What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-09 compared with 2023-08-11 · 307 added, 267 removed, 577 unchanged (50% of the section changed)

2 unchanged sentences

BALANCE SHEETS

June 30, 2023

December 31, 2022

Current assets:

Cash and cash equivalents

Cash and cash

Unbilled receivable

Right-of-use asset

Prepaid expenses and other current assets

expenses and other current assets

Total current assets

Liabilities and stockholders’ deficit

Liabilities and stockholders’

Current liabilities:

Accounts payable

Accrued expenses and other liabilities

Accrued expenses and other

Lease liability

Notes payable and accrued interest

payable and accrued interest

Total current liabilities

Long-term liabilities:

Notes payable, net of current portion

Liability classified warrants

Notes payable, net of current

classified warrants

Total long-term liabilities

Total liabilities

Commitments and contingencies (Note 6)

Stockholders’ equity deficit

Preferred stock, $ 0.0001 par value, 1,500,000 shares authorized, no shares issued and outstanding at June 30, 2023 and December 31, 2022

Common stock, $ 0.0001 par value, 250,000,000 shares authorized at June 30, 2023 and December 31, 2022;

2,669,873 and 534,571 shares issued at June 30, 2023 and December 31, 2022, respectively;

2,669,792 and 534,490 shares outstanding at June 30, 2023 and December 31, 2022, respectively

Stockholders’ equity

Preferred stock, $ 0.0001 par value, 1,500,000

shares authorized, no shares issued and outstanding at September 30, 2023 and December 31, 2022

Common stock, $ 0.0001 par value, 250,000,000

shares authorized at September 30, 2023 and December 31, 2022;

2,864,085 and 534,571 shares issued at September 30, 2023 and December

31, 2022, respectively;

2,864,004 and 534,490 shares outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

Accumulated deficit

( 118,052,779 )

1 unchanged sentence

Total Ensysce Biosciences, Inc.

stockholders’ equity (deficit)

stockholders’

equity (deficit)

( 3,714,444 )

Noncontrolling interests in stockholders’ equity (deficit)

Total stockholders’ equity (deficit)

Noncontrolling

interests in stockholders’ equity (deficit)

stockholders’ equity (deficit)

( 4,029,652 )

Total liabilities and stockholders’ equity (deficit)

liabilities and stockholders’ equity (deficit)

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

1 unchanged sentence

Statements of Operations

Three Months Ended June 30,

Six Months Ended June 30,

Months Ended September 30,

Federal grants

1 unchanged sentence

Research and development

General and administrative

Total operating expenses

and administrative

operating expenses

Loss from operations

4 unchanged sentences

Other income (expense):

Change in fair value of convertible notes

Change in fair value of liability classified warrants

Issuance costs for convertible

( 1,118,721 )

Loss on issuance of convertible

( 3,609,944 )

Change in fair value of

convertible notes

Issuance of liability classified

( 3,737,371 )

Change in fair value of

liability classified warrants

Loss on debt conversions

( 1,404,877 )

( 4,000,155 )

Interest expense, net

Other income, net

Total other income (expense), net

other income (expense), net

( 3,692,240 )

2 unchanged sentences

$ ( 7,121,914 )

Net loss attributable to noncontrolling interests

Deemed dividend related to warrants down round provision

Net loss attributable to common stockholders

$ ( 18,729,609 )

Net loss attributable to

noncontrolling interests

dividend related to warrants down round provision

loss attributable to common stockholders

$ ( 2,689,571 )

1 unchanged sentence

$ ( 7,121,716 )

Net loss per basic and diluted share:

Net loss per share attributable to common stockholders, basic and diluted

Weighted average common shares outstanding, basic and diluted

$ ( 19,563,588 )

Net loss per basic and diluted

Net loss per share attributable

to common stockholders, basic and diluted

Weighted average common shares outstanding,

basic and diluted

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

1 unchanged sentence

Statements of Changes in Stockholders’ EQUITY (Deficit)

Number of Shares

Noncontrolling

Stockholders’ Equity (Deficit)

Number of Shares

Stockholders’

Equity (Deficit)

Paid-In Capital

Noncontrolling

Balance on March 31, 2022

Balance on June 30, 2022

$ ( 95,511,543 )

$ ( 305,942 )

$ ( 797,578 )

Conversion of convertible notes

1 unchanged sentence

Settlement of restricted stock units

Deemed dividend related to warrants down round provision

( 7,896,811 )

Deemed dividend related to warrants down round

( 9,834,073 )

Balance on June 30, 2022

( 9,855,565 )

Balance on September

$ ( 105,409,155 )

$ ( 327,434 )

Balance on March 31, 2023

$ ( 6,421,932 )

Balance on June 30, 2023

$ 119,481,957

2 unchanged sentences

Settlement of restricted stock units

Public offering, net

Transaction costs associated with public offering

Issuance of common stock upon exercise of warrants

Stock-based compensation

Deemed dividend related to warrants down round provision

( 2,689,571 )

( 2,690,806 )

Balance on June 30, 2023

Balance on September

$ 119,537,611

12 unchanged sentences

( 18,729,609 )

Balance on June 30, 2022

Balance on September 30, 2022

$ ( 105,409,155 )

18 unchanged sentences

Reverse split fractional shares

Deemed dividend related to warrants down round provision

Deemed dividend related to warrants down round

( 7,109,678 )

( 7,121,914 )

Balance on June 30, 2023

Balance on September

$ 119,537,611

8 unchanged sentences

(U naudited )

Six Months Ended June 30,

Cash flows from operating activities:

Months Ended September 30,

Cash flows from operating

$ ( 7,121,914 )

$ ( 18,729,609 )

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

Adjustments to reconcile net loss to net cash

used in operating activities:

Gain on sale of asset

Accrued interest

Change in fair value of convertible notes

Change in fair value of

liability classified warrants

( 5,626,130 )

Change in fair value of liability classified warrants

Loss on issuance of convertible

Change in fair value of

convertible notes

( 6,169,929 )

Loss on debt conversions

Stock-based compensation

Changes in operating assets and liabilities:

Issuance of liability classified

Issuance costs paid to

close convertible notes

Loss on debt conversions

Changes in operating assets

and liabilities:

Unbilled receivable

Prepaid expenses and other assets

Prepaid expenses and other

Accounts payable

( 2,027,375 )

Accrued expenses and other liabilities

expenses and other liabilities

( 1,066,036 )

Net cash used in operating activities

cash used in operating activities

( 8,978,107 )

( 14,591,819 )

Cash flows from investing activities:

Proceeds from sale of assets

Net cash provided by investing activities

Cash flows from financing activities:

Proceeds from public offerings, net of placement fees and costs

Transaction costs associated with public offerings

Repayment of convertible notes

Cash flows from investing

from sale of asset

Net cash provided by

investing activities

Cash flows from financing

Proceeds public offerings,

Proceeds from issuance

of convertible notes, net

Transaction costs associated

with public offerings

Repayments of convertible

( 1,000,208 )

Repayment of financed insurance premiums

Net cash provided by (used in) financing activities

Increase (decrease) in cash and cash equivalents

of financed insurance premiums

cash provided by financing activities

Decrease in cash and cash

( 1,683,321 )

Cash and cash equivalents beginning of period

Cash and cash equivalents end of period

( 7,761,655 )

and cash equivalents beginning of period

and cash equivalents end of period

Supplemental cash flow information:

Income tax payments

Supplemental disclosure of non-cash investing and financing activities:

Deferred transaction costs for convertible notes

Supplemental disclosure

of non-cash investing and financing activities:

Stock-based compensation

Conversions of convertible notes into common stock

Financed insurance premiums

Settlement of commitment fee in shares

Deemed dividend related to warrants down round provision

Conversions of convertible

notes into common stock

Payable to related parties

Proceeds from financed

insurance premiums, net

Settlement of commitment

fee in shares

Deemed dividend related

to warrants down round provision

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

35 unchanged sentences

financial statements.

Operating results for the three and six months ended June 30, 2023, are not necessarily indicative of the results

that may be expected for the year ending December 31, 2023.

The interim unaudited consolidated financial statements have been prepared

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

statements for the fiscal year ended December 31, 2022, which may be found in the Company’s Form 10-K filed with the SEC on March

Operating results for the three and nine months ended September 30, 2023, are not necessarily indicative of the

results that may be expected for the year ending December 31, 2023.

The interim unaudited consolidated financial statements have been

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

financial statements for the fiscal year ended December 31, 2022, which may be found in the Company’s Form 10-K filed with the

SEC on March 30, 2023.

March 2023, the Company completed a 1-for-12 reverse split of its outstanding common stock.

4 unchanged sentences

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

Company has not generated any product revenue and had an accumulated deficit of $ 115.4 million at June 30, 2023.

Company has not generated any product revenue and had an accumulated deficit of $ 118.0 million at September 30, 2023.

There is no assurance

17 unchanged sentences

Concurrent with the public listing of the Company’s shares, the Company issued

to the investor 4,608 warrants with a five-year term to purchase common stock of Ensysce at an exercise price of $ 2,402.40 per share

to the investor 4,608 warrants with a three-year term to purchase common stock of Ensysce at an exercise price of $ 2,402.40 per share

The Company was required to pay a commitment fee to the investor of $ 1.2 million with $ 0.8 million due on the first anniversary

38 unchanged sentences

Property and equipment are fully depreciated as such there is no depreciation recognized

in the periods presented.

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

of operations.

There was no depreciation expense recognized during the three and six month periods ended June 30, 2023.

in the three and nine months ended September 30, 2023.

Depreciation expense is classified in general and administrative expense in the

accompanying consolidated statements of operations.

financial instruments

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

evaluates all of its financial instruments, including notes payable, to determine whether such instruments are derivatives or

contain features that qualify as embedded derivatives.

Embedded derivatives must be separately measured from the host contract if

all the requirements for bifurcation are met.

The assessment of the conditions surrounding the bifurcation of embedded derivatives

depends on the nature of the host contract and the features of the derivatives.

Bifurcated embedded derivatives are recognized at

fair value, with changes in fair value recognized in the consolidated statement of operations each period.

As of June 30, 2023 and

December 31, 2022, the Company did not have any bifurcated embedded derivatives in the

Company’s consolidated balance sheets.

The Company evaluates

all of its financial instruments, including notes payable, to determine whether such instruments are derivatives or contain features

that qualify as embedded derivatives.

Embedded derivatives must be separately measured from the host contract if all the requirements

for bifurcation are met.

The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of

the host contract and the features of the derivatives.

Bifurcated embedded derivatives are recognized at fair value, with changes in

fair value recognized in the consolidated statement of operations each period.

As of September 30, 2023 and December 31, 2022, the Company

did not have any bifurcated embedded derivatives in the Company’s consolidated balance sheets.

Value Measurement

12 unchanged sentences

This determination requires significant judgments to be made by the Company.

of June 30, 2023 and December 31, 2022, the recorded values of cash and cash equivalents, prepaid expenses, accounts payable, and accrued

expenses and other liabilities approximate their fair values due to the short-term nature of these items.

of September 30, 2023 and December 31, 2022, the recorded values of cash and cash equivalents, prepaid expenses, accounts payable, and

accrued expenses and other liabilities approximate their fair values due to the short-term nature of these items.

2021, the Company issued convertible notes and elected the fair value option to account for the convertible notes as it believes the

24 unchanged sentences

Refer to Note 8 for details of the warrants.

following tables present liabilities measured and recorded at fair value on the Company’s consolidated balance sheets as of June

following tables present liabilities measured and recorded at fair value on the Company’s consolidated balance sheets as of September

30, 2023, and December 31, 2022.

OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

June 30, 2023

Fair value of convertible note

Liability classified warrants

December 31, 2022

value of convertible note

classified warrants

Fair value of convertible note

Liability classified warrants

following table summarizes the change in fair value of the Company’s Level 3 assets and liabilities for the six months ended June

Liability classified

following table summarizes the change in fair value of the Company’s Level 3 assets and liabilities for the nine months ended September

OF CHANGE IN FAIR VALUE OF COMPANY’S LEVEL 3

Convertible note

Liability classified warrants

Fair value, December 31, 2022

4 unchanged sentences

Change in fair value

Fair value, June 30, 2023

Fair value, September 30, 2023

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

8 unchanged sentences

In June 2022, the Company received a Notice of Award for an

additional $ 2.8 million of funding in year 4 under the MPAR Grant from July 1, 2022 through June 30, 2023.

This brings total funding

under this grant to approximately $ 10.7 million.

additional $ 2.8 million of funding in year 4 under the MPAR Grant from July 1, 2022 through June 30, 2023, subsequently extended through

December 31, 2023.

This brings total funding under this grant to approximately $ 10.7 million.

September 2019, the NIH/NIDA awarded the Company a second research and development grant related to the development of its TAAP/MPAR ®

12 unchanged sentences

OF REVENUE RECOGNIZATION UNDER GRANTS

Three Months Ended June 30,

Six Months Ended June 30,

Months Ended September 30,

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

55 unchanged sentences

OF WEIGHTED AVERAGE SHARES OF ANTI-DILUTIVE SECURITIES

Three Months Ended June 30,

Six Months Ended June 30,

Ended September 30,

Stock options

Convertible notes

Anti-dilutive weighted average shares

Anti-dilutive weighted

average shares

Issued Accounting Pronouncements

26 unchanged sentences

4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid research and development

1 unchanged sentence

Other prepaid expenses

Total prepaid expenses and other current assets

Other current assets

Total prepaid expenses

and other current assets

5 – ACCRUED EXPENSES AND OTHER LIABILITIES

SCHEDULE OF ACCRUED EXPENSES AND OTHER LIABILITIES

OF ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued research and development

2 unchanged sentences

Other accrued liabilities

Total accrued expenses and other liabilities

Total accrued expenses

and other liabilities

6 – COMMITMENTS AND CONTINGENCIES

of June 30, 2023, the Company’s commitments included an estimated $ 18.5 million related to the Company’s open purchase orders

and contractual obligations that occurred in the ordinary course of business, including commitments with contract research organizations

of September 30, 2023, the Company’s commitments included an estimated $ 17.8 million related to the Company’s open purchase

orders and contractual obligations that occurred in the ordinary course of business, including commitments with contract research organizations

for multi-year pre-clinical and clinical research studies.

2 unchanged sentences

to the delivery of goods or the performance of services.

of June 30, 2023 and December 31, 2022, there were no pending legal proceedings against the Company that are expected to have a material

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

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

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

These may include disputes and lawsuits related to intellectual

property, licensing, contract law and employee relations matters.

Periodically, the Company reviews the status of significant matters,

if any exist, and assesses its potential financial exposure.

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

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

of September 30, 2023 and December 31, 2022, there were no pending legal proceedings against the Company that are expected to have a

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

From time to time, the Company could become involved

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

These may include disputes and lawsuits related

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

Periodically, the Company reviews the status of significant

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

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

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

Legal proceedings are subject to uncertainties,

3 unchanged sentences

Company’s current lease agreement (as amended) has a term that extends through October 31, 2024 with no option to renew.

June 30, 2023, the future lease payments totaled $ 10,926 .

The Company recognized total rent expense of $ 8,375 and $ 16,749 in the three

and six months ended June 30, 2023 and $ 7,834 and $ 15,667 in the three and six months ended June 30, 2022.

September 30, 2023, the future lease payments totaled $ 2,732 .

The Company recognized total rent expense of $ 8,375 and $ 25,124 in the

three and nine months ended September 30, 2023 and $ 7,939 and $ 23,606 in the three and nine months ended September 30, 2022.

7 – NOTES PAYABLE

Company’s outstanding notes payable balance was $ 445,738 as of June 30, 2023 consisting solely of the principal balance on the

Company’s financing of their current Directors’ and Officers’ insurance premiums.

Company’s outstanding notes payable balance was $ 350,932 as of September 30, 2023 consisting solely of the principal balance on

the Company’s financing of their current Directors’ and Officers’ insurance premiums.

following table provides a summary of the Company’s outstanding debt as of December 31, 2022:

SCHEDULE OF DEBT

Principal balance

Accrued interest

Fair value adjustment

Net debt balance

value adjustment

Financed insurance

interest expense recognized for financed insurance was $ 0 and $ 1,497 for the three and six month periods ended June 30, 2023 and $ 0

and $ 2,004 for the three and six month periods ended June 30, 2022.

interest expense recognized for financed insurance was $ 7,649 and $ 9,146 for the three and nine months ended September 30, 2023 and $ 4,859

and $ 6,864 for the three and nine months ended September 30, 2022.

September 24, 2021, the Company entered into an agreement with institutional investors to issue the 2021 Notes.

15 unchanged sentences

the consolidated statements of operations.

2021 Notes were settled on October 11, 2022 and were not outstanding during the quarter ended June 30, 2023.

2021 Notes were settled on October 11, 2022 and were not outstanding during the quarter ended September 30, 2023.

June 30, 2022, the Company entered into an $ 8.0 million convertible financing agreement with institutional investors.

2 unchanged sentences

received for the first closing on July 1, 2022 and for the second closing on August 9, 2022.

the issuance date, the Company assessed the probability of the potential settlement scenarios under the terms of the 2022 Notes and

determined that the predominant settlement feature of the 2022 Notes was the redemption feature into shares of the Company’s

common stock issuable at the lower of the conversion price or 92 %

of the average of the three lowest VWAPs in the 10 trading days immediately preceding the redemption date.

As the predominant

settlement feature of the 2022 Notes is to settle a fixed monetary amount into a variable number of shares, the 2022 Notes fell

within the scope of ASC 480.

Accordingly, the Company determined that the 2022 Notes should be recorded at fair value on its

issuance date and remeasured as of each reporting date with the change in fair value recorded as a component of other income

(expense) in the Company’s consolidated statements of operations.

the issuance date, the Company assessed the probability of the potential settlement scenarios under the terms of the 2022 Notes and determined

that the predominant settlement feature of the 2022 Notes was the redemption feature into shares of the Company’s common stock

issuable at the lower of the conversion price or 92 % of the average of the three lowest VWAPs in the 10 trading days immediately preceding

the redemption date.

As the predominant settlement feature of the 2022 Notes is to settle a fixed monetary amount into a variable number

of shares, the 2022 Notes fell within the scope of ASC 480.

Accordingly, the Company determined that the 2022 Notes should be recorded

at fair value on its issuance date and remeasured as of each reporting date with the change in fair value recorded as a component of

other income (expense) in the Company’s consolidated statements of operations.

Company initially recorded the 2022 Notes at a fair value of $ 12.09 million which included a loss upon issuance of $ 3.6 million due to

2 unchanged sentences

representing a 6 % original issue discount of $ 0.5 million and $ 0.6 million of legal and investment banking fees, which were immediately

connection with each of the first and second closings of the 2022 Notes, the Company also issued warrants to purchase 38,894

shares of the Company’s common stock.

The warrants had an original exercise price of $ 170.04

and are exercisable for five

years following issuance of the 2022 Notes.

The issuance of these warrants required the Company to reduce the conversion

price of the 2021 Notes and the exercise price of the outstanding warrants associated with the 2021 Notes to $ 187.20 .

In connection with 2023 May Offering, and in exchange for $ 0.125

per outstanding warrant, the exercise prices of the 2022 Notes warrants and 2021 Notes warrants were reduced to $ 3.64

connection with each of the first and second closings of the 2022 Notes, the Company also issued warrants to purchase 38,894 shares of

the Company’s common stock.

The warrants had an original exercise price of $ 170.04 and are exercisable for five years following

issuance of the 2022 Notes.

The issuance of these warrants required the Company to reduce the conversion price of the 2021 Notes and

the exercise price of the outstanding warrants associated with the 2021 Notes to $ 187.20 .

In connection with 2023 May Offering, and in

exchange for $ 0.125 per outstanding warrant, the exercise prices of the 2022 Notes warrants and 2021 Notes warrants were reduced to $ 3.64

proceeds of the 2022 Notes were used for working capital purposes subject to certain customary restrictions are secured by the Company’s

24 unchanged sentences

June 2023, the Company renewed and financed its directors’ and officers’ liability insurance in the amount of $ 0.4 million.

Monthly payments commence in July 2023 and are scheduled through March 2024.

Monthly payments commenced in July 2023 and are scheduled through March 2024.

During the year ended December 31, 2022, the Company financed

1 unchanged sentence

The Company paid a total of $ 9,402 in interest from inception through March 2023 when the note was paid in full.

expensed $ 1,497 of interest for the six months ended June 30, 2023.

The Company incurred no interest expense during the three months

ended June 30, 2023.

incurred $ 7,649 and $ 9,146 of interest expense for the three and nine months ended September 30, 2023.

8 - STOCKHOLDERS’ EQUITY

3 unchanged sentences

of Incorporation to authorize shares up to a total of 250,000,000 shares of common stock.

As of June 30, 2023 and December 31, 2022,

As of September 30, 2023 and December 31, 2022,

there were no shares of preferred stock issued and outstanding.

February Offering

February 2, 2023, the Company agreed to issue and sell in a registered direct offering an aggregate of 297,619

shares of common stock of the Company, par value $ 0.0001

per share, at an offering price of $ 10.08

per share, for gross proceeds of approximately $ 3.0

million before the deduction of placement agent fees and related costs of $ 0.3

February 2, 2023, the Company agreed to issue and sell in a registered direct offering an aggregate of 297,619 shares of common stock

of the Company, par value $ 0.0001 per share, at an offering price of $ 10.08 per share, for gross proceeds of approximately $ 3.0 million

before the deduction of placement agent fees and related costs of $ 0.3 million.

The closing occurred on February 6, 2023.

The warrants issued in connection with the 2023 February Offering are described

further below.

May 12, 2023, the Company completed a public offering of an aggregate of 1,800,876

shares of its common stock at par value $ 0.0001

per share (including pre-funded warrants in lieu thereof) at a combined offering price of $ 3.887

per share, gross proceeds from this offering were approximately $ 7.0

million before the deduction of placement agent fees and related costs of $ 0.7

The warrants issued in connection with the 2023 May Offering are described further below.

issued in connection with the 2023 February Offering are described further below.

May 12, 2023, the Company completed a public offering of an aggregate of 1,800,876 shares of its common stock at par value $ 0.0001 per

share (including pre-funded warrants in lieu thereof) at a combined offering price of $ 3.887 per share, gross proceeds from this offering

were approximately $ 7.0 million before the deduction of placement agent fees and related costs of $ 0.7 million.

The warrants issued in

connection with the 2023 May Offering are described further below.

connection with the offering, the Company also agreed to amend certain existing warrants to purchase up to an aggregate of 210,085 shares

2 unchanged sentences

had a reduced exercise price of $ 3.64 per share at an additional offering price of $ 0.125 per amended warrant.

June 30, 2023, outstanding warrants to purchase shares of common stock are as follows:

SCHEDULE OF OUTSTANDING WARRANT

Shares Underlying Outstanding Warrants

of September 30, 2023, outstanding warrants to purchase shares of common stock are as follows:

OF OUTSTANDING WARRANT

Classification

$ 2,400.00 - 2,760.00

LACQ warrants

Share subscription facility

$ 3.64 - 16.80

Public offering

$ 8.58 – 12.60

Public offering

$ 3.64 - 4.86

Public offering

June 30, 2021, as a result of the Business Combination, the Company assumed a total of 78,751 warrants previously issued by LACQ (subsequently

in December 2022, 7,782 warrants were cancelled).

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

$ 2,400.00 and $ 2,760.00 per share and expire June 30, 2026 , five years following the completion of the Business Combination.

of 41,666 of the outstanding warrants are public warrants which trade on the OTC Pink Open Market under the ticker symbol ENSCW.

The remaining 29,303 warrants are private warrants with restrictions on transfer and which have the right to a cashless exercise at the option

June 30, 2021, as a result of the Business Combination, the Company assumed a total of 78,751

warrants previously issued by LACQ (subsequently in December 2022 and August 2023, 7,782

and 7,310 warrants, respectively, were cancelled).

The warrants provide holders the right

to purchase common stock at a strike price between $ 2,400.00 and $ 2,760.00 per share and

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

total of 41,666 of the outstanding warrants are public warrants which trade on the OTC Pink

Open Market under the ticker symbol ENSCW.

The remaining 21,993 warrants are private warrants

with restrictions on transfer and which have the right to a cashless exercise at the option

of the holder.

9 unchanged sentences

The adjustments have progressed from the original exercise

price of $ 2,402.40 per share to the current exercise price at June 30, 2023 of $ 3.64 per share.

The difference in fair value of the

existing warrant prior to the adjustment and the value of the warrant after (utilizing a Black-Scholes model) is reflected on the

consolidated statement of operations as a deemed dividend.

price of $ 2,402.40 per share to the current exercise price at September 30, 2023 of $ 3.64 per share.

The difference in fair value

of the existing warrant prior to the adjustment and the value of the warrant after (utilizing a Black-Scholes model) is reflected

on the consolidated statement of operations as a deemed dividend.

September 24, 2021 and November 5, 2021, the Company issued 1,504 and 3,008 warrants in connection with the issuance of the 2021

15 unchanged sentences

warrant, the Company amended 166,667 of these warrants to reduce their exercise price to $ 3.64 .

February 6, 2023, the Company issued 318,451 equity classified warrants in connection with

a public offering.

The warrants were immediately exercisable with an exercise price of $ 8.58

- $ 12.60 and expire on February 2, 2028 , and August 7, 2028 .

May 12, 2023, the Company issued 3,727,813 equity classified warrants (series A-1, A-2 and

placement agent warrants) in connection with a public offering.

February 6, 2023, the Company issued 318,451 equity classified warrants in connection with a public offering.

The warrants were immediately

exercisable with an exercise price of $ 3.64 - $ 4.86 and expire on November 12, 2024 , May

10, 2028 , and May 12, 2028 .

exercisable with an exercise price of $ 8.58 - $ 12.60 and expire on February 2, 2028 , and August 7, 2028 .

May 12, 2023, the Company issued 3,727,813 equity classified warrants (series A-1, A-2 and placement agent warrants) in connection

with a public offering.

The warrants were immediately exercisable with an exercise price of $ 3.64 - $ 4.86 and expire on November

12, 2024 , May 10, 2028 , and May 12, 2028 .

May 12, 2023 the Company also issued 1,451,876 pre-funded warrants in connection with a public offering, 885,000 pre-funded warrants

were exercised in connection with the closing of the public offering, 300,902 were exercised between the closing date and June 30,

As of June 30, 2023, 415,974 pre-funded warrants remain outstanding.

The pre-funded warrants are immediately exercisable with

an exercise price of $ 0.0001 .

were exercised in connection with the closing of the public offering, 344,804 were exercised between the closing date and September

As of September 30, 2023, 222,072 pre-funded warrants remain outstanding.

The pre-funded warrants are immediately exercisable

with an exercise price of $ 0.0001 .

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

1 unchanged sentence

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

SCHEDULE OF WARRANTS FAIR VALUE ESTIMATION ASSUMPTIONS

Exercise price

OF WARRANTS FAIR VALUE ESTIMATION ASSUMPTIONS

Expected term (years)

Risk free rate

(a) LACQ warrants (grant date varies)

$ 2,400.00 - 2,760.00

(b) Share subscription facility (grant date 7/2/21)

(b) Share subscription facility (remeasurement date varies)

91.25 % - 96.0 %

3.9 %- 4.12 %

96.9 %- 98.5 %

(d) Liability classified warrants (grant date 7/1/22)

(d) Liability classified warrants (grant date 8/9/22)

(d) Liability classified warrants (remeasured at 6/30/23)

(a) LACQ warrants

(grant date varies)

(b) Share subscription facility

(grant date 7/2/21)

(b) Share subscription facility

(remeasurement date varies)

3.9 %- 4.12 %

(grant date 9/24/21)

(grant date 11/5/21)

(remeasured at 9/30/23)

(d) Liability classified warrants

(grant date 7/1/22)

(d) Liability classified warrants

(grant date 8/9/22)

(d) Liability classified warrants

(remeasured at 9/30/23)

9 - STOCK-BASED COMPENSATION

5 unchanged sentences

the Former Ensysce stock plans.

January 2022, the 2021 Omnibus Plan was amended and restated to include an additional 12,500

shares available for future grant and to provide for future annual increases.

In February 2023, the Company’s Board of

Directors approved an annual increase of 26,725

shares available for future grant.

January 2022, the 2021 Omnibus Plan was amended and restated to include an additional 12,500 shares available for future grant and to

provide for future annual increases.

In February 2023, the Company’s Board of Directors approved an annual increase of 26,725 shares

available for future grant.

Company recognized within general and administrative expense stock-based compensation expense of $ 41,336 and $ 198,000 for the three and

six months ended June 30, 2023 and $ 228,823 and $ 602,767 for the three and six months ended June 30, 2022.

The Company recognized stock-based

compensation expense within research and development of $ 17,023 and $ 37,887 for the three and six months ended June 30, 2023 and $ 66,756

and $ 95,246 for the three and six months ended June 30, 2022.

were no stock options granted during the six months ended June 30, 2023.

During the six months ended June 30, 2022, the Company granted

stock options to purchase an aggregate of 9,545 shares of common stock to employees, consultants, and members of the board of directors.

The options vest over periods between zero and four years and have an exercise price of between $ 103.20 and $ 1,507.20 per share.

following table summarizes the Company’s stock option activity during the six months ended June 30, 2023:

nine months ended September 30, 2023 and $ 128,357 and $ 731,126 for the three and nine months ended September 30, 2022.

The Company recognized

stock-based compensation expense within research and development of $ 14,338 and $ 52,224 for the three and nine months ended September

30, 2023 and $ 28,791 and $ 124,034 for the three and nine months ended September 30, 2022.

were no stock options granted during the nine months ended September 30, 2023.

During the nine months ended September 30, 2022, the Company

granted stock options to purchase an aggregate of 9,545 shares of common stock to employees, consultants, and members of the board of

The options vest over periods between zero and four years and have an exercise price of between $ 103.20 and $ 1,507.20 per

following table summarizes the Company’s stock option activity during the nine months ended September 30, 2023:

SCHEDULE OF STOCK OPTION ACTIVITY

Weighted average

Exercise price

Remaining contractual life

Intrinsic value

contractual life

Outstanding at December 31, 2022

Expired / Forfeited

Outstanding at June 30, 2023

Exercisable at June 30, 2023

Outstanding at September 30, 2023

Exercisable at September 30, 2023

Vested and expected to vest

4 unchanged sentences

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

Six Months Ended June 30, 2022

Nine Months Ended

September 30, 2022

Exercise price

25 unchanged sentences

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

weighted-average grant date fair value of options granted during the six months ended June 30, 2022 was $ 0.96 .

of June 30, 2023, the Company had an aggregate of $ 219,428 of unrecognized share-based compensation cost, which is expected to be recognized

over the weighted average period of 1.42 years.

following table summarizes the Company’s restricted stock units activity during the six months ended June 30, 2023:

weighted-average grant date fair value of options granted during the nine months ended September 30, 2022 was $ 19.24 .

of September 30, 2023, the Company had an aggregate of $ 163,754 of unrecognized share-based compensation cost, which is expected to be

recognized over the weighted average period of 1.32 years.

following table summarizes the Company’s restricted stock units activity during the nine months ended September 30, 2023:

SCHEDULE OF RESTRICTED STOCK UNITS

Restricted Stock Units

Weighted average fair value

Restricted Stock

Weighted average fair

Outstanding at December 31, 2022

Outstanding at June 30, 2023

were no restricted stock units granted or forfeited during the six months ended June 30, 2023.

The remaining awards outstanding are subject

to time-based vesting conditions and are scheduled to vest by December 2023.

The estimated fair value of each of the restricted stock

units was determined on the date of grant based on the closing price of the Company’s common stock on the previous trading date.

Outstanding at September 30, 2023

were no restricted stock units granted or forfeited during the nine months ended September 30, 2023.

The remaining awards outstanding

are subject to time-based vesting conditions and are scheduled to vest by December 2023.

The estimated fair value of each of the restricted

stock units was determined on the date of grant based on the closing price of the Company’s common stock on the previous trading

Reserved for Future Issuance

1 unchanged sentence

SCHEDULE OF COMMON STOCK FUTURE ISSUANCE

June 30, 2023

September 30, 2023

Awards outstanding under the 2021 Omnibus Incentive Plan

3 unchanged sentences

10 – SUBSEQUENT EVENTS

Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have been

no events that have occurred that would require adjustments to our disclosures in the unaudited consolidated financial statements.

October 23, 2023, the Company entered into a Securities Purchase Agreement (the “SPA”) for an aggregate financing of $ 1.7

million with investors.

At the first closing under the SPA, which is expected to occur on or before November 9, 2023, the Company will

issue to the investors (i) senior secured convertible promissory notes in the aggregate principal amount of $ 612,000 for an aggregate

purchase price of $ 566,667 and (ii) warrants to purchase 1,255,697 shares of the Company’s common stock, par value $ 0.0001 per

share in the aggregate.

At the second closing under the SPA, which will occur upon certain conditions being satisfied, the Company will

issue to the investors referenced above, (i) additional notes in the aggregate principal amount of $ 1,224,000 for an aggregate purchase

price of $ 1,133,333 and (i) additional warrants to purchase 2,511,394 shares of the common stock in the aggregate.

In connection with

the financing, the Company issued a $ 0.2 million senior secured convertible promissory note to a board member.

combined notes are subject to an original issue discount of 8 %, have a term of six months from their respective date of issuance and

accrue interest at the rate of 6.0 % per annum.

The notes are convertible into common stock, at a per share conversion price equal to

Beginning ninety days following issuance of the respective notes, the Company is obligated to redeem monthly one third of the

original principal amount under the applicable note, plus accrued but unpaid interest, liquidated damages and any other amounts then

owing to the holder of such note.

The Company is required to pay the redemption amount in cash with a premium of 10 % or, at the election

of the purchaser at any time, some or all of the principal amount and interest may be paid by conversion of shares under the note into

common stock based on a conversion price equal to $ 1.5675 .

warrants will have an exercise price of $ 1.5675 , the same as the conversion price, and are exercisable for five years following issuance,

issuance to occur on each of the first and second closing dates under the SPA.

Incentive Plan

October 19, 2023, the Company registered 26,725 additional common shares connection with Section 4.1(a)(i) of the 2021 Incentive Plan

and 585,796 additional common shares in connection with an amendment of the 2021 Incentive Plan, which was approved by shareholders on

August 24, 2023.

In October 2023, the Company granted awards for 615,000 common shares under the 2021 Incentive Plan.

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

What changed 10-Q

Item 1. Financial Statements