Business Context and Reporting Period
The filing is a Form 10-Q for Leisure Acquisition Corp., not Ensysce Biosciences, Inc. It covers the unaudited period ended September 30, 2017, from the company’s incorporation on September 11, 2017. Leisure Acquisition Corp. was a newly formed blank check company with no operating business, revenue, or identified acquisition target at the reporting date.
The company’s registration statement became effective and its initial public offering closed after the reporting period, on December 5, 2017. The filing was signed on January 9, 2018.
Financial Highlights
| Metric | September 30, 2017 or period since inception |
|---|---|
| Cash | $340,000 |
| Total assets | $400,000 |
| Current liabilities | $380,000, including $375,000 of related-party promissory notes |
| Stockholders’ equity | $20,000 |
| Revenue | None |
| Formation costs and net loss | $5,000 |
| Basic and diluted loss per share | $0.00 loss per share, as presented |
| Net cash used in operating activities | $5,000 |
| Net cash provided by financing activities | $345,000 |
| Deferred offering costs | $60,000 |
The company had no debt other than related-party promissory notes outstanding at September 30, 2017, and no market-risk-sensitive financial instruments. No meaningful operating margin analysis is applicable because the company had no revenue or operations.
Material Changes Versus the Prior Comparable Period
No prior comparable operating period was presented because the company was incorporated on September 11, 2017. All reported activity related to formation and preparation for the initial public offering.
Subsequent to the reporting date, the company completed an offering of 20,000,000 units at $10.00 per unit, generating gross proceeds of $200.0 million, and sold 6,825,000 private placement warrants for $6.825 million. It placed $200.0 million in a trust account and retained $2.465 million outside the trust account for working capital after offering costs.
Guidance, Outlook, Risks and Unusual Items
- Management intended to use substantially all trust-account funds to complete an initial business combination. No target had been identified as of September 30, 2017.
- The initial business combination was required to involve a target or targets with aggregate fair value of at least 80% of the trust account balance, subject to the stated conditions.
- The company had until December 5, 2019 to complete a business combination. If unsuccessful, it was required to cease operations, redeem the public shares from the trust account, and liquidate, subject to applicable law and creditor claims.
- Public stockholders could redeem shares in connection with a business combination. A public stockholder and affiliated group generally could not redeem 20% or more of the public shares.
- HG Vora committed to a contingent forward purchase of $62.5 million of units at the time of a business combination, but its approval of the transaction was required and could be withheld for any reason.
- Sponsors and related parties committed to provide up to $1.0 million of working-capital loans, although they were not obligated to fund every request. Such loans could be repaid or converted into warrants at the lender’s option.
- The company expected continuing expenses, including a monthly fee of up to $10,000 to an affiliate for office and administrative services, plus legal, accounting, due diligence, and public-company compliance costs.
- Key risks included failure to complete a business combination, dilution from additional equity or warrants, potential redemption of public shares, insufficient working capital, and the possibility that warrants could expire worthless upon liquidation.
- The company reported no legal proceedings, no material changes to previously disclosed risk factors, and effective disclosure controls as of September 30, 2017.
Important Facts for Investors to Verify
- Confirm the issuer identity: the supplied filing is for Leisure Acquisition Corp., while the request identifies Ensysce Biosciences, Inc.
- Verify the post-period IPO, private placement, trust-account balance, offering costs, and cash held outside the trust account.
- Review the terms and status of any completed or proposed business combination and the December 5, 2019 liquidation deadline.
- Assess redemption rights, the 80% acquisition requirement, HG Vora’s consent right, and sponsor indemnification provisions.
- Review potential dilution from founder shares, public warrants, private placement warrants, forward-purchase units, and possible working-capital loan conversions.
- Read the IPO prospectus and subsequent Form 8-K because the September 30, 2017 financial statements predate the IPO and are not indicative of future operating results.