Ensysce Biosciences, Inc. (NASDAQ: ENSC) carries a dilution risk score of 10 out of 10 — the maximum on our scale — driven by an active variable-rate convertible structure that is issuing new shares into the market right now.

The company's shares outstanding stood at 15.37 million as of June 2, 2026. That figure has already grown approximately 520% over the prior twelve months and 58.4% in just the six weeks between late March and mid-May. The engine behind that expansion: Series B Convertible Preferred Stock held by 3i, LP, a financing counterparty with a well-documented history in floating-rate convertible structures.

How the Conversion Mechanism Works

The Series B Preferred converts into common stock using an Alternate Conversion Price set at 90% of the lowest five-day volume-weighted average price (VWAP) — meaning the conversion holder pays ten percent below the cheapest recent trading level. A fixed conversion price, originally $2.50 per share, has already ratcheted down to $0.55. A contractual floor sits at $0.4104, below which the conversion price is not supposed to drop further. But because the stock has been trading below that floor, each conversion now issues the maximum possible number of shares. Roughly 3,400 preferred shares remain outstanding, convertible into an estimated 9 million common shares.

This is a self-reinforcing cycle. Each conversion adds shares to supply, which pressures the stock lower, which in turn makes the next conversion issue even more shares at the floor.

The Broader Overhang

Convertible preferred is only one layer. Sitting above the approximately 13.6 million tradeable float:

• ~14 million warrant shares, including 8.7 million warrants at $0.55 carrying full-ratchet adjustment — meaning the exercise price automatically resets downward if the company issues shares at a lower price.
• An undrawn equity line of credit (ELOC) — a standing facility that lets the company sell shares to 3i LP on demand — with $14 million of remaining capacity. At recent share-value levels, that capacity could translate into more than 50 million additional shares, over three times the current outstanding count.
• Over 20 million resale shares across pending S-3 registration statements — filings that, once effective, allow the named selling shareholders to freely trade those shares on the open market.

In total, pending supply of roughly 32 million shares is approximately 2.4 times the current public float.

Structural Context

ENSC has executed three reverse splits in approximately two years — 1-for-20, 1-for-12, and 1-for-15 — producing a cumulative ratio of roughly 1-for-3,600. The company faces an August 24, 2026 deadline to regain compliance with Nasdaq's minimum bid-price requirement, raising the probability of a fourth split.

The 3i LP financing agreement also includes a Variable Rate Transaction prohibition, which prevents Ensysce from seeking alternative floating-rate financing while the preferred stock's stated value exceeds $100,000. That covenant effectively locks the company into 3i's instruments.

Of the company's 250 million authorized shares, roughly 15.4 million are currently issued — leaving substantial authorized headroom for further issuance. Cash on hand was $745,482 as of the most recent quarterly filing, against a quarterly cash burn of approximately $1.5 million, implying roughly half a quarter of runway without additional capital raises.

The company's authorized share ceiling of 250 million accommodates every layer of the pending overhang with room to spare.