Ensysce Biosciences, Inc. Debt Disclosure

NOTE 7 - NOTES PAYABLE

 

The following table provides a summary of the Company’s outstanding debt as of December 31, 2024:

 SCHEDULE OF DEBT

		Principal balance				Accrued interest				Net debt balance
2023 Notes		$	216,000				14,368		(1,197,200	$	230,368
Financed insurance			71,292				-				71,292
Total		$	287,292			$	14,368			$	301,660

 

The following table provides a summary of the Company’s outstanding debt as of December 31, 2023:

 

		Principal balance				Accrued interest				Unamortized Debt Discount & Issuance Costs				Net debt balance
2023 Notes		$	1,836,000			$	13,078			$	(1,197,200	)		$	651,878
Financed insurance			197,249				5,570				-				202,819
Total		$	2,033,249			$	18,648			$	(1,197,200	)		$	854,697

 

Interest expense

 

The interest expense recognized for financed insurance was $8,848 and $14,716 for the year ended December 31, 2024 and 2023, respectively. Interest expense recognized for the 2023 Notes was $1,281,597 and $339,230 for the year-ended December 31, 2024 and 2023, respectively, which consists of amortization of the debt discount and debt issuance costs and accrued interest.

 

 

Ensysce Biosciences, Inc.

Notes to the Consolidated Financial Statements

 

2023 Notes

 

On October 23, 2023, the Company entered into a Securities Purchase Agreement (“SPA”) for an aggregate financing of $1.8 million with investors, including $0.2 million with a board member. At the first closing under the SPA, which occurred on October 25, 2023, the Company issued to the investors (i) senior secured convertible promissory notes in the aggregate principal amount of $612,000 for an aggregate purchase price of $566,667 and (ii) warrants to purchase 83,714 shares of the Company’s common stock, par value $0.0001 per share in the aggregate. At the second closing under the SPA, which occurred on November 29, 2023, the Company issued to the investors referenced above, (i) additional notes in the aggregate principal amount of $1,224,000 for an aggregate purchase price of $1,133,333 and (i) additional warrants to purchase 167,427 shares of the common stock in the aggregate.

 

The Company reflected the outstanding principal amount, the remaining unamortized discount (both original issue discount and the relative fair value discount associated with the warrants discussed below) and the remaining debt issuance costs as a net amount on the face of the balance sheet. The amortization of the original debt discount (approximately $0.1 million) and issuance costs (approximately $0.3 million) were recorded as interest expense within the consolidated statements of operations. As of December 31, 2024, the original debt discount and issuance costs were fully amortized to interest expense.

 

The warrants have an exercise price of $23.5125, the same as the conversion price, and are exercisable for five years following the issuance date. The warrants were equity classified as they are indexed to the Company’s stock and only settleable in shares. The warrants were initially measured at fair value using a Black-Scholes valuation model and were allocated along with the 2023 Notes using the relative fair value method. The initial fair value of $1.1 million allocated to the warrants was considered a debt discount and was amortized to interest expense over the remaining term of the notes. As of December 31, 2024, the discount associated with the warrants was fully amortized to interest expense.

 

During 2024, the Company converted 49,702 shares of common stock with a conversion value of $1.2 million related to the 2023 Notes. In addition, in connection with the SPA, the Company incurred a $1.0 million waiver fee as a result of the 2024 February Warrant Inducement (see Note 8) to pay down $0.5 million of the 2023 Notes and incurred $0.5 million in transaction costs recorded as such in the consolidated statement of stockholders’ equity. As of December 31, 2024, the remaining amount of the 2023 Notes relates to senior secured convertible promissory notes held by a Company board member (see Note 11).

 

Financed Insurance Premiums

 

In June 2024, the Company renewed and financed its directors’ and officers’ liability insurance in the amount of $0.2 million. Monthly payments are scheduled from July 2024 through March 2025.