Business Context and Reporting Period
This Form 8-K is filed by Leisure Acquisition Corp. (not Ensysce Biosciences, Inc.) for the reporting period of October 26, 2020. The registrant is a Delaware corporation and an emerging growth company trading on The Nasdaq Stock Market LLC under the symbols LACQ, LACQW, and LACQU. The filing details amendments to financing agreements and the issuance of new debt instruments.
Key Financial Metrics and Obligations
- Expense Advancement Limit: Increased from $1,125,000 to $1,200,000 via the Second Expense Advancement Amendment.
- New Debt Issuance: Unsecured promissory notes issued with an initial drawdown of $75,000 and a maximum aggregate amount of $200,000.
- Interest Rate: The new promissory notes bear no interest.
- Debt Breakdown:
- Hydra Management, LLC: $51,376.68
- Matthews Lane (MLCP): $48,623.32
- HG Vora Special Opportunities Master Fund, Ltd.: $100,000.00
- Revenue/Profit/Cash Flow: The filing text does not provide specific values for revenue, profit, operating cash flow, or margins.
Material Changes
The primary material change is the expansion of the Company's working capital facility. The Company amended its existing Expense Advancement Agreement to increase available funds by $75,000. Concurrently, the Company issued new promissory notes to the Funding Parties (Hydra, MLCP, and HG Vora) to access these funds. This follows a prior conversion of $1,000,000 in promissory notes into warrants on June 25, 2020.
Outlook, Risks, and Unusual Items
- Repayment Terms: Outstanding amounts are to be repaid upon the completion of an initial business combination. If no combination occurs, repayment may be made from working capital held outside the trust account; trust account proceeds cannot be used for repayment.
- Conversion Rights: The loans are convertible into warrants at the option of the Funding Parties at a price of $1.00 per warrant. Full conversion of the $200,000 maximum principal would result in the issuance of 200,000 private placement warrants.
- Regulatory Status: The issuance of notes relied on Section 4(a)(2) of the Securities Act of 1933 as an unregistered sale to sophisticated investors.
Investor Verification Checklist
- Verify the exact amount of the initial $75,000 drawdown versus the total $200,000 facility limit.
- Confirm the terms of the warrant conversion, specifically the $1.00 exercise price and the timeline for conversion.
- Review the full text of the Second Expense Advancement Amendment (Exhibit 10.1) for covenants or conditions not summarized in the 8-K.
- Monitor the Company's progress toward an initial business combination, as this triggers the repayment obligation.