Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 12, 2021 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2021 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-38306 | |
Entity Registrant Name | Ensysce Biosciences, Inc. | |
Entity Central Index Key | 0001716947 | |
Entity Tax Identification Number | 82-2755287 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 7946 Ivanhoe Avenue | |
Entity Address, Address Line Two | Suite 201 | |
Entity Address, City or Town | La Jolla | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92037 | |
City Area Code | (858) | |
Local Phone Number | 263-4196 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 24,255,786 | |
Common Stock [Member] | ||
Title of 12(b) Security | Common Stock, $0.0001 par value per share | |
Trading Symbol | ENSC | |
Security Exchange Name | NASDAQ | |
Warrants [Member] | ||
Title of 12(b) Security | Warrants to purchase one share of Common Stock | |
Trading Symbol | ENSCW | |
Security Exchange Name | NASDAQ |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 6,845,672 | $ 194,214 |
Unbilled receivable | 86,867 | |
Right-of-use asset | 31,543 | 23,538 |
Prepaid expenses and other current assets | 1,957,226 | 130,124 |
Total current assets | 8,921,308 | 347,876 |
Property and equipment, net | 151 | |
Other assets | 796,423 | 3,780 |
Total assets | 9,717,731 | 351,807 |
Current liabilities: | ||
Accounts payable | 471,858 | 1,724,598 |
Accrued expenses and other liabilities | 3,730,762 | 344,792 |
Lease liability | 31,667 | 25,500 |
Notes payable and accrued interest | 2,797,181 | 4,245,082 |
Embedded derivative on convertible notes | 670,262 | |
Total current liabilities | 7,031,468 | 7,010,234 |
Long-term liabilities: | ||
Notes payable, net of current portion | 2,114,451 | |
Other long term liabilities | 957,099 | |
Total long-term liabilities | 3,071,550 | |
Total liabilities | 10,103,018 | 7,010,234 |
Stockholders’ deficit | ||
Preferred stock, $0.0001 par value, 1,500,000 shares authorized, no shares issued and outstanding at September 30, 2021 (unaudited) and December 31, 2020 | ||
Common stock, $0.0001 par value, 150,000,000 shares authorized; 24,275,541 and 15,768,725 shares issued at September 30, 2021 (unaudited) and December 31, 2020, respectively; 24,255,786 and 15,768,725 shares outstanding at September 30, 2021 (unaudited) and December 31, 2020, respectively | 2,425 | 1,577 |
Additional paid-in capital | 74,897,406 | 49,516,337 |
Accumulated deficit | (75,005,517) | (55,958,716) |
Total Ensysce Biosciences, Inc. stockholders’ deficit | (105,686) | (6,440,802) |
Noncontrolling interests in stockholders’ deficit | (279,601) | (217,625) |
Total stockholders’ deficit | (385,287) | (6,658,427) |
Total liabilities and stockholders’ deficit | $ 9,717,731 | $ 351,807 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | |||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 1,500,000 | 1,500,000 | 1,500,000 |
Preferred Stock, Shares Issued | 0 | 0 | |
Preferred Stock, Shares Outstanding | 0 | 0 | |
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 | 150,000,000 |
Common Stock, Shares, Issued | 24,275,541 | 15,768,725 | |
Common Stock, Shares, Outstanding | 24,255,786 | 15,768,725 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Statement [Abstract] | ||||
Federal grants | $ 1,200,816 | $ 827,639 | $ 1,895,907 | $ 3,514,720 |
Operating expenses: | ||||
Research and development | 1,714,635 | 892,991 | 2,502,232 | 3,136,207 |
General and administrative | 16,372,976 | 339,422 | 17,257,361 | 898,470 |
Total operating expenses | 18,087,611 | 1,232,413 | 19,759,593 | 4,034,677 |
Loss from operations | (16,886,795) | (404,774) | (17,863,686) | (519,957) |
Other income (expense): | ||||
Adjustment to initial fair value of debt | (1,325,804) | (1,325,804) | ||
Issuance costs for convertible notes | (500,158) | (500,158) | ||
Change in fair value of liabilities | 1,476,185 | 2,171,446 | 2,149,499 | 1,088,272 |
Interest expense | (24,660) | (216,166) | (1,282,820) | (747,530) |
Loss on extinguishment of debt | (347,566) | |||
Other income and expense, net | 61,758 | 61,758 | ||
Total other income (expense), net | (312,679) | 1,955,280 | (1,245,091) | 340,742 |
Net income (loss) | (17,199,474) | 1,550,506 | (19,108,777) | (179,215) |
Net loss attributable to noncontrolling interests | (35,948) | (20,014) | (61,976) | (21,990) |
Net income (loss) attributable to common stockholders | $ (17,163,526) | $ 1,570,520 | $ (19,046,801) | $ (157,225) |
Net income (loss) per basic share: | ||||
Net income (loss) per share attributable to common stockholders, basic | $ (0.71) | $ 0.10 | $ (1.02) | $ (0.01) |
Weighted average common shares outstanding, basic | 24,255,786 | 15,768,725 | 18,755,252 | 15,768,725 |
Net income (loss) per diluted share: | ||||
Net income (loss) per share attributable to common stockholders, diluted | $ (0.71) | $ 0.09 | $ (1.02) | $ (0.01) |
Weighted average common shares outstanding, diluted | 24,255,786 | 16,849,422 | 18,755,252 | 15,768,725 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 1,577 | $ 49,337,658 | $ (56,015,486) | $ (6,676,251) | |
Beginning balance, shares at Dec. 31, 2019 | 15,768,725 | ||||
Stock-based compensation | 120,061 | 120,061 | |||
Net income (loss) | (157,225) | (21,990) | (179,215) | ||
Ending balance, value at Sep. 30, 2020 | $ 1,577 | 49,457,719 | (56,172,711) | (21,990) | (6,735,405) |
Ending balance, shares at Sep. 30, 2020 | 15,768,725 | ||||
Beginning balance, value at Jun. 30, 2020 | $ 1,577 | 49,406,209 | (57,743,231) | (1,976) | (8,337,421) |
Beginning balance, shares at Jun. 30, 2020 | 15,768,725 | ||||
Stock-based compensation | 51,510 | 51,510 | |||
Net income (loss) | 1,570,520 | (20,014) | 1,550,506 | ||
Ending balance, value at Sep. 30, 2020 | $ 1,577 | 49,457,719 | (56,172,711) | (21,990) | (6,735,405) |
Ending balance, shares at Sep. 30, 2020 | 15,768,725 | ||||
Beginning balance, value at Dec. 31, 2020 | $ 1,577 | 49,516,337 | (55,958,716) | (217,625) | (6,658,427) |
Beginning balance, shares at Dec. 31, 2020 | 15,768,725 | ||||
Stock-based compensation | 105,026 | 105,026 | |||
Issuance of warrants | 11,565,472 | 11,565,472 | |||
Warrants modification | 56,590 | 56,590 | |||
Exercise of stock options | $ 28 | 262,834 | $ 262,862 | ||
Exercise of stock options, shares | 284,825 | 284,825 | |||
Settlement of convertible notes | $ 136 | 5,696,567 | $ 5,696,703 | ||
Settlement of convertible notes, shares | 1,357,968 | ||||
Issuance of common stock for business combination, net of transaction costs | $ 684 | 7,694,580 | 7,695,264 | ||
Issuance of common stock for business combination, net of transaction costs, shares | 6,844,268 | ||||
Net income (loss) | (19,046,801) | (61,976) | (19,108,777) | ||
Ending balance, value at Sep. 30, 2021 | $ 2,425 | 74,897,406 | (75,005,517) | (279,601) | (385,287) |
Ending balance, shares at Sep. 30, 2021 | 24,255,786 | ||||
Beginning balance, value at Jun. 30, 2021 | $ 2,425 | 63,250,511 | (57,841,991) | (243,653) | 5,167,292 |
Beginning balance, shares at Jun. 30, 2021 | 24,255,786 | ||||
Stock-based compensation | 24,833 | 24,833 | |||
Issuance of warrants | 11,565,472 | 11,565,472 | |||
Warrants modification | 56,590 | 56,590 | |||
Net income (loss) | (17,163,526) | (35,948) | (17,199,474) | ||
Ending balance, value at Sep. 30, 2021 | $ 2,425 | $ 74,897,406 | $ (75,005,517) | $ (279,601) | $ (385,287) |
Ending balance, shares at Sep. 30, 2021 | 24,255,786 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Cash flows from operating activities: | ||||||
Net loss | $ (17,199,474) | $ 1,550,506 | $ (19,108,777) | $ (179,215) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Depreciation | 50 | 50 | 151 | 149 | ||
Accrued interest | 336,851 | 273,069 | ||||
Accretion of discounts on promissory notes | 945,969 | 474,461 | ||||
Change in fair value of embedded derivative | (673,314) | (1,088,272) | ||||
Change in fair value of convertible debt | (1,071,099) | |||||
Loss on extinguishment of debt | $ (347,566) | 347,566 | ||||
Stock-based compensation | 105,026 | 120,061 | ||||
Adjustment to fair value of financial instruments | 920,718 | |||||
Issuance of warrants for share subscription facility | 11,565,472 | |||||
Commitment fee for share subscription facility | 1,124,292 | |||||
Warrant modification | 56,590 | |||||
Lease cost | (1,838) | |||||
Issuance costs for convertible notes | 500,158 | 500,158 | ||||
Changes in operating assets and liabilities: | ||||||
Unbilled receivable | (86,867) | 173,552 | ||||
Prepaid expenses and other assets | (683,492) | (343,076) | ||||
Accounts payable | (1,252,740) | 1,161,526 | ||||
Accrued expenses and other liabilities | 2,500,970 | (1,305,740) | ||||
Net cash used in operating activities | (4,474,364) | (713,485) | ||||
Cash flows from investing activities: | ||||||
Purchases of property and equipment | (3,689) | |||||
Net cash used by investing activities | (3,689) | |||||
Cash flows from financing activities: | ||||||
Proceeds from issuance of convertible notes | 5,050,000 | 1,000,000 | ||||
Issuance costs for convertible notes | (500,158) | |||||
Proceeds from issuance of promissory notes to related parties | 350,000 | 100,000 | ||||
Repayment of promissory notes and accrued interest | (467,774) | |||||
Proceeds from exercise of stock options | 262,862 | |||||
Proceeds from issuance of common stock for business combination, net of transaction costs | 6,626,312 | |||||
Repayment of financed insurance premiums | (195,420) | |||||
Contribution from noncontrolling interests | 20 | |||||
Net cash provided by financing activities | 11,125,822 | 1,100,020 | ||||
Increase in cash and cash equivalents | 6,651,458 | 382,846 | ||||
Cash and cash equivalents beginning of period | $ 194,214 | 194,214 | 341,536 | $ 341,536 | ||
Cash and cash equivalents end of period | $ 6,845,672 | $ 724,382 | 6,845,672 | 724,382 | $ 194,214 | |
Supplemental cash flow information: | ||||||
Income tax payments | 1,600 | 1,600 | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||
Fair value of embedded derivative at issuance | 471,758 | |||||
Settlement of convertible notes into common stock | 5,696,703 | |||||
Net assets acquired in business combination | 1,068,950 | |||||
Proceeds from financed insurance premiums | 867,300 | |||||
Share subscription facility transaction costs | $ 12,689,764 |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES Ensysce Biosciences, Inc. (“Ensysce”), along with its subsidiary, Covistat Inc. (“Covistat”) and its wholly owned subsidiary EBI Operating, Inc. (collectively, the “Company”), is engaged in the development of small and large molecule drug delivery platforms targeting pain and cancer markets. The primary focus of the Company is its small molecule 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 TM TM On January 31, 2021, Leisure Acquisition Corp., a Delaware corporation (“LACQ”), entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with Ensysce Biosciences, Inc., a Delaware corporation (“Former Ensysce”), and EB Merger Sub, Inc., a Delaware corporation and wholly-owned, direct subsidiary of LACQ (“Merger Sub”). Pursuant to the Merger Agreement, on June 30, 2021 (the “Closing Date”), Merger Sub was merged with and into Former Ensysce, with Former Ensysce surviving the merger (“Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). In connection with the closing of the Business Combination on the Closing Date (the “Closing”), Former Ensysce became a wholly owned subsidiary of LACQ and the stockholders of Former Ensysce, as of immediately prior to the effective time of the Merger, received shares of LACQ and hold a portion of the shares of Common Stock, par value $ 0.0001 per share (the “Common Stock”), of LACQ. On the Closing Date, at the effective time of the Merger, LACQ changed its name from “Leisure Acquisition Corp.” to “Ensysce Biosciences, Inc.” Unless the context otherwise requires, “we,” “us,” “our” and the “Company” refer to Ensysce and the combined company and its subsidiaries following the Closing. Unless the context otherwise requires, references to “LACQ” refer to Leisure Acquisition Corp., a Delaware corporation, prior to the Closing. In connection with the Business Combination, outstanding shares of common stock of Former Ensysce (including shares resulting from the conversion of Former Ensysce’s convertible debt prior to Closing) were converted into the right to receive shares of Ensysce at an exchange ratio of 0.06585 . Immediately following the Business Combination, stockholders of Former Ensysce owned approximately 71.8 % of the outstanding common stock of the combined company. In addition, Former Ensysce’s existing options and warrants were exchanged for equivalent securities in Ensysce on their existing terms (with standard adjustments to exercise price and underlying shares, consistent with the foregoing exchange ratio). As of July 2, 2021, Ensysce’s shares of common stock are traded on the Nasdaq Capital Market (“Nasdaq”) under the new ticker symbol “ENSC”. In June 2020, the Company commenced an initiative to develop a therapeutic for the treatment of certain coronavirus infections through the formation of a separate entity, Covistat, Inc., a Delaware corporation. Pursuant to the articles of incorporation, Covistat 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 Covistat, with 19.8 % and 1.0 % of the shares held by certain key personnel of the Company and an unrelated party, respectively. In March 2020, the World Health Organization declared the outbreak of a respiratory disease caused by a new coronavirus as a “pandemic”. First identified in late 2019 and known now as COVID-19, the outbreak has impacted millions of individuals worldwide. In response, many countries have implemented measures to combat the outbreak which have impacted global business operations. As of the date of issuance of the consolidated financial statements, the Company’s operations have not been significantly impacted; however, the Company continues to monitor the situation. No impairments were recorded as of the balance sheet date as no triggering events or changes in circumstances had occurred as of year-end; however, due to significant uncertainty surrounding the situation, management’s judgment regarding this could change in the future. In addition, while the Company’s results of operations, cash flows and financial condition could be negatively impacted, the extent of the impact cannot be reasonably estimated at this time. The Company currently operates in one business segment, which is pharmaceuticals. The Company is not organized by market and is managed and operated as one business. A single management team reports to the chief operating decision maker, the Chief Executive Officer. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | 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. In the opinion of management, all adjustments considered necessary for a fair presentation have been included in the consolidated financial statements. Operating results for the three and nine months ended September 30, 2021, are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The interim unaudited consolidated financial statements have been prepared under the presumption that users of the interim financial information have either read or have access to the audited consolidated financial statements for the fiscal year ended December 31, 2020, which may be found in the Company’s Form S-1 registration statement filed with the SEC on August 9, 2021. Business Combination The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, LACQ was identified as the acquired company for financial reporting purposes, primarily because the stockholders of Former Ensysce control the majority of the voting power of the combined company, Former Ensysce’s board of directors comprise a majority of the governing body of the combined company, and Former Ensysce’s senior management comprise the leadership of the combined company. Accordingly, for accounting purposes, the transaction was treated as the equivalent of Former Ensysce issuing shares for the net assets of LACQ, accompanied by a recapitalization. The net assets of LACQ, primarily consisting of cash of $ 7.8 million and prepaid expenses of $ 1.1 million, were recorded at historical cost with no goodwill or other intangible assets recorded. The shares and net loss per share prior to the reverse recapitalization have been retroactively restated to reflect the exchange ratio of 0.06585 . The financial statements reflect the historical operations of Ensysce. The Business Combination triggered the conversion of the 2015 convertible notes, the 2018 convertible notes and the 2021 convertible note of Former Ensysce into common stock. In connection with the Closing, the 2020 convertible notes were amended to provide for automatic conversion of the outstanding principal and interest into shares common stock of Ensysce. The Company had recorded $ 1.2 million of deferred transaction costs, consisting of legal and accounting fees directly related to the Business Combination, which were offset against the proceeds of the Business Combination within additional paid-in capital. 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 and had an accumulated deficit of $ 75.0 million at September 30, 2021. There is no assurance that profitable operations will ever be achieved, and, if achieved, could be sustained on a continuing basis. Product development activities, clinical and pre-clinical testing, and commercialization of the Company’s product candidates are necessary to develop the Company’s products and will require significant additional financing. There can be no assurance the Company will be able to obtain such funds. These matters, among others, raise substantial doubt about the Company’s ability to continue as a going concern. In December 2020, the Company executed a share subscription facility with an investment group. Under the agreement, the investor agreed to provide the Company with a share subscription facility of up to $ 60.0 million for a 36-month term following the public listing of the Company’s common stock. The Company will control the timing and maximum amount of drawdown under this facility and has no minimum drawdown obligation. The investor will pay, in cash, a per-share amount equal to 90% of the average daily closing price of the Company’s stock during the 30 consecutive trading days prior to the issuance of a draw notice, which shall not exceed 400% of the average trading volume for the 30 trading days immediately preceding the draw down date. On June 30, 2021, the Company consummated the Business Combination with LACQ, resulting in the Company’s shares becoming publicly listed on Nasdaq on July 2, 2021. Concurrent with the public listing of the Company’s shares, the Company issued to the investor 1,106,108 warrants with a five-year term to purchase common stock of Ensysce at an exercise price of $ 10.01 per share (Notes 3 and 8). The Company must pay a commitment fee to the investor of $ 1.2 million with $ 800,000 due on the first anniversary of the public listing date and $ 400,000 due on the 18-month anniversary of the public listing date. The commitment fee can be paid from the proceeds of a draw against the facility or in freely tradable common stock of the Company. In September 2021, the Company entered into a $ 15.9 million convertible note financing agreement with institutional investors, of which, as of September 30, 2021, the Company had drawn $ 5.0 million. (See Notes 7 and 11 for additional information.) The agreement limits the Company’s ability to execute certain debt and equity financings, including its existing $ 60.0 million share subscription facility, while the convertible notes are outstanding. Without the availability of proceeds through the share subscription facility, existing cash resources are not sufficient to fund current planned operations. While the Company believes in the viability of its strategy to ultimately realize revenues and in its ability to raise additional funds, management cannot be certain that additional funding will be available on acceptable terms, or at all. The Company’s ability to continue as a going concern is dependent upon its ability to obtain adequate financing and achieve profitable operations. As a result, these plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern for a period of 12 months following the date these consolidated financial statements were issued. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 research and development services, the valuation allowance of deferred tax assets resulting from net operating losses, the valuation of common stock, warrants, options to purchase the Company’s common stock, and the notes payable. 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 may exceed federally insured limits. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held. The Company has no financial instruments with off-balance sheet risk of loss. 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. Depreciation expense of $ 50 and $ 151 was recognized for the three and nine months ended September 30, 2021, respectively. Depreciation expense of $ 50 and $ 149 was recognized for the three and nine months ended September 30, 2020, respectively. Depreciation expense is classified in general and administrative expense in the accompanying consolidated statements of operations. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company will recognize an impairment loss only if the carrying amount is not recoverable through its undiscounted cash flows and measure any impairment loss based on the difference between the carrying amount and estimated fair value. There were no such losses for the three and nine months ended September 30, 2021 and 2020. Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to interest rate, market, or foreign currency risks. The Company evaluates all of its financial instruments, including notes payable, to determine whether such instruments are derivatives or contain features that qualify as embedded derivatives. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract and the features of the derivatives. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the consolidated statement of operations each period. Bifurcated embedded derivatives are classified with the related host contract in the Company’s consolidated balance sheet. Between January 2018 and January 2021, the Company entered into a series of notes that were determined to have embedded derivative instruments in the form of a contingent put option. The notes are recognized at the value of proceeds received after allocating issuance proceeds to the bifurcated contingent put option. The notes are subsequently measured at amortized cost using the effective interest method to accrete interest over their term to bring the notes’ initial carrying value to their principal balance at maturity. The bifurcated put option is initially measured at fair value and subsequently measured at fair value with changes in fair value recognized as a component of other expenses in the consolidated statements of operations (see Note 7). The notes and the contingent put option are classified as either long-term or short-term liabilities based on the maturity date of the related loan. All outstanding derivative liabilities were settled in connection with the conversion of outstanding notes payable on June 30, 2021. Refer to Note 7 for details of the conversion. Fair Value Measurement ASC 820, Fair Value Measurements 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. 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. ASC 820 requires all entities to disclose the fair value of financial instruments, both assets and liabilities, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of September 30, 2021 and December 31, 2020, the recorded values of cash and cash equivalents, prepaid expenses, accounts payable, and accrued expenses and other liabilities approximate their fair values due to the short-term nature of these items. Convertible notes On September 24, 2021, the Company issued convertible notes with a face value of $ 5.3 The carrying value of outstanding notes payable at December 31, 2020 approximates the estimated aggregate fair value as the embedded contingent put option is recognized at fair value and classified with the debt host. The put option allows certain notes payable to be converted into common stock, contingent upon completion of an equity financing transaction with gross proceeds above certain thresholds. The fair value estimate of the embedded put option is based on the probability-weighted discounted value of the put feature and represents a Level 3 measurement. Significant assumptions used to determine the fair value of the put feature include the estimated probability of exercise of the put option and the discount rate used to calculate fair value. The estimated probability of exercise is based on management’s expectation for future equity financing transactions. The discount rate is based on the weighted average effective yield of notes payable previously issued by the Company, adjusted for changes in market yields of healthcare sector CCC-rated debt. As of December 31, 2020, assumptions included a probability of exercise of the put option of 10 % and a discount rate of 42.9 %. As noted above, all outstanding derivative liabilities were settled upon the conversion of outstanding notes payable upon the consummation of the Business Combination. Refer to Note 7 for details of the conversion. Warrants On September 24, 2021, the Company issued liability classified warrants in connection with the issuance of convertible notes. The Company uses a Black Scholes model to estimate the fair value of the warrants, which relies on unobservable Level 3 inputs. Changes in the fair value of the warrants are recognized through earnings for each reporting period. Refer to Note 8. The following tables present assets and liabilities measured and recorded at fair value on the Company’s consolidated balance sheet as of September 30, 2021 and December 31, 2020. As of September 30, 2021, all contingent put options were settled upon conversion of the notes at the closing of the Business Combination. SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE September 30, 2021 Total Level 1 Level 2 Level 3 Convertible note $ 4,233,318 $ - $ - $ 4,233,318 Liability classified warrants 620,718 - - 620,718 Total $ 4,854,036 $ $ $ 4,854,036 December 31, 2020 Total Level 1 Level 2 Level 3 Contingent put option $ 670,262 $ - $ - $ 670,262 Total $ 670,262 $ $ $ 670,262 The following table summarizes the change in fair value of the Company’s Level 3 assets and liabilities: SCHEDULE OF CHANGE IN FAIR VALUE OF COMPANY’S LEVEL 3 For the nine months ended September 30, 2021 Total Contingent put option Convertible notes Liability classified warrants Fair value, December 31, 2020 $ 670,262 $ 670,262 $ - $ - Additions 6,333,273 3,052 5,304,417 1,025,804 Change in fair value (2,149,499 ) (673,314 ) (1,071,099 ) (405,086 ) Fair value, September 30, 2021 $ 4,854,036 $ - $ 4,233,318 $ 620,718 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 TM 5.4 million ($ 3.2 million and $ 2.2 million in years 1 and 2 respectively) of which the Company must 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 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 TM 5.4 million. The Company concluded the government grants are not within the scope of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers Not-for-Profit-Entities-Revenue Recognition The revenue recognized under the MPAR Grant and OUD Grant was as follows: SCHEDULE OF REVENUE RECOGNIZATION UNDER GRANTS Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 MPAR $ 1,119,312 $ 458,883 $ 1,246,424 $ 2,853,899 OUD 81,504 368,756 649,483 660,821 Total $ 1,200,816 $ 827,639 $ 1,895,907 $ 3,514,720 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. 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. For the three and nine months ended September 30, 2021 and 2020, stock-based compensation costs are recorded in general and administrative expenses in the consolidated statements of operations. 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 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. 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. A reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations follows: SCHEDULE OF EARNINGS PER SHARE RECONCILIATION 2021 2020 Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Numerator: Net income (loss) attributable to common stockholders $ (17,163,525 ) $ 1,570,520 $ (19,046,800 ) $ (157,225 ) Denominator: Weighted average shares outstanding, basic 24,255,786 15,768,725 18,755,252 15,768,725 Weighted average dilutive stock options - 1,080,697 - - Weighted average shares outstanding, diluted 24,255,786 16,849,422 18,755,252 15,768,725 Net income (loss) per share attributable to common stockholders, basic $ (0.71 ) $ 0.10 $ (1.02 ) $ (0.01 ) Net income (loss) per share attributable to common stockholders, diluted (0.71 ) 0.09 (1.02 ) (0.01 ) 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: SCHEDULE OF WEIGHTED AVERAGE SHARES OF ANTI-DILUTIVE SECURITIES Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Stock options 4,444,068 2,647,342 4,516,652 5,851,008 Warrants 20,019,056 19,755 6,710,625 19,755 Total 24,463,124 2,667,097 11,227,277 5,870,763 Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The guidance is effective for fiscal years beginning after December 31, 2021 and interim periods within that year. Early adoption is permitted. The Company is evaluating the impact of ASU 2019-12 on the consolidated financial statements. 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. Entities must adopt the guidance as of the beginning of its annual fiscal year and a modified retrospective or fully retrospective transition approach is permitted. The Company is evaluating the impact of ASU 2020-06 on the consolidated financial statements. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 9 Months Ended |
Sep. 30, 2021 | |
Prepaid Expenses And Other Current Assets | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 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 September 30, December 31, 2021 2020 Prepaid insurance $ 984,972 $ 17,158 Prepaid research and development 874,865 112,966 Other prepaid expenses 97,389 - Total prepaid expenses and other current assets $ 1,957,226 $ 130,124 |
ACCRUED EXPENSES AND OTHER LIAB
ACCRUED EXPENSES AND OTHER LIABILITIES | 9 Months Ended |
Sep. 30, 2021 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER LIABILITIES | NOTE 5 – ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consisted of the following: SCHEDULE OF ACCRUED EXPENSES AND OTHER LIABILITIES September 30, December 31, 2021 2020 Consultant stock compensation expenses $ 2,264,479 $ - Share subscription facility commitment fees 800,000 Professional fees 265,450 - Accrued research and development 142,897 72,906 Accrued scientific advisory board fees 60,032 60,032 Deferred grant revenue - 159,047 Other accrued liabilities 197,904 52,807 Total accrued expenses and other liabilities $ 3,730,762 $ 344,792 Other long-term liabilities consisted of the following: SCHEDULE OF OTHER LONG-TERM LIABILITIES September 30, December 31, 2021 2020 Share subscription facility commitment fees $ 336,381 $ - Liability classified warrants 620,718 Total other long-term liabilities $ 957,099 $ - |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 6 - COMMITMENTS AND CONTINGENCIES Litigation As of September 30, 2021 and December 31, 2020, there were no pending legal proceedings against the Company that are expected to have a material adverse effect on cash flows, financial condition or results of operations. From time to time, the Company could become involved in disputes and various litigation matters that arise in the normal course of business. These may include disputes and lawsuits related to intellectual property, licensing, contract law and employee relations matters. Periodically, the Company reviews the status of significant matters, if any exist, and assesses its potential financial exposure. If the potential loss from any claim or legal claim is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, 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. On July 12, 2021, following the Business Combination with LACQ, the Company’s former financial advisor filed an action against the Company and its Chief Executive Officer alleging that the common stock and warrants issued to the former advisor in satisfaction of its advisory fee should have been registered and immediately tradeable. On August 3, 2021, the parties entered into a settlement agreement whereby the former advisor would have their common stock and the common stock underlying their warrants registered on the Company’s resale Registration Statement on Form S-1 that it filed on August 9, 2021 (the “Resale Registration Statement”). In addition, the warrants would be modified to allow for cashless exercise and to reduce the exercise price from $ 11.50 /share to $ 10.00 /share. In consideration for this, both parties agreed to release the other from any past, present, or future claims. In addition, the former advisor agreed to immediately stay the proceedings and inform the Superior Court of a conditional settlement and to dismiss the lawsuit with prejudice five days following the effectiveness of the Resale Registration Statement. See Note 11 for additional information. Lease During the three and nine months ended September 30, 2020, the Company leased office space on a month-to-month basis. In August 2020, the Company entered into an agreement to lease office space. The lease commencement date was October 1, 2020 and the lease will terminate October 31, 2021 with no option to renew. In August 2021, the Company entered into an amendment of the aforementioned lease, whereby the term of the lease was extended through October 31, 2022 with no option to renew. The amendment resulted in a modification of the lease under ASC 842 and the Company remeasured the lease liability as of the amendment date. As of September 30, 2021, the future lease payments totalled $ 34,068 . The Company recognized total rent expense of $ 11,781 and $ 36,058 in the three and nine months ended September 30, 2021, respectively. The Company recognized total rent expense of $ 10,807 and $ 26,255 in the three and nine months ended September 30, 2020, respectively. Share-based 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 500,000 shares of common stock with a five -year term and an exercise price of $ 6.28 each , 50,000 shares of common stock each, and 200,000 restricted stock units each. The restricted stock units vest over one year with 50 % of the vesting contingent upon certain market conditions. These equity awards are contingent upon shareholder approval of an amended and restated 2021 Omnibus Plan at a special shareholder meeting scheduled to occur in December 2021, whereby the warrants would be replaced by non-qualified stock options with similar terms. As the Company did not identify a grant date for the equity awards as of September 30, 2021, it did not record these instruments in equity and instead recorded a liability and an expense for the estimated value of services received during the period. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 7 - NOTES PAYABLE The following table provides a summary of the Company’s outstanding debt as of September 30, 2021: SCHEDULE OF DEBT Principal balance Accrued interest Fair value adjustment Net debt balance 2021 convertible notes $ 5,300,000 $ 4,417 $ (1,071,099 ) $ 4,233,318 Financed insurance 676,555 1,759 - 678,314 Total $ 5,976,555 $ 6,176 $ (1,071,099 ) $ 4,911,632 The following table provides a summary of the Company’s outstanding debt as of December 31, 2020: Principal balance Accrued interest Unamortized debt discount Net debt balance 2015 convertible notes $ 100,000 $ 28,671 $ - $ 128,671 2018 convertible notes 3,500,000 727,905 (783,124 ) 3,444,781 2020 promissory notes 100,000 1,694 - 101,694 2020 convertible notes 700,000 29,726 (159,790 ) 569,936 Total $ 4,400,000 $ 787,996 $ (942,914 ) $ 4,245,082 The interest expense recognized for notes payable was as follows: SCHEDULE OF INTEREST EXPENSE DEBT 2021 2020 2021 2020 Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Stated interest accrual $ 24,660 $ 101,562 $ 251,857 $ 273,069 Debt discount amortization - 114,604 945,969 474,461 Total $ 24,660 $ 216,166 $ 1,197,826 $ 747,530 2015 Convertible Notes Payable During 2015, the Company issued certain convertible promissory notes in the aggregate principal amount of $ 873,000 100,000 5% 80% 2018 Convertible Notes Payable Between January 2018 and December 2020, the Company received financing totaling $ 3,500,000 2,500,000 1,000,000 24 10% 50% 5,000,000 Additionally, if there is an initial public offering or reverse merger that results in Ensysce becoming publicly listed, the promissory notes automatically convert to equity at the lower of $ 0.25 55 The 2018 convertible notes also include a change in control call option whereby, upon the close of a sale of Ensysce, other than an initial public offering, Ensysce has the right to prepay the promissory notes at 200% of the principal outstanding plus all accrued and unpaid interest. In June 2020, the board resolved to extend the maturity of all 2018 convertible notes payable issued in 2018 by one 2020 Convertible Notes Payable During the year ended December 31, 2020, Covistat received financing totaling $ 700,000 10% 2.0 80% 10.0 10.0 2020 Promissory Notes Payable During the year ended December 31, 2020, the Company received financing totaling $ 100,000 under a series of unsecured promissory notes with the Chief Executive Officer and a board member. The promissory notes bear interest at a rate of 10 % per annum and mature December 31, 2021 or upon certain financing transactions, whichever is earlier. The notes were repaid in full in July 2021. 2021 Convertible Note Payable In January 2021, the Company received financing totaling $ 50,000 10% January 28, 2023 80% 10.0 2021 Promissory Notes In March and May 2021, the Company received financing totaling $ 350,000 under unsecured promissory notes issued to related parties including the Chief Executive Officer and members of the board of directors. The notes mature on the earlier of June 30, 2022 or the Company’s receipt of gross proceeds of at least $ 2.0 million from the sale of common or preferred stock and bear interest at a rate of 10 % per annum. The notes were repaid in full in July 2021. Settlement of Convertible Notes Payable On June 30, 2021, the Company consummated the Business Combination with LACQ, which triggered the automatic conversion into common stock of the 2015 convertible notes payable, the 2018 convertible notes payable, and the 2021 convertible notes payable. In connection with certain closing conditions, the 2020 convertible notes were amended to provide for automatic conversion of the outstanding principal and interest into common stock. The modification resulted in a loss on extinguishment of debt of $ 347,566 The Company applied ASC 470-20-40-1 to the accounting of the conversion, which requires the accelerated recognition of unamortized debt discounts as interest expense upon conversion. Accordingly, $ 554,911 The table below summarizes the conversion of each class of notes payable: SCHEDULE OF CONVERTIBLE DEBT Immediately prior to Business Combination Note series Principal Interest Carrying value of debt converted Shares of common stock issued Outstanding debt, June 30, 2021 2015 Convertible Note $ 100,000 $ 31,151 $ 131,151 15,116 $ — 2018 Convertible Notes 3,500,000 901,466 4,401,466 1,259,837 — 2020 Convertible Notes 700,000 64,438 764,438 77,000 — 2021 Convertible Note 50,000 2,082 52,082 6,015 — Total $ 4,350,000 $ 999,137 $ 5,349,137 1,357,968 $ — September 2021 Convertible Notes Payable On September 24, 2021, the Company entered into an agreement with institutional investors to issue $ 15.9 million of convertible notes (“Convertible Notes”). The agreement provides for two closings: the first closing for $ 5.3 million (resulting in net proceeds of $ 4.7 million) and closed on September 24, 2021. The second closing for $ 10.6 million was completed in the fourth quarter of 2021 (See Note 11 for additional information). The proceeds of the sale of the securities shall be used for working capital purposes subject to certain customary restrictions and secured by the Company’s rights to its patents and licenses. The Company may not issue any additional debt or equity without the prior written consent of the holders. The convertible notes mature on June 23, 2023 5% 6% The interest may be settled in cash or shares at the option of the Company and is payable together with monthly redemptions of the outstanding principal amount of the debt. The Company recorded $ 4,417 The Company elected to apply the fair value option to the measurement of the Convertible Notes and accordingly recorded a charge to other income (expense), net for issuance costs of $ 500,158 . 5.3 1.1 4.2 The convertible notes may be converted into the Company’s common stock at the option of the holder in whole or in part at the conversion price of $ 5.87 , subject to a beneficial ownership limitation of 4.99% (subject to adjustment). The Company must reserve sufficient shares of authorized common stock to effect the conversion of the convertible notes and payment of interest. The shares were registered for public resale under a registration statement. At the Company’s option, the Company may redeem some or all of the then-outstanding principal amount of the convertible notes for cash in an amount equal to 100% of the outstanding principal amount of the principal to be redeemed, plus accrued but unpaid interest, plus all other amounts due with respect to the convertible notes. The number of shares to be settled shall be based on a conversion price equal to the lesser of (a) $5.87 and (b) 92 The Monthly Redemption Amount is defined as 1/18 th 4,855,108 If, at any time while the Convertible Notes are outstanding, the Company carries out one or more capital raises in excess of $ 5.0 million, the holder has the right to require the Company to use up to 20 % of the gross proceeds of such transaction to redeem all or a portion of the convertible notes for an amount in cash equal to the cash Mandatory Redemption Amount (i.e., 108% of outstanding principal and unpaid interest). Financed insurance premiums During the nine months ended September 30, 2021, the Company financed its directors and officers liability insurance in the amount of $ 867,300 12,078 |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | 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 . As of September 30, 2021 and December 31, 2020, there were no shares of preferred stock issued and outstanding. Common Stock On June 30, 2021, in connection with the Closing, the following common stock activity occurred: ● 16,053,550 shares of common stock were issued to holders of Former Ensysce common stock. ● 6,219,268 shares of common stock outstanding were assumed by the Company. ● 1,357,968 shares of common stock were issued in settlement of $ 5.8 million of convertible debt. ● 19,755 shares of restricted common stock were issued in exchange for previously outstanding warrants to purchase Former Ensysce common stock. ● 500,000 shares of common stock were issued in settlement of a termination agreement with a strategic advisor dated January 2021. ● 125,000 shares of common stock were issued in settlement of deferred underwriting costs. Warrants In February 2013, the Company issued 13,170 warrants to purchase common stock, with a ten -year life and an exercise price of $ 6.23 per share. In August 2019, in connection with the issuance of convertible debt, the Company issued 6,585 warrants to purchase common stock, with a ten -year life and an exercise price of $ 3.04 . As of December 31, 2020, the warrants remained outstanding. On June 30, 2021, the Company issued 19,755 shares of common stock in settlement of the warrants, with such shares subject to restriction until certain conditions are met. On September 30, 2021, 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) 18,901,290 $ 10.00 11.50 LACQ warrants Equity (b) 1,106,108 $ 10.01 Share subscription facility Equity (c) 361,158 $ 7.63 Convertible note Liability 20,368,556 (a) On June 30, 2021, as a result of the Closing, the Company assumed a total of 18,901,290 10.00 11.50 June 30, 2026 five 10,000,000 8,901,290 On August 3, 2021, the Company entered into an agreement with an existing warrant holder to reduce the exercise price of 500,000 warrants issued on June 30, 2021 from $ 11.50 to $ 10.00 , resulting in an incremental increase in their fair value of $ 56,591 , recognized in general and administrative expense. (a) On June 30, 2021, as a result of the Closing, the Company assumed a total of 18,901,290 10.00 11.50 June 30, 2026 five 10,000,000 8,901,290 500,000 warrants issued on June 30, 2021 from $ 11.50 to $ 10.00 , resulting in an incremental increase in their fair value of $ 56,591 , recognized in general and administrative expense. (b) On July 2, 2021, upon public listing of the Company’s shares, the Company issued 1,106,108 three 10.01 14.49 11.6 (c) On September 24, 2021, the Company issued 361,158 7.63 September 23, 2026 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 Share Liability classified warrants (grant date 9/24/2021) Liability classified warrants (remeasured at 9/30/2021) Stock price $ 14.49 $ 4.49 $ 3.03 Exercise price $ 10.01 $ 7.63 $ 7.63 Expected term (years) 3.00 5.00 5.00 Volatility 110.0 % 94.1 % 94.1 % Risk free rate 0.5 % 1.0 % 1.0 % |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 9 - STOCK-BASED COMPENSATION In 2016, Former Ensysce adopted the Ensysce Biosciences, Inc. 2016 Stock Incentive Plan (the “2016 Plan”). The 2016 Plan, as amended, allowed for the issuance of non-statutory stock options, incentive stock options and other equity awards to Former Ensysce’s employees, directors, and consultants. In March 2019, Former Ensysce adopted the 2019 Directors Plan, which was amended in August 2020. The 2019 Directors Plan, as amended, allowed for the issuance of shares of Former Ensysce’s common stock pursuant to the grant of non-statutory stock options. In addition to the 2016 Plan and the 2019 Directors Plan, the Company has two legacy equity incentive plans (the “Legacy Plans”). No additional equity awards may be made under the Legacy Plans and the outstanding options will expire if unexercised by certain dates through August 2024. 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 4,444,068 options outstanding under Former Ensysce stock plans and reserves for issuance an additional 1,000,000 shares for future awards under the 2021 Omnibus Plan. No further awards may be made under the Former Ensysce stock plans. As of September 30, 2021 and December 31, 2020, the options outstanding under each plan were as follows: SCHEDULE OF STOCK OPTION OUTSTANDING September 30, December 31, 2021 2020 Legacy Plans - 543,106 2016 Plan - 4,034,332 2019 Directors Plan - 151,455 2021 Omnibus Plan 4,444,068 - Total options outstanding 4,444,068 4,728,893 Option Activity During the three and nine months ended September 30, 2020, the Company granted stock options to purchase an aggregate of 65,850 and 131,700 shares of common stock to members of the board of directors. The options vest over three years and have an exercise price of $ 3.35 per share. The Company recognized within general and administrative expense stock-based compensation expense of $ 24,833 and $ 105,026 for the three and nine months ended September 30, 2021, respectively. The Company recognized within general and administrative expense stock-based compensation expense of $ 51,510 and $ 120,061 for the three and nine months ended September 30, 2020, respectively. During the three and nine months ended September 30, 2021 and 2020, there was no stock-based compensation allocated to research and development expense. The following table summarizes the Company’s stock option activity during the nine months ended September 30, 2021: SCHEDULE OF STOCK OPTION ACTIVITY Weighted average Options Exercise price Remaining contractual life Intrinsic value Outstanding at December 31, 2020 4,728,893 $ 2.28 6.80 $ 1,817,383 Granted - - - Exercised (284,825 ) 0.91 472,453 Expired / Forfeited - - - Outstanding at September 30, 2021 4,444,068 2.40 6.20 2,944,345 Exercisable at September 30, 2021 4,337,971 2.38 6.20 2,937,754 Vested and expected to vest 4,444,068 2.40 6.20 2,944,345 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 Nine months ended September 30, 2020 Stock price $ 2.58 Exercise price $ 3.35 Expected stock price volatility 124.0 % Expected term (years) 5.8 Risk-free interest rate 0.27 1.52 % Expected dividend yield 0 % ● Expected stock-price volatility. ● Expected term. ● Risk-free interest rate. ● Expected dividend yield. The weighted-average grant date fair value of options granted during the nine months ended September 30, 2020 was $ 2.20 . There were no options granted during the nine months ended September 30, 2021. As of September 30, 2021, the Company had an aggregate of $ 54,427 of unrecognized share-based compensation cost, which is expected to be recognized over the weighted average period of 1.68 years. Shares Reserved for Future Issuance The following shares of common stock are reserved for future issuance: SCHEDULE OF COMMON STOCK FUTURE ISSUANCE September 30, 2021 Stock options outstanding 4,444,068 Stock options available for future grant under 2021 Omnibus Incentive Plan 1,000,000 Convertible notes outstanding 902,896 Warrants outstanding 20,368,556 Total shares of common stock reserved for future issuance 26,715,520 |
RELATED PARTIES
RELATED PARTIES | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTIES | NOTE 10 - RELATED PARTIES The Company paid cash compensation during the three and nine months ended September 30, 2021 of $ 3,584 and $ 43,898 , respectively, to the Chief Executive Officer through a separate operating company with which the Chief Executive Officer is affiliated. Such cash compensation totalled $ 38,967 and $ 77,934 for the three and nine months ended September 30, 2020. As of September 30, 2021 and December 31, 2020, the Company owed $ 0 and $ 12,989 , respectively, in accounts payable to the separate operating company. The Company issued a series of convertible notes to the Chairman of the Board as described in Note 7, which totalled $ 2.5 million as of December 31, 2020. All outstanding notes converted into common stock upon the closing of the Business Combination on June 30, 2021. As of September 30, 2021 and December 31, 2020, the Company had promissory notes outstanding which totalled $ 0 and $ 100,000 , respectively, to three members of the board of directors, including the Chief Executive Officer and Chairman of the Board, as described in Note 7. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 - SUBSEQUENT EVENTS On October 6, 2021, the Superior Court dismissed with prejudice the case filed on July 12, 2021 by the Company’s former financial advisor, as discussed in Note 6, following effectiveness of the Resale Registration Statement filed on August 9, 2021 and amended on September 22, 2021. On November 5, 2021, the Company completed the second closing of the agreement with institutional investors for convertible notes payable discussed in Note 7. The Company issued $ 10.6 million in convertible notes and 722,317 warrants with a five 7.63 per share, in exchange for $ 10.0 million of cash proceeds before fees and offering expenses. The convertible notes from the second closing have similar terms to those discussed in Note 7, except that the monthly redemption period begins February 1, 2022 and the maturity date is August 4, 2023. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Use of Estimates and Assumptions | 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 research and development services, the valuation allowance of deferred tax assets resulting from net operating losses, the valuation of common stock, warrants, options to purchase the Company’s common stock, and the notes payable. |
Cash and Cash Equivalents | 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 | 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 may exceed federally insured limits. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held. The Company has no financial instruments with off-balance sheet risk of loss. |
Property and Equipment | 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. Depreciation expense of $ 50 and $ 151 was recognized for the three and nine months ended September 30, 2021, respectively. Depreciation expense of $ 50 and $ 149 was recognized for the three and nine months ended September 30, 2020, respectively. Depreciation expense is classified in general and administrative expense in the accompanying consolidated statements of operations. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company will recognize an impairment loss only if the carrying amount is not recoverable through its undiscounted cash flows and measure any impairment loss based on the difference between the carrying amount and estimated fair value. There were no such losses for the three and nine months ended September 30, 2021 and 2020. |
Derivative Financial Instruments | Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to interest rate, market, or foreign currency risks. The Company evaluates all of its financial instruments, including notes payable, to determine whether such instruments are derivatives or contain features that qualify as embedded derivatives. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract and the features of the derivatives. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the consolidated statement of operations each period. Bifurcated embedded derivatives are classified with the related host contract in the Company’s consolidated balance sheet. Between January 2018 and January 2021, the Company entered into a series of notes that were determined to have embedded derivative instruments in the form of a contingent put option. The notes are recognized at the value of proceeds received after allocating issuance proceeds to the bifurcated contingent put option. The notes are subsequently measured at amortized cost using the effective interest method to accrete interest over their term to bring the notes’ initial carrying value to their principal balance at maturity. The bifurcated put option is initially measured at fair value and subsequently measured at fair value with changes in fair value recognized as a component of other expenses in the consolidated statements of operations (see Note 7). The notes and the contingent put option are classified as either long-term or short-term liabilities based on the maturity date of the related loan. All outstanding derivative liabilities were settled in connection with the conversion of outstanding notes payable on June 30, 2021. Refer to Note 7 for details of the conversion. |
Fair Value Measurement | Fair Value Measurement ASC 820, Fair Value Measurements 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. 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. ASC 820 requires all entities to disclose the fair value of financial instruments, both assets and liabilities, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of September 30, 2021 and December 31, 2020, the recorded values of cash and cash equivalents, prepaid expenses, accounts payable, and accrued expenses and other liabilities approximate their fair values due to the short-term nature of these items. |
Convertible notes | Convertible notes On September 24, 2021, the Company issued convertible notes with a face value of $ 5.3 The carrying value of outstanding notes payable at December 31, 2020 approximates the estimated aggregate fair value as the embedded contingent put option is recognized at fair value and classified with the debt host. The put option allows certain notes payable to be converted into common stock, contingent upon completion of an equity financing transaction with gross proceeds above certain thresholds. The fair value estimate of the embedded put option is based on the probability-weighted discounted value of the put feature and represents a Level 3 measurement. Significant assumptions used to determine the fair value of the put feature include the estimated probability of exercise of the put option and the discount rate used to calculate fair value. The estimated probability of exercise is based on management’s expectation for future equity financing transactions. The discount rate is based on the weighted average effective yield of notes payable previously issued by the Company, adjusted for changes in market yields of healthcare sector CCC-rated debt. As of December 31, 2020, assumptions included a probability of exercise of the put option of 10 % and a discount rate of 42.9 %. As noted above, all outstanding derivative liabilities were settled upon the conversion of outstanding notes payable upon the consummation of the Business Combination. Refer to Note 7 for details of the conversion. |
Warrants | Warrants On September 24, 2021, the Company issued liability classified warrants in connection with the issuance of convertible notes. The Company uses a Black Scholes model to estimate the fair value of the warrants, which relies on unobservable Level 3 inputs. Changes in the fair value of the warrants are recognized through earnings for each reporting period. Refer to Note 8. The following tables present assets and liabilities measured and recorded at fair value on the Company’s consolidated balance sheet as of September 30, 2021 and December 31, 2020. As of September 30, 2021, all contingent put options were settled upon conversion of the notes at the closing of the Business Combination. SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE September 30, 2021 Total Level 1 Level 2 Level 3 Convertible note $ 4,233,318 $ - $ - $ 4,233,318 Liability classified warrants 620,718 - - 620,718 Total $ 4,854,036 $ $ $ 4,854,036 December 31, 2020 Total Level 1 Level 2 Level 3 Contingent put option $ 670,262 $ - $ - $ 670,262 Total $ 670,262 $ $ $ 670,262 The following table summarizes the change in fair value of the Company’s Level 3 assets and liabilities: SCHEDULE OF CHANGE IN FAIR VALUE OF COMPANY’S LEVEL 3 For the nine months ended September 30, 2021 Total Contingent put option Convertible notes Liability classified warrants Fair value, December 31, 2020 $ 670,262 $ 670,262 $ - $ - Additions 6,333,273 3,052 5,304,417 1,025,804 Change in fair value (2,149,499 ) (673,314 ) (1,071,099 ) (405,086 ) Fair value, September 30, 2021 $ 4,854,036 $ - $ 4,233,318 $ 620,718 |
Federal Grants | 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 TM 5.4 million ($ 3.2 million and $ 2.2 million in years 1 and 2 respectively) of which the Company must 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 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 TM 5.4 million. The Company concluded the government grants are not within the scope of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers Not-for-Profit-Entities-Revenue Recognition The revenue recognized under the MPAR Grant and OUD Grant was as follows: SCHEDULE OF REVENUE RECOGNIZATION UNDER GRANTS Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 MPAR $ 1,119,312 $ 458,883 $ 1,246,424 $ 2,853,899 OUD 81,504 368,756 649,483 660,821 Total $ 1,200,816 $ 827,639 $ 1,895,907 $ 3,514,720 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. |
Research and Development Costs | 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 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 | 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. For the three and nine months ended September 30, 2021 and 2020, stock-based compensation costs are recorded in general and administrative expenses in the consolidated statements of operations. 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 Income taxes are recorded in accordance with ASC 740, Income Taxes 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. |
Earnings per Share | 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. A reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations follows: SCHEDULE OF EARNINGS PER SHARE RECONCILIATION 2021 2020 Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Numerator: Net income (loss) attributable to common stockholders $ (17,163,525 ) $ 1,570,520 $ (19,046,800 ) $ (157,225 ) Denominator: Weighted average shares outstanding, basic 24,255,786 15,768,725 18,755,252 15,768,725 Weighted average dilutive stock options - 1,080,697 - - Weighted average shares outstanding, diluted 24,255,786 16,849,422 18,755,252 15,768,725 Net income (loss) per share attributable to common stockholders, basic $ (0.71 ) $ 0.10 $ (1.02 ) $ (0.01 ) Net income (loss) per share attributable to common stockholders, diluted (0.71 ) 0.09 (1.02 ) (0.01 ) 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: SCHEDULE OF WEIGHTED AVERAGE SHARES OF ANTI-DILUTIVE SECURITIES Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Stock options 4,444,068 2,647,342 4,516,652 5,851,008 Warrants 20,019,056 19,755 6,710,625 19,755 Total 24,463,124 2,667,097 11,227,277 5,870,763 |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The guidance is effective for fiscal years beginning after December 31, 2021 and interim periods within that year. Early adoption is permitted. The Company is evaluating the impact of ASU 2019-12 on the consolidated financial statements. 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. Entities must adopt the guidance as of the beginning of its annual fiscal year and a modified retrospective or fully retrospective transition approach is permitted. The Company is evaluating the impact of ASU 2020-06 on the consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE | The following tables present assets and liabilities measured and recorded at fair value on the Company’s consolidated balance sheet as of September 30, 2021 and December 31, 2020. As of September 30, 2021, all contingent put options were settled upon conversion of the notes at the closing of the Business Combination. SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE September 30, 2021 Total Level 1 Level 2 Level 3 Convertible note $ 4,233,318 $ - $ - $ 4,233,318 Liability classified warrants 620,718 - - 620,718 Total $ 4,854,036 $ $ $ 4,854,036 December 31, 2020 Total Level 1 Level 2 Level 3 Contingent put option $ 670,262 $ - $ - $ 670,262 Total $ 670,262 $ $ $ 670,262 |
SCHEDULE OF CHANGE IN FAIR VALUE OF COMPANY’S LEVEL 3 | The following table summarizes the change in fair value of the Company’s Level 3 assets and liabilities: SCHEDULE OF CHANGE IN FAIR VALUE OF COMPANY’S LEVEL 3 For the nine months ended September 30, 2021 Total Contingent put option Convertible notes Liability classified warrants Fair value, December 31, 2020 $ 670,262 $ 670,262 $ - $ - Additions 6,333,273 3,052 5,304,417 1,025,804 Change in fair value (2,149,499 ) (673,314 ) (1,071,099 ) (405,086 ) Fair value, September 30, 2021 $ 4,854,036 $ - $ 4,233,318 $ 620,718 |
SCHEDULE OF REVENUE RECOGNIZATION UNDER GRANTS | The revenue recognized under the MPAR Grant and OUD Grant was as follows: SCHEDULE OF REVENUE RECOGNIZATION UNDER GRANTS Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 MPAR $ 1,119,312 $ 458,883 $ 1,246,424 $ 2,853,899 OUD 81,504 368,756 649,483 660,821 Total $ 1,200,816 $ 827,639 $ 1,895,907 $ 3,514,720 |
SCHEDULE OF EARNINGS PER SHARE RECONCILIATION | SCHEDULE OF EARNINGS PER SHARE RECONCILIATION 2021 2020 Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Numerator: Net income (loss) attributable to common stockholders $ (17,163,525 ) $ 1,570,520 $ (19,046,800 ) $ (157,225 ) Denominator: Weighted average shares outstanding, basic 24,255,786 15,768,725 18,755,252 15,768,725 Weighted average dilutive stock options - 1,080,697 - - Weighted average shares outstanding, diluted 24,255,786 16,849,422 18,755,252 15,768,725 Net income (loss) per share attributable to common stockholders, basic $ (0.71 ) $ 0.10 $ (1.02 ) $ (0.01 ) Net income (loss) per share attributable to common stockholders, diluted (0.71 ) 0.09 (1.02 ) (0.01 ) |
SCHEDULE OF WEIGHTED AVERAGE SHARES OF ANTI-DILUTIVE SECURITIES | 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: SCHEDULE OF WEIGHTED AVERAGE SHARES OF ANTI-DILUTIVE SECURITIES Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Stock options 4,444,068 2,647,342 4,516,652 5,851,008 Warrants 20,019,056 19,755 6,710,625 19,755 Total 24,463,124 2,667,097 11,227,277 5,870,763 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Prepaid Expenses And Other Current Assets | |
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS | Prepaid expenses and other current assets consisted of the following: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS September 30, December 31, 2021 2020 Prepaid insurance $ 984,972 $ 17,158 Prepaid research and development 874,865 112,966 Other prepaid expenses 97,389 - Total prepaid expenses and other current assets $ 1,957,226 $ 130,124 |
ACCRUED EXPENSES AND OTHER LI_2
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Payables and Accruals [Abstract] | |
SCHEDULE OF ACCRUED EXPENSES AND OTHER LIABILITIES | Accrued expenses and other liabilities consisted of the following: SCHEDULE OF ACCRUED EXPENSES AND OTHER LIABILITIES September 30, December 31, 2021 2020 Consultant stock compensation expenses $ 2,264,479 $ - Share subscription facility commitment fees 800,000 Professional fees 265,450 - Accrued research and development 142,897 72,906 Accrued scientific advisory board fees 60,032 60,032 Deferred grant revenue - 159,047 Other accrued liabilities 197,904 52,807 Total accrued expenses and other liabilities $ 3,730,762 $ 344,792 |
SCHEDULE OF OTHER LONG-TERM LIABILITIES | Other long-term liabilities consisted of the following: SCHEDULE OF OTHER LONG-TERM LIABILITIES September 30, December 31, 2021 2020 Share subscription facility commitment fees $ 336,381 $ - Liability classified warrants 620,718 Total other long-term liabilities $ 957,099 $ - |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF DEBT | The following table provides a summary of the Company’s outstanding debt as of September 30, 2021: SCHEDULE OF DEBT Principal balance Accrued interest Fair value adjustment Net debt balance 2021 convertible notes $ 5,300,000 $ 4,417 $ (1,071,099 ) $ 4,233,318 Financed insurance 676,555 1,759 - 678,314 Total $ 5,976,555 $ 6,176 $ (1,071,099 ) $ 4,911,632 The following table provides a summary of the Company’s outstanding debt as of December 31, 2020: Principal balance Accrued interest Unamortized debt discount Net debt balance 2015 convertible notes $ 100,000 $ 28,671 $ - $ 128,671 2018 convertible notes 3,500,000 727,905 (783,124 ) 3,444,781 2020 promissory notes 100,000 1,694 - 101,694 2020 convertible notes 700,000 29,726 (159,790 ) 569,936 Total $ 4,400,000 $ 787,996 $ (942,914 ) $ 4,245,082 |
SCHEDULE OF INTEREST EXPENSE DEBT | The interest expense recognized for notes payable was as follows: SCHEDULE OF INTEREST EXPENSE DEBT 2021 2020 2021 2020 Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Stated interest accrual $ 24,660 $ 101,562 $ 251,857 $ 273,069 Debt discount amortization - 114,604 945,969 474,461 Total $ 24,660 $ 216,166 $ 1,197,826 $ 747,530 |
SCHEDULE OF CONVERTIBLE DEBT | The table below summarizes the conversion of each class of notes payable: SCHEDULE OF CONVERTIBLE DEBT Immediately prior to Business Combination Note series Principal Interest Carrying value of debt converted Shares of common stock issued Outstanding debt, June 30, 2021 2015 Convertible Note $ 100,000 $ 31,151 $ 131,151 15,116 $ — 2018 Convertible Notes 3,500,000 901,466 4,401,466 1,259,837 — 2020 Convertible Notes 700,000 64,438 764,438 77,000 — 2021 Convertible Note 50,000 2,082 52,082 6,015 — Total $ 4,350,000 $ 999,137 $ 5,349,137 1,357,968 $ — |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
SCHEDULE OF OUTSTANDING WARRANT | On September 30, 2021, 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) 18,901,290 $ 10.00 11.50 LACQ warrants Equity (b) 1,106,108 $ 10.01 Share subscription facility Equity (c) 361,158 $ 7.63 Convertible note Liability 20,368,556 (a) On June 30, 2021, as a result of the Closing, the Company assumed a total of 18,901,290 10.00 11.50 June 30, 2026 five 10,000,000 8,901,290 On August 3, 2021, the Company entered into an agreement with an existing warrant holder to reduce the exercise price of 500,000 warrants issued on June 30, 2021 from $ 11.50 to $ 10.00 , resulting in an incremental increase in their fair value of $ 56,591 , recognized in general and administrative expense. (a) On June 30, 2021, as a result of the Closing, the Company assumed a total of 18,901,290 10.00 11.50 June 30, 2026 five 10,000,000 8,901,290 500,000 warrants issued on June 30, 2021 from $ 11.50 to $ 10.00 , resulting in an incremental increase in their fair value of $ 56,591 , recognized in general and administrative expense. (b) On July 2, 2021, upon public listing of the Company’s shares, the Company issued 1,106,108 three 10.01 14.49 11.6 (c) On September 24, 2021, the Company issued 361,158 7.63 September 23, 2026 |
SCHEDULE OF WARRANTS FAIR VALUE ESTIMATION ASSUMPTIONS | 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 Share Liability classified warrants (grant date 9/24/2021) Liability classified warrants (remeasured at 9/30/2021) Stock price $ 14.49 $ 4.49 $ 3.03 Exercise price $ 10.01 $ 7.63 $ 7.63 Expected term (years) 3.00 5.00 5.00 Volatility 110.0 % 94.1 % 94.1 % Risk free rate 0.5 % 1.0 % 1.0 % |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
SCHEDULE OF STOCK OPTION OUTSTANDING | As of September 30, 2021 and December 31, 2020, the options outstanding under each plan were as follows: SCHEDULE OF STOCK OPTION OUTSTANDING September 30, December 31, 2021 2020 Legacy Plans - 543,106 2016 Plan - 4,034,332 2019 Directors Plan - 151,455 2021 Omnibus Plan 4,444,068 - Total options outstanding 4,444,068 4,728,893 |
SCHEDULE OF STOCK OPTION ACTIVITY | The following table summarizes the Company’s stock option activity during the nine months ended September 30, 2021: SCHEDULE OF STOCK OPTION ACTIVITY Weighted average Options Exercise price Remaining contractual life Intrinsic value Outstanding at December 31, 2020 4,728,893 $ 2.28 6.80 $ 1,817,383 Granted - - - Exercised (284,825 ) 0.91 472,453 Expired / Forfeited - - - Outstanding at September 30, 2021 4,444,068 2.40 6.20 2,944,345 Exercisable at September 30, 2021 4,337,971 2.38 6.20 2,937,754 Vested and expected to vest 4,444,068 2.40 6.20 2,944,345 |
SCHEDULE OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS | 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 Nine months ended September 30, 2020 Stock price $ 2.58 Exercise price $ 3.35 Expected stock price volatility 124.0 % Expected term (years) 5.8 Risk-free interest rate 0.27 1.52 % Expected dividend yield 0 % |
SCHEDULE OF COMMON STOCK FUTURE ISSUANCE | The following shares of common stock are reserved for future issuance: SCHEDULE OF COMMON STOCK FUTURE ISSUANCE September 30, 2021 Stock options outstanding 4,444,068 Stock options available for future grant under 2021 Omnibus Incentive Plan 1,000,000 Convertible notes outstanding 902,896 Warrants outstanding 20,368,556 Total shares of common stock reserved for future issuance 26,715,520 |
ORGANIZATION AND PRINCIPAL AC_2
ORGANIZATION AND PRINCIPAL ACTIVITIES (Details Narrative) - $ / shares | Sep. 30, 2021 | Jun. 30, 2021 | Jan. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2020 |
Restructuring Cost and Reserve [Line Items] | |||||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | |||
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 | 150,000,000 | ||
Preferred Stock, Shares Authorized | 1,500,000 | 1,500,000 | 1,500,000 | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Former Ensysce [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | ||||
Debt Instrument, Convertible, Conversion Price | $ 0.06585 | $ 0.06585 | |||
Equity Method Investment, Ownership Percentage | 71.80% | ||||
Covistat [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Common Stock, Par or Stated Value Per Share | $ 0.001 | ||||
Equity Method Investment, Ownership Percentage | 79.20% | ||||
Common Stock, Shares Authorized | 1,000,000 | ||||
Preferred Stock, Shares Authorized | 100,000 | ||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | ||||
Covistat [Member] | Key Personnel [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Equity Method Investment, Ownership Percentage | 19.80% | ||||
Covistat [Member] | Unrelated Party [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Equity Method Investment, Ownership Percentage | 1.00% |
BASIS OF PRESENTATION (Details
BASIS OF PRESENTATION (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2021 | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 24, 2021 | Jul. 02, 2021 | Jan. 31, 2021 | Dec. 31, 2020 | Aug. 31, 2019 | Feb. 28, 2013 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Retained Earnings (Accumulated Deficit) | $ 75,005,517 | $ 75,005,517 | $ 55,958,716 | |||||||
Common Stock, Value, Subscriptions | 60,000,000 | 60,000,000 | 60,000,000 | |||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 18,901,290 | 361,158 | 13,170 | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 7.63 | $ 14.49 | $ 3.04 | $ 6.23 | ||||||
Debt Instrument, Face Amount | 5,976,555 | 5,976,555 | $ 4,400,000 | |||||||
Proceeds from Convertible Debt | 5,050,000 | $ 1,000,000 | ||||||||
Convertible Note Financing Agreement [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Debt Instrument, Face Amount | 15,900,000 | 15,900,000 | ||||||||
Proceeds from Convertible Debt | 5,000,000 | |||||||||
Investor [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 1,106,108 | |||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 10.01 | |||||||||
Debt Related Commitment Fees and Debt Issuance Costs | $ 1,200,000 | |||||||||
Investor [Member] | First Anniversary [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Debt Related Commitment Fees and Debt Issuance Costs | 800,000 | |||||||||
Investor [Member] | 18 Month Anniversary [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Debt Related Commitment Fees and Debt Issuance Costs | $ 400,000 | |||||||||
Former Ensysce [Member] | ||||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||
Cash | 7,800,000 | 7,800,000 | ||||||||
Prepaid Expense | 1,100,000 | 1,100,000 | ||||||||
Other Intangible Assets, Net | $ 0 | $ 0 | ||||||||
Debt Instrument, Convertible, Conversion Price | $ 0.06585 | $ 0.06585 | $ 0.06585 | |||||||
Debt Issuance Costs, Net | $ 1,200,000 | $ 1,200,000 |
SCHEDULE OF ASSETS AND LIABILIT
SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Defined Benefit Plan Disclosure [Line Items] | ||
Convertible note | $ 4,233,318 | |
Liability classified warrants | 620,718 | |
Total | 4,854,036 | $ 670,262 |
Contingent put option | 670,262 | |
Fair Value, Inputs, Level 1 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Convertible note | ||
Liability classified warrants | ||
Total | ||
Contingent put option | ||
Fair Value, Inputs, Level 2 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Convertible note | ||
Liability classified warrants | ||
Total | ||
Contingent put option | ||
Fair Value, Inputs, Level 3 [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Convertible note | 4,233,318 | |
Liability classified warrants | 620,718 | |
Total | $ 4,854,036 | 670,262 |
Contingent put option | $ 670,262 |
SCHEDULE OF CHANGE IN FAIR VALU
SCHEDULE OF CHANGE IN FAIR VALUE OF COMPANY’S LEVEL 3 (Details) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Beginning Balance | $ 670,262 |
Issuance | 6,333,273 |
Change in fair value | (2,149,499) |
Ending Balance | 4,854,036 |
Contingent Put Option [Member] | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Beginning Balance | 670,262 |
Issuance | 3,052 |
Change in fair value | (673,314) |
Ending Balance | |
Convertible Notes [Member] | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Beginning Balance | |
Issuance | 5,304,417 |
Change in fair value | (1,071,099) |
Ending Balance | 4,233,318 |
Liability Classified Warrants [Member] | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Beginning Balance | |
Issuance | 1,025,804 |
Change in fair value | (405,086) |
Ending Balance | $ 620,718 |
SCHEDULE OF REVENUE RECOGNIZATI
SCHEDULE OF REVENUE RECOGNIZATION UNDER GRANTS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Product Information [Line Items] | ||||
Total | $ 1,200,816 | $ 827,639 | $ 1,895,907 | $ 3,514,720 |
MPAR [Member] | ||||
Product Information [Line Items] | ||||
Total | 1,119,312 | 458,883 | 1,246,424 | 2,853,899 |
OUD [Member] | ||||
Product Information [Line Items] | ||||
Total | $ 81,504 | $ 368,756 | $ 649,483 | $ 660,821 |
SCHEDULE OF EARNINGS PER SHARE
SCHEDULE OF EARNINGS PER SHARE RECONCILIATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Accounting Policies [Abstract] | ||||
Net income (loss) attributable to common stockholders | $ (17,163,525) | $ 1,570,520 | $ (19,046,800) | $ (157,225) |
Weighted average shares outstanding, basic | 24,255,786 | 15,768,725 | 18,755,252 | 15,768,725 |
Weighted average dilutive stock options | 1,080,697 | |||
Weighted average shares outstanding, diluted | 24,255,786 | 16,849,422 | 18,755,252 | 15,768,725 |
Net income (loss) per share attributable to common stockholders, basic | $ (0.71) | $ 0.10 | $ (1.02) | $ (0.01) |
Net income (loss) per share attributable to common stockholders, diluted | $ (0.71) | $ 0.09 | $ (1.02) | $ (0.01) |
SCHEDULE OF WEIGHTED AVERAGE SH
SCHEDULE OF WEIGHTED AVERAGE SHARES OF ANTI-DILUTIVE SECURITIES (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 24,463,124 | 2,667,097 | 11,227,277 | 5,870,763 |
Share-based Payment Arrangement, Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 4,444,068 | 2,647,342 | 4,516,652 | 5,851,008 |
Warrant [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 20,019,056 | 19,755 | 6,710,625 | 19,755 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Sep. 24, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Jun. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2019 | Aug. 31, 2019 | Sep. 30, 2018 |
Debt Instrument [Line Items] | ||||||||||
Depreciation | $ 50 | $ 50 | $ 151 | $ 149 | ||||||
Put option percent | 10.00% | |||||||||
Discount rate of put option | 42.90% | |||||||||
Grants Receivable | $ 5,400,000 | $ 5,100,000 | $ 5,400,000 | |||||||
Year 1 [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Grants Receivable | 2,100,000 | 3,200,000 | ||||||||
Contribution of grants | 1,100,000 | |||||||||
Year 2 [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Grants Receivable | $ 3,000,000 | $ 2,200,000 | ||||||||
Year 3 [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Grants Receivable | $ 2,800,000 | |||||||||
Convertible Debt [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Proceeds from Issuance of Debt | $ 5,300,000 |
SCHEDULE OF PREPAID EXPENSES AN
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Prepaid Expenses And Other Current Assets | ||
Prepaid insurance | $ 984,972 | $ 17,158 |
Prepaid research and development | 874,865 | 112,966 |
Other prepaid expenses | 97,389 | |
Total prepaid expenses and other current assets | $ 1,957,226 | $ 130,124 |
SCHEDULE OF ACCRUED EXPENSES AN
SCHEDULE OF ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Consultant stock compensation expenses | $ 2,264,479 | |
Share subscription facility commitment fees | 800,000 | |
Professional fees | 265,450 | |
Accrued research and development | 142,897 | 72,906 |
Accrued scientific advisory board fees | 60,032 | 60,032 |
Deferred grant revenue | 159,047 | |
Other accrued liabilities | 197,904 | 52,807 |
Total accrued expenses and other liabilities | $ 3,730,762 | $ 344,792 |
SCHEDULE OF OTHER LONG-TERM LIA
SCHEDULE OF OTHER LONG-TERM LIABILITIES (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Total other long-term liabilities | $ 957,099 | |
Commitment Fees [Member] | ||
Total other long-term liabilities | 336,381 | |
Warrant Liabilities [Member] | ||
Total other long-term liabilities | $ 620,718 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Jul. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 24, 2021 | Aug. 03, 2021 | Jul. 02, 2021 | Jun. 30, 2021 | Aug. 31, 2019 | Feb. 28, 2013 | |
Loss Contingencies [Line Items] | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 7.63 | $ 14.49 | $ 3.04 | $ 6.23 | |||||||
Operating Lease, Payments | $ 34,068 | ||||||||||
Operating Leases, Rent Expense | $ 11,781 | $ 10,807 | $ 36,058 | $ 26,255 | |||||||
Warrants and Rights Outstanding, Term | 3 years | 5 years | 10 years | 10 years | |||||||
Investors [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 6.28 | ||||||||||
Common stock issuable upon exercise warrants | 500,000 | ||||||||||
Warrants and Rights Outstanding, Term | 5 years | ||||||||||
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture | 50,000 | ||||||||||
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures | 200,000 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 1 year | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 50.00% | ||||||||||
Minimum [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 11.50 | ||||||||||
Maximum [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 10 |
SCHEDULE OF DEBT (Details)
SCHEDULE OF DEBT (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Short-term Debt [Line Items] | ||
Principal balance | $ 5,976,555 | $ 4,400,000 |
Accrued interest | 6,176 | 787,996 |
Fair value adjustment | (1,071,099) | |
Net debt balance | 4,911,632 | 4,245,082 |
Debt instrument unamortized discount | (942,914) | |
2021 Promissory Notes [Member] | ||
Short-term Debt [Line Items] | ||
Principal balance | 5,300,000 | |
Accrued interest | 4,417 | |
Fair value adjustment | (1,071,099) | |
Net debt balance | 4,233,318 | |
Financed Insurance [Member] | ||
Short-term Debt [Line Items] | ||
Principal balance | 676,555 | |
Accrued interest | 1,759 | |
Fair value adjustment | ||
Net debt balance | $ 678,314 | |
2015 Convertible Notes [Member] | ||
Short-term Debt [Line Items] | ||
Principal balance | 100,000 | |
Accrued interest | 28,671 | |
Net debt balance | 128,671 | |
Debt instrument unamortized discount | ||
2018 Convertible Notes [Member] | ||
Short-term Debt [Line Items] | ||
Principal balance | 3,500,000 | |
Accrued interest | 727,905 | |
Net debt balance | 3,444,781 | |
Debt instrument unamortized discount | (783,124) | |
2020 Promissory Notes [Member] | ||
Short-term Debt [Line Items] | ||
Principal balance | 100,000 | |
Accrued interest | 1,694 | |
Net debt balance | 101,694 | |
Debt instrument unamortized discount | ||
2020 Convertible Notes [Member] | ||
Short-term Debt [Line Items] | ||
Principal balance | 700,000 | |
Accrued interest | 29,726 | |
Net debt balance | 569,936 | |
Debt instrument unamortized discount | $ (159,790) |
SCHEDULE OF INTEREST EXPENSE DE
SCHEDULE OF INTEREST EXPENSE DEBT (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Debt Disclosure [Abstract] | ||||
Stated interest accrual | $ 24,660 | $ 101,562 | $ 251,857 | $ 273,069 |
Debt discount amortization | 114,604 | 945,969 | 474,461 | |
Total | $ 24,660 | $ 216,166 | $ 1,197,826 | $ 747,530 |
SCHEDULE OF CONVERTIBLE DEBT (D
SCHEDULE OF CONVERTIBLE DEBT (Details) - USD ($) | 6 Months Ended | 9 Months Ended | |
Jun. 30, 2021 | Sep. 30, 2021 | Dec. 31, 2020 | |
Short-term Debt [Line Items] | |||
Debt Instrument, Face Amount | $ 5,976,555 | $ 4,400,000 | |
Interest Payable | 6,176 | 787,996 | |
Debt converted | $ 5,800,000 | ||
Common stock issued | 1,357,968 | ||
Outstanding debt | 4,911,632 | 4,245,082 | |
Convertible Debt [Member] | |||
Short-term Debt [Line Items] | |||
Debt Instrument, Face Amount | 4,350,000 | ||
Interest Payable | 999,137 | ||
Debt converted | $ 5,349,137 | ||
Common stock issued | 1,357,968 | ||
Outstanding debt | |||
2015 Convertible Notes [Member] | |||
Short-term Debt [Line Items] | |||
Debt Instrument, Face Amount | 100,000 | ||
Interest Payable | 28,671 | ||
Outstanding debt | 128,671 | ||
2015 Convertible Notes [Member] | Convertible Debt [Member] | |||
Short-term Debt [Line Items] | |||
Debt Instrument, Face Amount | 100,000 | ||
Interest Payable | 31,151 | ||
Debt converted | $ 131,151 | ||
Common stock issued | 15,116 | ||
Outstanding debt | |||
2018 Convertible Notes [Member] | |||
Short-term Debt [Line Items] | |||
Debt Instrument, Face Amount | 3,500,000 | ||
Interest Payable | 727,905 | ||
Outstanding debt | 3,444,781 | ||
2018 Convertible Notes [Member] | Convertible Debt [Member] | |||
Short-term Debt [Line Items] | |||
Debt Instrument, Face Amount | 3,500,000 | ||
Interest Payable | 901,466 | ||
Debt converted | $ 4,401,466 | ||
Common stock issued | 1,259,837 | ||
Outstanding debt | |||
2020 Convertible Notes [Member] | |||
Short-term Debt [Line Items] | |||
Debt Instrument, Face Amount | 700,000 | ||
Interest Payable | 29,726 | ||
Outstanding debt | $ 569,936 | ||
2020 Convertible Notes [Member] | Convertible Debt [Member] | |||
Short-term Debt [Line Items] | |||
Debt Instrument, Face Amount | 700,000 | ||
Interest Payable | 64,438 | ||
Debt converted | $ 764,438 | ||
Common stock issued | 77,000 | ||
Outstanding debt | |||
2021 Convertible Notes [Member] | Convertible Debt [Member] | |||
Short-term Debt [Line Items] | |||
Debt Instrument, Face Amount | 50,000 | ||
Interest Payable | 2,082 | ||
Debt converted | $ 52,082 | ||
Common stock issued | 6,015 | ||
Outstanding debt |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | 24 Months Ended | 36 Months Ended | |||||||||
Sep. 24, 2021 | Jan. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2021 | May 31, 2021 | Sep. 30, 2020 | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2015 | Dec. 31, 2018 | Dec. 31, 2020 | Dec. 05, 2021 | Nov. 05, 2021 | |
Short-term Debt [Line Items] | ||||||||||||||||
Principal amount of convertible promissory notes. | $ 670,262 | $ 670,262 | $ 670,262 | |||||||||||||
Converted into common stock | $ 5,800,000 | |||||||||||||||
Debt gross proceeds | 5,050,000 | $ 1,000,000 | ||||||||||||||
Cash and cash equivalent of comm stock | $ 194,214 | 6,845,672 | 6,845,672 | $ 194,214 | $ 194,214 | |||||||||||
Gain (Loss) on Extinguishment of Debt | 347,566 | (347,566) | ||||||||||||||
Debt discount amortization | 114,604 | 945,969 | 474,461 | |||||||||||||
Interest Expense, Debt | 24,660 | $ 216,166 | 1,197,826 | 747,530 | ||||||||||||
Debt Instrument, Fair Value Disclosure | 620,718 | 620,718 | ||||||||||||||
Proceeds from financed insurance premiums | 867,300 | |||||||||||||||
Repayment of insurance premium | $ 12,078 | |||||||||||||||
Maximum [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Redemption of shares | 4,855,108 | |||||||||||||||
Subsequent Event [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Convertible Notes Payable, Current | $ 10,600,000 | |||||||||||||||
Convertible Debt [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Converted into common stock | $ 5,349,137 | |||||||||||||||
Debt discount amortization | $ 554,911 | |||||||||||||||
2015 Convertible Notes [Member] [Default Label] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Principal amount of convertible promissory notes. | $ 873,000 | |||||||||||||||
Converted into common stock | $ 100,000 | |||||||||||||||
Debt Conversion, Converted Instrument, Rate | 5.00% | |||||||||||||||
Converible variable price per share | 80.00% | |||||||||||||||
2018 Convertible Notes [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Debt Conversion, Converted Instrument, Rate | 50.00% | |||||||||||||||
Promissory note mature date | 1 year | 24 months | ||||||||||||||
Debt Instrument, Interest Rate During Period | 10.00% | |||||||||||||||
Debt gross proceeds | $ 5,000,000 | |||||||||||||||
Conversion price per share | $ 0.25 | $ 0.25 | $ 0.25 | |||||||||||||
Cash and cash equivalent of comm stock | $ 55,000,000 | $ 55,000,000 | $ 55,000,000 | |||||||||||||
Repayment of promissory note rate | The 2018 convertible notes also include a change in control call option whereby, upon the close of a sale of Ensysce, other than an initial public offering, Ensysce has the right to prepay the promissory notes at 200% of the principal outstanding plus all accrued and unpaid interest. | |||||||||||||||
2018 Convertible Notes [Member] | Convertible Debt [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Converted into common stock | 4,401,466 | |||||||||||||||
2018 Convertible Notes [Member] | Stockholder [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Unsecured promissory notes | $ 3,500,000 | |||||||||||||||
2018 Convertible Notes [Member] | Board Member [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Unsecured promissory notes | 2,500,000 | |||||||||||||||
2018 Convertible Notes [Member] | Unrelated Party [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Unsecured promissory notes | $ 1,000,000 | |||||||||||||||
2020 Convertible Notes [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Converible variable price per share | 80.00% | 80.00% | 80.00% | |||||||||||||
Unsecured promissory notes | $ 700,000 | |||||||||||||||
Debt gross proceeds | $ 2,000,000 | |||||||||||||||
Interest rate | 10.00% | 10.00% | 10.00% | |||||||||||||
Divided aggregate number of shares | $ 10,000,000 | |||||||||||||||
Conversion price divided aggregate number of shares | $ 10,000,000 | |||||||||||||||
2020 Convertible Notes [Member] | Convertible Debt [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Converted into common stock | 764,438 | |||||||||||||||
2020 Promissory Notes [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Unsecured promissory notes | $ 100,000 | |||||||||||||||
Interest rate | 10.00% | 10.00% | 10.00% | |||||||||||||
2021 Promissory Notes [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Debt Conversion, Converted Instrument, Rate | 80.00% | |||||||||||||||
Unsecured promissory notes | $ 50,000 | $ 3,500 | ||||||||||||||
Debt Instrument, Interest Rate During Period | 10.00% | |||||||||||||||
Debt gross proceeds | $ 10,000,000 | |||||||||||||||
Interest rate | 10.00% | |||||||||||||||
Debt Instrument, Maturity Date | Jan. 28, 2023 | |||||||||||||||
2021 Convertible Notes [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Debt gross proceeds | $ 2,000,000 | |||||||||||||||
2021 Convertible Notes [Member] | Convertible Debt [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Converted into common stock | 52,082 | |||||||||||||||
Twenty Twenty One Convertible Notes Payable [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Principal amount of convertible promissory notes. | $ 5,000,000 | $ 5,000,000 | ||||||||||||||
Debt Instrument, Interest Rate During Period | 5.00% | |||||||||||||||
Debt gross proceeds | $ 4,700,000 | |||||||||||||||
Conversion price per share | $ 5.87 | $ 5.87 | ||||||||||||||
Debt Instrument, Maturity Date | Jun. 23, 2023 | |||||||||||||||
Convertible Notes Payable | 15,900,000 | |||||||||||||||
Convertible Notes Payable, Current | $ 5,300,000 | |||||||||||||||
Debt Instrument Original Issue Discount | 6.00% | |||||||||||||||
Interest Expense, Debt | $ 4,417 | |||||||||||||||
Debt Instrument, Convertible, Terms of Conversion Feature | beneficial ownership limitation of 4.99% | |||||||||||||||
Debt Instrument, Redemption, Description | The number of shares to be settled shall be based on a conversion price equal to the lesser of (a) $5.87 and (b) 92% of the average of the three lowest volume-weighted average prices (“VWAP”) during the 10 consecutive trading days prior to the applicable Monthly Redemption Date. The Company may not pay the Monthly Redemption Amount in shares unless the applicable conversion price is greater than or equal to $0.78 and the Company has been in compliance with customary requirements under the agreement, unless waived in writing by the holder. | |||||||||||||||
Debt Instrument, Redemption Price, Percentage | 92.00% | |||||||||||||||
Twenty Twenty One Convertible Notes Payable [Member] | Maximum [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Debt Instrument, Redemption Price, Percentage | 20.00% | |||||||||||||||
Twenty Twenty One Convertible Notes Payable [Member] | General and Administrative Expense [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Proceeds from Issuance of Convertible Preferred Stock | $ 500,158 | |||||||||||||||
Debt Instrument, Fair Value Disclosure | $ 5,300,000 | 5,300,000 | ||||||||||||||
Gain on fair value of debt | 1,100,000 | |||||||||||||||
Decrease In Fair Value Of Debt | $ 4,200,000 | |||||||||||||||
Twenty Twenty One Convertible Notes Payable [Member] | Subsequent Event [Member] | ||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||
Convertible Notes Payable, Current | $ 10,600,000 |
SCHEDULE OF OUTSTANDING WARRANT
SCHEDULE OF OUTSTANDING WARRANT (Details) - USD ($) | Sep. 24, 2021 | Aug. 03, 2021 | Jul. 02, 2021 | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Aug. 31, 2019 | Feb. 28, 2013 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 361,158 | 18,901,290 | 13,170 | ||||||
Warrants and Rights Outstanding, Maturity Date | Jun. 30, 2026 | ||||||||
Warrants and Rights Outstanding, Term | 3 years | 5 years | 10 years | 10 years | |||||
Fair Value Adjustment of Warrants | $ 11,565,472 | ||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 7.63 | $ 14.49 | $ 3.04 | $ 6.23 | |||||
Debt Instrument Expiration Date | Sep. 23, 2026 | ||||||||
General and Administrative Expense [Member] | |||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Fair Value Adjustment of Warrants | $ 56,591 | $ 11,600,000 | |||||||
Grant Date Fair Value of Warrants Price Per Share | $ 10.01 | ||||||||
Subscription Arrangement [Member] | |||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 500,000 | 1,106,108 | |||||||
Warrant [Member] | |||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Outstanding Warrant | 20,368,556 | ||||||||
Public Warrant [Member] | |||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Class of Warrant or Right, Outstanding | 10,000,000 | ||||||||
Private Warrant [Member] | |||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Remaining of cashless warrant shares. | 8,901,290 | ||||||||
Minimum [Member] | |||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Exercise Price | [1] | $ 10 | |||||||
Sale of Stock, Price Per Share | $ 10 | ||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 11.50 | ||||||||
Maximum [Member] | |||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Exercise Price | [1] | $ 11.50 | |||||||
Sale of Stock, Price Per Share | 11.50 | $ 11.50 | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 10 | ||||||||
Warrant One [Member] | |||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Outstanding Warrant | [1] | 18,901,290 | |||||||
Warrant Description | [1] | LACQ warrants | |||||||
Warrant Two [Member] | |||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Outstanding Warrant | [2] | 1,106,108 | |||||||
Exercise Price | [2] | $ 10.01 | |||||||
Warrant Description | [2] | Share subscription facility | |||||||
Warrant Three [Member] | |||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||
Outstanding Warrant | [3] | 361,158 | |||||||
Exercise Price | [3] | $ 7.63 | |||||||
Warrant Description | [3] | Convertible note | |||||||
[1] | On June 30, 2021, as a result of the Closing, the Company assumed a total of 18,901,290 10.00 11.50 June 30, 2026 five 10,000,000 8,901,290 500,000 warrants issued on June 30, 2021 from $ 11.50 to $ 10.00 , resulting in an incremental increase in their fair value of $ 56,591 , recognized in general and administrative expense. | ||||||||
[2] | On July 2, 2021, upon public listing of the Company’s shares, the Company issued 1,106,108 three 10.01 14.49 11.6 | ||||||||
[3] | On September 24, 2021, the Company issued 361,158 7.63 September 23, 2026 |
SCHEDULE OF OUTSTANDING WARRA_2
SCHEDULE OF OUTSTANDING WARRANT (Details) (Parenthetical) - USD ($) | Aug. 03, 2021 | Jul. 02, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 24, 2021 | Jun. 30, 2021 | Feb. 28, 2013 |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 361,158 | 18,901,290 | 13,170 | ||||
Fair Value Adjustment of Warrants | $ 11,565,472 | ||||||
General and Administrative Expense [Member] | |||||||
Fair Value Adjustment of Warrants | $ 56,591 | $ 11,600,000 | |||||
Maximum [Member] | |||||||
Sale of Stock, Price Per Share | $ 11.50 | $ 11.50 | |||||
Minimum [Member] | |||||||
Sale of Stock, Price Per Share | $ 10 | ||||||
Subscription Arrangement [Member] | |||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 500,000 | 1,106,108 |
SCHEDULE OF WARRANTS FAIR VALUE
SCHEDULE OF WARRANTS FAIR VALUE ESTIMATION ASSUMPTIONS (Details) | Sep. 30, 2021$ / shares | Sep. 24, 2021$ / shares | Jul. 02, 2021 | Jun. 30, 2021 | Aug. 31, 2019 | Feb. 28, 2013 |
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Expected term (years) | 3 years | 5 years | 10 years | 10 years | ||
Share Subscription Facility [Member] | Measurement Input, Share Price [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Estimating fair value of warrants | 14.49 | |||||
Share Subscription Facility [Member] | Measurement Input, Exercise Price [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Estimating fair value of warrants | 10.01 | |||||
Share Subscription Facility [Member] | Measurement Input, Expected Term [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Expected term (years) | 3 years | |||||
Share Subscription Facility [Member] | Measurement Input, Price Volatility [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Estimating fair value of warrants | 1.100 | |||||
Share Subscription Facility [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Estimating fair value of warrants | 0.005 | |||||
Liability Classified Warrants Grant Date [Member] | Measurement Input, Share Price [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Estimating fair value of warrants | 4.49 | |||||
Liability Classified Warrants Grant Date [Member] | Measurement Input, Exercise Price [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Estimating fair value of warrants | 7.63 | |||||
Liability Classified Warrants Grant Date [Member] | Measurement Input, Expected Term [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Expected term (years) | 5 years | |||||
Liability Classified Warrants Grant Date [Member] | Measurement Input, Price Volatility [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Estimating fair value of warrants | 0.941 | |||||
Liability Classified Warrants Grant Date [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Estimating fair value of warrants | 0.010 | |||||
Liability Classified Warrants Remeasured [Member] | Measurement Input, Share Price [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Estimating fair value of warrants | 3.03 | |||||
Liability Classified Warrants Remeasured [Member] | Measurement Input, Exercise Price [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Estimating fair value of warrants | 7.63 | |||||
Liability Classified Warrants Remeasured [Member] | Measurement Input, Expected Term [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Expected term (years) | 5 years | |||||
Liability Classified Warrants Remeasured [Member] | Measurement Input, Price Volatility [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Estimating fair value of warrants | 0.941 | |||||
Liability Classified Warrants Remeasured [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||||||
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Line Items] | ||||||
Estimating fair value of warrants | 0.010 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 6 Months Ended | |||||
Aug. 31, 2019 | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 24, 2021 | Jul. 02, 2021 | Dec. 31, 2020 | Feb. 28, 2013 | |
Restructuring Cost and Reserve [Line Items] | |||||||
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 | 150,000,000 | ||||
Preferred Stock, Shares Authorized | 1,500,000 | 1,500,000 | 1,500,000 | ||||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Preferred Stock, Shares Issued | 0 | 0 | |||||
Preferred Stock, Shares Outstanding | 0 | 0 | |||||
Common Stock, Shares, Issued | 24,275,541 | 15,768,725 | |||||
Common Stock, Shares, Outstanding | 24,255,786 | 15,768,725 | |||||
Debt Conversion, Converted Instrument, Shares Issued | 1,357,968 | ||||||
Debt Conversion, Converted Instrument, Amount | $ 5.8 | ||||||
Termination of common stock settlement | 500,000 | ||||||
Deferred common stock issued | 125,000 | ||||||
Warrants issued | 18,901,290 | 361,158 | 13,170 | ||||
Warrants and Rights Outstanding, Term | 10 years | 5 years | 3 years | 10 years | |||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 3.04 | $ 7.63 | $ 14.49 | $ 6.23 | |||
Stock issued | 6,585 | ||||||
Weighted Average Number of Shares, Restricted Stock | 19,755 | ||||||
SPAC [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Common Stock, Shares, Outstanding | 6,219,268 | ||||||
Former Ensysce [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Common Stock, Shares, Issued | 16,053,550 | ||||||
Stock Issued During Period, Shares, Purchase of Assets | 19,755 |
SCHEDULE OF STOCK OPTION OUTSTA
SCHEDULE OF STOCK OPTION OUTSTANDING (Details) - shares | Sep. 30, 2021 | Dec. 31, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total option Outstanding | 4,444,068 | 4,728,893 |
Legacy Plans [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total option Outstanding | 543,106 | |
2016 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total option Outstanding | 4,034,332 | |
2019 Directors Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total option Outstanding | 151,455 | |
Two Thousand Twenty One Omnibus Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total option Outstanding | 4,444,068 |
SCHEDULE OF STOCK OPTION ACTIVI
SCHEDULE OF STOCK OPTION ACTIVITY (Details) - USD ($) | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Option Outstanding, Beginning Balance | 4,728,893 |
Weighted Average Exercise Price Per Share, Number Beginning Balance | $ 2.28 |
Weighted Average Remaining Contractual Term in Years, Beginning Balance | 6 years 9 months 18 days |
Aggregate Intrinsic Value, Beginning Balance | $ 1,817,383 |
Option Outstanding, Granted | |
Weighted Average Exercise Price Per Share, Granted | |
Aggregate Intrinsic Value,Granted | |
Option Outstanding, Exercised | (284,825) |
Weighted Average Exercise Price Per Share, Exercised | $ 0.91 |
Aggregate Intrinsic Value, Exercised | $ 472,453 |
Option Outstanding, Expired or Forfeited | |
Weighted Average Exercise Price Per Share, Cancelled or Forfeited | |
Aggregate Intrinsic Value, Expired/Forfeited | |
Option Outstanding, Ending Balance | 4,444,068 |
Weighted Average Exercise Price Per Share, Number Ending Balance | $ 2.40 |
Weighted Average Remaining Contractual Term in Years, Ending Balance | 6 years 2 months 12 days |
Aggregate Intrinsic Value, Ending Balance | $ 2,944,345 |
Option Outstanding, Options Exercisable Ending Balance | 4,337,971 |
Weighted Average Exercise Price Per Share, Options Exercisable Ending Balance | $ 2.38 |
Weighted Average Remaining Contractual Term in Years, Options Exercisable Ending Balance | 6 years 2 months 12 days |
Aggregate Intrinsic Value, Options Exercisable Ending Balance | $ 2,937,754 |
Option Outstanding, Vested or Expected to Vest, Ending Balance | 4,444,068 |
Weighted Average Exercise Price Per Share, Vested or Expected to Vest Ending Balance | $ 2.40 |
Weighted Average Remaining Contractual Term in Years, Options | 6 years 2 months 12 days |
Aggregate Intrinsic Value Options Options Vested or Expected to Vest Ending Balance | $ 2,944,345 |
SCHEDULE OF SHARE-BASED PAYMENT
SCHEDULE OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS (Details) | 9 Months Ended |
Sep. 30, 2021$ / shares | |
Share-based Payment Arrangement [Abstract] | |
Share Price | $ 2.58 |
Exercise price | $ 3.35 |
Expected stock price volatility | 124.00% |
Expected term of option in years | 5 years 9 months 18 days |
Risk-free interest rate minimum | 0.27% |
Risk-free interest rate maximum | 1.52% |
Expected dividend rate | 0.00% |
SCHEDULE OF COMMON STOCK FUTURE
SCHEDULE OF COMMON STOCK FUTURE ISSUANCE (Details) | Sep. 30, 2021shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common Stock, capital shares reserved for future issuance | 26,715,520 |
Warrant Outstanding [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common Stock, capital shares reserved for future issuance | 20,368,556 |
ConvertibleNotesOustanding [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common Stock, capital shares reserved for future issuance | 902,896 |
Share-based Payment Arrangement, Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common Stock, capital shares reserved for future issuance | 4,444,068 |
Share-based Payment Arrangement, Option [Member] | Stock Option Available For Future Grant Under 2021 Omnibus Incentive Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common Stock, capital shares reserved for future issuance | 1,000,000 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Option, outstanding | 4,444,068 | 4,444,068 | 4,728,893 | ||
Common Stock, Capital Shares Reserved for Future Issuance | 26,715,520 | 26,715,520 | |||
Stock option granted | |||||
Exercise price per share vested | $ 2.40 | $ 2.40 | |||
weighted-average grant date fair value | $ 0 | $ 2.20 | |||
Unrecognized stock-based compensation | $ 54,427 | $ 54,427 | |||
Weighted average period | 1 year 8 months 4 days | ||||
General and Administrative Expense [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based compensation | 24,833 | 51,510 | 105,026 | 120,061 | |
Board Of Directors [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock option granted | 65,850 | 131,700 | |||
Option, vesting period | 3 years | ||||
Exercise price per share vested | $ 3.35 | $ 3.35 | |||
2021 Omnibus Incentive Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Option, outstanding | 4,444,068 | 4,444,068 | |||
Common Stock, Capital Shares Reserved for Future Issuance | 1,000,000 | 1,000,000 |
RELATED PARTIES (Details Narrat
RELATED PARTIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||
Proceeds from Convertible Debt | $ 5,050,000 | $ 1,000,000 | |||
Debt Instrument, Face Amount | $ 5,976,555 | 5,976,555 | $ 4,400,000 | ||
Chief Executive Officer [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||
Cash compensation | 3,584 | $ 38,967 | 43,898 | $ 77,934 | |
Accounts Payable | 0 | 0 | 12,989 | ||
Debt Instrument, Face Amount | $ 0 | $ 0 | 100,000 | ||
Board of Directors Chairman [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||
Proceeds from Convertible Debt | $ 2,500,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) $ / shares in Units, $ in Millions | Nov. 05, 2021 | Sep. 24, 2021 | Jul. 02, 2021 | Jun. 30, 2021 | Aug. 31, 2019 | Feb. 28, 2013 |
Subsequent Event [Line Items] | ||||||
Warrants issued | 361,158 | 18,901,290 | 13,170 | |||
Warrant term | 3 years | 5 years | 10 years | 10 years | ||
Exercise price | $ 7.63 | $ 14.49 | $ 3.04 | $ 6.23 | ||
Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Convertible Notes Payable, Current | $ 10.6 | |||||
Warrants issued | 722,317 | |||||
Warrant term | 5 years | |||||
Exercise price | $ 7.63 | |||||
Cash proceeds before fees and offering expenses | $ 10 |