Ensysce Biosciences, Inc. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a–15(e) and 15d-15(e)) as of December 31, 2023. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2023. 84 Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, the company’s executive and financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes and includes those policies and procedures that (a) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements, errors, or fraud. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. As of December 31, 2023, our management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013) (the “2013 Framework”). In adopting the 2013 Framework, management assessed the applicability of the principles within each component of internal control and determined whether they have been adequately addressed within the current system of internal control and adequately documented. Based on this assessment, management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, concluded that, as of December 31, 2023, our internal control over financial reporting was effective based on these criteria. This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. As a smaller reporting company, we were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to SEC rules that permit us to provide only management’s report in this Annual Report on Form 10-K. Changes in Internal Control Over Financial Reporting Management worked with third-party accounting consultants to develop a control structure that can be consistently applied to period-end financial reporting as well as to unusual and infrequent complex accounting transactions. Testing of these remediations was satisfactorily completed during the quarter ended December 31, 2023. There were no other changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information Not applicable. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 85 PART III Item 10. Executive Officers and Directors The following persons are our executive officers and directors: Name Age* Position Executive Officers Lynn Kirkpatrick, Ph.D.** 67 President, Chief Executive Officer and Class III Director Geoffrey Birkett 61 Chief Commercial Officer David Humphrey 55 Chief Financial Officer, Secretary and Treasurer Jeffrey Millard, Ph.D. 48 Chief Operating Officer (consultant) Linda Pestano, Ph.D. 55 Chief Development Officer William Schmidt, Ph.D. 73 Chief Medical Officer Directors** Andrew Benton, J.D. 71 Class I Director William Chang 67 Class I Director Bob Gower, Ph.D. 86 Class II Director and Chairman of the Board Adam S. Levin, M.D. 45 Class III Director Steve R. Martin 62 Class III Director Lee Rauch 70 Class I Director Curtis Rosebraugh, M.D., MPH 66 Class II Director *Ages presented as of December 31, 2023 ** Information about Dr. Kirkpatrick is set forth under “Executive Officers” Information about our Executive Officers and Directors Executive Officers Lynn Kirkpatrick, Ph.D. has served as our Chief Executive Officer since January 2009. Dr. 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, Corp. (“ 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., and Dr. 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. Dr. 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. Geoffrey 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. He then 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. Mr. 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. Mr. Birkett joined us in 2018 and is focused on building a world class commercial team. Mr. Birkett attended Henley Business College in London and INSEAD Business School in France where he studied general management and a global leadership. 86 David Humphrey 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. Mr. 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. Mr. 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 (inactive) in California. Jeffrey Millard, Ph.D. has served as our Chief Operating Officer since January 2019. Dr. 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. Dr. 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. Dr. 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. joined Ensysce in October 2021, as Chief Development Officer. Dr. Pestano has worked throughout her career to guide the development of novel therapeutics to improve patient outcomes and quality of life. She has 20 years of experience developing vaccines, drugs and novel biologics for a diverse range of indications. She has been instrumental in guiding new therapies, including small molecules, nucleic acids, and biologicals through development into clinical trials. Dr. Pestano’s expertise spans lead development, pre-clinical and translational studies, and interacting with multiple regulatory agencies. Dr. Pestano received her PhD from Tufts University and undertook a Post-Doctoral Fellowship with Dana Farber Cancer Institute at the Harvard Medical School in Boston. William K. 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. Dr. Schmidt received a Bachelor of Arts degree from the University of California Berkeley and his Ph.D. University of California-San Francisco. Directors Andrew Benton, J.D. has served as a member of our Board since December 2, 2019. Mr. Benton was the President, Chief Executive Officer and Trustee of Pepperdine University from June 2000 to July 2019. Mr. Benton was the former chairman of both the American Council of Education, the major coordinating body for all of the nation’s higher education institutions, and the National Association of Independent Colleges and Universities. Mr. Benton is also past chair of the Association of Independent California Colleges and Universities and a member of the American Bar Association, the Council for Higher Education Accreditation, the President’s Cabinet of the West Coast Conference, the Association of Presidents of Independent Colleges and Universities, and the Los Angeles World Affairs Council. Mr. Benton holds an undergraduate degree in American studies from Oklahoma Christian University and a J.D. from Oklahoma University. We believe that Mr. Benton’s experience governing academic and other institutions qualifies him to serve on our Board. 87 William Chang serves as Chief Executive Officer of Westlake Realty Group and Chairman of Westlake International Group where he has worked for more than 40 years. Mr. Chang is an investor in the San Francisco Giants of Major League Baseball. Mr. Chang was the former Chairman of U.S. Rugby Football Union. He also served on the Board of the Asia Foundation and San Francisco Port and Social Services Commissions. Mr. Chang holds a Bachelor’s degree in Economics from Harvard University. We believe that Mr. Chang’s extensive business experience and expertise in corporate governance qualifies him to serve on our Board. Bob Gower, Ph.D. has served as our Chairman since 2008. Dr. Gower was Chief Executive Officer of Lyondell Petrochemical from 1985 through his retirement at the end of 1996. In 1997, he acquired businesses from Howell Corporation that became Specified Fuels and Chemicals. Dr. Gower sold Specified in 2000 and, with Dr. Richard Smalley, founded Carbon Nanotechnologies, Inc. (“ CNI ”) that same year to develop production capabilities and applications for single wall carbon nanotubes. CNI was acquired by Unidym in 2007. Dr. Gower founded Ensysce in 2008 with the focus of using single wall carbon nanotubes in therapeutic areas. Ensysce subsequently merged with Signature Therapeutics, Inc. and changed its focus to developing safe opioid pain drugs. He has served on the Board of Directors of several public companies, including Kirby Corporation, OmNova and Keystone. He also has been and continues to be involved with several not-for-profit organizations and has especially focused on Communities In Schools Houston, a leading dropout prevention and mental health program, and on Southern Illinois University with focus on the chemistry department. Dr. Gower received his B.S. from SIU and his Ph.D. from the University of Minnesota. We believe that Mr. Gower’s previous board and industry experience qualifies him to serve on our Board. Adam S. Levin, MD joined the Board in June 2021 and is the Vice Chair of Clinical Operations for the Department of Orthopaedic Surgery at Johns Hopkins University, where he has been on faculty since 2014. He is an Associate Professor of Orthopaedic Surgery and Associate Professor of Oncology, researching treatments related to musculoskeletal oncology, while also maintaining an active clinical practice. Dr. Levin holds the Virginia M. Percy and William Algernon Percy Chair in Orthopaedic Surgery at Johns Hopkins University. He serves in additional leadership roles related to billing, coding, and practice management for the Musculoskeletal Tumor Society, the American Academy of Orthopaedic Surgeons, and the American Medical Association. Prior to joining Johns Hopkins University, Dr. Levin was an Assistant Professor of Orthopaedic Surgery at the Zucker School of Medicine at Hofstra University in New York between 2012 and 2014. From 2010 to 2012, he was a fellow of musculoskeletal oncology and Clinical Instructor at Memorial Sloan-Kettering Cancer Center, following his residency training at the North Shore/LIJ Health System (now Northwell Health) from 2005 to 2010. He has been a member of leadership fellows programs through the North Shore/LIJ Physician High Potential Program, the American Academy of Orthopaedic Surgeons, and the American Orthopaedic Association. Dr. Levin has also continued to serve as Associate Editor for CME for the Journal of Bone and Joint Surgery since 2016, and is on the Steering Committee for the Musculoskeletal Tumor Registry. Dr. Levin served as a subject-matter consultant to our predecessor, LACQ, during their initial review of our preclinical and Phase I clinical trial results. Dr. Levin holds a B.S. in Biology with a concentration in Animal Physiology from Cornell University, an M.D. from New York Medical College, and is currently studying at the Johns Hopkins University Carey School of Business for an M.B.A. with a specialization in Healthcare Management, Innovation, and Technology. We believe that Dr. Levin is qualified to serve as a member of our Board based on his academic and practice experience and his detailed knowledge of value-based care, acute and chronic pain management, novel drug design, and health care operations and management. Steve R. Martin has served as a member of our Board since August 2020. Mr. Martin was formerly Senior Vice President and Chief Financial Officer of Armata Pharmaceuticals, Inc., a clinical development stage biotechnology company listed on New York Stock Exchange, from January 2016 until his retirement from the position on June 30, 2022. Previously, Mr. Martin served as Senior Vice President and Chief Financial Officer of Applied Proteomics, Inc., a molecular diagnostics company, from December 2014 to August 2015. From June 2011 to December 2014, Mr. Martin served as Senior Vice President and Chief Financial Officer of Apricus Biosciences, Inc. (“Apricus”), a publicly traded pharmaceutical company, and served as the Interim Chief Executive Officer of Apricus from November 2012 through March 2013. From 2008 to January 2011, Mr. Martin served as Senior Vice President and Chief Financial Officer of BakBone Software (“BakBone”), a publicly traded software company. During his final 10 months with BakBone until the company’s acquisition in January 2011, Mr. Martin also served as BakBone’s Interim Chief Executive Officer. From 2005 to 2007, Mr. Martin served as Chief Financial Officer of Stratagene Corporation, a publicly traded research products and clinical diagnostics company. Mr. Martin’s previous experience also includes serving as Controller with Gen-Probe Incorporated, a publicly traded molecular diagnostics company, as well as 10 years with Deloitte & Touche LLP, a public accounting firm. Mr. Martin holds a Bachelor in Science in Accounting from San Diego State University and is a certified public accountant (inactive). We believe that Mr. Martin’s expertise in biopharmaceutical industry and accounting expertise qualifies him to serve on our Board. 88 Lee Rauch has served on our Board since February 2022. She is an experienced Chief Executive Officer and Strategy Advisor, has served both public and private companies. During her near 40-year career, Ms. Rauch successful built companies ranging in focus from pre-clinical research to advanced clinical development, took the lead in mergers and acquisitions and used her experience to secure financing for public and private biotech companies. Among her many leadership roles, Ms. Rauch, was notably a founding member of McKinsey & Co.’s International Pharmaceutical Practice and the Executive Chairman of Springboard Enterprises Health Innovation Hub. Most recently, Ms. Rauch, served as President and CEO of Viridian Therapeutics, Inc. Ms. Rauch received a B.S. in Chemistry from Arizona State University and an M.B.A. in Finance from the University of Chicago. We believe that Ms. Rauch’s biopharmaceutical industry experience and expertise qualifies her to serve on our Board. Curtis Rosebraugh, M.D., MPH has served on our Board since 2021. He is a member of Griebel and Rosebraugh Consulting LLC since May 2018, where he is a regulatory consultant for small molecule and biological drug development. Prior to forming a consulting firm, he was employed by the Food and Drug Administration since 2000, holding the position of Director of the Office of Drug Evaluation II (“ODEII”) within the Center for Drug Evaluation and Research (“ CDER ”) from 2007 until his retirement in 2018, with supervisory responsibility for the evaluation of all drug products within 3 divisions: the Division of Pulmonary, Allergy and Rheumatology Products, the Division of Metabolism and Endocrinology Products and the Division of Anesthesia, Analgesia, and Addiction Products. In this position, he has overseen the development and approval of over 50 new drugs, was responsible for the planning of over 100 advisory committee meetings, led ODE II through several controversial safety issues and has received many honors and awards. Dr. Rosebraugh has been involved in the development of abuse deterrent opioid formulations and has also been involved in the development of the biosimilar program as well as many other CDER initiatives. Dr. Rosebraugh received his undergraduate degree in pharmacy in 1981, his Medical Degree in 1986 and completed a residency in Internal Medicine in 1989, all at the University of Kansas. He completed a Masters of Public Health at Johns Hopkins School of Public Health in 1999 and a Clinical Pharmacology Fellowship at Georgetown University in 2000. We believe that Dr. Rosebraugh’s regulatory experience in the biopharmaceutical industry qualifies him to serve on our Board. Role of Board in Risk Oversight The Board has extensive involvement in the oversight of risk management related to us and our business and accomplishes this oversight through the regular reporting to the Board by the audit committee. The audit committee represents the Board by periodically reviewing our accounting, reporting and financial practices, including the integrity of our financial statements, the surveillance of administrative and financial controls and our compliance with legal and regulatory requirements. Through its regular meetings with management, including the finance, legal, internal audit and information technology functions, the audit committee reviews and discuss all significant areas of our business and summarize for the Board all areas of risk and the appropriate mitigating factors. In addition, our Board receives periodic detailed operating performance reviews from management. Composition of the Board Our business and affairs are managed under the direction of the Board. Our Board consists of eight directors, which are divided into three classes (Class I, II and III) with Class I and III each consisting of three directors and Class II consisting of two directors. Board Committees The standing committees of our Board consist of an audit committee, a compensation committee and a nominating and corporate governance committee. Our Board may from time to time establish other committees. Each of the committees reports to the Board. Our president and chief executive officer and other executive officers regularly report to the non-executive directors and the audit, the compensation and the nominating and corporate governance committees to ensure effective and efficient oversight of our activities and to assist in proper risk management and the ongoing evaluation of management controls. 89 Audit Committee We have an audit committee consisting of Steve R. Martin, who serves as the chairperson, Bob Gower and Andrew Benton. Each member of the audit committee qualifies as an independent director under the Nasdaq corporate governance standards and the independence requirements of Rule 10A-3 of the Exchange Act. Our Board has determined that Steve R. Martin qualifies as an “ audit committee financial expert ” as such term is defined in Item 407(d)(5) of Regulation S-K and possesses financial sophistication, as defined under the rules of Nasdaq. The purpose of the audit committee is to prepare the audit committee report required by the SEC to be included in our proxy statement and to assist our Board in overseeing and monitoring (1) the quality and integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent registered public accounting firm’s qualifications and independence, (4) the performance of our internal audit function and (5) the performance of our independent registered public accounting firm. Our Board adopted a written charter for the audit committee, which is available on our website. Compensation Committee We have a compensation committee consisting of Adam Levin, who serves as the chairperson, Bob Gower, William Chang, and Lee Rauch. The purpose of the compensation committee is to assist our Board in discharging its responsibilities relating to (1) setting our compensation program and compensation of our executive officers and directors, (2) monitoring our incentive and equity-based compensation plans and (3) preparing the compensation committee report, if required to be included in our proxy statement under the rules and regulations of the SEC. Our Board adopted a written charter for the compensation committee, which is available on our website. Nominating and Corporate Governance Committee We have a nominating and corporate governance committee, consisting of Lee Rauch, who serves as chairperson, Bob Gower, Steve R. Martin and Curtis Rosebraugh. The purpose of our nominating and corporate governance committee is to assist our Board in discharging its responsibilities relating to (1) identifying individuals qualified to become new Board members, consistent with criteria approved by the Board, (2) reviewing the qualifications of incumbent directors to determine whether to recommend them for re-election and selecting, or recommending that the Board select, the director nominees for the next annual meeting of stockholders, (3) identifying Board members qualified to fill vacancies on any Board committee and recommending that the Board appoint the identified member or members to the applicable committee, (4) reviewing and recommending to the Board corporate governance principles applicable to us, (5) overseeing the evaluation of the Board and management and (6) handling such other matters that are specifically delegated to the committee by the Board from time to time. Our Board adopted a written charter for the nominating and corporate governance committee, which is available on our website. Delinquent Section 16(a) Reports None to report. Code of Business Conduct We adopted a code of business conduct that applies to all our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer, which is available on our website. Our code of business conduct is a “code of ethics,” as defined in Item 406(b) of Regulation S-K. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our website. 90 Item 11. Executive & Director Compensation This section discusses the material components of the executive compensation program for our named executive officers. Our named executive officers, consisting of our principal executive officer and the next two most highly compensated executive officers, for the year ended December 31, 2023, were: ● Lynn Kirkpatrick, Ph.D., Chief Executive Officer; ● David Humphrey, Chief Financial Officer; and ● Geoff Birkett, Chief Commercial Officer. This discussion may contain forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt in the future may differ materially from the currently planned programs summarized in this discussion. Summary Compensation Table The following table sets forth information concerning the compensation earned by our NEOs in respect of our fiscal years ended December 31, 2023 and December 31, 2022. Name and Principal Position Year Salary ($) Bonus ($) Stock and Option Awards ($) (1) Non-Equity Incentive Plan Compensation ($) All Other Compensation ($) (2) Total ($) Dr. Lynn Kirkpatrick, PhD. Chief Executive Officer 2023 404,875 - 93,800 - 9,900 508,575 2022 392,500 - 214,914 - 15,195 622,609 Dave Humphrey Chief Financial Officer 2023 338,250 - 93,800 - 9,900 441,950 2022 328,333 - 438,562 - 13,722 780,617 Geoff Birkett Chief Commercial Officer 2023 312,625 - 70,350 - 9,379 392,354 2022 304,167 - 53,664 - 9,125 366,956 (1) In accordance with SEC rules, this column reflects the aggregate grant date fair value of the restricted stock awards and stock option awards granted. This amount has been computed in accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) Topic 718. This amount does not reflect the actual economic value that will be realized by a named executive officer upon the vesting of the stock awards or stock options, the exercise of the stock options, or the sale of the common stock underlying such awards. (2) Amounts shown represent 401(k) matching contributions. Narrative Disclosure to Summary Compensation Table Elements of Compensation in 2023 The compensation of our NEOs generally consists of base salary, annual cash bonus opportunities and long-term incentive compensation in the form of equity awards, as described below. Base Salary The base salary payable to each NEO is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role, responsibilities, and contributions. Base salaries were initially set at the time each NEO commenced employment with us, are reviewed annually and may be increased based on the individual performance of the NEO, company performance, any change in the executive’s position within our business, the scope of the executive’s responsibilities and any changes thereto. Effective July 1, 2023, the NEO’s annual base salary rates were $414,750 for Dr. Kirkpatrick, $346,500 for Mr. Humphrey and $320,250 for Mr. Birkett. A five percent (5%) cost of living increase was approved for executive officers, effective March 1, 2024. 91 Annual Performance-Based Bonuses Each of our NEOs’ performance-based cash bonus opportunity is expressed as a percentage of base salary that can be achieved at a target level by meeting predetermined Company performance objectives established by the Board or the Compensation Committee. The annual bonus for Dr. Kirkpatrick is targeted at 50% of her base salary, and Mr. Humphrey and Mr. Birkett’s annual bonuses are targeted at 30% of their respective base salary. There are no amounts accrued for bonuses as of December 31, 2023. Long-Term Equity Incentives In 2021, the Company maintained the Ensysce Biosciences, Inc. 2021 Omnibus Incentive Plan to provide equity-based incentive awards, designed to align our interests and the interests of our stockholders with those of our employees and consultants, including our NEOs. On January 26, 2022, our stockholders approved the 2021 Amended and Restated Plan. All grants effectuated under predecessor equity plans were converted to grants outstanding under the 2021 Amended and Restated Plan. In August 2023, the 2021 Amended and Restated Plan was amended to increase the number of awards that may be granted from 31,296 to 617,092. Employment Agreements with our NEOs Dr. Lynn Kirkpatrick, Ph.D. In September 2021, we entered into an employment offer letter with Dr. Kirkpatrick. The offer letter provides for Dr. Kirkpatrick’s at-will employment as our Chief Executive Officer and sets forth her annual base salary of $380,000. Additionally, the letter provides for her initial target annual bonus opportunity of up to 50% of base salary. The offer letter also indicates that Dr. Kirkpatrick is eligible to be granted certain stock awards under our equity incentive plan. Dr. Kirkpatrick’s offer letter provides for severance benefits upon a termination of her employment by the Company without “ cause ”, or upon her resignation for “ good reason ”, in an amount equal to twelve (12) months of her then current base salary (ignoring any decrease in base salary that forms the basis for good reason); provided, however, that the payment of such benefits is subject to Dr. Kirkpatrick’s continued compliance with her obligations under her “ At-Will, Confidential Information and Assignment of Inventions Agreement ” and her execution of a general release of claims. Additionally, if such termination without cause or for good reason occurs within the one (1) month prior to, or during the twelve (12) month period immediately following a change in control, then all outstanding equity awards subject to time-based vesting will become fully vested on the later of Dr. Kirkpatrick’s termination date and the change in control. Cause and good reason are as defined in Dr. Kirkpatrick’s offer letter. Dave Humphrey In February 2021, we entered into an employment offer letter with Mr. Humphrey. The offer letter provided for Mr. Humphrey’s at-will employment as our Chief Financial Officer at an initial annual base salary of $320,000. Additionally, the letter provided for his initial target annual bonus opportunity of up to 30% of base salary. The offer letter also indicates that Mr. Humphrey is eligible to be granted certain stock awards under our equity incentive plan. Mr. Humphrey’s offer letter provides for severance benefits upon a termination of his employment by the Company without “ cause ”, or upon his resignation for “ good reason ”, in an amount equal to six (6) months of his then current base salary (ignoring any decrease in base salary that forms the basis for good reason); provided, however, that the payment of such benefits is subject to Mr. Humphrey’s continued compliance with his obligations under his “ Confidential Information and Assignment Agreement ” and his execution of a general release of claims. Additionally, if such termination without cause or for good reason occurs within the one (1) month prior to, or during the twelve (12) month period immediately following a change in control, then all outstanding equity awards subject to time-based vesting will become fully vested on the later of Mr. Humphrey’s termination date and the change in control. Cause and good reason are as defined in Mr. Humphrey’s offer letter. Geoff Birkett In July 2021, we entered into an employment offer letter with Mr. Birkett. The offer letter provides for Mr. Birkett’s at-will employment as our Chief Commercial Officer and sets forth his annual base salary of $300,000. Additionally, the letter provides for his initial target annual bonus opportunity of up to 30% of base salary. The offer letter also indicates that Mr. Birkett is eligible to be granted certain stock awards under our equity incentive plan. Mr. Birkett’s offer letter provides for severance benefits upon a termination of his employment by the Company without “cause”, or upon his resignation for “good reason”, in an amount equal to three (3) months of his then current base salary (ignoring any decrease in base salary that forms the basis for good reason); provided, however, that the payment of such benefits is subject to Mr. Birkett’s continued compliance with his obligations under his “ Confidential Information and Assignment Agreement ” and his execution of a general release of claims. Additionally, if such termination without cause or for good reason occurs within the one (1) month prior to, or the twelve (12) month period immediately following a change in control, then all outstanding equity awards subject to time-based vesting will become fully vested on the later of Mr. Birkett’s termination date and the change in control. Cause and good reason are as defined in the offer letter. 92 At-Will, Confidential Information and Assignment of Inventions Agreement In connection with each respective offer letter, Dr. Kirkpatrick, Mr. Birkett and Mr. Humphrey entered into an “At-Will, Confidential Information and Assignment of Inventions Agreement” (the “Confidentiality Agreement”). The Confidentiality Agreements include customary prohibitions against solicitation of our customers and employees, both during employment and for two (2) years following any cessation of employment. The Confidentiality Agreements also include standard provisions relating to the Company’s intellectual property rights and prohibit the executive from disclosing confidential information. The Confidentiality Agreements are incorporated by reference into the offer letters and payment of any severance benefits under each executive’s offer letter is conditioned on continued compliance with his or her Confidentiality Agreement. Other Benefits We currently provide welfare benefits that are available to all of our employees, including our NEOs, including health, dental, vision and group life insurance. Effective January 1, 2022, we put into place the Ensysce Biosciences, Inc. 401(k) Plan” (the “ 401(k) Plan ”). The 401(k) Plan provides eligible employees with an opportunity to save for retirement on a tax-advantaged basis and under which we are permitted to make safe harbor employer contributions. Employees’ pre-tax contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. The 401(k) Plan is intended to be qualified under Section 401(a) of the Code, with the related trust intended to be tax exempt under Section 501(a) of the Code. Under the 401(k) Plan, we make employer contributions to all employees – regardless of an employee’s contributions (or lack thereof) – in an amount equal to 3% of the employee’s eligible compensation. We do not maintain any defined benefit pension plans or nonqualified deferred compensation plans. Outstanding Equity Awards at Fiscal Year-End The following table provides information regarding outstanding equity awards held by our NEOs as of December 31, 2023. Option Awards Stock Awards Name Grant Date Number of Securities Underlying Unexercised Options Exercisable (#) Number of Securities Underlying Unexercised Options Unexercisable (#) Option Exercise Price ($) Option Expiration Date Number of Shares of Stock That Have Not Vested (#) Market Value of Shares of Stock That Have Not Vested ($) Dr. Lynn Kirkpatrick, PhD. 1/15/2016 1,097 0 765.60 1/15/2026 - - 1/4/2017 1,920 0 439.20 1/4/2027 - - 2/5/2018 3,406 0 403.20 2/5/2028 - - 3/1/2019 2,743 0 621.60 2/28/2029 - - 3/15/2019 27 0 621.60 3/14/2029 - - 2/17/2022 381 452 336.00 2/17/2032 - - 10/25/2023 100,000 0 1.18 10/25/2033 - - Dave Humphrey 2/4/2022 811 334 751.20 2/4/2032 - - 2/17/2022 152 181 336.00 2/17/2032 - - 10/25/2023 100,000 0 1.18 10/25/2033 - - Geoff Birkett 10/1/2018 82 0 621.60 9/30/2028 - - 3/1/2019 1,371 0 621.60 2/28/2029 - - 2/17/2022 95 113 336.00 2/17/2032 - - 10/25/2023 75,000 0 1.18 10/25/2033 - - 93 Pay Versus Performance In August 2022, the SEC adopted additional disclosure requirements regarding the relationship between a registrant’s executive compensation and its financial performance. SEC rules in Item 402(v) of Regulation S-K require certain adjustments be made to the Summary Compensation Table totals to determine Compensation Actually Paid as reported in the Pay Versus Performance Table. Compensation Actually Paid does not necessarily represent cash and/or equity value earned by or paid to the applicable named executive officer without restriction, but rather is a valuation calculated under applicable SEC rules. For further information concerning our executive compensation program and our pay-for-performance philosophy, refer to the preceding compensation discussion. The following table sets forth specified executive compensation and financial performance measures for our two most recently completed fiscal years, as required under transitional guidance for Smaller Reporting Companies provided by the SEC. We have not paid dividends and do not sponsor any pension arrangements; thus, no adjustments are made for these items. Year Summary Compensation Table Total for PEO (1) Compensation Actually Paid to PEO (2) Average Summary Compensation Table Total for Non-PEO NEOs (3) Average Compensation Actually Paid to Non-PEO NEOs (4) Value of Initial Fixed $100 Investment Based on Total Shareholder Return (5) Net Income (Loss) 2023 $ 508,575 $ 507,187 $ 417,152 $ 416,177 $ 0.09 ($ 10,626,011 ) 2022 $ 622,609 $ 152,787 $ 573,787 $ 372,469 $ 0.80 ($ 25,085,496 ) (1) For fiscal years 2023 and 2022, the principal executive officer (“PEO”) was our Chief Executive Officer, Dr. Lynn Kirkpatrick. (2) The amounts disclosed reflect the following adjustments to the amounts reported in the Summary Compensation Table for the PEO: Year Less: Grant Date Value of Equity Awards Fair Value as of Year End of Awards Granted in the Year and Outstanding and Unvested as of Year End Change in Fair Value of Awards Granted in Prior Years and Outstanding and Unvested as of Year End Fair Value as of Vesting Date of Awards Granted and Vested in the Year Change in Fair Value of Awards Granted in Prior Years that Vested in the Year Less: Fair Value as of Prior Year End of Awards Forfeited in the Year Total Adjustments 2023 $ (93,800 ) $ - $ (809 ) $ 93,800 $ (579 ) $ - $ (1,388 ) 2022 $ (214,914 ) $ 1,574 $ - $ - $ - $ (256,482 ) $ (469,822 ) (3) For fiscal years 2023 and 2022, the Non-PEO NEOs were Dave Humphrey and Geoff Birkett. (4) The amounts disclosed reflect the following adjustments to the amounts reported in the Summary Compensation Table for the Non-PEO NEOs: Year Less: Grant Date Value of Equity Awards Fair Value as of Year End of Awards Granted in the Year and Outstanding and Unvested as of Year End Change in Fair Value of Awards Granted in Prior Years and Outstanding and Unvested as of Year End Fair Value as of Vesting Date of Awards Granted and Vested in the Year Change in Fair Value of Awards Granted in Prior Years that Vested in the Year Less: Fair Value as of Prior Year End of Awards Forfeited in the Year Total Adjustments 2023 $ (82,075 ) $ - $ (362 ) $ 82,075 $ (613 ) $ - $ (975 ) 2022 $ (246,113 ) $ 997 $ - $ 43,798 $ - $ - $ (201,318 ) (5) Total Shareholder Return is calculated as the sum of (i) the cumulative amount of dividends for the measurement period, assuming reinvestment of all dividends, if any, plus (ii) the cumulative increase or decrease in the price of our common stock each respective year, divided by the price of our common stock at the beginning of the measurement period. 94 Relationship Between Compensation Actually Paid and Company Total Shareholder Return (“TSR”) Relationship Between Compensation Actually Paid and Net Income (Loss) Director Compensation The following table provides summary information concerning compensation paid or accrued by us to or on behalf of our non-employee directors for services rendered to us as of December 31, 2023. Name Fees Earned or Paid in Cash ($) Option Awards ($) Total ($) Bob Gower 25,000 22,600 47,600 William Chang 7,500 22,600 30,100 Andrew Benton 7,500 22,600 30,100 Steve Martin 15,000 17,920 32,920 Adam Levin 10,000 17,920 27,920 Lee Rauch 11,250 17,920 29,170 Curt Rosebraugh 7,500 17,920 25,420 In October 2023, each Board member was granted 20,000 restricted stock units or a stock option to purchase 20,000 shares of our common stock at an exercise price of $1.13 per share. The awards were fully vested and have a ten (10) year term. 95 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth information with respect to the beneficial ownership of shares of our common stock by (i) each director, (ii) each named executive officer, (iii) all directors and executive officers as a group, and (iv) each person who we know beneficially owns more than 5% of our common stock as of March 8, 2024, unless otherwise indicated below. Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and include shares of common stock issuable upon the exercise of stock options that are immediately exercisable or exercisable within 60 days after March 8, 2024 but excludes unvested stock options. Except as otherwise indicated, all of the shares reflected in the table are shares of common stock and all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. The information is not necessarily indicative of beneficial ownership for any other purpose. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of common stock subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of March 8, 2024. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Percentage ownership calculations for beneficial ownership for each person or entity are based on 7,329,172 shares outstanding as of March 8, 2024. Except as otherwise indicated in the table below, addresses of named beneficial owners are in care of Ensysce Biosciences, Inc., 7946 Ivanhoe Avenue, Suite 201, La Jolla, California 92037. All share amounts have been adjusted for prior reverse stock splits. Beneficial Ownership Table Name and Address of Beneficial Owners Number of Shares Percentage Officers and Directors Dr. Lynn Kirkpatrick (1) 111,235 1.5 % Geoff Birkett (2) 76,565 1.0 % David Humphrey (3) 101,294 1.4 % Linda Pestano (4) 75,520 1.0 % Andrew Benton (5) 20,444 * William Chang (6) 30,960 * Bob Gower (7) 379,262 5.0 % Adam Levin (8) 20,145 * Steve R. Martin (9) 20,419 * Lee Rauch (10) 20,121 * Curtis Rosebraugh (11) 20,145 * All directors and named executive officers as a group (eleven individuals) 876,110 10.9 % Greater than 5% Holders Bob Gower (7) 379,262 5.0 % * Indicates less than 1%. (1) Includes 109,644 shares subject to options. (2) Consists of shares subject to options. (3) Consists of 101,086 shares subject to options. (4) Consists of shares subject to options. (5) Consists of 419 shares subject to options and 20,025 shares owned directly. (6) Includes 145 shares subject to options, 23,126 shares owned directly by Mr. Chang and his wife and 7,689 shares owned through trusts in which Mr. Chang has sole or shared voting and dispositive power. Does not include 416 shares held by trusts for family members in which Mr. Chang does not have beneficial ownership. The business address for Mr. Chang is 520 El Camino Real, 9th Floor, San Mateo, CA 94402. (7) Includes 172 shares subject to options, 121,890 shares held directly and 257,200 shares that may be acquired through the exercise of (i) warrants acquired in connection with the October 2023 Securities Purchase Agreement and (ii) warrants acquired in 2022. The business address for Mr. Gower is 101 Westcott, Unit 303, Houston, Texas 77007. (8) Consists of shares subject to options. (9) Consists of shares subject to options. (10) Consists of shares subject to options. (11) Consists of shares subject to options. 96 Item 13. Certain Relationships and Related Transactions and Director Independence Other than the agreements and arrangements described under the section entitled “ Executive & Director Compensation ” and the transactions described below, since January 1, 2023, there has not been and there is not currently proposed, any transaction or series of similar transactions to which (i) we were, or will be, a participant; (ii) the amount involved exceeded, or will exceed, $120,000 or 1% of the average of our total assets at December 31, 2022 and 2023; and (iii) in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of, or entities affiliated with, any of the foregoing persons, had, or will have, a direct or indirect material interest. EBIR We own 79.2% of the issued and outstanding shares of EBIR, a clinical stage pharmaceutical company that is developing a compound utilized in our overdose protection program for the treatment of COVID-19. The other 20.8% is owned by two affiliates of Ensysce and Mucokinetica. Specifically, our Chief Executive Officer and Director, Dr. Lynn Kirkpatrick, owns 9.9%, our former Chief Business Officer owns 9.9% and Mucokinetica owns 1.0%. Dr. Kirkpatrick is also Chief Executive Officer of EBIR. There is no revenue sharing agreement between us and EBIR. Convertible Notes In the 2023 Notes offering, Bob Gower, our Chairman, purchased an aggregate principal amount of Investor Notes of $216,000 for a purchase price of $200,000 and Investor Warrants that may be exercised for an aggregate of 443,187 shares of common stock. The per share conversion price of the Investor Notes and the per share exercise price of the Investor Warrants is $1.5675. Employment Relationship Jeff Millard is an executive officer of the Company. Mr. Millard’s spouse is also employed by the Company. Related Party Transaction Policy The Board previously adopted a written related person transaction policy that sets forth the following policies and procedures for the review and approval or ratification of related person transactions. An “ Immediate Family Member ” means a child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, or any person sharing the household (other than a tenant or employee). A “ Related Party ” means any (a) person who is or was (since the beginning of the last fiscal year for which we have filed a Form 10-K and proxy statement, even if they do not presently serve in that role) an executive officer, director or nominee for election as a director of the Company, (b) greater than 5% beneficial owner of the Company’s outstanding common stock, or (c) Immediate Family Member of any of the foregoing. 97 A “ Related Person Transaction ” is any Transaction involving the Company in which a Related Party has or will have a direct or indirect material interest, as determined by the Audit Committee. A “ Transaction ” means any financial transaction, arrangement or relationship or any series of similar transactions, arrangements or relationships, including indebtedness and guarantees of indebtedness and transactions involving employment and similar relationships. Under the policy, the following types of Transactions are deemed not to create or involve a material interest on the part of the Related Party, nor will they require approval or ratification, under the policy: ● Transactions involving the purchase or sale of products or services in the ordinary course of business, not exceeding $50,000 or, if the Company is a “ smaller reporting company ” as defined under the Securities Act, if less, one percent of the average of the Company’s total assets as of December 31st for the last two completed fiscal years. ● Transactions in which the Related Party’s interest derives solely from his or her service as a director of another corporation or organization that is a party to the Transaction. ● Transactions in which the Related Party’s interest derives solely from his or her ownership of less than 5% of the equity interest in another person (other than a general partnership interest) which is a party to the Transaction. ● Transactions in which the Related Party’s interest derives solely from his or her ownership of a class of equity securities of the Company and all holders of that class of equity securities received the same benefit on a pro rata basis (e.g., dividends). ● Transactions in which the Related Party’s interest derives solely from his or her service as a director, trustee or officer (or similar position) of a not-for-profit organization or charity that receives donations from the Company, which donations are made pursuant to the Company’s matching program, as a result of contributions by employees, that is available on the same terms to all employees of the Company. ● Compensation arrangements of any executive officer, other than an individual who is an Immediate Family Member of a Related Party, if such arrangements have been approved or recommended to the Board for approval by the Compensation Committee. ● Director compensation arrangements, if such arrangements have been approved by the Board or the Compensation Committee of the Board. ● Transactions with a Related Party in which the rates or charges involved in the Transaction are determined by competitive bids, or the Transaction involves the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority. ● Indemnity payments made to directors and executive officers in accordance with the Company’s then existing certificate of incorporation, bylaws and applicable laws. ● Transactions with a Related Party involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture or similar services. Pursuant to its Audit Committee charter, the Audit Committee will have the responsibility to review, approve or ratify any Related Person Transactions. 98 Director Independence Nasdaq listing rules require that a majority of the board of directors of a company listed on Nasdaq be composed of “ independent directors ,” which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship that, in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Based on information provided by each director concerning his or her background, employment and affiliations, including family relationships, the Board determined that each of Bob Gower, William Chang, Andrew Benton, Steve R. Martin, Adam S. Levin, Lee Rauch and Curtis Rosebraugh is an independent director under the Nasdaq listing rules and Rule 10A-3 of the Exchange Act. In making these determinations, the Board considered the current and prior relationships that each non-employee director has and will have with us and all other facts and circumstances that the Board deems relevant in determining independence, including the beneficial ownership of our common stock by each non- employee director (and related entities) and the transactions involving them described in the section entitled “ Certain Relationships and Related Party Transactions.” Item 14. Principal Accountant Fees and Services On April 10, 2023, the Audit Committee of our Board appointed Moss Adams LLP (“ Moss Adams ”) as our independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 2023. During fiscal year 2022, Mayer Hoffman McCann P.C. (“ Mayer Hoffman ”) served as our independent auditor and reported on our consolidated financial statements for that year. Mayer Hoffman had been our independent auditor between 2017 and our dismissal of that firm on April 10, 2023. The following table sets forth the aggregate fees incurred for our independent registered accounting firm for the fiscal years ended December 31, 2023 and 2022. These fees are categorized as audit fees, audit-related fees, tax fees, and all other fees. The nature of the services provided in each category is described below the table. 2023 2022 Audit Fees $ 472,200 $ 670,372 Audit-Related Fees 76,125 - Tax Fees - - All Other Fees - - Total $ 548,325 $ 670,372 Audit fees . Consist of fees incurred for professional services rendered for the audit of the consolidated financial statements and review of the quarterly interim consolidated financial statements. These fees also include the review of registration statements and the delivery of consents in connection with registration statements. The amount for fiscal year 2023 includes $89,250 for the audit of the year ended December 31, 2022, completed in conjunction with the audit of the year ended December 31, 2023. Amounts for fiscal year 2023 reflect services performed by Moss Adams and amounts for fiscal year 2022 reflect services performed by Mayer Hoffman. Audit-related fees . Consist of fees incurred for professional services rendered for the compliance audit in accordance with the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards related to funding under federal government grants. Tax fees . There were no fees billed for tax fees for the fiscal years ended December 31, 2023 and 2022. All other fees . There were no fees billed for professional services rendered for other compliance purposes for the fiscal years ended December 31, 2023 and 2022. All audit-related and other non-audit services were pre-approved by the Audit Committee, which concluded that the provision of such services was compatible with the maintenance of the respective firm’s independence in the conduct of its auditing functions. 99 PART IV Item 15. Exhibits and Financial Statement Schedules. Financial Statements ENSYSCE BIOSCIENCES, INC. CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB No. 659 ) F-1 Consolidated Balance Sheets as of December 31, 2023 and 2022 F-2 Consolidated Statements of Operations for the years ended December 31, 2023 and 2022 F-3 Consolidated Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2023 and 2022 F-4 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 F-5 Notes to the Consolidated Financial Statements F-6 to F-25 100 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Ensysce Biosciences Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Ensysce Biosciences Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss), stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023 and 2022, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern Uncertainty The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred recurring losses from operations and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ Moss Adams LLP San Diego, California March 14, 2024 We have served as the Company’s auditor since 2023. F- 1 Ensysce Biosciences, Inc. Consolidated Balance Sheets 2023 2022 December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 1,123,604 $ 3,147,702 Unbilled receivable 97,561 276,821 Right-of-use asset - 27,165 Prepaid expenses and other current assets 1,067,703 1,847,481 Total current assets 2,288,868 5,299,169 Property and equipment, net - - Other assets 419,217 585,883 Total assets $ 2,708,085 $ 5,885,052 Liabilities and stockholders’ deficit Current liabilities: Accounts payable $ 1,936,007 $ 2,943,791 Accrued expenses and other liabilities 542,260 2,226,494 Lease liability - 27,315 Notes payable and accrued interest 854,697 4,266,610 Total current liabilities 3,332,964 9,464,210 Long-term liabilities: Notes payable, net of current portion (at fair value) - 140,148 Other long-term liabilities 26,388 310,346 Total long-term liabilities 26,388 450,494 Total liabilities $ 3,359,352 $ 9,914,704 Commitments and contingencies (Note 6) - - Stockholders’ deficit Preferred stock, $ 0.0001 par value, 1,500,000 shares authorized, no shares issued and outstanding at December 31, 2023 and December 31, 2022 - - Common stock, $ 0.0001 par value, 250,000,000 shares authorized at December 31, 2023 and December 31, 2022; 3,146,157 and 534,571 shares issued at December 31, 2023 and December 31, 2022, respectively; 3,146,076 and 534,490 shares outstanding at December 31, 2023 and December 31, 2022, respectively 315 53 Additional paid-in capital 121,233,901 107,216,566 Accumulated deficit ( 121,557,074 ) ( 110,931,063 ) Total Ensysce Biosciences, Inc. stockholders’ deficit ( 322,858 ) ( 3,714,444 ) Noncontrolling interests in stockholders’ deficit ( 328,409 ) ( 315,208 ) Total stockholders’ deficit ( 651,267 ) ( 4,029,652 ) Total liabilities and stockholders’ deficit $ 2,708,085 $ 5,885,052 The accompanying notes are an integral part of these consolidated financial statements. F- 2 Ensysce Biosciences, Inc. Consolidated Statements of Operations 2023 2022 Year Ended December 31, 2023 2022 Federal grants $ 2,230,520 $ 2,523,383 Operating expenses: Research and development 7,587,473 19,835,875 General and administrative 5,361,234 6,909,603 Total operating expenses 12,948,707 26,745,478 Loss from operations ( 10,718,187 ) ( 24,222,095 ) Other income (expense): Loss on issuance of convertible notes - ( 3,609,944 ) Issuance costs for convertible notes - ( 1,137,740 ) Loss on conversions and change in fair value of convertible notes 146,479 1,792,154 Issuance of liability classified warrants - ( 3,737,371 ) Change in fair value of liability classified warrants 283,958 6,730,613 Interest expense, net ( 353,945 ) ( 109,525 ) Other income and expense, net 15,420 86,223 Total other income (expense), net 91,912 14,410 Net loss $ ( 10,626,275 ) $ ( 24,207,685 ) Net loss attributable to noncontrolling interests ( 13,201 ) ( 35,393 ) Deemed dividend related to warrants down round provision 12,937 913,204 Net loss attributable to common stockholders $ ( 10,626,011 ) $ ( 25,085,496 ) Net loss per basic and diluted share: Net loss per share attributable to common stockholders, basic and diluted $ ( 4.69 ) $ ( 139.42 ) Weighted average common shares outstanding, basic and diluted 2,264,060 179,925 The accompanying notes are an integral part of these consolidated financial statements. F- 3 Ensysce Biosciences, Inc. Consolidated Statements of Changes in Stockholders’ Deficit Number of Shares Amount Paid-In Capital Accumulated Deficit Noncontrolling interests Total Stockholders’ Equity (Deficit) Common Stock Additional Number of Shares Amount Paid-In Capital Accumulated Deficit Noncontrolling interests Total Balance on December 31, 2021 102,678 $ 10 $ 77,967,314 $ ( 85,845,567 ) $ ( 279,815 ) $ ( 8,158,058 ) Consultant compensation 208 - 54,250 - - 54,250 Settlement of restricted stock units 3,278 - - - - - Conversion of convertible notes 181,999 18 21,485,886 - - 21,485,904 Settlement of payable to related parties 3,838 1 191,617 - - 191,618 Capital contribution from related parties - - 608,382 - - 608,382 Public offering, net 241,666 24 3,783,216 - - 3,783,240 Stock-based compensation - - 2,760,074 - - 2,760,074 Transaction costs associated with public offering - - ( 547,377 ) - - ( 547,377 ) Reverse split fractional shares 823 - - - - Deemed dividend related to warrants down round provision - - 913,204 ( 913,204 ) - Net loss - - - ( 24,172,292 ) ( 35,393 ) ( 24,207,685 ) Balance on December 31, 2022 534,490 $ 53 $ 107,216,566 $ ( 110,931,063 ) $ ( 315,208 ) $ ( 4,029,652 ) Balance 534,490 $ 53 $ 107,216,566 $ ( 110,931,063 ) $ ( 315,208 ) $ ( 4,029,652 ) Settlement of restricted stock units 60,938 6 ( 6 ) - - - Settlement of commitment fee 44,444 4 399,996 - 400,000 Conversion of convertible notes 408,580 41 3,056,851 - - 3,056,892 Public offering, net 1,381,619 139 9,049,865 - - 9,050,004 Stock-based compensation - - 879,160 - - 879,160 Issuance of warrants - debt discount - - 1,066,483 1,066,483 Transaction costs associated with public offering - - ( 447,879 ) - - ( 447,879 ) Issuance of common stock upon exercise of warrants 716,867 72 ( 72 ) - - Reverse split fractional shares ( 862 ) - - - - - Deemed dividend related to warrants down round provision - - 12,937 ( 12,937 ) - - Net loss - - - ( 10,613,074 ) ( 13,201 ) ( 10,626,275 ) Balance on December 31, 2023 3,146,076 $ 315 $ 121,233,901 $ ( 121,557,074 ) $ ( 328,409 ) $ ( 651,267 ) Balance 3,146,076 $ 315 $ 121,233,901 $ ( 121,557,074 ) $ ( 328,409 ) $ ( 651,267 ) The accompanying notes are an integral part of these consolidated financial statements. F- 4 Ensysce Biosciences, Inc. Consolidated Statements of Cash Flow s 2023 2022 Year Ended December 31, 2023 2022 Cash flows from operating activities: Net loss $ ( 10,626,275 ) $ ( 24,207,685 ) Adjustments to reconcile net loss to net cash used in operating activities: Gain on sale of asset - ( 4,500 ) Accrued interest 18,648 60,488 Amortization of original issue discount and debt issuance costs 326,151 - Loss on conversions and change in fair value of convertible notes ( 146,479 ) ( 1,792,154 ) Loss on issuance of convertible notes - 3,609,944 Issuance costs for convertible notes - 946,085 Issuance of liability classified warrants - 3,737,371 Change in fair value of liability classified warrants ( 283,958 ) ( 6,730,613 ) Stock-based compensation 879,160 1,071,843 Lease cost ( 150 ) ( 3 ) Other income - ( 60,035 ) Unbilled receivable 179,260 164,900 Prepaid expenses and other assets 1,392,181 1,652,756 Accounts payable ( 1,234,287 ) 2,642,686 Accrued expenses and other liabilities ( 1,284,233 ) 1,021,478 Net cash used in operating activities ( 10,779,982 ) ( 17,887,439 ) Cash flows from investing activities: Proceeds from sale of assets - 4,500 Net cash provided by investing activities - 4,500 Cash flows from financing activities: Proceeds from public offerings, net 9,050,004 3,783,240 Proceeds from issuance of convertible notes, net 1,605,635 7,533,915 Repayment of convertible notes ( 1,000,208 ) ( 1,408,364 ) Transaction costs from public offerings ( 447,879 ) ( 547,377 ) Repayment of financed insurance premiums ( 451,668 ) ( 595,509 ) Net cash provided by financing activities 8,755,884 8,765,905 Decrease in cash and cash equivalents ( 2,024,098 ) ( 9,117,034 ) Cash and cash equivalents beginning of period 3,147,702 12,264,736 Cash and cash equivalents end of period $ 1,123,604 $ 3,147,702 Supplemental cash flow information: Income tax payments $ 3,200 $ 1,600 Supplemental disclosure of non-cash investing and financing activities: Stock-based compensation $ - $ 1,742,481 Conversion of convertible notes into common stock $ 3,056,892 $ 17,521,271 Payable to related parties settled in shares $ - $ 191,618 Capital contribution from related parties $ - $ 608,382 Original debt discount from convertible notes $ 136,000 $ - Debt discount from warrants issuance $ 1,066,483 $ - Issuance cost from convertible notes $ 226,503 $ - Financed insurance premiums $ 445,737 $ 399,949 Settlement of commitment fee in shares $ 400,000 $ - Deemed dividend related to warrants down round provision $ 12,937 $ 913,204 The accompanying notes are an integral part of these consolidated financial statements. F- 5 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES Ensysce Biosciences, Inc. (“Ensysce”), along with its 79.2 %-owned subsidiary, EBIR, Inc. (“EBIR”, formerly known as Covistat, Inc.) and its wholly-owned subsidiaries EBI Operating, Inc. and EBI OpCo, Inc. (collectively, the “Company”), is a clinical-stage biotech company using its proprietary technology platforms to develop safer prescription drugs. The primary focus of the Company is its program developing abuse and overdose resistant pain technology with a clinical stage program being the abuse resistant, TAAP (Trypsin Activated Abuse Protection) opioid product candidate, PF614. In addition, the Company is developing its MPAR® (Multi-Pill Abuse Resistant) technology for overdose protection which will be applied to the PF614 program. The Company is also applying its TAAP and MPAR® technology to a methadone prodrug for use in the treatment of Opioid Use Disorder. In 2020, the Company commenced an initiative to develop a therapeutic for the treatment of certain coronavirus infections through the formation of a separate entity, EBIR, a Delaware corporation. Pursuant to the articles of incorporation, EBIR was authorized to issue 1,000,000 shares of common stock, $ 0.001 par value per share, and 100,000 shares of preferred stock, $ 0.001 par value per share. Ensysce is a 79.2 % stockholder in EBIR, with 19.8 % and 1.0 % of the shares held by certain key personnel of the Company and an unrelated party, respectively. The non-Ensysce owned shares and the activity are reflected on the financial statements as noncontrolling interests. The Company currently operates in one business segment, which is pharmaceuticals. The Company is not organized by market and is managed and operated as one business. A single management team reports to the chief operating decision maker, the Chief Executive Officer. F- 6 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements NOTE 2 - BASIS OF PRESENTATION The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the United States Securities Exchange Commission (“SEC”). The consolidated financial statements include the accounts of Ensysce Biosciences, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in the consolidation. Reverse Stock Split In March 2023, the Company completed a 1-for-12 reverse split of its outstanding common stock. All references in these consolidated financial statements to shares and per share amounts in all periods have been retroactively restated to reflect the split. The number of authorized shares and the par value of the shares did not change as a result of the reverse stock split. Going Concern The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company has not generated any product revenue. There is no assurance that profitable operations will ever be achieved, and, if achieved, would be sustained on a continuing basis. Product development activities, clinical and pre-clinical testing, and commercialization of the Company’s product candidates are necessary to develop the Company’s products and will require significant additional financing. There can be no assurance the Company will be able to obtain such funds. These matters, among others, raise substantial doubt about the Company’s ability to continue as a going concern. While the Company believes in the viability of its strategy to ultimately realize revenues and in its ability to raise additional funds, management cannot be certain that additional funding will be available on acceptable terms, or at all. The Company’s ability to continue as a going concern is dependent upon its ability to obtain adequate financing and achieve profitable operations. As a result, these plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern for a period of 12 months following the date these consolidated financial statements were issued. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. F- 7 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates and Assumptions Preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and disclosed in the accompanying notes. Actual results may differ from those estimates and such differences may be material to the consolidated financial statements. The more significant estimates and assumptions by management include, but are not limited to, the expense recognition for certain accrued research and development services. Cash and Cash Equivalents For purposes of the consolidated balance sheets and consolidated statements of cash flows, the Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. Concentrations of Credit Risk and Off-Balance Sheet Risk Cash and cash equivalents are financial instruments that are potentially subject to concentrations of credit risk. The Company’s cash and cash equivalents are deposited in accounts at large financial institutions and amounts currently exceed federally insured limits. The Company has no financial instruments with off-balance sheet risk of loss. Additionally, the Company had a concentration in accounts payable, as two research and development vendors made up greater than 10% individually, and 38% and 65% in aggregate , of the outstanding accounts payable balance as of December 31, 2023 and 2022, respectively. F- 8 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements Property and Equipment Property and equipment include office and laboratory equipment that is recorded at cost and depreciated using the straight-line method over the estimated useful lives of five to six years . Property and equipment are fully depreciated as such there is no depreciation recognized in the years ended December 31, 2023 and 2022. Fair Value Measurement ASC 820, Fair Value Measurements , (“ASC 820”) provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. Level 3: Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. F- 9 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements The Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them for each reporting period. This determination requires significant judgments to be made by the Company. As of December 31, 2023 and 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 Notes In 2021 the Company issued convertible notes with a face value of $ 15.9 million. The Company elected the fair value option to account for the convertible notes as it believes the fair value option provides users of the financial statements with greater ability to estimate the outcome of future events as facts and circumstances change, particularly with respect to changes in the fair value of the common stock underlying the conversion option and redemption feature. The fair value estimate of the 2021 Notes was based on a discounted cash flow model and a Monte Carlo simulation, which represent Level 3 measurements. Significant assumptions include the discount rate used in the discounted cash flow model and the expected premium for conversion and expected volatility used in the Monte Carlo simulation. Changes in the fair value of the notes are recognized in other income (expense) for each reporting period. Refer to Note 7 for details of the terms and conditions of the 2021 Notes. 2022 Notes In July 2022 the Company issued convertible notes with a face value of $ 8.5 million. The 2022 Notes are accounted for under ASC 480 – Distinguishing Liabilities from Equity, due to share settlement features contained within the notes. As a result, the 2022 Notes are recorded as liabilities at fair value at the balance sheet date with changes in the fair value of the notes recognized in other income (expense) for each reporting period. The fair value estimate of the 2022 Notes was based on a discounted cash flow model and a Monte Carlo simulation, which represent Level 3 measurements. Significant assumptions include the discount rate used in the discounted cash flow model and the expected premium for conversion and expected volatility used in the Monte Carlo simulation. Refer to Note 7 for details of the terms and conditions of the 2022 Notes. Warrants In 2021 the Company issued liability classified warrants in connection with the issuance of the 2021 Notes. In 2022 the Company issued liability classified warrants in connection with the issuance of the 2022 Notes. The warrants were liability classified due to certain cash settlement features and included in “Other long-term liabilities” on the consolidated balance sheets. The Company uses a Black Scholes model to estimate the fair value of the warrants. Changes in the fair value of the warrants are recognized in other income (expense) for each reporting period. Refer to Note 8 for additional details of the warrants. The following tables present assets and liabilities measured and recorded at fair value on the Company’s consolidated balance sheet as of December 31, 2023 and 2022. SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE Total Level 1 Level 2 Level 3 December 31, 2023 Total Level 1 Level 2 Level 3 Fair value of convertible note Liability classified warrants $ 26,388 $ - $ - $ 26,388 Total $ 26,388 $ - $ - $ 26,388 Total Level 1 Level 2 Level 3 December 31, 2022 Total Level 1 Level 2 Level 3 Fair value of convertible note $ 4,203,579 $ - $ - $ 4,203,579 Liability classified warrants 310,346 - - 310,346 Total $ 4,513,925 $ - $ - $ 4,513,925 F- 10 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements The following table summarizes the change in fair value of the Company’s Level 3 assets and liabilities for the year ended December 31, 2023: SCHEDULE OF CHANGE IN FAIR VALUE OF COMPANY’S LEVEL 3 For the year ended December 31, 2023 Total Convertible note Liability classified warrants Fair value, December 31, 2022 $ 4,513,925 $ 4,203,579 $ 310,346 Conversions ( 3,056,892 ) ( 3,056,892 ) - Cash payments ( 415,351 ) ( 415,351 ) - Cash true up liability ( 584,857 ) ( 584,857 ) - Change in fair value ( 430,437 ) ( 146,479 ) ( 283,958 ) Fair value, December 31, 2023 $ 26,388 $ - $ 26,388 Federal Grants In September 2018, the National Institutes of Health (“NIH”) through the National Institute on Drug Abuse awarded the Company a research and development grant related to the development of its MPAR® overdose prevention technology (the “MPAR Grant”). The total approved budget for the initial two-year period was approximately $ 5.4 million ($ 3.2 million and $ 2.2 million in years 1 and 2 respectively) of which the Company would contribute $ 1.1 million in the first year of the grant. In August 2019, the grant was amended such that the approved budget for the two-year period decreased to approximately $ 5.1 million ($ 2.1 million and $ 3.0 million in years 1 and 2, respectively). In June 2021, the Company received a Notice of Award for an additional $ 2.8 million of funding in year 3 under the MPAR Grant beginning July 1, 2021. 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. In September 2019, the NIH/National Institute on Drug Abuse awarded the Company a second research and development grant related to the development of its TAAP/MPAR® abuse deterrent technology for Opioid Use Disorder (the “OUD Grant”). The total approved budget for the grant was approximately $ 5.4 million, and the current grant period ends in August of 2024. As of December 31, 2023, the remaining funding under the grant is $ 2.2 million The Company recognizes revenue when costs related to the grants are incurred and assessed as reimbursable. The Company believes this policy is consistent with the overarching premise in Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), applied by analogy, to ensure that it recognizes revenues to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services, even though there is no “exchange” as defined in ASC 606. The Company believes the recognition of revenue as costs are incurred and reimbursable amounts become due is analogous to the concept of transfer of control of a service over time under ASC 606. The revenue recognized under the MPAR Grant and OUD Grant was as follows: SCHEDULE OF REVENUE RECOGNIZATION UNDER GRANTS 2023 2022 Year Ended December 31, 2023 2022 MPAR $ 1,293,238 $ 2,006,885 TAAP/OUD 937,282 516,498 Total $ 2,230,520 $ 2,523,383 Amounts requested or eligible to be requested through the NIH payment management system, but for which cash has not been received, are presented as an unbilled receivable on the Company’s consolidated balance sheet. As all amounts are expected to be remitted timely, no valuation allowances are recorded. F- 11 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements Research and Development Costs The Company’s research and development expenses consist primarily of third-party research and development expenses, consulting expenses, animal and clinical studies, and any allocable direct overhead, including facilities and depreciation costs, as well as salaries, payroll taxes, and employee benefits for those individuals directly involved in ongoing research and development efforts. Research and development expenses are charged to expense as incurred. Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. General and Administrative Expenses General and administrative expenses consist primarily of personnel costs associated with the Company’s executive, finance, human resources, compliance, and other administrative personnel, as well as accounting and legal professional services fees. Stock-based Compensation The Company expenses stock-based compensation over the requisite service period based on the estimated grant-date fair value of the awards using a graded amortization approach. The Company accounts for forfeitures as they occur. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. Stock-based compensation costs are recorded in research and development and general and administrative expenses in the consolidated statements of operations. From time-to-time equity classified awards may be modified. On the modification date, the Company estimates the fair value of the awards immediately before and immediately after modification. The incremental increase in fair value is recognized as expense immediately to the extent the underlying equity awards are vested and on a straight-line basis over the same remaining amortization schedule as the unvested underlying equity awards. Income Taxes Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes any interest and penalties accrued related to unrecognized tax benefits as income tax expense. F- 12 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements Earnings per Share The basic earnings per share is calculated by dividing the Company’s net income or loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. The diluted earnings per share is calculated by dividing the Company’s net earnings attributable to common stockholders by the diluted weighted average number of common shares outstanding during the period, determined using the treasury stock method and the average stock price during the period. The following weighted average shares have been excluded from the calculations of diluted weighted average common shares outstanding because they would have been anti-dilutive (the Company has utilized the principal balance outstanding and the end of period conversion price for the Convertible Notes for the purposes of the weighted average share calculation below): SCHEDULE OF WEIGHTED AVERAGE SHARES OF ANTI-DILUTIVE SECURITIES 2023 2022 Year Ended December 31, 2023 2022 Stock options 131,767 26,302 RSUs - 3,772 Warrants 3,798,114 138,485 Convertible Notes 1,171,292 73,326 Total 5,101,173 241,885 Anti-dilutive weighted average shares 5,101,173 241,885 Recently Adopted Accounting Pronouncements In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Topic 470) to address issues identified as a result of the complexity with applying GAAP for certain financial instruments with characteristics of liabilities and equity. The FASB decided to reduce the number of accounting models for convertible debt instruments and convertible preferred stock, resulting in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Certain types of convertible instruments will continue to be subject to separation models: (a) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (b) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. For convertible instruments, the contracts primarily affected are those with beneficial conversions or cash conversion features as the accounting models for those specific features have been removed. For contracts in an entity’s own equity, the contracts primarily affected are freestanding instruments and embedded features that are accounted for as derivatives due to a failure to meet the settlement conditions of the derivatives scope exceptions. The FASB simplified the settlement assessment by removing the requirements to (a) consider whether the contract would be settled in registered shares, (b) to consider whether collateral is required to be posted, and (c) assess shareholder rights. The FASB also decided to enhance information transparency by making targeted improvements to the disclosures for convertible instruments and earnings-per-share guidance. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023 and early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The Company adopted the standard with an effective date of January 1, 2023 and the adoption did not have a significant impact on the consolidated financial statements. Recently Issued Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which sets forth improvements to the current segment disclosure requirements in accordance with Topic 280 “Segment Reporting,” including clarifying that entities with a single reportable segment are subject to both new and existing segment reporting requirements. ASU 2023-07 will be effective retrospectively for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. Adoption of this ASU is currently being evaluated by the Company. In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for public entities with annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. F- 13 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of the following: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS 2023 2022 December 31, 2023 2022 Prepaid research and development $ 535,474 $ 1,300,473 Prepaid insurance 441,871 445,583 Other prepaid expenses 72,358 101,425 Other current assets 18,000 - Total prepaid expenses and other current assets $ 1,067,703 $ 1,847,481 NOTE 5 – ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consisted of the following: SCHEDULE OF ACCRUED EXPENSES AND OTHER LIABILITIES 2023 2022 December 31, 2023 2022 Accrued research and development $ 329,228 $ 1,332,713 Share subscription facility commitment fees - 400,000 Professional fees 110,202 421,530 Other accrued liabilities 102,830 72,251 Total accrued expenses and other liabilities $ 542,260 $ 2,226,494 F- 14 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements NOTE 6 - COMMITMENTS AND CONTINGENCIES Purchase Commitments As of December 31, 2023, the Company’s commitments included an estimated $ 17.9 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. Although open purchase orders are considered enforceable and legally binding, the terms generally allow the Company the option to cancel, reschedule, and adjust its requirements based on its business needs prior to the delivery of goods or the performance of services. Litigation As of December 31, 2023 and 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, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation. Lease The Company’s current lease agreement (as amended) has a term that extends through October 31, 2024 with no option to renew. As of December 31, 2023, the future lease payments totaled $ 31,249 . The Company recognized total rent expense of $ 33,747 and $ 31,756 in the year ended December 31, 2023, and 2022, respectively. Share Subscription Facility In December 2020, the Company executed the GEM Agreement, under which an investor agreed to provide the Company with a share subscription facility of up to $ 60.0 million for a 36-month term following the public listing of the Company’s common stock. The Company controls the timing and maximum amount of drawdown under this facility and has no minimum drawdown obligation. The investor will pay, in cash, a per-share amount equal to 90% of the average daily closing price of the Company’s stock during the 30 consecutive trading days prior to the issuance of a draw notice, which shall not exceed 400% of the average trading volume for the 30 trading days immediately preceding the draw down date. Concurrent with the public listing of the Company’s shares on July 2, 2021, the Company issued 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, subsequently reduced to $ 1.5675 at December 31, 2023 (Note 8). 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 of the public listing date and $ 0.4 million due on the 18-month anniversary of the public listing date. The first $ 0.8 million of the commitment fee was paid in July 2022 in common stock of the Company and the remaining $ 0.4 million was paid in January 2023 in common stock of the Company. Usage of the GEM facility is limited by other agreements of the Company. The Company has not raised any capital to date pursuant to the GEM facility. Compensation Subject to Shareholder Approval In July 2021, the Company engaged two consultants to perform certain public and investor relations services in consideration for warrants to purchase 2,083 shares of common stock with a five-year term and an exercise price of $ 1,507.20 each, 208 shares of common stock each, and 833 restricted stock units each. The restricted stock units vested over one year with 50 % of the vesting contingent upon certain market conditions. These equity awards were contingent upon shareholder approval of an amended and restated 2021 Omnibus Plan at a special shareholder meeting in January 2022, at which time the warrants were replaced by non-qualified stock options with similar terms. As the original terms of the awards did not satisfy the grant date criteria for an equity award, as of December 31, 2021, the Company recorded a liability of $ 1,342,479 to reflect the estimated value of services received during the period. On February 14, 2022, the equity awards were granted, and the Company reclassified the outstanding liability to stockholders’ equity (See Note 9 for additional details of the Company’s stock-based compensation). F- 15 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements NOTE 7 - NOTES PAYABLE The following table provides a summary of the Company’s outstanding debt as of December 31, 2023: SCHEDULE OF DEBT Principal balance Accrued interest Unamortized Debt Discount & Issuance Costs Net debt balance 2023 Notes $ 1,836,000 $ 13,078 $ ( 1,197,200 ) $ 651,878 Financed insurance 197,249 5,570 - 202,819 Total $ 2,033,249 $ 18,648 $ ( 1,197,200 ) $ 854,697 The following table provides a summary of the Company’s outstanding debt as of December 31, 2022: Principal balance Accrued interest Fair value adjustment Net debt balance 2022 Notes $ 3,905,264 $ 10,544 $ 287,771 $ 4,203,579 Financed insurance 195,273 7,906 - 203,179 Total $ 4,100,537 $ 18,450 $ 287,771 $ 4,406,758 Interest expense The interest expense recognized for financed insurance was $ 14,716 and $ 9,909 for the year ended December 31, 2023 and 2022, respectively. Interest expense recognized for the 2023 Notes was $ 339,230 for the year-ended December 31, 2023, which consists of amortization of the debt discount and debt issuance costs and accrued interest. 2021 Notes On September 24, 2021, the Company entered into an agreement with institutional investors to issue the 2021 Notes. The agreement provided for two closings: the first closing for $ 5.3 million (resulting in net proceeds of $ 4.6 million) which closed on September 24, 2021. The second closing for $ 10.6 million (resulting in net proceeds of $ 9.4 million) which closed on November 5, 2021. The 2021 Notes included a stated rate of interest of 5 % per annum, in addition to an original issue discount of 6 %. The interest could be settled in cash or shares at the option of the Company and was payable together with monthly redemptions of the outstanding principal amount of the debt. The Company elected to apply the fair value option to the measurement of the 2021 Notes. The total initial fair value of the debt at issuance was $ 15.9 million. The fair value measurement included the assumption of accrued interest and interest expense (at the stated rate plus an 8 % cash settlement premium). If presented separately, the total amount of interest expense (after consideration of the conversions) for the year-ended December 31, 2022 would be $ 0.2 million. In connection with the issuance of the 2021 Notes the Company also issued 1,507 and 3,011 warrants on the respective closing dates. The warrants were immediately exercisable with an exercise price of $ 1,831.20 (subject to downward revision protection in the event the Company makes certain issuances of common stock at prices below the conversion price) and expire on September 23, 2026 and November 4, 2026 , respectively. As a result of the issuance of the 2022 Notes in July 2022, the exercise price of these warrants was adjusted down to $ 187.20 . On May 12, 2023, in exchange for $ 0.125 per outstanding warrant, the Company amended the warrants to reduce their exercise price to $ 3.64 . The 2021 Notes were settled on October 11, 2022 and were not outstanding as of December 31, 2023 and 2022. 2022 Notes On June 30, 2022, the Company entered into an $ 8.0 million convertible financing agreement with institutional investors. The agreement provided for two closings, each for notes payable of $ 4.24 million (resulting in gross cash proceeds of $ 4.0 million per closing). Funds were received for the first closing on July 1, 2022 and for the second closing on August 9, 2022. On 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. F- 16 The 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 the current share price at issuance exceeding the conversion price. Additionally, the Company recorded issuance costs of $ 1.1 million representing a 6 % original issue discount of $ 0.5 million and $ 0.6 million of legal and investment banking fees, which are included in other income (expense) on the consolidated statement of operations. After several conversions, the Company reflected the remaining balance due as of December 31, 2022 at fair value and recognized a change in fair value of convertible notes of $ 3.1 million (gain) for the period ended December 31, 2022 also in other income (expense) on the consolidated statements of operations. The December 31, 2022 fair value measurement includes the assumption of accrued interest and interest expense (at the stated rate plus an 8 % cash settlement premium) and thus a separate amount is not reflected on the consolidated statements of operations. If presented separately, the amount of interest expense after consideration of the conversions would be $ 0.2 million for the year ended December 31, 2022. In connection with each of the first and second closings of the 2022 Notes, the Company also issued warrants to purchase 38,900 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 per share. The proceeds of the 2022 Notes were used for working capital purposes subject to certain customary restrictions and are secured by the Company’s rights to its patents and licenses. The Company was restricted from issuing certain additional debt or equity without the prior written consent of the holders for certain specified periods set forth in the 2022 Notes. If, at any time while the 2022 Notes are outstanding, the Company carried out one or more capital raises in excess of $ 5.0 million, the holder had the right to require the Company to use up to 20 % of the gross proceeds of such transaction to redeem all or a portion of the convertible notes for an amount in cash equal to the cash Mandatory Redemption Amount (i.e., 108% of outstanding principal and unpaid interest). The Company triggered this provision in connection with the public offering of securities in December of 2022, the resulting principal payments and interest were reflected as a reduction to the outstanding balance of the 2022 Notes. The 8 % premium was paid in cash and was reflected as interest expense within the consolidated statement of operations. The 2022 Notes were scheduled to mature on December 29, 2023 and February 7, 2024 , for the first and second closings, respectively. The notes bear interest at a rate of 6 % per annum, in addition to an original issue discount of 6 %. The interest may be settled in cash or shares at the option of the Company and is payable together with monthly redemptions of the outstanding principal amount of the debt. The outstanding principal and interest balances were satisfied in March 2023. In January 2023, the Company entered into a letter agreement to reduce the conversion price for the remaining balance of the Company’s outstanding 2022 Notes from $ 24.07 to $ 9.01 for the period from January 12, 2023 until May 12, 2023.The holders converted $ 3.1 million of the outstanding balance of the 2022 Notes during 2023 and received cash true-up payments totaling $ 0.4 million for conversions executed before the letter agreement. Additional cash true-up payments totaling $ 0.6 million for conversions below the adjusted price were due to be paid within 120 days from January 12, 2023, in accordance with the Letter Agreement. On May 12, 2023, the Company paid $ 0.6 million of cash for the additional true-up payments to the holders of the 2022 Notes. F- 17 2023 Notes On October 23, 2023, the Company entered into a Securities Purchase Agreement (“SPA”) for an aggregate financing of $ 1.8 million with investors, including $ 0.2 million with a board member. At the first closing under the SPA, which occurred on October 25, 2023, the Company issued 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 occurred on November 29, 2023, the Company issued 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. The notes mature on April 25, 2024 and May 28, 2024 respectively. The 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 $ 1.5675 . 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 . The Company determined the 2023 Notes are to be accounted for as conventional convertible debt as they provide for the holder an option to convert the outstanding balances into a fixed number of shares (or an equivalent amount of cash at the discretion of the Company) and the option to convert meets the definition of an exception from derivative accounting. As a result, the Company has reflected the outstanding principal amount, the remaining unamortized discount (both original issue discount and the relative fair value discount associated with the warrants discussed below) and the remaining debt issuance costs as net amount on the face of the balance sheet. The amortization of the original debt discount (approximately $ 0.1 million) and issuance costs (approximately $ 0.3 million) will be recorded as interest expense within the consolidated statements of operations. As of December 31, 2023, approximately $ 0.1 million of the original debt discount and issuance costs was amortized to interest expense. The warrants have an exercise price of $ 1.5675 , the same as the conversion price, and are exercisable for five years following the issuance date. The warrants were equity classified as they are indexed to the Company’s stock and only settleable in shares. The warrants were initially measured at fair value using a Black-Scholes valuation model and were allocated along with the 2023 Notes using the relative fair value method. The initial fair value of $ 1.1 million allocated to the warrants was considered a debt discount and will be amortized to interest expense over the remaining term of the notes. As of December 31, 2023, approximately $ 0.2 million of the discount associated with the warrants was amortized to interest expense. Financed Insurance Premiums In June 2023, the Company renewed and financed its directors’ and officers’ liability insurance in the amount of $ 0.4 million. Monthly payments commenced in July 2023 and are scheduled through March 2024. During the year ended December 31, 2022, the Company financed its directors’ and officers’ liability insurance in the amount of $ 0.4 million and the liability was paid in full by March 31, 2023. The Company paid a total of $ 9,402 in interest from inception through March 2023 when the note was paid in full. The Company incurred $ 14,715 and $ 9,909 of interest expense associated with the financed insurance premiums for the years ended December 31, 2023 and 2022. NOTE 8 - STOCKHOLDERS’ EQUITY In June 2021, in connection with the Business Combination, the Company amended and restated its Certificate of Incorporation to authorize 150,000,000 shares of common stock and 1,500,000 shares of preferred stock, both with par value equal to $ 0.0001 . In September 2022, the Company amended and restated its Certificate of Incorporation to authorize up to a total of 250,000,000 shares of common stock. As of December 31, 2023 and 2022, there were no shares of preferred stock issued and outstanding. F- 18 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements 2022 December Offering On December 7, 2022, we entered into an underwriting agreement with an underwriter, pursuant to which we agreed to issue and sell (i) 190,000 shares of the Company’s common stock, par value $ 0.0001 per share, (ii) pre-funded warrants to purchase 51,666 shares of common stock and (iii) warrants to purchase 483,333 shares of common stock to the underwriter in a public offering. In addition, the Company granted the underwriter the option, for 45 days from the closing of the offering, to purchase up to 28,500 additional shares of common stock and common warrants to purchase up to an additional 72,500 shares of common stock. The Underwriter agreed to purchase the shares from the Company pursuant to at a price of $ 15.62 per share. In lieu of a purchase of common stock that would otherwise result in an investor’s beneficial ownership exceeding 4.99 % (or, at the election of the investor, 9.99 %) of the outstanding common stock, a pre-funded warrant was offered, each of which enables the investor to purchase one share of common stock at an exercise price of $ 0.0001 . Each pre-funded warrant was exercisable upon issuance and will expire when exercised in full (all pre-funded warrants were exercised immediately upon issuance). Each pre-funded warrant was sold with a common warrant to purchase two shares of common stock. The public purchase price of one share of common stock and accompanying common warrant to purchase two shares of Common Stock is $ 16.80 and the combined purchase price of one pre-funded warrant and accompanying common warrant to purchase two shares of common stock is $ 16.80 . Each common warrant is exercisable immediately at an exercise price of $ 16.80 per share and will expire five years following the date of issuance. The offering closed on December 9, 2022 and we received aggregate gross proceeds of approximately $ 4.1 million from the Offering. 2023 February Offering On 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. 2023 May Offering On 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. In connection with the offering, the Company also agreed to amend certain existing warrants to purchase up to an aggregate of 210,085 shares of the Company’s common stock that were previously issued in September 2021 through December 2022 to purchasers in the offering at exercise prices ranging from $ 16.80 to $ 187.20 per share, such that effective upon the closing of the offering, the amended warrants had a reduced exercise price of $ 3.64 per share at an additional offering price of $ 0.125 per amended warrant. Warrants On December 31, 2023, outstanding warrants to purchase shares of common stock are as follows: SCHEDULE OF OUTSTANDING WARRANT Reference Shares Underlying Outstanding Warrants Exercise Price Description Classification (a) 63,659 $ 2,400.00 - 2,760.00 LACQ warrants Equity (b) 4,608 $ 1.57 Share subscription facility Equity (c) 4,518 $ 3.64 2021 Notes Liability (d) 38,900 $ 3.64 2022 Notes Liability (e) 549,993 $ 3.64 - 16.80 Public offering Equity (f) 318,451 $ 8.58 - 12.60 Public offering Equity (g) 3,727,813 $ 3.64 - 4.86 Public offering Equity (h) 3,767,091 $ 1.57 2023 Notes Equity 8,475,033 a) On June 30, 2021, 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 of between $ 2,400.00 and $ 2,760.00 per share and expire June 30, 2026 , five years following the completion of the Business Combination. A 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. On August 3, 2021, the Company entered into an agreement with an existing warrant holder to reduce the price of 2,083 warrants issued on June 30, 2021 from $ 2,760.00 to $ 2,400.00 . b) On July 2, 2021, upon public listing of the Company’s shares, the Company issued 4,608 three-year warrants to purchase common stock pursuant to the share subscription facility. The warrants have a three -year life and an initial exercise price of $ 2,402.40 per share. F- 19 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements The warrants have been subject to multiple exercise price reductions as required by a down round adjustment feature of the warrant, due to common stock issued at prices below the then current exercise price. The adjustments have progressed from the original exercise price of $ 2,402.40 per share to the current exercise price at December 31, 2023 of $ 1.5675 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. c) On September 24, 2021 and November 5, 2021, the Company issued 1,507 and 3,011 warrants in connection with the issuance of the 2021 Notes. The warrants were immediately exercisable with an exercise price of $ 1,831.20 (subject to downward revision protection in the event the Company makes certain issuances of common stock at prices below the conversion price) and expire on September 23, 2026 and November 4, 2026 , respectively. As a result of the issuance of the 2022 Notes in July 2022, the exercise price of these warrants was adjusted down to $ 187.20 . On May 12, 2023, in exchange for $ 0.125 per outstanding warrant, the Company amended the warrants to reduce their exercise price to $ 3.64 . d) On July 1, 2022 and August 9, 2022, the Company issued 19,450 warrants each in connection with the issuance of the 2022 Notes. The warrants were immediately exercisable with an exercise price of $ 170.04 (subject to downward revision protection in the event the Company makes certain issuance of common stock at prices below the conversion price) and expire on June 29, 2027 and August 8, 2027 , respectively. As a result of the issuance of shares and warrants in connection with the December public offering, the exercise price of these warrants was adjusted down to $ 24.07 . On May 12, 2023, in exchange for $ 0.125 per outstanding warrant, the Company amended the warrants to reduce their exercise price to $ 3.64 . e) On December 9, 2022, the Company issued 549,993 equity classified warrants in connection with a public offering. The warrants were immediately exercisable with an exercise price of $ 16.80 (subject to downward revision protection in the event the Company makes certain issuance of common stock at prices below the conversion price) and expire on December 9, 2027 . On May 12, 2023, in exchange for $ 0.125 per applicable warrant, the Company amended 166,667 of these warrants to reduce their exercise price to $ 3.64 . (f) On 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 . (g) On 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 . The Company also issued 1,451,876 pre-funded warrants, 735,000 pre-funded warrants were exercised in connection with the closing of the public offering, 716,876 were exercised between the closing date and December 31, 2023. The pre-funded warrants were immediately exercisable with an exercise price of $ 0.0001 . (h) On October 25, 2023 and November 28, 2023, the Company issued warrants to purchase 1,255,697 shares and 2,511,394 shares, respectively. The warrants were immediately exercisable with an exercise price of $ 1.5675 and expire on October 25, 2028 and November 28, 2028 , respectively. The fair value of each warrant issued has been determined using the Black-Scholes option-pricing model. The material assumptions used in the Black-Scholes model in estimating the fair value of the warrants issued for the periods presented were as follows: SCHEDULE OF WARRANTS FAIR VALUE ESTIMATION ASSUMPTIONS Stock price Exercise price Expected term (years) Volatility Risk free rate (a) LACQ warrants (grant date varies) 3,477.60 2,400.00 - 2,760.00 3.00 110.0 % 0.5 % (b) Share subscription facility (grant date 7/2/21) 3,477.60 2,402.40 3.00 110.0 % 0.5 % (b) Share subscription facility (remeasurement date varies) 1.13 - 1,029.60 1.57 - 680.23 0.68 - 2.58 91.3 % - 117.2 % 1.04 % - 5.43 % (c) Liability classified warrants (grant date 9/24/21) 1,077.60 1,831.20 5.00 94.1 % 1.0 % (c) Liability classified warrants (grant date 11/5/21) 540.00 1,831.20 5.00 94.1 % 1.0 % (c) Liability classified warrants (remeasured at 12/31/23) 1.09 3.64 2.75 - 3.86 124.7 % - 126.9 % 4.1 % (d) Liability classified warrants (grant date 7/1/22) 136.80 170.04 5.00 98.9 % 2.9 % (d) Liability classified warrants (grant date 8/9/22) 127.20 170.04 5.00 102.8 % 3.0 % (d) Liability classified warrants (remeasured at 12/31/23) 1.09 3.64 3.50 - 3.61 116.2 % - 116.7 % 3.9 % NOTE 9 - STOCK-BASED COMPENSATION In connection with the Business Combination, the Company assumed the 2021 Omnibus Incentive Plan (the “2021 Omnibus Plan”), which was approved by LACQ’s board and subsequently LACQ’s stockholders at a special stockholder meeting on June 28, 2021. The 2021 Omnibus Plan provides for the conversion with existing terms of the 18,432 options outstanding under Former Ensysce stock plans and reserves for issuance an additional 4,166 shares for future awards under the 2021 Omnibus Plan. No further awards may be made under the Former Ensysce stock plans. In 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. In August 2023, the Company’s stockholders approved a proposal for an increase of 585,796 shares available for future grant. The Company recognized within general and administrative expense stock-based compensation expense of $ 627,406 and $ 919,056 for the year ended December 31, 2023 and 2022, respectively. During the year ended December 31, 2023 and 2022, the company recognized within research and development expense stock-based compensation expense of $ 251,754 and $ 152,787 , respectively. F- 20 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements Option Activity During the year ended December 31, 2023, the Company granted stock options to purchase an aggregate of 555,000 shares of common stock to employees and members of the board of directors. The options vested immediately and have an exercise price of between $ 1.13 and $ 1.18 per share. During the year ended December 31, 2022, the Company granted stock options to purchase an aggregate of 9,535 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 $ 102 and $ 1,507.20 per share. The following table summarizes the Company’s stock option activity during the year ended December 31, 2023: SCHEDULE OF STOCK OPTION ACTIVITY Weighted average Options Exercise price Remaining contractual life Intrinsic value Outstanding at December 31, 2022 26,334 $ 707.63 6.53 $ - Granted 555,000 1.17 - - Exercised - - - - Expired / Forfeited ( 20 ) 770.40 - - Outstanding at December 31, 2023 581,314 33.15 9.57 - Exercisable at December 31, 2023 579,733 31.89 9.57 - Vested and expected to vest 581,314 33.15 9.57 - Option Valuation The fair value of each stock option granted has been determined using the Black-Scholes option-pricing model. The material assumptions used in the Black-Scholes model in estimating the fair value of the options granted for the periods presented were as follows: SCHEDULE OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS December 31, 2023 December 31, 2022 Exercise price $ 1.13 - 1.18 $ 103.20 - 1,507.20 Expected stock price volatility 106.77 % - 106.82 % 76.61 % - 95.87 % Expected term (years) 5.00 5.19 -10.00 Risk-free interest rate 4.62 % - 4.89 % 1.52 % - 3.14 % Expected dividend yield 0 % 0 % ● Expected stock-price volatility. The expected volatility is derived from the historical volatilities of comparable publicly traded companies within the Company’s industry over a period approximately equal to the expected term. The comparable companies were utilized as the Company’s stock does not have sufficient historical trading activity. ● Expected term. The expected term represents the period that the stock-based awards are expected to be outstanding. The Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate an expected term due to a lack of sufficient data. Therefore, the Company estimates the expected term for employees by using the simplified method provided by the Securities and Exchange Commission. The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the options. ● Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the expected term. ● Expected dividend yield. The expected dividend is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on the Company’s common stock. F- 21 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements The weighted-average grant date fair value of options granted during the year ended December 31, 2023 was $ 0.93 . The weighted-average grant date fair value of options granted during the year ended December 31, 2022 was $ 230.89 . As of December 31, 2023, the Company had an aggregate of $ 119,848 of unrecognized share-based compensation cost, which is expected to be recognized over the weighted average period of 1.21 years. Restricted Stock Units The following table summarizes the Company’s restricted stock units activity during the year ended December 31, 2023: SCHEDULE OF RESTRICTED STOCK UNITS Restricted Stock Units Weighted average fair value Outstanding at December 31, 2022 1,003 $ 120.02 Granted 60,000 1.13 Released ( 61,001 ) 3.07 Cancelled ( 2 ) 386.40 Outstanding at December 31, 2023 - $ - The estimated fair value of each of the Company’s restricted stock unit awards granted in 2023 was determined on the date of grant based on the closing price of the Company’s common stock on the previous trading date. The restricted stock unit awards granted in 2023 were immediately vested and there were no other valuation inputs used for the estimated fair value. Shares Reserved for Future Issuance The following shares of common stock are reserved for future issuance: SCHEDULE OF COMMON STOCK FUTURE ISSUANCE December 31, 2023 Awards outstanding under the 2021 Omnibus Incentive Plan 581,314 Awards available for future grant under 2021 Omnibus Incentive Plan 2,112 Warrants outstanding 8,475,033 Total shares of common stock reserved for future issuance 9,058,459 NOTE 10 - INCOME TAXES Loss before provision for income taxes consisted of the following: SCHEDULE OF INCOME TAXES BENEFIT Year ending December 31, 2023 2022 United States $ ( 10,626,275 ) $ ( 24,207,685 ) The federal and state income tax provision (benefit), included in general and administrative expenses in the Consolidated Statement of Operations, is summarized as follows: SCHEDULE OF FEDERAL AND STATE INCOME TAX PROVISION (BENEFIT) Year ending December 31, 2023 2022 Current state provision $ 3,200 $ 1,600 F- 22 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements The effective tax rate of the Company’s provision (benefit) for income taxes differs from the federal statutory rate as follows: SCHEDULE OF FEDERAL INCOME TAX RATE RECONCILIATION 2023 2022 Year ending December 31, 2023 2022 Income (benefit) taxes at statutory rates ( 2,231,518 ) ( 5,083,614 ) State income tax, net of federal benefit ( 77,243 ) ( 175,164 ) Warrants and convertible debt ( 90,392 ) ( 234,214 ) Nondeductible executive compensation 2,107 - Stock based compensation 580,823 303,499 Share subscription facility transaction costs - 20,335 Research and development tax credits ( 629,239 ) ( 1,028,988 ) Change in tax rates ( 3,848 ) 54,263 Other 77,162 ( 78,227 ) Change in valuation allowance 2,372,148 6,222,110 Total - - Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards. The Company’s deferred tax assets were comprised of the following: SCHEDULE OF DEFERRED TAX ASSETS 2023 2022 As of December 31, 2023 2022 Deferred tax assets: Net operating loss tax carryforwards $ 28,485,164 $ 26,726,066 Tax credits 4,793,138 4,164,187 Capitalized research costs 4,368,767 3,729,483 Stock-based compensation 746,444 1,173,158 Other 31,279 265,677 Gross deferred tax assets 38,424,792 36,058,571 Valuation allowance ( 38,424,792 ) ( 36,052,644 ) Total deferred tax assets - 5,927 Deferred tax liabilities: Other - ( 5,927 ) Total deferred tax liabilities - ( 5,927 ) Net deferred tax assets $ - $ - As of December 31, 2023, the Company had federal and California net operating loss (NOL) carryforwards of $ 110.8 million and $ 74.6 million, respectively, net of the NOLs that will expire due to Internal Revenue Code (IRC) Section 382 limitations. The federal net operating losses generated in 2018 and after of $ 28.4 million will carryforward indefinitely and be available to offset up to 80% of future taxable income each year . The federal net operating losses generated prior to 2018 of $ 82.4 million will begin to expire in 2024 unless previously utilized. The California NOL carryforwards will begin to expire in 2028, unless previously utilized. F- 23 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements In addition, as of December 31, 2023, the Company had federal and state research and development (R&D) tax credit carryforwards of $ 5.1 million and $ 1.7 million, respectively. The federal tax credit carryforwards will begin to expire in 2024 unless previously utilized. The California research tax credits do not expire. Pursuant to IRC Sections 382 and 383, annual use of the Company’s NOL and R&D credit carryforwards may be limited in the event that a cumulative change in ownership of more than 50% occurs within a three-year period. Although the Company has not completed an IRC Section 382/383 analysis regarding the limitation of NOL and R&D credit carryforwards as of December 31, 2023, the Company estimates that approximately $ 1.5 million of tax benefits related to NOL and R&D carryforwards acquired in 2015 will expire unused. Accordingly, the related NOL and R&D credit carryforwards have been removed from deferred tax assets accompanied by a corresponding reduction of the valuation allowance. Due to the existence of the valuation allowance, limitations created by current and future ownership changes, if any, related to the Company’s operations in the United States will not impact its effective tax rate. Any additional ownership changes may further limit the ability to use the NOL and R&D credit carryforwards. The following table summarizes the activity related to the Company’s unrecognized tax benefits: SUMMARY OF INCOME TAX CONTINGENCIES 2023 2022 Year ending December 31, 2023 2022 Balance at beginning of year $ 1,428,261 $ 1,135,179 Increases related to current year tax positions 128,404 341,108 Increases related to prior year tax positions 128,695 - Decreases related to prior year tax positions - 48,026 Balance at end of year $ 1,685,360 $ 1,428,261 As of December 31, 2023 and 2022, the Company had unrecognized tax benefits of $ 1.7 million and $ 1.4 million, respectively. Due to the existence of the valuation allowance, none of the unrecognized tax benefits would affect the effective tax rate. The Company’s policy is to recognize interest and penalties from uncertain tax positions in income tax expense. The Company did not record any interest or penalties for the years ended December 31, 2023 or 2022 and had no accrued interest on the consolidated balance sheets as of December 31, 2023 or 2022. The Company does not anticipate that the total amount of unrecognized tax benefits will significantly increase or decrease within twelve months of the reporting date. The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in multiple state jurisdictions. With few exceptions, the Company is no longer subject to United States federal income tax examinations for years before 2020 and state and local income tax examinations before 2019. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses were generated and carried forward, and make adjustments up to the amount of the NOL carryforward amount. The Company is not currently under examination by the Internal Revenue Service or any state or local tax authority. F- 24 Ensysce Biosciences, Inc. Notes to the Consolidated Financial Statements NOTE 11 - RELATED PARTIES In July 2022, the Chief Executive Officer and a Board member transferred 3,838 shares of registered common stock to GYBL to settle $ 0.8 million of Company obligations related to the GEM Agreement (Note 6). In October 2022, 3,838 shares of unregistered and restricted common stock were subsequently issued by the Company to the related parties as reimbursement and recognized under the consolidated statement of changes in stockholders’ deficit. In connection with the issuance of the 2023 Notes, the Company issued to a board member a $ 0.2 million senior secured convertible promissory note and 0.4 million warrants exercisable for common stock at $ 1.5675 per share. NOTE 12 - SUBSEQUENT EVENTS In January and February 2024, the Company issued 0.7 million shares of common stock in repayment of $ 1.2 million of the 2023 Notes, paid cash of $ 1.0 million in repayment of the 2023 Notes and issued 1.3 million shares of common stock for $ 2.1 million upon exercise of warrants issued in conjunction with the 2023 Notes, as discussed in Note 7. In February 2024, the Company entered into definitive agreements for the immediate exercise of certain outstanding warrants to purchase up to an aggregate of 3,601,752 shares of common stock of the Company originally issued in May 2023, having an exercise price of $ 3.637 per share, at a reduced exercise price of $ 1.31 per share. The gross proceeds to the Company from the exercise of the warrants was approximately $ 4.7 million, prior to deducting placement agent fees and offering expenses. In connection with the exercise of the warrants, new warrants were issued that are immediately exercisable for an aggregate of up to 7,203,504 shares of common stock, at an exercise price of $ 1.06 per share. 3,601,752 of the new warrants will expire on May 12, 2028 , and 3,601,752 of the new warrants will have a term of eighteen months from the issuance date. The Company also issued to the placement agent warrants to purchase up to 252,123 shares of common stock at an exercise price of $ 1.6375 per share; these warrants will expire on May 12, 2028 . F- 25 Exhibit Index No. Description of Exhibit 2.1† Agreement and Plan of Merger, dated January 31, 2021, by and among Leisure Acquisition Corp., Ensysce Biosciences, Inc. and EB Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 filed with the registrant’s Registration Statement on Form S-4 (File No.333-254279) initially filed on March 15, 2021). 3.1(a) Third Amended and Restated Certificate of Incorporation of Ensysce Biosciences, Inc. (incorporated by reference to Exhibit 3.1 filed with the registrant’s Current Report on Form 8-K on July 7, 2021). 3.1(b) Certificate of amendment to Third Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1(b) filed with the registrant’s Registration Statement on Form S-1 (File No. 333-268038) on October 28, 2022) 3.1(c) Certificate of Second Amendment to Third Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 filed with the registrant’s Current Report on Form 8-K (File No. 001-38306) on October 27, 2022) 3.1(d) Certificate of Designation of the Series A Preferred Stock of Ensysce Biosciences, Inc., dated February 1, 2023 (incorporated by reference to Exhibit 3.1 to the registrant’s Registration Statement on Form 8-A, filed on February 1, 2023, File No. 000-56516) 3.1(e) Certificate of Amendment to Certificate of Designation of the Series A Preferred Stock of Ensysce Biosciences, Inc., dated February 7, 2023 (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 8-A/A (Amendment No. 1), filed on February 7, 2023, File No. 000-56516) 3.2 Amended and Restated Bylaws of Ensysce Biosciences, Inc. (incorporated by reference to Exhibit 3.2 filed with the registrant’s Current Report on Form 8-K on July 7, 2021) 4.1 Warrant Agreement, dated December 1, 2017, between the Leisure Acquisition Corp. and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.1 filed with the registrant’s Current Report on Form 8-K on December 5, 2017) 4.2 Investor Rights Agreement between Ensysce Biosciences, Inc. and the Investors listed on the signature pages thereto dated as of May 11, 2018 (incorporated by reference to Exhibit 4.6 filed with the registrant’s Registration Statement on Form S-4 (File No.333-254279) initially filed on March 15, 2021) 4.3 Form of Warrant Certificate issued to previous holders of Private Placement Warrants and other private warrants (incorporated by reference to Exhibit 4.8 filed with the registrant’s Registration Statement on Form S-4 (File No.333-254279) initially filed on March 15, 2021) 4.4 Form of Senior Secured Convertible Promissory Note issued by the Company pursuant to and in accordance with the Securities Purchase Agreement (incorporated by reference to Exhibit 4.6 filed with the registrant’s Current Report on Form 8-K initially filed on September 27, 2021) 4.5 Form of Common Stock Purchase Warrant to be issued by the Company pursuant to and in accordance with the Securities Purchase Agreement (incorporated by reference to Exhibit 4.7 filed with the registrant’s Current Report on Form 8-K initially filed on September 27, 2021) 4.6 Form of Senior Secured Convertible Promissory Note issued by Ensysce Biosciences, Inc. pursuant to and in accordance with a 2022 Securities Purchase Agreement (incorporated by reference to Exhibit 4.6 filed with the registrant’s Current Report on Form 8-K on August 9, 2022) 4.7 Form of Common Stock Purchase Warrant issued by Ensysce Biosciences, Inc. pursuant to and in accordance with a 2022 Securities Purchase Agreement (incorporated by reference to Exhibit 4.7 filed with the registrant’s Current Report on Form 8-K on August 9, 2022) 4.8 Form of warrant delivered by Ensysce Biosciences, Inc. in December 2022 in connection with an underwritten offering (incorporated by reference to Exhibit 4.10 filed with the registrant’s Post-Effective Amendment No. 1 to the registrant’s Registration Statement on Form S-1 filed December 8, 2022) 4.9 Form of pre-funded warrant delivered by Ensysce Biosciences, Inc. in December 2022 in connection with an underwritten offering (incorporated by reference to Exhibit 4.11 filed with the registrant’s Post-Effective Amendment No. 1 to the registrant’s Registration Statement on Form S-1 filed December 8, 2022) 4.10 Form of warrant issued in connection with a private placement conducted concurrently with a public offering (incorporated by reference to Exhibit 4.1 filed with the registrant’s Current Report on Form 8-K on February 7, 2023) 4.11 Form of warrant issued to a placement agent or its designees in connection with a private placement conducted concurrently with a public offering (incorporated by reference to Exhibit 4.2 filed with the registrant’s Current Report on Form 8-K on February 7, 2023) 4.12 Form of common warrant (incorporated by reference to Exhibit 4.12 filed with the registrant’s Post-Effective Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-271480) on May 17, 2023) 4.13 Form of pre-funded warrant (incorporated by reference to Exhibit 4.13 filed with the registrant’s Post-Effective Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-271480) on May 17, 2023) 4.14 Form of placement agent warrant (incorporated by reference to Exhibit 4.14 filed with the registrant’s Post-Effective Amendment on Form S-1 (File No. 333-271480) on May 17, 2023) 4.15 Form of warrants amended in connection with the execution of a Securities Purchase Agreement on May 10, 2023 (incorporated by reference to Exhibit 4.15 filed with the registrant’s Post-Effective Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-271480) on May 17, 2023) 4.16 Form of common warrant issued in October 2023 and November 2023 (incorporated by reference to Exhibit 4.16 filed with the registrant’s Registration Statement on Form S-1 (File No. 333-275456) on November 9, 2023) 4.17 Form of October 2023 Secured Convertible Promissory Note (incorporated by reference to Exhibit 4.6 filed with the registrant’s Current Report on Form 8-K (File No. 001-38306) on October 24, 2023). 4.18 Form of Series A/B common stock purchase warrant issued February 14, 2024 (incorporated by reference to Exhibit 4.1 filed with the registrant’s Current Report on Form 8-K (File No. 001-38306) on February 14, 2024) 4.19 Form of placement agent warrant issued February 14, 2024 (incorporated by reference to Exhibit 4.2 filed with the registrant’s Current Report on Form 8-K (File No. 001-38306) on February 14, 2024) 10.1 Registration Rights Agreement, dated December 1, 2017, among Leisure Acquisition Corp. and certain securityholders (incorporated by reference to Exhibit 10.2 filed with the registrant’s Current Report on Form 8-K on December 5, 2017) 10.2 Warrant Purchase Agreement, dated December 1, 2017, between Leisure Acquisition Corp. and certain security holders (incorporated by reference to Exhibit 10.3 filed with the registrant’s Current Report on Form 8-K on December 5, 2017) 101 10.3(a) Form of Director and Officer Indemnity Agreement (incorporated by reference to Exhibit 10.8 filed with the registrant’s Registration Statement on Form S-1 (File No.333-221330) initially filed on November 3, 2017) 10.3(b) Form of Indemnification Agreement executed by each of the Ensysce directors and executive officers (incorporated by reference to Exhibit 10.6 filed with the registrant’s Form 10-Q initially filed on November 15, 2021) 10.4+ Executive Employment Agreement, by and between the Company and Dr. Lynn Kirkpatrick, dated September 14, 2021 (incorporated by reference to Exhibit 10.44 filed with the registrant’s Amendment Number 1 to its Registration Statement on Form S-1 (File No.333-260478) filed on October 29, 2021) 10.5 Agreement and Plan of Merger by and among the Signature Therapeutics, Inc., Signature Acquisition Corp. and the Company dated December 28, 2015 (incorporated by reference to Exhibit 10.21 filed with the registrant’s Registration Statement on Form S-4 (File No.333-254279) initially filed on March 15, 2021) 10.6+ Executive Employment Agreement, by and between the Company and Geoffrey Birkett, dated August 21, 2021 (incorporated by reference to Exhibit 10.45 filed with the registrant’s Amendment Number 1 to its Registration Statement on Form S-1 (File No.333-260478) filed on October 29, 2021) 10.7+ Employment Agreement between the Company and David Humphrey dated February 11, 2021 (incorporated by reference to Exhibit 10.26 filed with the registrant’s Registration Statement on Form S-4 (File No.333-254279) initially filed on March 15, 2021) 10.8+ Amendment to Offer Letter between the Company and David Humphrey dated February 23, 2021 (incorporated by reference to Exhibit 10.27 filed with the the registrant’s Registration Statement on Form S-4 (File No.333-254279) initially filed on March 15, 2021) 10.9(a)+ Amended and Restated 2021 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.22 filed with the registrant’s Annual Report on Form 10-K filed on March 31, 2022) 10.9(b)+ Amended and Restated 2021 Omnibus Incentive Plan Form of Stock Option Grant Notice and Award Agreement (incorporated by reference to Exhibit 10.22(a) filed with the registrant’s Annual Report on Form 10-K filed on March 31, 2022) 10.10 Share Purchase Agreement between the Company, GEM Global Yield LLC SCS and GEM Yield Bahamas Limited dated as of December 29, 2020, including a Registration Rights Agreement between the same parties and dated as of the same date and form of Warrant to Purchase Common Shares of Ensysce Biosciences, Inc. issued by the Company to GEM Yield Bahamas Limited (incorporated by reference to Exhibit 10.29 filed with the registrant’s Registration Statement on Form S-4 (File No.333-254279) initially filed on March 15, 2021) 10.11† Technology Transfer Agreement by and among the Company, Covistat, Inc., Mucokinetica, Ltd., Roderick Hall and Peter Cole dated August 5, 2020 (incorporated by reference to Exhibit 10.30 filed with the registrant’s Registration Statement on Form S-4 (File No.333-254279) initially filed on March 15, 2021) 10.12 Manufacturing Agreement between Recro Gaineville LLC and the Company dated September 11, 2019 (incorporated by reference to Exhibit 10.35 filed with the registrant’s Registration Statement on Form S-4 (File No.333-254279) initially filed on March 15, 2021) 10.13(a) Form of Exchange Agreement between Leisure Acquisition Corp. and the holders of Private Placement Warrants (incorporated by reference to Exhibit 10.36(a) filed with the registrant’s Registration Statement on Form S-4 (File No.333-254279) initially filed on March 15, 2021) 10.13(b) Form of Exchange Agreement to be entered into by the Company with each of the Sponsors and the Strategic Investor (incorporated by reference to Exhibit 10.36(b) filed with the registrant’s Registration Statement on Form S-4 (File No.333-254279) initially filed on March 15, 2021) 10.14(a)† Securities Purchase Agreement, dated September 24, 2021 by and among the Company and the purchasers signatory thereto (incorporated by reference to Exhibit 10.1 filed with the registrant’s Current Report on Form 8-K initially filed on September 27, 2021) 10.14(b) Registration Rights Agreement, dated September 24, 2021, by and among the Company and the parties signatory thereto (incorporated by reference to Exhibit 10.2 filed with the registrant’s Current Report on Form 8-K initially filed on September 27, 2021) 10.14(c) Subsidiary Guarantee, dated September 24, 2021, by and among the Company and the purchasers signatory thereto (incorporated by reference to Exhibit 10.3 filed with the registrant’s Current Report on Form 8-K initially filed on September 27, 2021) 102 10.14(d)† Security Agreement, dated September 24, 2021, by and among the Company, EBI OpCo, Inc., Covistat, Inc. and the other parties signatory thereto (incorporated by reference to Exhibit 10.4 filed with the registrant’s Current Report on Form 8-K initially filed on September 27, 2021) 10.14(e) Patent Security Agreement, dated September 24, 2021, by and among the Company, EBI OpCo, Inc., Covistat, Inc. and the other parties signatory thereto (incorporated by reference to Exhibit 10.5 filed with the registrant’s Current Report on Form 8-K initially filed on September 27, 2021) 10.14(f) Letter Agreement, dated December 27, 2021, by and among the Company and the parties signatory thereto (incorporated by reference to Exhibit 10.6 filed with the registrant’s Current Report on Form 8-K initially filed on December 27, 2021) 10.14(g) Second Letter Agreement, dated January 16, 2022, by and among the Company and the parties signatory thereto (incorporated by reference to Exhibit 10.7 filed with the registrant’s Current Report on Form 8-K initially filed on January 18, 2022) 10.15(a) Securities Purchase Agreement, dated June 30, 2022, by and among the Company and the purchasers signatory thereto (incorporated by reference to Exhibit 10.1 filed with the registrant’s Current Report on Form 8-K on July 6, 2022) 10.15(b) Registration Rights Agreement, dated June 30, 2022, by and among the Company and the parties signatory thereto (incorporated by reference to Exhibit 10.2 filed with the registrant’s Current Report on Form 8-K on July 6, 2022) 10.15(c) Subsidiary Guarantee, dated June 30, 2022, by and among the Company and the purchasers signatory thereto (incorporated by reference to Exhibit 10.3 filed with the registrant’s Current Report on Form 8-K on July 6, 2022) 10.15(d) Security Agreement, dated June 30, 2022, by and among the Company, EBI OpCo, Inc., Covistat, Inc. and the other parties signatory thereto (incorporated by reference to Exhibit 10.4 filed with the registrant’s Current Report on Form 8-K on July 6, 2022) 10.15(e) Patent Security Agreement, dated June 30, 2022, by and among the Company, EBI OpCo, Inc., Covistat, Inc. and the other parties signatory thereto (incorporated by reference to Exhibit 10.5 filed with the registrant’s Current Report on Form 8-K on July 6, 2022) 10.15(f) Letter Agreement, dated January 12, 2023, by and among the Company and the parties signatory thereto (incorporated by reference to Exhibit 10.6 filed with the registrant’s Current Report on Form 8-K on January 13, 2023) 10.16 October 2023 Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 filed with the registrant’s Current Report on Form 8-K (File No. 001-38306) on October 24, 2023) 10.17 Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 filed with the registrant’s Current Report on Form 8-K (File No. 001-38306) on October 24, 2023) 10.18 Form of Subsidiary Guaranty (incorporated by reference to Exhibit 10.3 filed with the registrant’s Current Report on Form 8-K (File No. 001-38306) on October 24, 2023) 10.19 Form of Security Agreement (incorporated by reference to Exhibit 10.4 filed with the registrant’s Current Report on Form 8-K (File No. 001-38306) on October 24, 2023) 10.20 Form of Patent Security Agreement (incorporated by reference to Exhibit 10.5 filed with the registrant’s Current Report on Form 8-K (File No. 001-38306) on October 24, 2023) 10 21 Form of Inducement Letter Agreement, dated as of February 12, 2024 (incorporated by reference to Exhibit 10.1 filed with the registrant’s Current Report on Form 8-K (File No. 001-38306) on February 14, 2024) 10.22 Form of Waiver, dated February 12, 2024, under the Securities Purchase Agreement dated October 23, 2023 ((incorporated by reference to Exhibit 10.2 filed with the registrant’s Current Report on Form 8-K (File No. 001-38306) on February 14, 2024) 14 Company’s Code of Business Conduct (incorporated by reference to Exhibit 14 filed with the registrant’s Annual Report on Form 10-K (File No. 001-38306) on March 30, 2023) 21.1 List of Subsidiaries (incorporated by reference to Exhibit 21 filed with the Registration Statement on Form S-1 (333-268038) filed on October 28, 2022) 23.1* Consent of Moss Adams LLP, Independent Registered Public Accounting Firm 31.1*++ Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2*++ Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1*++ Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2*++ Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97* Policy relating to recovery of erroneously awarded compensation (101) Interactive Data File (104) Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) * Filed herewith. † Certain schedules (or similar attachments) to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5) or 601(b)(2), as applicable. The registrant agrees to furnish supplementally a copy of all omitted schedules to the Securities and Exchange Commission upon its request. + Denotes compensatory plans or arrangements or management contracts. ++ This certificate accompanies this report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by Ensysce for purposes of Section 18 or any other provisions of the Exchange Act. Item 16. Form 10-K Summary. Not applicable. 103 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in San Diego, State of California, on March 14, 2024. ENSYSCE BIOSCIENCES, INC. By: /s/ Dr. Lynn Kirkpatrick Name: Dr. Lynn Kirkpatrick Title: President, Chief Executive Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities indicated on March 14, 2024. Name Title By: /s/ Dr. Lynn Kirkpatrick President, Chief Executive Officer and Director Dr. Lynn Kirkpatrick (Principal Executive Officer) By: /s/ David Humphrey Chief Financial Officer, Secretary and Treasurer David Humphrey (Principal Financial and Accounting Officer) By: /s/ Andrew Benton Director Andrew Benton By: /s/ William Chang Director William Chang By: /s/ Bob Gower Director and Chairman of the Board Bob Gower By: /s/ Adam Levin Director Adam Levin By: /s/ Steve Martin Director Steve Martin By: /s/ Lee Rauch Director Lee Rauch By: /s/ Curtis Rosebraugh Director Curtis Rosebraugh 104