty a faster development or regulatory review or approval process and does

not assure FDA approval.

We are currently devoting our efforts to develop PF614 for the severe pain market with acute and chronic

pain indications, while bringing other TAAP and MPAR™ products through regulatory approval with the expertise of team members

who have launched a number of products in the central nervous system, or CNS, space.

our proprietary technologies to develop a full line of pharmaceutical products.

Medication abuse and misuse is not limited to

single drugs but often pervades entire drug categories.

We have initiated programs to apply our TAAP and MPAR™ technology to

other categories of prescription drugs such as amphetamine and methadone.

Commercialize

our products through focus on the United States market to commercialize our lead products while licensing our technology internationally

and through patent life extension .

We intend to bring PF614 and PF614-MPAR™ through regulatory approval to commercialization

in the United States.

We expect to seek licensing partners in jurisdictions outside the United States for our product candidates.

We also expect to seek partners who wish to license our TAAP and MPAR™ technologies for patent life extension of their portfolio

products, or to improve delivery or pharmacokinetic properties of certain of their drug candidates.

an efficient internal cost structure .

Our internal cost structure has been designed to enable us to focus on our lead drug products,

PF614, PF614-MPAR™, and nafamostat oral and inhalation drug products clinically through to commercialization.

many high-cost elements of development such as clinical trials.

Outsourcing these functions minimizes our fixed overhead without

reliance or dependence on individual third parties, and capital investment and thereby reduce our business risk in our view.

seek to achieve our strategic goals through the utilization of our key competitive strengths, including:

worldwide patent portfolio has extensive coverage in major markets and coverage in select secondary markets.

These patents provide

protection to the underlying molecules of both our immediate and extended-release drug candidates.

We expect our patent portfolio

will continue to expand and deepen as new products are developed and new markets are identified.

Our lead product candidates

are new chemical entities and not simply re-formulations.

Our TAAP prodrugs have a unique technology that has been demonstrated in

our Phase 1 clinical trials for PF614.

of our leadership team in all stages of discovery, development, marketing, and business development.

Our team has successfully

developed and launched many successful products with multi-billion dollar selling market leaders in the CNS area.

track designation .

Our lead clinical candidate, PF614, has received fast track designation from the FDA.

Federal grants from Federal agencies including NIDA, NIH.

We have received two large Federal government grants to support our

MPAR™ overdose protection program and our opioid use disorder program from NIH/NIDA.

proof of concept.

We have conducted a Phase 1 trial with TAAP prodrug PF614.

The trial demonstrated that, after oral administration

of the TAAP prodrug, the corresponding opioid was measured in the subjects’ blood.

Abuse and Drug Overdose

pain medications are essential for improving the care and outcomes of a majority of Americans who live with chronic pain.

study reported that 25.3 million adults suffered from pain every day for the preceding three months and almost 40 million adults experience

severe levels of pain, which is linked to worse health status.

Prescription opioids drugs, such as morphine, hydromorphone, hydrocodone,

and oxycodone, have a long history of use for the management of patient pain.

Prescriptions for opioid medications in 2020 totaled 153

million, with $4.2 billion in market size in the United States, where 80% of world’s opioids are consumed.

CDC recently provided recommendations for clinicians who provide pain care, defining acute pain (duration less than 1 month), subacute

pain (duration of 1–3 months), or chronic pain (duration of 3 months or more), not including sickle cell disease related pain management,

cancer pain treatment, palliative care, and end-of life care .

These guidelines provide the market indications, acute and chronic,

that Ensysce will explore for its TAAP and MPAR™ opioid products including PF614.

are offered in a variety of dosages including immediate-release tablets (or capsules), extended-release tablets (or capsules), patches,

and other dose forms.

Oxycodone is one of the most effective pain killers available today.

This drug helps the patient to overcome pain

and focus on his or her work.

Opioids have an increased risk of dependence and, when used improperly, a common side effect of high doses

of opioids like oxycodone can be euphoria, or a “high.” As a result of these side effects, opioids have become amongst the

most misused or abused prescription drugs in the United States.

Opioid abuse was declared a public-health emergency in 2017 when more

than 130 people died each day from opioid-related overdoses.

Currently, that number has risen to over 200 deaths per day.

large increase in overall overdose deaths is now driven by use of synthetic opioids, in particular fentanyl, as prescription opioids

have become harder to obtain.

From 2017 to 2018 the prescription opioid-involved death rates decreased by 13.5% showing that attention

to the problem had beneficial effect.

However, 1.6 million people reported having opioid use disorder (“Opioid Use Disorder”)

Based on information from the CDC, the most common drugs involved in prescription opioid overdose deaths include Methadone,

Oxycodone (such as OxyContin®), and Hydrocodone (such as Vicodin®).

The CDC indicates that improving opioid prescribing, treatment

of opioid use disorder, and prevention of opioid use disorder would help to improve the opioid crisis.

Misuse or abuse of opioids is

often done in one of the following manners:

Excessive Tablet Abuse .

Generally recognized as the most prevalent route of administration by abusers, an abuser orally ingests

more tablets (or capsules) than is recommended for pain relief.

Crushed tablets are inhaled for absorption of the drug through the nasal tissues.

The opioid is physically or chemically removed from the dosage and injected into the vein using a syringe.

Manipulated Tablet Abuse .

Extended-release tablets or patches are crushed, chewed, or otherwise physically or chemically manipulated

to defeat an extended-release mechanism and provide an immediate-release of the opioid for oral ingestion.

Poly-pharmacy .

Opioids are sometimes used in conjunction with alcohol, methamphetamine, or other drugs to accentuate the euphoria.

Users may accidentally introduce excessive quantities of drugs in their systems or combine drugs that may heighten the chance of

adverse effects of drugs.

Some patients may over-ingest drugs accidentally or with the express intent of suicide.

or prolonged use.

Chronic or prolonged use of opioids resulting in dependence is another form of misuse or abuse.

like Adderall are manufactured in pill form and are intended for oral ingestion.

Fifty-three percent of Adderall prescriptions are prescribed

to the 10.5 million adults that are diagnosed with attention deficit hyperactivity disorder, or ADHD.

ADHD is the most common neurodevelopment

disorder in children.

Five million adults misuse stimulant medication annually, by using alternative consumption methods to achieve a

more intense high faster;

snorting or injecting are most-common methods of abuse.

Both of these methods involve crushing pills.

believe that having prescription drug products available that have a reduced potential for abuse by crushing and injecting, snorting,

and chewing could provide an even greater reduction of prescription opioid related deaths in the abuse of opioids or amphetamines.

market opportunity is multifaceted.

The oral form could be used alone or in combination with other antiviral drugs that target separate

processes needed for virus product, such as RNA replication or viral protein processing.

An inhaled form of nafamostat could be applied

to patients that have a more severe stage of the disease.

lead clinical program is an oral drug product of nafamostat for use against COVID-19 and other coronaviral infections.

The dosing and

positioning of oral nafamostat will be similar to antiviral drug oseltamivir phosphate, Tamiflu®.

Tamiflu® is a seasonal influenza

treatment that is taken in oral form within two days of influenza symptoms starting and applying a two-dosage daily schedule.

the H5N1 outbreaks and the H1N1 and other coronavirus outbreaks, Tamiflu® had annual U.S.

sales above $1 billion and has had cumulative

sales of $15.9 billion since its launch in 1999.

World Health Organization estimates influenza epidemics result in approximately three to five million cases of severe illness and 250,000

to 500,000 deaths each year.

Nafamostat will be well positioned to generate revenue from several changing market conditions:

new virus strains of influenza and coronavirus create new outbreaks, there is a window of opportunity to grow or boost sales before

production of the appropriate vaccine is increased.

our antiviral in situations of waning immunity to vaccines, particularly in the elderly, and in immunocompromised patients;

influenza vaccines are approximately 45% effective since the 2010 influenza season.

influenza and coronavirus vaccines remain several years from market launch, making nafamostat a potential first line of defense against

are only four antiviral treatments for early symptoms of influenza for hospitalized patients that have severe, complicated, or progressive

illness, or who are at high risk for complications.

reality of unexpected and rapidly spreading influenza or coronavirus outbreaks causes healthcare systems to stockpile and replenish

first response antivirals.

a drug repurposing model and the Hatch Waxman Act, we believe that we will be able to receive eight to ten years of market exclusivity

in North America, European Union, and Japan.

See “— Intellectual Property ” for further detail.

Technology Platform Solution

Prescription Drugs

technology under the TAAP platform utilizes a novel technology designed to deter prescription drug abuse at the molecular level.

molecular delivery system is designed to release clinically effective drugs only when exposed to specific physiological conditions (i.e.,

when the drug is ingested and exposed to the digestive enzyme trypsin).

We believe that our TAAP prodrugs delivery system demonstrates

several features aimed at resisting both oral and non-oral modes of abuse.

This platform’s approach differs from current formulation-based

strategies (abuse deterrent formulations, or ADFs) in a number of ways including that it is designed to be unaffected by simple physical

manipulations (e.g.

crushing and extraction and/or chewing of the dose form provided to patients).

We believe the potential benefits

to society of applying TAAP to opioids and amphetamines providing medication that resists both oral and parenteral abuse are considerable.

Prescription Drugs

combination therapy, involves co-formulating TAAP prodrugs with a trypsin inhibitor, nafamostat, which, when administered at prescribed

dose levels, are intended to have no effect on the conversion of the prodrug to the active ingredient thus allowing normal drug plasma

exposure levels.

However, if the drug were taken in greater than prescribed quantities, the trypsin inhibitor would also be present at

higher levels, inhibiting the first step in the activation process, preventing the conversion of the prodrug to the active ingredient

thus limiting the potential to an overdose from the medication.

Development Programs

are currently developing product candidates designed to improve the safety and performance of prescription drugs.

Our primary focus has

been on opioid pain products and opioid use disorder products.

Our development pipeline of TAAP prodrugs is summarized in the table below.

Each prodrug is intended to be able to be combined with our MPAR™ technology for overdose protection.

Additionally, nafamostat,

which is an ingredient in our overdose protection combination products, is also being developed for infection and pulmonary lung diseases.

Besides our clinical candidates, we have a product portfolio of other TAAP and MPAR TM opioids that could potentially be

developed to build on this pipeline.

is a chemically modified, delayed onset oxycodone-derivative which releases clinically effective oxycodone only when exposed trypsin

in the gut (i.e., when the drug is ingested).

This approach differs from formulation-based strategies which are currently commercially

available, in several ways.

Foremost, the abuse-resistance provided by PF614 is designed to be unaffected by simple physical manipulations

(e.g., extraction, chewing, and/or crushing).

It also limits the bioavailability of active medication following co-ingestion of multiple

ingestion, the release of oxycodone from PF614 proceeds via a two-step process comprised of (1) trypsin activation in the small intestine

and (2) a subsequent intramolecular cyclization release reaction.

This reaction releases oxycodone with concomitant formation of a cyclic

urea metabolite.

The time-course of oxycodone release from PF614 is a function of the kinetics of (i) the trypsin hydrolysis and (ii)

the cyclization-release reaction.

In the Phase 1 study of PF614, the time to maximal blood concentration of oxycodone (T max )

was five to six hours for the release of oxycodone and this time cannot be modified by crushing, chewing, or physically manipulating

the drug product.

Oxycodone safety, metabolism, and pharmacokinetics have been well studied.

Phase 1 Clinical Trial

(IND 116796) has been evaluated in a Phase 1 clinical study for safety and pharmacokinetics of oxycodone release in 64 healthy subjects

in seven different closing cohorts from November 2016 to January 2018.

This study was conducted for us by PRA Health Sciences –

Early Development Services Lenexa, Kansas, principal investigator, Daniel Dickerson, M.D., Ph.D.

to evaluate the safety and pharmacokinetics

of PF614, as well as the pharmacokinetics of oxycodone at doses sufficient to characterize the extent to which plasma oxycodone is produced

and maintained following oral ingestion of PF614 and was compared to the oxycodone released from extended release oxycodone from OxyContin

Subjects were randomized to receive a single dose of PF614 (dose of 15, 25, 50, 100, and 200 mg with 6 subjects per dosing group)

or OxyContin OP (dose of 10, 20, 50, and 80 mg with 2 subjects per dosing group).

New subjects were recruited for each cohort.

1 compared subjects receiving PF614 and OxyContin OP with and without naltrexone blockade.

Naltrexone is an opioid blocker to prevent

opioids from attaching to the opioid receptors, preventing the effect of the opioid medication such as pain relief, feeling of euphoria

or respiratory depression.

The single ascending dose study also compared the release of oxycodone from PF614 under both fasted and fed

conditions at the highest does of PF614 evaluated, 200 mg.

The pharmacokinetics of the prodrug fragments was also evaluated.

this study instructed as to the “conversion efficiency” of the PF614 prodrug to oxycodone, with respect to OxyContin.

Pharmacokinetic

shape of the plasma concentration versus time curve of oxycodone was similar following administration of OxyContin OP (oxycodone extended

release) and PF614.

The efficiency of conversion for PF614 to oxycodone was determined to be approximately 86%.

A PF614 dose of 50 mg

yields oxycodone exposure comparable to a 20.01 mg dose of OxyContin, indicating a potency ratio of 0.40.

This data has allowed us to

match doses of PF614 to those of commercially available OxyContin OP.

total of 64 subjects were included in this study, of which 23 (35.9%) experienced 47 treatment-emergent adverse events, or TEAEs.

majority of TEAEs were either gastrointestinal disorders or nervous system disorders with no deaths, serious adverse events, or severe

Additionally, there were no discontinuations due to study drug-related adverse events.

Over half of TEAEs were study drug related,

but they were mostly mild in severity.

The three TEAEs that were moderate in severity were nephrolithiasis, or kidney stones, nausea,

and vomiting, with the nausea and vomiting being study drug related.

Comparing safety data across cohorts, the data indicated that dose,

naltrexone, and fed/fasted state had no clinically relevant effect on the safety profile of PF614.

PF614 was generally well tolerated

at doses up to 200 mg in healthy subjects.

initiated additional clinical studies with PF614 in the fourth quarter of 2021.

A multi ascending dose study with a bioequivalence arm,

PF614-102 concluded enrollment, with data anticipated in the second quarter of 2022.

In 2022, two human abuse liability studies will

be initiated to understand the tendency for drug abusers to like the effects achieved from taking PF614 either orally or nasally as compared

to that of a comparator product such as crushed OxyContin.

IND application (IND 150966) received FDA allowance and a Phase 1 study was initiated in December 2021 with first patients dosed.

study to evaluate PF614-MPAR™ is entitled “A Single Dose, 2 Part Study to Evaluate the Pharmacokinetics of Oxycodone, PF614,

PFR06082, and nafamostat, when PF614 Solution is Co-Administered with nafamostat, as an Immediate Release Solution and/or Extended Release

(ER) Capsule Formulations in Healthy Subjects”.

PF614-MPAR™-101

Phase 1 Clinical Trial

primary objectives of the Phase 1 study are to assess the pharmacokinetics of oxycodone, when PF614 solution is administered alone and

with nafamostat as an immediate release solution and/or extended-release capsule prototypes.

The study is designed to aid in the selection

of the optimal nafamostat formulation and dose to combine with PF614 in order to provide oxycodone when a prescribed dose is taken yet

attenuate the maximum plasma concentration (C max ) and the area under the concentration time curve (AUC) of oxycodone when

more than the prescribed PF614-MPAR™ dose is taken.

Extended-release prototype capsule formulations will be selected from a two-dimensional

design space describing formulation variables for release rate and dose.

Phase 1 Clinical Trial

believe nafamostat has the potential to be effective in the treatment of patients with COVID-19 as it is an inhibitor of transmembrane

protease Serine 2 (TMPRSS2) the protease responsible for cleaving the spike protein of SARS-CoV-2.

While patients with COVID-19 typically

present with fever and a respiratory illness, some patients also report gastrointestinal symptoms, such as diarrhea, vomiting, and abdominal

Studies have identified a recent strain of COVID-19 virus, SARS-CoV-2 RNA, in stool specimens of infected patients, and its viral

receptor angiotensin converting enzyme 2 was found to be highly expressed in gastrointestinal epithelial cells.

These suggest that SARS-CoV-2

can actively infect and replicate in the gastrointestinal tract, and oral nafamostat which acts locally in the gut may be able to reduce

the ability of the virus to replicate.

The purpose of our study was to evaluate the safety of oral nafamostat in healthy volunteers.

This was a three-part single ascending dose study (Part 1) examining safety and pharmacokinetics of single doses of 50, 100, and 200

mg nafamostat administered sequentially on three separate days to a single cohort of eight subjects.

The multiple ascending dose study

(Part 2) administered 100 mg nafamostat twice daily to four healthy subjects and evaluated safety and pharmacokinetic for five days.

A second cohort of four subjects received 200 mg nafamostat twice daily for five days and evaluated safety and pharmacokinetic.

group of six healthy subjects received 200 mg nafamostat the multiple fixed dose study (Part 3) to evaluate the safety and tolerability

of oral nafamostat solution administered three times daily.

Pharmacokinetic

was shown to have limited bioavailability at any dose level evaluated up to 200 mg.

were no drug-related adverse events reported for nafamostat delivered at 200 mg three times daily, therefore additional dose levels are

currently being examined for safety.

We concluded that 200 mg can be delivered three times daily which may provide local effects in the

gastrointestinal tract.

are also planning to evaluate nafamostat in a Phase 2 clinical trial in COVID-19 subjects when delivered as an oral drug product.

industry is characterized by rapidly advancing technologies, intense competition, and a strong emphasis on proprietary products.

to face competition from a number of sources, including pharmaceutical and biotechnology companies, generic drug companies, drug delivery

companies, and academic and research institutions.

Many of these existing and potential competitors have significantly greater financial

resources, more people and other resources than we do.

key competitive factors that are expected to affect the development and commercial success of our product candidates include their respective

degree to limit human abuse potential, bioavailability, enhance therapeutic efficacy, and convenience of dosing and distribution.

addition, other factors include their respective safety, cost and tolerability profiles are likely to be important factors.

product candidate, PF614, may also face competition from commercially available generic and branded immediate and extended-release opioid

drugs other than oxycodone, including, but not limited to, fentanyl, hydromorphone, and oxymorphone, as well as opioids that may be currently

in clinical development.

an abuse-deterrent label through the FDA involves a lengthy and complicated process.

We believe abuse-deterrent opioids represent a therapeutic

option to maximize pain relief in patients for whom opioid analgesia is indicated, while reducing the risks of abuse and diversion.

approval, the FDA evaluates the results from in vitro manipulation and extraction, pharmacokinetics, and clinical human abuse potential

studies to determine whether the accumulated evidence is sufficient to warrant claims of abuse deterrence.

Post-marketing studies may

also be required to determine whether the marketing of a product with abuse-deterrent properties results in meaningful reductions in

abuse, misuse, and related adverse clinical outcomes, including addiction, overdose, and death in the post-approval setting.

are only four commercially available (in the United States) opioid drugs for chronic pain relief that have an abuse-deterrent label.

These drugs are MorphaBond™ ER, marketed by Daiichi Sankyo, OxyContin® ER and Hysingla® ER, both of which are marketed

by Purdue Pharma, LP, and Collegium Pharmaceutical, Inc.’s XTampza®ER.

Hysingla® ER is a once-a-day hydrocodone extended-release

Xtampza® ER is a twice daily, extended-release opioid formulation that contains microspheres that combine oxycodone with

inactive ingredients to increase the difficulty of tampering.

Xtampza®ER has abuse-deterrent properties in the FDA approved product

label, and post-marketing data has shown Xtampza®ER abuse, misuse, and diversion and tampering are low relative to other prescription

opioid analgesics.

Pharma LP is expected to have tighter marketing and management controls than it has exhibited in the past which may impact its overall

market share.

While Oxycontin OP is an abuse-deterrent formula that has impacted the ability to snort or inject, the drug has been documented

to be abused through other means.

other companies including, but not limited to, Pfizer Inc., Daiichi Sankyo, Teva Pharmaceutical, Inc., Egalet Ltd., KemPharm Inc., Elysium

Therapeutics Inc., and Acura Pharmaceutical, have either extended-release or abuse-deterrent products in various stages of development.

Other companies offer products indicated for chronic, severe, long-term pain with various delivery technologies, but these products do

not have abuse-deterrent claims on their labels.

do not believe there are other companies developing products that have an overdose mechanism to compete with our MPAR™ technology.

commercial success depends in part on our ability to obtain and maintain proprietary protection for product candidates and any of our

future product candidates, novel discoveries, product development technologies, and know-how;

to operate without infringing on the proprietary

rights of others;

and to prevent others from infringing our proprietary rights.

Our policy is to seek to protect our proprietary position

by, among other methods, filing or in-licensing United States and foreign patents and patent applications related to our proprietary

technology, inventions, and improvements that are important to the development and implementation of our business.

We also rely on trademarks,

trade secrets, know-how, continuing technological innovation, and potential in-licensing opportunities to develop and maintain our proprietary

and Patent Applications

own numerous patents and applications in the United States and significant commercial markets, such as Europe, China, and Japan, relating

to our product candidates currently in development, as well as other product candidates that may be developed in the future.

These patents,

and patents that may issue from pending patent applications, are projected to expire between 2028 and 2041, subject to any patent term

adjustment or extension that might be available in a particular jurisdiction.

A table of the key patent families and their projected

expiry dates is presented below.

Projected Expiry Date

and MPAR™ Patents and Applications for Opioids

Comprising Enzyme-Cleavable Ketone-Modified Opioid Prodrugs and Optional Inhibitors Thereof

Australia, Brazil, Canada, China, Europe*, Hong Kong, Israel, India, Japan, Mexico, Russia

Comprising Enzyme-Cleavable Opioid Prodrugs and Inhibitors Thereof

Comprising Enzyme-Cleavable Oxycodone Prodrugs

Australia, Brazil, Canada, China, Europe*, Hong Kong, Israel, India, Japan, Russia

Enzyme-Cleavable

Methadone Prodrugs and Methods of Use Thereof

Comprising Enzyme-Cleavable Prodrugs and Controlled Release Nafamostat and Methods of Use Thereof

Agent Prodrugs with Heterocyclic Linkers

Australia, Brazil, Canada, China, Europe*, Hong Kong, Israel, India, Japan, Russia

Patents and Applications

of Treating coronavirus infections and COVID-19

Cooperation Treaty member countries

formulations of Nafamostat

of Treating Respiratory Diseases with mucostasis

France, Italy, United Kingdom

and MPAR™ Patents and Applications for Amphetamines

Comprising Enzyme-Cleavable Amphetamine Prodrugs and Inhibitors Thereof

refers to patent applications filed in, and patents issued by, the European Patent Office (“ EPO ”), which can

provide the basis for rights in multiple countries that are members of the European Patent Convention.

we seek broad coverage under our existing patent applications, there is always a risk that an alteration to the products or processes

may provide sufficient basis for a competitor to avoid infringing our patent claims.

In addition, patents, if granted, expire, and extension

of term may not be available.

We also cannot provide any assurance that any patents will be issued from our pending or any future applications

or that any potentially issued patents will adequately protect our product candidates.

enforceable term of an individual patent varies depending on the date of filing of the patent application, the date of patent issuance,

and the statutory term of patents in the countries in which they are obtained.

Generally, in the United States, patents are granted a

term of 20 years from the earliest effective non-provisional filing date.

In addition, in certain instances, a patent term can be extended

to recapture a period due to delay by the United States Patent and Trademark Office (“ USPTO ”) in issuing the patent

as well as a portion of the term effectively lost as a result of the FDA regulatory review period.

However, as to the FDA component,

the restoration period cannot be longer than five years, the total patent term including the restoration period must not exceed fourteen

years following FDA approval, and the scope of patent coverage is limited to the scope of the FDA approved product.

The duration of foreign

patents varies in accordance with provisions of applicable local law, but typically is also 20 years from the earliest effective non-provisional

However, the actual protection afforded by a patent varies on a product-by-product basis, from country to country, and depends

upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability

of legal remedies in a particular country, and the validity and enforceability of the patent.

commercial success will also depend in part on not infringing upon the proprietary rights of third parties.

It is uncertain whether the

issuance of any third-party patent would require us to alter our development or commercial strategies for our products or processes,

or to obtain licenses or cease certain activities.

Our breach of any license agreements or failure to obtain a license to proprietary

rights that we may require to develop or commercialize our future products may have an adverse impact on us.

If third parties prepare

and file patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference

or derivation proceedings in the USPTO to determine priority of invention.

For more information, please see “ Risk Factors—Risks

Related to Our Intellectual Property .”

and MPAR™ Patents and Applications for Opioids

our merger with Signature, we became the owner of patent families that include several granted U.S.

patents, as well as granted patents

and pending patent applications in numerous foreign jurisdictions, including Australia, Brazil, Canada, China, the EPO, India, Japan,

and Russia, relating to chemically modified opioids, such as oxycodone, methadone, and hydromorphone, covalently linked using specific

linkers to a gastrointestinal enzyme-cleavable moiety and pharmaceutical compositions containing these modified opioids, pharmaceutical

compositions containing these modified opioids and a gastrointestinal enzyme inhibitor, and methods of using the same to treat pain.

Three of these patent families are variously directed to ketone containing opioids and cover PF614 and PF614-MPAR™ and certain

methadone TAAP product candidates that are still in the discovery phase.

These three families contain issued patents in the United States

and certain foreign jurisdictions, including Australia, Brazil, Canada, China, the EPO, India, Japan, and Russia and expire between 2030

and 2032, subject to any applicable patent term extension that might be available in a jurisdiction.

We also own a patent family with

pending applications filed in the U.S., Taiwan and under the Patent Cooperation Treaty, which applications include coverage for oral

formulations of PF614-MPAR™, which if pursued and issued would expire in 2042, subject to any potential patent term adjustment

or extension that may be available in a jurisdiction.

We also own one patent family that includes granted patents in the United States,

as well as granted patents and pending patent applications in numerous foreign jurisdictions, including Australia, Brazil, Canada, China,

the EPO, India, Japan, and Russia, relating to chemically modified ketone-containing agents, such as oxycodone, methadone, and hydromorphone,

covalently linked using specific linkers to a gastrointestinal enzyme-cleavable moiety, pharmaceutical compositions containing these

modified ketone-containing agents, pharmaceutical compositions containing these modified ketone-containing agents and a gastrointestinal

enzyme inhibitor, and methods of using the same to treat pain, would cover certain methadone TAAP product candidates that are still in

discovery phase and have an earliest expiration date in 2030.

While we own these patent families, we have not updated records in the

various patent offices to reflect our ownership of these patent families.

Failure to update such ownership may result in an innocent

purchaser potentially acquiring rights in such patents that are adverse to our interests.

Furthermore, as noted above, we have not obtained

assignments for certain patent applications relating to abuse-resistant amphetamines.

believe that one patent covering PF614 will be eligible for up to five years of patent term extension in the United States and intend

to pursue such extension.

In addition to patent exclusivity until at least 2032, under the provisions of the Hatch-Waxman Act, upon any

approval in the United States, we believe that PF614 will be eligible for five-year New Chemical Entity, or NCE, regulatory exclusivity,

during which time no 505(b)(2) New Drug Application, or NDA, or Abbreviated New Drug Application, or ANDA, can be approved that contains

the same active moiety as the chemical entity in the PF614 NDA.

In addition, if an ANDA or 505(b)(2) applicant were to file its application

referencing the NDA for PF614 before expiration of our formulation patent and the applicant asserted that the patent is invalid or would

not be infringed, it may be subject to additional waiting periods prior to the FDA’s approval (including a statutory thirty-month

stay, starting at the end of the five-year NCE regulatory exclusivity period, if we sue for infringement, or a shorter period if the

patent expires of there are certain settlements or judicial decisions in the patent litigation) and may ultimately be required to wait

until the natural expiration of our compositions patents if the patents are found to be valid and infringed by the challenging applicant.

For more information please see “— Patents and Patent Applications.”

Patents Applications

own one pending Patent Cooperation Treaty, or PCT, application directed to the use of orally administered nafamostat for the treatment

of infections caused by coronaviruses, including COVID-19, and a pending PCT, U.S.

and Taiwan application directed to oral formulations

of nafamostat.

We intend to pursue these applications in the United States and other significant commercial markets and any patents that

may be issued would expire in 2041 and 2042, respectively, subject to any applicable patent term adjustment or extension in a particular

jurisdiction.

Additionally, we acquired one European patent from Mucokinetica that is directed to the use of certain compounds, including

nafamostat, for the manufacture of a medicament for the treatment of respiratory diseases with mucostasis or poor mucus clearance.

patent was validated in Germany, France, Italy, and the United Kingdom and expires in 2028, subject to any applicable patent term extension

that might be available in Europe Union or United Kingdom.

While we own this patent family, we have not updated the records in the various

patent offices to reflect our ownership of this patent family.

Failure to update such ownership may result in an innocent purchaser potentially

acquiring rights in such patents that are adverse to our interests.

Currently, we do not have any issued patent or pending application

directed to methods of treating infections caused by coronaviruses, including COVID-19, with inhaled nafamostat.

In addition to patent

exclusivity, under the provisions of the Hatch-Waxman Act, upon any approval in the United States, we believe that nafamostat will be

eligible for five-year NCE regulatory exclusivity, during which time no 505(b)(2) NDA or ANDA can be approved that contains the same

active moiety as the chemical entity in the nafamostat NDA.

In addition, if an ANDA or 505(b)(2) applicant were to file its application

referencing the NDA for nafamostat before expiration of our use patent and the applicant asserted that the patent is invalid or would

not be infringed, it may be subject to additional waiting periods prior to the FDA’s approval (including a statutory thirty-month

stay, starting at the end of the five-year NCE regulatory exclusivity period, if we sue for infringement, or a shorter period if the

patent expires of there are certain settlements or judicial decisions in the patent litigation) and may ultimately be required to wait

until the natural expiration of our compositions patents if the patents are found to be valid and infringed by the challenging applicant.

For more information, please see “— Patent and Patent Applications .”

and MPAR™ Patents and Applications for Amphetamines

the merger with Signature, we became the owner of one patent family that includes issued patents in the United States and numerous European

foreign jurisdictions (through the EPO), and a pending application in the United States, relating to chemically modified amphetamines

covalently linked to a gastrointestinal enzyme-cleavable moiety, pharmaceutical compositions containing the modified amphetamines, pharmaceutical

compositions containing the modified amphetamines and a gastrointestinal enzyme inhibitor and methods of using the same to treat a subject.

While we own this patent family, we have not updated the records in the various patent offices to reflect our ownership of this patent

Failure to update such ownership may result in an innocent purchaser potentially acquiring rights in such patents that are adverse

to our interests.

In addition, we own one patent family with pending applications in the United States and the EPO directed to pharmaceutical

compositions containing chemically modified amphetamines covalently linked to a gastrointestinal enzyme-cleavable moiety and a trypsin

inhibitor and methods of using the same to treat a subject.

We have not obtained assignments from all of the inventors of this patent

family to date, which could negatively impact our ability to pursue or enforce this application.

If issued, these patent applications

would expire between 2031 and 2040, subject to any applicable patent term adjustment or extension that might be available in a jurisdiction.

and Trade Secrets

intend to pursue trademark registrations in the United States and other significant commercial markets for our product candidates as

they progress through clinical development.

we rely upon trade secrets, know-how, continuing technological innovation, and potential in-licensing opportunities to develop and maintain

our competitive position.

We seek to protect our proprietary information, in part, using confidentiality and invention assignment agreements

with our commercial partners, collaborators, employees, and consultants.

These agreements are designed to protect our proprietary information

and, in the case of the invention assignment agreements, to grant us ownership of technologies that are developed through a relationship

with an employee or a third party.

These agreements may be breached, and we may not have adequate remedies for any breach.

our trade secrets may otherwise become known or be independently discovered by competitors.

To the extent that our commercial partners,

collaborators, employees, and consultants use intellectual property owned by others in their work for us, disputes may arise as to the

rights in related or resulting know-how and inventions.

Manufacturing

drug substance and drug products are manufactured by contract manufacturing organizations.

We do not currently own or operate manufacturing

facilities for the production of clinical or commercial quantities of our product candidates.

Any manufacturing problem or the loss of

a contract manufacturer could be disruptive to our operations and result in lost sales.

See “ Risk Factors ” for more

Although we intend to rely on third-party contract manufacturers to produce our product candidates, we have personnel with

experience managing the third-party contract manufacturers who are expected to produce our product candidates and other product candidates

or products that we may develop in the future.

lead product candidate, PF614, is small molecule opioid prodrug.

As such, it is a controlled substance, regulated by the Drug Enforcement

Administration (“ DEA ”) and state-controlled substance authorities.

Our third-party manufacturers will be required

to be registered with DEA and will be responsible for obtaining adequate quota to manufacture and otherwise handle controlled substances.

currently engage third parties to provide clinical supplies of PF614 and nafamostat.

We also currently engage a third-party manufacturer

to provide drug product manufacture of PF614, PF614-MPAR™, and nafamostat.

We currently have sufficient supplies of PF614 and nafamostat

on hand for our current clinical trial needs.

Any reliance on suppliers may involve several risks, including a potential inability to

obtain critical materials and reduced control over production costs, delivery schedules, reliability, and quality.

Factors ” for more information.

Manufacturing Agreement

to the Recro Agreement, we engaged Recro to manufacture PF614 and other clinical trial materials under cGMP conditions and provide stability

studies with respect to our PF614 clinical trials.

Pursuant to the agreement, Recro will create placebo capsules, PF614 powder-filled

capsules and provide us with master batch records and a GMP manufacturing report upon completion of manufacturing and analytical activities.

Under the Recro Agreement, Recro also generated stability data according to ICH program for two formulations to provide stability data

for shelf-life assessment with respect to our Phase II clinical trial.

We have agreed to pay Recro $173,000 and pass-through costs, estimated

at $14,000 at the time of the agreement, for the manufacturing and services provided under the Recro Agreement.

The term of the Recro

Agreement began on September 19, 2019 and continues until the completion of the manufacturing and services described in therein.

we paused the Recro Agreement in early 2020 in connection with the timing of our PF614 clinical studies and resumed in the first quarter

We expect to enter into additional related agreements with Recro.

In the event that Recro is unable to perform the services

promised under the Recro Agreement, we may be subject to unforeseen costs and delays with respect to our clinical trials and be unable

to replace the Recro Agreement on terms as favorable to us.

See “ Risk Factors—We expect to be completely dependent on

third parties to manufacture our product candidates, and our commercialization of our product candidates could be halted, delayed or

made less profitable if those third parties fail to maintain a compliance status acceptable to the FDA or comparable foreign regulatory

authorities, fail to provide to us with sufficient quantities of our product candidates or fail to do so at acceptable quality levels

or prices ” for more information.

We received funding under federal

grant award programs funded by governmental agencies, such as the NIH and NIDA.

Specifically, for fiscal year 2021, we received funding

revenue of approximately $3.5 million in federal grants, approximately $2.6 million from the NIH related to

the Phase 1 clinical trial for PF614 MPAR™ and approximately $0.9 million from NIDA under our five-year award to undertake

the preclinical development of our opioid use disorder- MPAR TM technology.

We may apply for additional grant funding from

these or similar governmental agencies in the future.

See “ Risks Related to Our Business, Financial Condition and Capital Requirements ”

for additional information.

Promissory Notes

On September 24, 2021, we entered

into a Securities Purchase Agreement (the “SPA”) for an aggregate financing of $15.0 million with institutional investors.

A first closing under the SPA occurred on September 24, 2021, and a second closing under the SPA occurred on November 5, 2021.

first closing, we issued to the investors (i) senior secured convertible promissory notes in the aggregate principal amount of $5.3 million

for an aggregate purchase price of $5.0 million and (ii) warrants to purchase 361,158 shares of the Company’s common stock

in the aggregate at an exercise price of $7.63 per share.

At the second closing, the Company issued to the institutional investors

referenced above, (i) senior secured convertible promissory notes in the aggregate principal amount of $10.6 million for an aggregate

purchase price of $10 million and (ii) warrants to purchase 722,317 shares of the Company’s common stock in the aggregate

at an exercise price of $7.63 per share.

to the GEM Agreement, we are entitled to draw down up to $60.0 million of gross proceeds from GEM Global in exchange for shares of our

common stock, subject to meeting the terms and conditions of the GEM Agreement.

This share subscription facility is available for a period

of 36 months from the closing date of the Merger.

A draw down is subject to limitations on the amount that is drawn under the facility

and must comply with certain conditions precedent including the listing of our shares on a principal market (which includes Nasdaq),

having the necessary number of shares that are issuable pursuant to the draw down registered under an effective registration statement,

and other notice and timing requirements.

Upon our valid exercise of a draw down, pursuant to delivery of a notice and in accordance

with other conditions, GEM Global is required to pay, in cash, a per-share amount equal to 90% of the average closing bid price of the

shares of our common stock recorded by Nasdaq during the 30 consecutive trading days commencing on the first trading day that is designated

on the draw down notice.

In no event may our draw down requests exceed 400% (“ Draw Down Limit ”) of the average daily

trading volume for the 30 trading days immediately preceding the date we deliver the draw down notice.

The SPA limits our ability to

execute certain debt and equity financings, including our existing $60.0 million share subscription facility, while the 2021 Notes remain

See, “ Liquidity and Capital Resources ” for a detailed description of the GEM Facility.

the United States, pharmaceutical products are subject to extensive regulation by the FDA, and those pharmaceutical products that are

controlled substance are also subject to extensive regulation by the DEA.

The FDC Act, the CSA, and other federal, state, and local statutes

and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling,

promotion and marketing, distribution, prescribing, dispensing, post-approval monitoring and reporting, sampling, and import and export

of pharmaceutical products.

Pharmaceutical products used for the prevention, treatment, or cure of a disease or condition of a human

being are subject to regulation under the FDC Act.

Failure to comply with applicable U.S.

requirements may subject a company to a variety

of administrative or judicial sanctions, such as clinical hold, FDA refusal to approve pending NDAs, revocation of licensing authority,

warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions,

fines, civil penalties, and criminal prosecution.

FDA Drug Approval Process

approval is required before any new drug can be marketed.

A new drug is one not generally recognized, by experts qualified by scientific

training and experience, as safe and effective for its intended use.

The process of drug development is complex and lengthy.

The activities

undertaken before a new pharmaceutical product may be marketed in the United States generally include, but are not limited to, preclinical

submission to the FDA of an IND, which must become active before human clinical trials may commence;

adequate and well-controlled

human clinical trials to establish the safety and efficacy of the product;

submission to the FDA of an NDA;

filing of the NDA by FDA;

satisfactory completion of an FDA pre-approval inspection of the clinical trial sites and manufacturing facility or facilities at which

both the active ingredients and finished drug product are produced to assess compliance with, among other things, patient informed consent

requirements, the clinical trial protocols, current Good Clinical Practices, or GCP, and GMPs;

and FDA review and approval of the NDA

prior to any commercial sale and distribution of the product in the United States.

studies include laboratory evaluation of product chemistry and formulation, and in some cases, animal studies and other studies to preliminarily

assess the potential safety and efficacy of the product candidate.

The results of preclinical studies together with manufacturing information,

analytical data, and detailed information including protocols for proposed human clinical trials are then submitted to the FDA as a part

An IND must become effective, and approval must be obtained from an Institutional Review Board (“ IRB ”)

prior to the commencement of human clinical trials.

The IND becomes effective 30 days following its receipt by the FDA unless the FDA

objects to, or otherwise raises concerns or questions and imposes a clinical hold.

We, the FDA, or the IRB may suspend or terminate a

clinical trial at any time after it has commenced due to safety or efficacy concerns or for commercial reasons.

In the event the FDA

imposes a clinical hold, the IND sponsor must address any outstanding FDA concerns or questions to the satisfaction of the FDA before

clinical trials can proceed or resume.

clinical trials are typically conducted in three sequential phases that may sometimes overlap or be combined:

Phase 1, the initial introduction of the drug into patients, the product is tested to assess safety, dosage tolerance, metabolism, pharmacokinetics,

pharmacological actions, side effects associated with drug exposure, and to obtain early evidence of a treatment effect if possible.

Phase 2 usually involves trials in a limited patient population to determine the effectiveness of the drug for a particular indication,

determine optimal dose and regimen, and to identify common adverse effects and safety risks.

If a compound demonstrates evidence of effectiveness

and an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are undertaken to obtain additional information about clinical

effects and confirm efficacy and safety in a larger number of patients, typically at geographically dispersed clinical trial sites, to

permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of

In most cases, the FDA requires two adequate and well-controlled Phase 3 clinical trials to demonstrate the safety and efficacy

In rare instances, a single Phase 3 trial may be sufficient when either (1) the trial is a large, multicenter trial demonstrating

internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity,

or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or

ethically impossible or (2) the single trial is supported by other confirmatory evidence.

addition, the manufacturer of an investigational drug in a Phase 2 or Phase 3 clinical trial for a serious or life-threatening disease

is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for expanded access

to such investigational drug.

completion of the required clinical testing, an NDA is prepared and submitted to the FDA.

FDA approval of the NDA is required before

marketing and distribution of the product may begin in the United States.

The NDA must include the results of all preclinical, clinical,

and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture, and controls.

of preparing and submitting an NDA is substantial.

The submission of most NDAs is additionally subject to a substantial application user

fee, currently exceeding $3.1 million.

Under an approved NDA, the applicant is also subject to an annual program fee, currently approximately

These fees typically increase annually.

Under limited circumstances, an applicant may be exempt from or seek a waiver of the

application fee requirement.

FDA has 60 days from its receipt of an NDA to determine whether the application will be filed based on the FDA’s determination

that it is adequately organized and sufficiently complete to permit substantive review.

Once the submission is filed, the FDA begins

an in-depth review.

The FDA has agreed to certain performance goals to complete the review of NDAs.

For a standard review, the goal for

review of a new molecular entity (“ NME ”) is ten months from the date the FDA files the NDA, while the goal for review

of a non-NME is ten months from the date of receipt of the NDA.

For an NDA that has received a priority review designation from the FDA,

the goal for review of an NME is six months from the date the FDA files the NDA, while the goal for review of a non-NME is six months

from the date of receipt of the NDA.

An NDA can receive a priority review designation when the FDA determines the drug has the potential

to treat a serious or life-threatening condition and, if approved, would be a significant improvement in safety or effectiveness compared

to available therapies.

The review process for both standard and priority reviews may be extended by the FDA for three or more additional

months to consider certain late-submitted information, or information intended to clarify information already provided in the NDA submission.

FDA may also refer applications for novel drug products, as well as drug products that present difficult questions of safety or efficacy,

to be reviewed by an advisory committee—typically a panel that includes clinicians, statisticians, and other experts—for

review, evaluation, and a recommendation as to whether the NDA should be approved.

The FDA is not bound by the recommendation of an advisory

committee, but generally follows these recommendations.

Before approving an NDA, the FDA will typically inspect one or more clinical

sites to assure compliance with GCP.

Additionally, the FDA will inspect the facility or the facilities at which the drug product is manufactured.

The FDA will not approve the product unless compliance with cGMP is satisfactory, and the NDA contains data that provide substantial

evidence that the drug is safe and effective in the claimed indication.

the FDA evaluates the NDA and completes any clinical and manufacturing site inspections, it issues either an approval letter or a complete

response letter.

A complete response letter generally outlines the deficiencies in the NDA submission and may require substantial additional

testing, or information, in order for the FDA to reconsider the application for approval.

If, or when, those deficiencies have been addressed

to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter.

The FDA has committed to reviewing

such resubmissions in two or six months depending on the type of information included.

An approval letter authorizes commercial marketing

and distribution of the drug with specific prescribing information for specific indications.

As a condition of NDA approval, the FDA

may require a risk evaluation and mitigation strategy (“ REMS ”) to help ensure that the benefits of the drug outweigh

the potential risks to patients.

A REMS can include medication guides, communication plans for healthcare professionals, and elements

to assure a products safe use (“ ETASU ”).

An ETASU REMS can include, but is not limited to, special training or certification

for prescribing or dispensing the product, dispensing the product only under certain circumstances, special monitoring, and the use of

patient-specific registries.

The requirement for a REMS can materially affect the potential market and profitability of the product.

Moreover, the FDA may require substantial post-approval testing and surveillance to monitor the product’s safety or efficacy.

granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following

initial marketing.

Changes to some of the conditions established in an approved NDA, including changes in indications, product labeling,

manufacturing processes, or facilities, require submission and FDA approval of a new NDA, or supplement to an approved NDA, before the

change can be implemented.

An NDA supplement for a new indication typically requires clinical data similar to that in the original application,

and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing original NDAs.

505(b)(2) NDAs

alternative to the NDA pathway described above is an NDA submitted under Section 505(b)(2) of the FDC Act, which enables the applicant

to rely, in part, on the FDA’s prior findings in approving a similar product or published literature in support of its application.

Section 505(b)(2) NDAs often provide an alternate path to FDA approval for modified formulations, new routes of administration, or new

uses of previously approved products.

Section 505(b)(2) permits the submission of an NDA where at least some of the information required

for approval comes from studies not conducted by, or for, the applicant and for which the applicant has not obtained a right of reference.

If the Section 505(b)(2) applicant can establish that reliance on the FDA’s prior findings of safety or effectiveness is scientifically

appropriate, it may eliminate the need to conduct certain preclinical or clinical studies of the new product.

The FDA may also require

companies to perform additional studies or measurements to support the change from the approved product.

The FDA may then approve the

new product candidate for all, or some, of the indications for which the referenced product has been approved, as well as for any new

indication sought by the Section 505(b)(2) applicant.

Track Designation and Priority Review

is required to facilitate the development, and expedite the review, of drugs that are intended for the treatment of a serious or life-threatening

disease or condition for which there is no effective treatment and which demonstrate the potential to address unmet medical needs for

the condition.

Fast track designation may be granted for products that are intended to treat a serious or life-threatening disease or

condition for which there is no effective treatment and preclinical or clinical data demonstrate the potential to address unmet medical

needs for the condition.

Fast track designation applies to both the product and the specific indication for which it is being studied.

Any product submitted to FDA for marketing, including under a fast-track program, may be eligible for other types of FDA programs intended

to expedite development and review, such as priority review.

review may be granted for products that are intended to treat a serious or life-threatening condition and, if approved, would provide

a significant improvement in safety and effectiveness compared to available therapies.

FDA will attempt to direct additional resources

to the evaluation of an application designated for priority review in an effort to facilitate the review.

of Clinical Trial Information

of clinical trials of FDA-regulated products, including drugs, are required to register and disclose certain clinical trial information

on the website www.clinicaltrials.gov.

Information related to the product, patient population, phase of investigation, trial sites and

investigators, and other aspects of a clinical trial are then made public as part of the registration.

Sponsors are also obligated to

disclose the results of their clinical trials after completion.

Disclosure of the results of clinical trials can be delayed in certain

circumstances for up to two years after the date of completion of the trial.

Competitors may use this publicly available information

to gain knowledge regarding the progress of clinical development programs as well as clinical trial design.

Hatch-Waxman Amendments

the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments, a portion of a product’s

patent term that was lost during clinical development and regulatory review by the FDA may be restored.

The Hatch-Waxman Amendments

also provide a process for listing patents pertaining to approved products in the FDA’s Approved Drug Products with Therapeutic

Equivalence Evaluations (commonly known as the “ Orange Book ”) and for a competitor seeking approval of an application

that references a product with listed patents to make certifications pertaining to such patents.

In addition, the Hatch-Waxman Amendments

provide for a statutory protection, known as non-patent exclusivity, against the FDA’s acceptance or approval of certain competitor

applications.

Term Extension

Term Extension (“ PTE ”) in the United States can compensate for lost patent grant time during product development and

the regulatory review process for a patent that covers a new product or its use.

This PTE period is generally one-half the time between

the effective date of an IND (falling after issuance of the patent) and the submission date of an NDA, plus the time between the submission

date of an NDA and the approval of that application, provided the sponsor acted with diligence.

PTEs that can be obtained are for up

to five years beyond the expiration of the patent or fourteen years from the date of product approval, whichever is earlier.

patent applicable to an approved drug may be extended and the extension must be applied for prior to expiration of the patent.

in consultation with the FDA, reviews and approves the application for any patent term extension or restoration.

term of individual patents depends upon the legal term of the patents in the countries in which they are obtained.

In most countries

in which we file, the patent term is 20 years from the earliest date of filing a nonprovisional patent application related to the patent.

patent also may be accorded patent term adjustment, or PTA, under certain circumstances to compensate for delays in obtaining

the patent from the USPTO.

In some instances, such a PTA may result in a U.S.

patent term extending beyond 20 years from the earliest

date of filing a non-provisional patent application related to the U.S.

In addition, in the United States, the term of a U.S.

patent that covers an FDA-approved drug may also be eligible for a patent term extension, or PTE, which permits patent term restoration

as compensation for the patent term lost during the FDA regulatory review process.

The Hatch-Waxman Act permits a PTE of up to five years

beyond the expiration of the patent.

The length of the PTE is related to the length of time the drug is under regulatory review.

cannot extend the remaining term of a patent beyond a total of fourteen years from the date of product approval and only one patent applicable

to an approved drug may be extended.

Similar provisions are available in Europe and certain other jurisdictions to extend the term of

a patent that covers an approved drug.

In the future, if and when our products receive FDA approval, we expect to apply for PTEs on patents

covering products eligible for PTE.

We plan to seek PTEs for any of our issued patents in any jurisdiction where these are available;

however, there is no guarantee that the applicable authorities, including the FDA in the United States, will agree with our assessment

of whether such extensions should be granted, and if granted, the length of such extensions.

also believe that (1) PF614 and nafamostat will be eligible for a five-year NCE regulatory exclusivity, and (2) PF614-MPAR™ will

be eligible for a three-year clinical investigation, or CI, regulatory exclusivity, under the Hatch-Waxman Act, during which time no

ANDA can be approved.

the Hatch-Waxman Act, patents covering the product such as patents claiming the approved composition of matter, approved methods of use,

approved formulations, and approved dosing and administration shall be listed in the Orange Book, which identifies drug products approved

by FDA under the FDC Act.

Applicable regulatory exclusivities, such as the five-year NCE exclusivity and the three-year CI exclusivity,

are also listed in the Orange Book.

If an ANDA or 505(b)(2) applicant were to file its application before expiration of all patents listed

in the Orange Book, it must certify whether it will either honor or challenge all the patents listed in the Orange Book.

Book listed patent is challenged and we sue the ANDA or 505(b)(2) applicant for infringement, a statutory 30-month stay of approval,

started at the end of the NCE exclusivity period, will be put in place that will prohibit the FDA from finally approving the ANDA or

505(b)(2) application until the 30-months have expired or after a court has held in favor of the ANDA or 505(b)(2) applicant.

stay begins at the end of the five-year NCE exclusivity period.

If the Orange Book listed patent(s) is ultimately held valid and infringed,

the ANDA or 505(b)(2) applicant will not be finally approved until the Orange Book listed patent(s) expires.

If a pediatric study is

requested by the FDA in a Pediatric Written Request, or PWR, and we complete the pediatric study according to the terms of the PWR, all

unexpired Orange Book listed exclusivities (patent or regulatory) will be extended by six months.

provisions are available in Europe, Japan, and certain other jurisdictions to extend the exclusivity of a patent that covers an approved

In Europe, we believe PF614 and nafamostat will be eligible for 10 years of regulatory exclusivity from European Marketing Application,

or EMA, approval.

In Japan, we believe PF614 will be eligible for eight years of regulatory exclusivity from a Japanese new drug application,

or J-NDA, approval.

seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with claims covering the applicant’s

product or method of using the product.

Upon approval of a drug, each of the patents identified in the application for the drug are then

published in the FDA’s Orange Book.

Drugs listed in the Orange Book can, in turn, be cited by potential generic competitors in

support of approval of an ANDA.

An ANDA provides for marketing of a drug product that has the same active ingredients in the same strengths

and dosage form as the listed drug and has been shown to be bioequivalent to the listed drug.

Other than the requirement for bioequivalence

testing, ANDA applicants are not required to conduct, or submit results of, preclinical or clinical tests to prove the safety or effectiveness

of their drug product.

Drugs approved in this way are commonly referred to as “generic equivalents” to the listed drug and

can often be substituted by pharmacists under prescriptions written for the original listed drug.

ANDA applicant is required to certify to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book.

Specifically, the applicant must certify that:

(i) the required patent information has not been filed;

(ii) the listed patent has expired;

(iii) the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration;

the listed patent is invalid or will not be infringed by the new product.

The ANDA applicant may also elect to submit a Section VIII

statement certifying that its proposed ANDA labeling does not contain (or carves out) any language regarding the patented method-of-use

rather than certify to a listed method-of-use patent.

If the applicant does not challenge the listed patents, the ANDA application will

not be approved until all the listed patents claiming the referenced product have expired.

certification that the new product will not infringe the already approved product’s listed patents, or that such patents are invalid,

is called a Paragraph IV certification.

If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must

also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been filed with and accepted by the

The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification.

The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the

FDA from approving the ANDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit, or a decision in the

infringement case that is favorable to the ANDA applicant.

applicant submitting an NDA under Section 505(b)(2) of the FDC Act, which permits the filing of an NDA where at least some of the information

required for approval comes from studies not conducted by, or for, the applicant and for which the applicant has not obtained a right

of reference, is required to certify to the FDA regarding any patents listed in the Orange Book for the approved product it references

to the same extent that an ANDA applicant would.

exclusivity provisions under the FDC Act also can delay the submission or the approval of certain applications.

The FDC Act provides

a five-year period of non-patent marketing exclusivity within the United States to the first applicant to gain approval of an NDA for

a new chemical entity (“ NCE ”).

A drug is entitled to NCE exclusivity if it contains a drug substance with no active

moiety of which has been previously approved by the FDA.

During the exclusivity period, the FDA may not accept for review an ANDA or

a 505(b)(2) NDA submitted by another company for another version of such drug where the applicant does not own or have a legal right

of reference to all the data required for approval.

However, an application may be submitted after four years if it contains a Paragraph

IV certification.

For a drug that has been previously approved by the FDA, the FDC Act also provides three years of marketing exclusivity

for an NDA, 505(b)(2) NDA, or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that

were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, for example, for

new indications, dosages or strengths of an existing drug.

This three-year exclusivity covers only the new conditions of use and does

not prohibit the FDA from approving ANDAs for drugs for the original conditions of use, such as the originally approved indication.

and three-year exclusivity will not delay the submission or approval of a full NDA;

however, an applicant submitting a full NDA would

be required to conduct or obtain a right of reference to all of the non-clinical studies and adequate and well-controlled clinical trials

necessary to demonstrate safety and effectiveness.

Post-Marketing

approval of a new product, a pharmaceutical company and the approved product are subject to continuing regulation by the FDA.

This regulation

includes, among other things, monitoring and recordkeeping activities, reporting to the applicable regulatory authorities of adverse

experiences with the product, providing the regulatory authorities with updated safety and efficacy information, product sampling and

distribution requirements, and complying with promotion and advertising requirements, which include, among others, standards for direct-to-consumer

advertising, restrictions on promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling

(known as “off-label use”), limitations on industry-sponsored scientific and educational activities and requirements for

promotional activities involving the internet.

Although physicians may prescribe legally available drugs for off-label uses, manufacturers

may not market or promote such off-label uses.

Modifications or enhancements to the product or its labeling or changes of the site of

manufacture are often subject to the approval of the FDA and other regulators, who may or may not grant approval or may include in a

lengthy review process.

drug advertising is subject to federal, state, and foreign regulations.

In the United States, the FDA regulates prescription drug promotion,

including direct-to-consumer advertising.

Prescription drug promotional materials must be submitted to the FDA in conjunction with their

Any distribution of prescription drug products and pharmaceutical samples must comply with the U.S.

Prescription Drug Marketing

Act (“ PDMA ”), a part of the FDC Act.

In addition, Title II of the Federal Drug Quality and Security Act of 2013, known

as the Drug Supply Chain Security Act or the DSCSA, has imposed new “track and trace” requirements on the distribution of

prescription drug products by manufacturers, distributors, and other entities in the drug supply chain.

These requirements are being

phased in over a ten-year period.

Unless the products were packaged prior to November 27, 2018, the DSCSA requires product identifiers

(i.e., serialization) on prescription drug products in order to establish an electronic interoperable prescription product system to

identify and trace certain prescription drugs distributed in the United States.

The DSCSA replaced the prior drug “pedigree”

requirements under the PDMA and preempts existing state drug pedigree laws and regulations.

The DSCSA also establishes requirements for

the licensing of wholesale distributors and third-party logistic providers.

These licensing requirements preempt states from imposing

licensing requirements that are inconsistent with, less stringent than, directly related to, or otherwise encompassed by standards established

by FDA pursuant to the DSCSA.

Until FDA promulgates regulations to address the DSCSA’s new national licensing standard, current

state licensing requirements typically remain in effect.

the United States, once a product is approved, its manufacture is subject to comprehensive and continuing regulation by the FDA.

FDA regulations require that products be manufactured in specific facilities and in accordance with cGMP.

cGMP regulations require among

other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation and the obligation

to investigate and correct any deviations from cGMP.

Drug manufacturers and other entities involved in the manufacture and distribution

of approved drugs are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced

inspections by the FDA and certain state agencies for compliance with cGMP and other laws.

Accordingly, manufacturers must continue to

expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.

These regulations also impose

certain organizational, procedural, and documentation requirements with respect to manufacturing and quality assurance activities.

holders using contract manufacturers, laboratories, or packagers are responsible for the selection and monitoring of qualified firms,

and, in certain circumstances, qualified suppliers to these firms.

These firms and, where applicable, their suppliers are subject to

inspections by the FDA at any time, and the discovery of violative conditions, including failure to conform to cGMP, could result in

enforcement actions that interrupt the operation of any such product or may result in restrictions on a product, manufacturer, or holder

of an approved NDA, including, among other things, recall or withdrawal of the product from the market.

CSA and DEA Regulation

products are regulated as “controlled substances” as defined under the CSA and regulations promulgated by DEA.

regulations establish registration, security, recordkeeping, reporting, storage, distribution, importation, exportation, and other requirements

administered by DEA.

substances are classified into five schedules:

Schedule I, II, III, IV, or V, depending on the abuse potential.

Schedule I substances

by definition have no established medicinal use and may not be marketed or sold in the United States.

A pharmaceutical product may be

listed as Schedule II, III, IV, or V, with Schedule II substances considered to present the highest risk of abuse and Schedule V substances

the lowest relative risk of abuse among such substances.

will be classified as a Schedule II controlled substance under the CSA and regulations because it contains oxycodone which is already

regulated as a Schedule II controlled substance.

Consequently, the manufacturing, shipping, storing, selling, prescribing, and dispensing

of our products is subject to a high degree of regulation.

Schedule II drugs are subject to the strictest requirements for registration,

security, recordkeeping, and reporting.

Facilities must maintain complete and accurate inventories and records of all controlled substances

received, manufactured, stored, and distributed.

These facilities must comply with strict security requirements to prevent diversion

of drugs in their possession.

Also, distribution and dispensing of these drugs are highly regulated.

For example, all Schedule II drug

prescriptions must be signed by a physician, presented to a pharmacist and, generally limited to a 30-day supply, and may not be refilled,

that is, a new prescription is required.

registration is required for any facility that manufactures, distributes, imports, or exports any controlled substance.

Also, practitioners

and pharmacies are required to register every three years.

The registration is specific to the particular location, activity, and controlled

substance schedule.

For example, separate registrations are needed for import and manufacturing, and each registration will specify which

schedules of controlled substances the facility is authorized to handle.

Our contract manufacturers must be registered with DEA.

addition, the CSA establishes an annual quota system that limits the manufacturing of API and dosage forms in the United States of Schedule

I and II controlled substances.

First, the DEA establishes an annual aggregate quota for how much active opioid ingredients, such as

oxycodone and tapentadol, may be produced in total in the United States based on the DEA’s estimate of the quantity needed to meet

legitimate scientific and medicinal needs.

The limited aggregate amount of opioids that the DEA allows to be produced in the United States

each year is allocated among individual companies, which must submit applications annually to the DEA for individual production quotas.

Also, dosage form manufacturers must also request a procurement quota to acquire opioid API to manufacture dosage forms for distribution.

We and our contract manufacturers must receive an annual quota from the DEA in order to produce or procure any Schedule I or Schedule

II substance, including oxycodone base for use in manufacturing PF614.

The DEA may adjust aggregate production quotas and individual

production and procurement quotas from time to time during the year.

DEA has substantial discretion in whether or not to make such adjustments.

Our contract manufacturers must apply for and obtain the necessary quotas on an annual basis.

November 2017, the DEA reduced the amount of almost every Schedule II opiate and opioid medication that may be manufactured in the United

States in calendar year 2018 by 20%.

In October 2018, the SUPPORT Act was enacted, which included amendments to the CSA to require that

appropriate quota reductions be made after estimating potential for diversion.

DEA announced that the estimate is based on rates of overdose

deaths and abuse, the overall public health impact related to specific controlled substances and may include other factors as appropriate.

For 2019, the DEA proposed decreased manufacturing quotas for the six most frequently misused opioids, including oxycodone, by an average

of 10% as compared to the 2018 quotas.

In October 2019, consistent with the SUPPORT Act, DEA proposed additional regulations to amend

the manner in which the agency grants quotas to manufacturers.

The proposed regulations will establish use-specific quotas, including

commercial sales, product development, transfer, replacement, and packaging.

To decrease the risk of diversion and increase accountability,

inventory allowances will be reduced, and procurement quota certifications will be required.

The DEA proposed further decreasing manufacturing

quotas in 2020 for five of the six opioids (fentanyl, hydrocodone, hydromorphone, oxycodone, and oxymorphone), by an average of 28%.

For 2021, the DEA decreased the aggregate quota for oxycodone by about 13% and for hydrocodone by about 10% from the final established

Because PF614 is regulated as a Schedule II controlled substance, it is subject to the DEA’s aggregate, individual

production, and procurement quota scheme.

and distribution of any Schedule I or II controlled substance are also subject to special ordering requirements under either the electronic

Controlled Substance Ordering System (“ CSOS ”) or use of DEA Form 222s.

Information regarding specific transactions

are reported to DEA, and cumulative reports of such transactions are required monthly/quarterly.

DEA also requires drug manufacturers to design and implement a system that identifies and reports suspicious orders of controlled substances.

Such orders include those of unusual size, those that deviate substantially from a normal pattern, and those of unusual frequency.

Manufacturers

must refuse to complete any sale and report to DEA any orders for which it is unable to resolve any potential “red flags.”

A compliant suspicious order monitoring system includes well-defined due diligence, “know your customer” process as well

as systems to identify and monitor ordering and sales of controlled substances.

enforce these requirements, the DEA conducts periodic inspections of registered establishments that handle controlled substances.

to maintain compliance with applicable requirements, especially security and recordkeeping and as manifested in loss or diversion or

inability to account for all controlled substances, can result in administrative, civil, or criminal enforcement action that could have

a material adverse effect on our business, results of operations, and financial condition.

The DEA may seek civil penalties, refuse to

renew necessary registrations, or initiate administrative proceedings to revoke those registrations.

The DEA may also reduce or deny

quota to manufacturing facilities based on non-compliance with these requirements.

In certain circumstances, violations could result

in criminal proceedings.

states also independently regulate controlled substances.

and Regulatory Initiatives for Opioids

response to widespread prescription opioid abuse, the United States government and a number of state legislatures have enacted legislation

and regulations intended to fight the opioid epidemic.

The number and scope of legislative and regulatory actions, particularly in the

last three years, emphasize the severity of the opioid epidemic and its impact on our society.

The FDA has stated that addressing prescription

drug abuse is a priority and has reaffirmed that the development of abuse-deterrent opioids is a key part of that strategy.

actions to address the opioid abuse epidemic include:

In April 2015, the FDA adopted final guidance regarding studies and clinical trials that should be conducted to demonstrate

that a given formulation has abuse-deterrent properties, how those studies and clinical trials will be evaluated, and what product

labeling claims may be approved based on the results of those studies and clinical trials.

The guidance describes four categories

of abuse-deterrence studies and clinical trials:

Categories 1, 2, and 3 consist of pre-marketing studies and clinical trials designed

to evaluate a product candidate’s potentially abuse-deterrent properties under controlled conditions, while Category 4, post-marketing

clinical trials and studies, assesses the real-world impact of abuse-deterrent formulations.

The final guidance also provides examples

of product label claims that may be made based on the results of the corresponding studies and clinical trials.

Opioids Action Plan:

In February 2016, the FDA released an action plan to address the opioid abuse epidemic and reassess the FDA’s

approach to opioid medications.

The FDA’s plan is part of a broader initiative led by the U.S.

Department of Health and Human

Services (“ HHS ”), to address opioid-related overdose, death, and dependence.

Prescribing Guidelines:

In March 2016, the CDC released a new Guideline for Prescribing Opioids for Chronic Pain intended to assist

primary care providers treating adults for chronic pain in outpatient settings.

The guideline provides recommendations to improve

communications between doctors and patients about the risks and benefits of opioid therapy for chronic pain, improve the safety and

effectiveness of pain treatment, and reduce the risks associated with long-term opioid therapy.

Warnings and Safety Labeling:

In March 2016, the FDA announced required enhanced warnings for immediate-release opioid pain medications

related to risks of misuse, abuse, addiction, overdose, and death.

Subsequently, there have been several class-wide labeling changes,

including the addition of boxed warnings relating to serious risks of using certain opioids medications along with benzodiazepines

and other central nervous system depressants, including alcohol (Decembers 2016);

and additional information relating to the new

class-wide REMS (Septembers 2018).

of the Comprehensive Addiction and Recovery Act (“ CARA ”):

In 2016, the CARA was enacted to address the national

epidemics of prescription opioid abuse and heroin use.

Consistent with the initiatives of HHS, this legislation sought to, among

other things, expand the availability of naloxone for law enforcement and other first responders;

form an interagency task force

to develop best practices for pain management with opioid medications;

and provide resources to improve state monitoring of controlled

substances, including opioids.

In 2018, CARA 2.0 was introduced as follow-up legislation to limit initial prescriptions for opioids

to 3 days, while exempting initial prescriptions for chronic care, cancer care, hospice or end of life care, and palliative care.

of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (“ SUPPORT

In November 2018, the SUPPORT Act was enacted as a comprehensive legislative response to the continuing opioid epidemic.

It includes a number of measures directed towards regulation and improvement of treatment for substance use-disorder and increased

coverage by CMS of medically assisted treatment options.

In addition, the SUPPORT Act requires HHS to report to Congress on existing

barriers to access to abuse-deterrent opioid formulations by Medicare Part C and D beneficiaries.

It also includes a number of requirements

directed at reducing the potential for oversupply of opioids to reduce the potential for misuse and diversion.

Capital Resources

of December 31, 2021, we had six full-time employees and six consultants.

Of these, five have a Ph.D.

and two have an M.B.A.

time to time, we also retain independent contractors to support our organization.

None of our employees are represented by a labor union

or covered by collective bargaining agreements, and we believe our relationship with our employees is good.

We intend to add additional

full-time employees along with additional clinical support staff in 2022, and to expand our commercial sales force beginning 2023.

July 2021 Ensysce appointed David J.

Kovacs to a new position of VP Public Policy and David Tanzer to a new position of VP Strategic

Kovacs has extensive experience shaping policy and setting strategy for disruptive companies in pharmaceutical and technology

He has served in various roles for public companies, including Vinco Ventures (NASDAQ:

BBIG) and AudioEye, Inc.

Previously, Mr.

Kovacs held senior roles in private equity and investment banking, including at Blackstone Group, Citigroup, and the

Hinduja Group.

Tanzer is an accomplished business executive specializing in helping companies with innovative intellectual property

and technology maximize their potential.

He has 25 years of diverse experience in the healthcare and media sectors, including as CEO

or President of eight companies, service on nine company boards, and working at private equity firms, including Lee Equity Partners and

Elevation Partners.

Tanzer previously was President of PDR Network, publisher of the Physicians’ Desk Reference, the authoritative

source of drug safety information for prescribers.

Linda Pestano joined Ensysce in October 2021, as Chief Development Officer.

Pestano has worked throughout her career to guide

the development of novel therapeutics to improve patient outcomes and quality of life.

Pestano received her PhD from Tuffs University

and undertook a Post-Doctoral Fellowship with Dana Farber Cancer Institute at the Harvard Medical School in Boston.

She has been instrumental

in guiding new therapies, including small molecules, nucleic acids, and biologicals through development into clinical trials.

expertise spans lead development, pre-clinical and translational studies, and interacting with multiple regulatory agencies.

joins Ensysce with 20 years of experience developing vaccines, drugs and novel biologics for a diverse range of indications.

Identification

of Our Executive Officers

Company’s Executive Officers and their age and position are below.

Lynn Kirkpatrick, Ph.D

Chief Executive Officer and Class III Director

Commercial Officer

Humphrey, CPA

Financial Officer, Secretary and Treasurer

Jeffrey Millard, Ph.D.

Operating Officer

Linda Pestano, Ph.D.

Development Officer

William Schmidt, Ph.D.

Medical Officer

Business Officer

presented as of December 31, 2021

Lynn Kirkpatrick, Ph.D.

has served as our Chief Executive Officer since January 2009.

Kirkpatrick has spent over 30 years

in drug discovery and development, has initiated the clinical development of four novel drug candidates and now strives to bring highly

novel and safe pain therapies to commercialization.

She received a Doctor of Philosophy (“ Ph.D.

”) degree in Medicinal

and Biomedicinal Chemistry at the University of Saskatchewan, completed a Post-Doctoral Fellowship at the Yale University School of Medicine,

and became a tenured full professor in the Department of Chemistry at the University of Regina.

She co-founded ProlX Pharmaceuticals,

(“ ProlX ”) an oncology discovery company, becoming Chief Executive Officer and successfully bringing three small

molecules from discovery into clinical development, two of these her own discoveries from academia.

ProlX was acquired by Biomira Inc.,

Kirkpatrick became the Chief Scientific Officer of the merged company to focus on the development of oncology products and vaccines.

In 2009, she co-founded PHusis Therapeutics, developing targeted small molecule precision medicines for oncology.

At the same time, she

became our Chief Executive Officer.

Kirkpatrick has published extensively in the area of targeted drug discovery, abuse deterrent

pain products and holds numerous patents for novel drugs and modalities.

We believe Dr.

Kirkpatrick is qualified to serve on our Board

because of her extensive executive experience in our industry and her service as our Chief Executive Officer.

Birkett has served as our Chief Commercial Officer since October 2018.

He has over 30 years of experience in the Pharmaceutical

and Biotechnology area.

He started his career as a biochemist at the Royal Victoria Infirmary in Newcastle-upon-Tyne, England.

moved into the pharmaceutical industry, where he focused on pain/addiction and neuroscience throughout his career.

He has developed and

launched several groundbreaking therapies, including Nicorette (POM) and (OTC), Lexapro and several other psychiatry agents with Lundbeck.

Birkett assisted on the launch of Prozac and Humatrope (human growth hormone) with Eli Lilly.

He assisted in moving Seroquel from

Phase 2 to global market leader with multi-billion dollar sales and he also participated in the launch of Zomig for migraines, which

became a European market leader.

He worked for most of his pharmaceutical career at AstraZeneca plc in both the United Kingdom and the

United States, where he held many roles including overseeing the global oncology division.

When the AstraZeneca merger took place, Mr.

Birkett ran the merger process outside the United States across all markets, and ran a corporate change program to streamline research

and development involving 67,000 staff.

Since leaving AstraZeneca, Mr.

Birkett has held multiple roles in biotech companies as senior

officer or as a consultant.

He is co-founder of a novel drug delivery company and has consulted for IPSOS, a large global research and

consulting firm.

He also served as president for North America/Canada of INDIVIOR, a large company producing addiction treatment drugs.

Birkett joined us in 2018 and is focused on building a world class commercial team.

Birkett attended Henley Business College

in London and INSEAD Business School in France where he studied general management and a global leadership.

Humphrey, CPA has served as our Chief Financial Officer since February 2021.

Prior to joining the Company, Mr.

Humphrey was most

recently Chief Financial Officer of Senomyx, Inc.

(“Senomyx”), a publicly held biotechnology company focused on taste science.

In his previous employment, he guided public company financial reporting, including Forms 10-K, 10-Q, 8-K, S-3, S-8, proxy statements

and SOX internal controls compliance, and acted as primary liaison with the audit committee and external auditors.

Humphrey advised

Senomyx’s board of directors, as part of core executive management team, in a $75 million acquisition by Firmenich SA, a private

Swiss multinational flavor and fragrance company.

Previously, he held finance and accounting leadership positions and consulted at numerous

life sciences companies, including ActivX Biosciences, Aurora Biosciences and Gensia.

Humphrey started his career as an accountant

at Price Waterhouse.

He holds a Bachelor of Science with Honors in Accountancy from the University of Illinois at Urbana-Champaign and

is a Certified Public Accountant in California.

Jeffrey Millard, Ph.D.

served as our Chief Operating Officer since January 2019.

Millard has both academic and industrial experience in chemistry and pharmaceutical

sciences covering all aspects of chemistry, manufacturing, and controls, or CMC.

He has been involved in both start-up biotech as well

as small and mid-sized public biopharmaceutical companies.

Millard has been directly responsible for research and development activities

and writing of more than seven IND submissions and Investigational Medicinal Product Dossiers, or IMPDs.

He has directed the CMC efforts

from discovery and in-licensing through commercial launch activities.

His experience covers the application programming interface, or

API, lifecycle (from synthetic route scouting, process chemistry, analytical chemistry development and validation, cGMP production and

release of API, to QbD and process validation), and drug product development through manufacture.

Millard received a Bachelor of

Arts from Rice University and a Ph.D.

in Pharmaceutical Sciences from the University of Arizona.

Linda Pestano, Ph.D.

Capital Resources ” for Dr.

Pestano’s biographical information.

Schmidt, Ph.D ., has served as our Chief Medical Officer since January 2016.

He is also the Head of NorthStar Consulting,

the Parliamentarian and a former president of the Eastern Pain Association, the largest regional affiliate of the American Pain Society.

He has over 25 years of pharmaceutical industry experience with a special emphasis on the discovery and development of novel analgesic

and narcotic antagonist drugs.

He was previously Vice President of Clinical Development for CrystalGenomics (Seoul, South Korea) and

its United States subsidiary, CG Pharmaceuticals (Emeryville, CA);

Senior Vice President of Development at Limerick BioPharma;

Vice President,

Clinical Research, for Renovis, Inc.;

and Vice President, Scientific Affairs and acting Vice President, Clinical Research and Development,

at Adolor Corporation.

At Adolor Corporation, Dr.

Schmidt was a key member of the team leading to the clinical development, NDA filing,

and FDA approval of Entereg® (alvimopan), a peripherally acting opioid antagonist.

Currently Dr.

Schmidt serves as an expert on pain

medicine pharmaceutical development with pharmaceutical and biotech companies throughout North America, Europe, Asia, Latin America,

and Australia.

Schmidt received a Bachelor of Arts degree from the University of California Berkeley and his Ph.D.

University of

California-San Francisco.

Wright MSE, MBA has served as our Chief Business Officer since January 2016.

Wright is the Chief Executive Officer of Magnostics,

Ltd, a superparamagnetic nano-material company based in Dublin, Ireland.

Previously, he served as Venture Partner at Ren Capital Partners

(“ Ren Capital ”), a healthcare fund of funds based in Beijing.

Prior to Ren Capital, he was a strategic advisor to

Bangkok Dusit Medical Service, the largest healthcare conglomerate in Southeast Asia, assisting in drug commercialization efforts.

Wright was Managing Director at Newstock Capital, an intellectual property investment advisory firm based in Stockholm, Sweden.

at Newstock, he worked with venture capital and corporate funds on divestitures, mergers and acquisitions, patent transactions, licensing

and infringement.

Previously Mr.

Wright was fund manager for General Electric / Technology Ventures where he managed an intellectual

property healthcare fund.

He was the Co-Founder and Chief Executive Officer of TherimuneX, a company that has been developing endogenous

lipopeptides for their immune regulating properties.

Wright was principal of Guardian Technology Partners, a chemical and life sciences

intellectual property advisory firm that was sold to investment bank Boenning and Scattergood.

Wright started his career on the business

development team of Endo Pharmaceuticals, plc.

Wright has over 24 years of experience spanning start-up, fast growth pharmaceutical

companies combined with intellectual property and healthcare investment acumen from varied international markets.

Wright holds a

Master of Science in Engineering, Management of Technology with a focus of biotechnology from University of Pennsylvania’s School

of Engineering and Applied Sciences and Wharton School of Business, and a Master of Business Administration from London School of Economics

TRIUM program.

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-K

Item 1. Business