Ensysce Biosciences, Inc. Commitments Disclosure

NOTE 7 - COMMITMENTS AND CONTINGENCIES

 

Purchase Commitments

 

As of December 31, 2025, the Company’s commitments included an estimated $18.7 million related to the Company’s open purchase orders and contractual obligations that occurred in the ordinary course of business, including commitments with contract research organizations for multi-year pre-clinical and clinical research studies. Although open purchase orders are considered enforceable and legally binding, the terms generally allow the Company the option to cancel, reschedule, and adjust its requirements based on its business needs prior to the delivery of goods or the performance of services.

 

Litigation

 

As of December 31, 2025 and 2024, 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.

 

Consultant Dispute

 

In April 2025, the Company entered into an agreement with a former independent contractor to resolve a dispute over payment. The Company denied the allegations but agreed to settle the matter. In connection with the settlement agreement, the Company issued 20,000 shares of common stock to the consultant in April 2025. As of December 31, 2025, the Company accrued a total settlement value of $0.2 million.

 

 

Galephar Agreement

 

In January 2025, the Company entered into a product development and supply agreement with Galephar Pharmaceutical Research, Inc., a Puerto Rico specialty drug manufacturer (“Galephar”), to support the development, manufacture, packaging and testing of the Company’s PF614 and PF614-MPAR drug products for use in clinical trials and potential future commercial launch.

 

Upon execution of the agreement, the Company committed to issue 13,801 restricted shares of common stock (representing approximately 1% of the Company’s outstanding common stock), subject to vesting in three tranches upon the achievement of specific operational and regulatory milestones. The Company accounts for this share grant as nonemployee share-based compensation in accordance with ASC 718.

 

One-third of the restricted shares vested immediately upon grant, and the remaining two-thirds will vest as services are performed. During the year ended December 31, 2025, the Company recognized $25,806 of stock-based compensation related to the immediate vesting of 4,600 shares upon the grant date. As of December 31, 2025, 4,600 shares had been issued and outstanding.

 

The agreement also provides for milestone-based payments to be settled in shares of the Company’s common stock, with 50% of the shares issued as restricted stock and 50% issued as freely tradeable shares. The number of shares issuable upon achievement of each milestone is based on the trailing five-day average closing price at the time of each milestone achievement.

 

Share-based expense for these milestone grants is recognized as services are rendered. These awards are classified as liabilities until the shares are issued, at which point the awards are reclassified to equity. During the year ended December 31, 2025, the Company recognized $600,000 of research and development expense related to milestone progression for awards to be settled in shares. As of December 31, 2025, 468,750 shares had been issued pursuant to these milestone-based awards.

 

Lease

 

The Company’s current lease agreement (as amended) has a term that extends through October 31, 2026, with no option to renew. As of December 31, 2025, the future lease payments totaled $30,726. The Company recognized total rent expense of $36,590 and $35,217 in the years ended December 31, 2025, and 2024, respectively.