What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-08 · 260 added, 234 removed, 642 unchanged (43% of the section changed)

5 unchanged sentences

interest income

asset - current portion

and other current assets

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investment securities

Property and equipment,

net of accumulated depreciation of $ 1,148,374 and $ 1,144,077

asset - non-current portion

equipment, net of accumulated depreciation of $ 1,150,952 and $ 1,144,077

and Stockholders’ Equity

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Consolidated Statements of Operations and Comprehensive Loss

Months Ended June 30,

Months Ended September 30,

and development

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( 4,000,000 )

other income (expense), net

( 3,619,776 )

( 4,072,151 )

before income tax expense

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Consolidated Statements of Changes in Stockholders’ Equity

the Three and Six Months Ended June 30, 2022 and 2021

Comprehensive

Stockholders’

Comprehensive

the Three and Nine Months Ended September 30, 2022 and 2021

Paid-In Capital

Comprehensive Loss

Stockholders’

at March 31, 2021

at June 30, 2021

$ 217,986,752

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( 3,081,297 )

net gain on marketable investment securities

net loss on marketable investment securities

associated with ATM offering

at June 30, 2021

at September 30, 2021

$ 218,136,818

$ ( 185,290,428 )

Comprehensive

Paid-In Capital

Comprehensive Loss

Stockholders’

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stock sold through ATM offering

at June 30, 2021

at September 30, 2021

$ 218,136,818

$ ( 185,290,428 )

Comprehensive

Comprehensive Gain (Loss)

Stockholders’

at March 31, 2022

at June 30, 2022

$ 218,792,479

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( 2,409,165 )

net loss on marketable investment securities

net gain on marketable investment securities

associated with ATM offering

at June 30, 2022

at September 30, 2022

$ 218,952,749

$ ( 181,195,130 )

Comprehensive

Comprehensive Loss

Stockholders’

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associated with ATM offering

at June 30, 2022

at September 30, 2022

$ 218,952,749

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Consolidated Statements of Cash Flows

Months Ended June 30,

Months Ended September 30,

flows from operating activities:

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( 1,250,000 )

Gain on extinguishment

of litigation settlement liability

on extinguishment of litigation settlement liability

used in operating activities

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( 2,121,044 )

increase (decrease) in cash, cash equivalents, and restricted cash

decrease in cash and cash equivalents

( 19,700,277 )

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in accordance with rules and regulations of the SEC.

Operating results for the three and six months ended June 30, 2022 are not necessarily

indicative of the results that may be expected for any future period or for the year ending December 31, 2022.

Operating results for the three and nine months ended September 30, 2022 are not

necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2022.

unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial

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results could differ from these estimates.

Company believes that its existing capital resources, together with interest thereon, will be sufficient to meet its projected operating

requirements through at least June 30, 2023 which includes an on-going clinical study for LPCN 1148 and compliance with regulatory requirements.

The Company has based this estimate on assumptions that may prove to be wrong, and the Company could utilize its available capital resources

sooner than it currently expects if additional activities are performed by the Company including clinical studies for LPCN 1148, LPCN

Company believes that its existing capital resources, together with interest thereon, will be sufficient to meet its projected

operating requirements through at least September 30, 2023 which includes an on-going clinical study for LPCN 1148 in the management

of decompensated cirrhosis, a pilot pharmacokinetic (“PK”) bridge study for LPCN 1154 in Postpartum Depression

(“PPD”), and compliance with regulatory requirements.

The Company has based this estimate on assumptions that may prove

to be wrong, and the Company could utilize its available capital resources sooner than it currently expects if additional activities

are performed by the Company including additional clinical studies for LPCN 1148, LPCN 1144 for non-cirrhotic non-alcoholic

steatohepatitis (“NASH”), LPCN 1111 an oral TRT product with the potential for once daily dosing, LPCN1107 for the prevention of recurrent preterm birth, LPCN 1154

and LPCN 2101 for epilepsy.

While the Company believes it has sufficient liquidity and capital resources to fund our projected operating

requirements through at least September 30, 2023, the Company will need to raise additional capital at some point through the equity

or debt markets or via out-licensing activities to support its operations.

If the Company is

unsuccessful in raising additional capital, its ability to continue as a going concern may become a risk.

Company’s operating plan may change, and the Company may need additional funds to meet operational needs and capital

requirements for product development, regulatory compliance and clinical trial activities sooner than planned.

In addition, the

Company’s capital resources may be consumed more rapidly if it pursues additional clinical studies for LPCN 1148, LPCN 1144,

LPCN 1111, LPCN 1107, LPCN 1154 and LPCN 2101.

While the Company believes it has sufficient liquidity and capital resources to fund

our projected operating requirements through at least June 30, 2023, the Company will need to raise additional capital at some point

through the equity or debt markets or via out-licensing activities, before or after June 30, 2023, to support its operations.

Company is unsuccessful in raising additional capital, its ability to continue as a going concern may become a risk.

Further, the Company’s

operating plan may change, and the Company may need additional funds to meet operational needs and capital requirements for product development,

regulatory compliance and clinical trial activities sooner than planned.

In addition, the Company’s capital resources may be consumed

more rapidly if it pursues additional clinical studies for LPCN 1148, LPCN 1144, LPCN 1111, LPCN 1107, LPCN 1154 and LPCN 2101.

the Company’s capital resources could last longer if it reduces expenses, reduces the number of activities currently contemplated

under our operating plan, terminates, modifies the design or suspends on-going clinical studies or terminates or settles

any on-going litigation activities.

Conversely, the Company’s capital resources could last longer if it reduces

expenses, reduces the number of activities currently contemplated under our operating plan, terminates, modifies the design or

suspends on-going clinical studies or terminates or settles any on-going litigation activities.

Company generates most of its revenue from license and royalty arrangements.

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the uncertainty associated with the variable consideration is subsequently resolved.

The Company reassess its reserves for variable consideration

The Company reassesses its reserves for variable consideration

at each reporting date and makes adjustments, if necessary, which may affect revenue and earnings in periods in which any such changes

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extent collectability is reasonably certain.

Royalties revenue consists of sales-based and minimum royalties earned under licenses agreements for our products.

Royalties revenue consists of sales-based and minimum royalties earned under license agreements for our products.

Performance obligations

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on the terms of the contract.

The contract asset as of June 30, 2022 is related to the Antares License Agreement.

Based on the terms

of the license agreement, the Company estimates that it will receive a payment of approximately $ 235,000 for royalties on estimated second

quarter 2022 net sales of TLANDO under this agreement.

Receipt of this payment will reduce the contract asset in the third quarter of

The contract asset as of September 30, 2022 is related to the Antares License Agreement.

asset was reduced by approximately $ 218,000

for royalty payments received during the 90 days ended September 30, 2022.

These royalties were received from Antares under the

terms of our license agreement based on net sales of TLANDO in the second quarter of 2022.

Based on the terms of the license

agreement and sales estimates for the third quarter of 2022 provided by Antares, the Company estimates that it will not receive a

royalty payment on estimated third quarter 2022 net sales of TLANDO under this agreement.

Concentration.

A major customer is considered to be one that comprises more than 10 %

of the Company’s total revenues.

The Company recognized license revenue of $ 500,000 for

the three and six months ended June 30, 2022, and zero for the three and six months ended June 30, 2021.

The revenue recognized was 100 %

from one major customer, Antares.

A major customer is considered to be one that comprises more than 10 % of the Company’s total revenues.

recognized revenue of $ 0 and $ 500,000 for the three and nine months ended September 30, 2022, and $ 55,000 for both the three and nine

months ended September 30, 2021.

The revenue recognized in 2022 was 100 % from one major customer, Antares.

(3) Earnings (Loss) per Share

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warrants and, unvested restricted stock units to the extent such shares are dilutive.

following table sets forth the computation of basic and diluted earnings (loss) per share of common stock for the three and six months

ended June 30, 2022 and 2021:

The diluted loss per share for

the three and nine months ended September 30, 2021, has been revised to reflect minor changes in the diluted loss per share

calculation related to the treatment of the gain on warrant liability.

This resulted in a change in the diluted net loss per share

from a loss per share of $ 0.03 per share as reported to $ 0.04 per share as revised for the three months ended September 30, 2021, and

from $ 0.15 per share as reported to $ 0.16 per share as revised for the nine months ended September 30, 2021.

following table sets forth the computation of basic and diluted earnings (loss) per share of common stock for the three and nine months

ended September 30, 2022 and 2021:

Schedule of Computation of Basic and Diluted Earnings (loss) Per Share of Common Stock

Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

loss per share attributable to common stock:

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$ ( 13,258,420 )

Effect of dilutive securities on net loss:

Common stock warrants

Total net loss for purpose of calculating diluted net loss per common share

of dilutive securities on net loss:

stock warrants

net loss for purpose of calculating diluted net loss per common share

$ ( 2,735,405 )

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common shares outstanding

Weighted average effect of dilutive securities:

average effect of dilutive securities:

stock warrants

Total shares for purpose of calculating diluted net loss per common share

shares for purpose of calculating diluted net loss per common share

loss per share attributable to common stock

computation of diluted loss per share for the three and six months ended June 30, 2022 and 2021 does not include the following stock

options and warrants to purchase shares of common stock in the computation of diluted loss per share because these instruments were antidilutive:

computation of diluted loss per share for the three and nine months ended September 30, 2022 and 2021 does not include the following

stock options and warrants to purchase shares of common stock in the computation of diluted loss per share because these instruments

were antidilutive:

Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share

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The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value for available-for-sale

securities by major security type and class of security at June 30, 2022 and December 31, 2021 were as follows:

securities by major security type and class of security at September 30, 2022 and December 31, 2021 were as follows:

Schedule of Available for Sale Securities

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treasury bills

of debt securities classified as available-for-sale securities at June 30, 2022 are as follows:

of debt securities classified as available-for-sale securities at September 30, 2022 are as follows:

Schedule of Maturities of Debt Securities Classified as Available-for-sale Securities

within one year

were no sales of marketable investment securities during the three and six months ended June 30, 2022 and 2021, and therefore no realized

gains or losses.

Additionally, during the three months ended June 30, 2022 and 2021, $ 8.6 million and $ 0 marketable investment securities

matured, and $ 33.8 million and $ 450,000 of marketable investment securities matured during the six months ended June 30, 2022 and 2021,

respectively.

The Company determined there were no other-than-temporary impairments for the three and six months ended June 30, 2022

were no sales of marketable investment securities during the three and nine months ended September 30, 2022 and 2021, and therefore no

realized gains or losses.

Additionally, during the three months ended September 30, 2022 and 2021, $ 11.5 million and $ 2.8 million marketable

investment securities matured, and $ 45.3 million and $ 3.3 million of marketable investment securities matured during the nine months

ended September 30, 2022 and 2021, respectively.

The Company determined there were no other-than-temporary impairments for the three

and nine months ended September 30, 2022 and 2021.

(5) Fair Value

Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent

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The following table presents the placement in the fair value hierarchy of assets

and liabilities that are measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021:

and liabilities that are measured at fair value on a recurring basis at September 30, 2022 and December 31, 2021:

Schedule of Fair Value, Assets Measured on Recurring Basis

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The significant

assumptions used in preparing the option pricing model for valuing the warrant liability as of June 30, 2022, include (i) volatility

assumptions used in preparing the option pricing model for valuing the warrant liability as of September 30, 2022, include (i) volatility

of 100.0 %, (ii) risk free interest rate of 4.22 %, (iii) strike price of $ 0.50 , (iv) fair value of common stock of $ 0.45 , and (v) expected

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in circumstances that caused the transfer.

There were no transfers into or out of Level 1, Level 2, or Level 3 for the three and six

months ended June 30, 2022.

There were no transfers into or out of Level 1, Level 2, or Level 3 for the three and nine

months ended September 30, 2022.

(6) Loan and Security Agreements and Other Liabilities

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Valley Bank (“SVB”) pursuant to which SVB agreed to lend the Company $ 10.0 million.

The principal borrowed under the

Loan and Security Agreement bore interest at a rate equal to the Prime Rate, as reported in the money rates section of The Wall

Street Journal or any successor publication representing the rate of interest per annum then in effect, plus one percent per annum,

which interest was payable monthly.

The principal borrowed under the Loan

and Security Agreement bore interest at a rate equal to the Prime Rate, as reported in the money rates section of The Wall Street Journal

or any successor publication representing the rate of interest per annum then in effect, plus one percent per annum, which interest was

payable monthly .

Additionally on April 1, 2020, the Company entered into a Deferral Agreement with SVB.

Deferral Agreement, principal repayments were deferred by six months and the Company was only required to make monthly interest

The loan matured and was paid in full on June 1, 2022 .

The Company made a final payment at maturity equal to

$ 650,000 (the “Final Payment Charge”) at the time the loan matured.

The expense of the final payment charge had been

recognized over the term of the facility using the effective interest method.

Under the Deferral Agreement,

principal repayments were deferred by six months and the Company was only required to make monthly interest payments.

The loan matured

and was paid in full on June 1, 2022 .

The Company made a final payment at maturity equal to $ 650,000 (the “Final Payment Charge”)

at the time the loan matured.

The expense of the final payment charge had been recognized over the term of the facility using the effective

interest method.

(7) Income Taxes

tax provision for interim periods is determined using an estimate of the Company’s effective tax rate for the full year adjusted

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annual effective tax rate, and if the estimated tax rate changes, the Company makes a cumulative adjustment.

June 30, 2022 and December 31, 2021, the Company had a full valuation allowance against its deferred tax assets, net of expected reversals

of existing deferred tax liabilities, as it believes it is more likely than not that these benefits will not be realized.

September 30, 2022 and December 31, 2021, the Company had a full valuation allowance against its deferred tax assets, net of expected

reversals of existing deferred tax liabilities, as it believes it is more likely than not that these benefits will not be realized.

(8) Contractual Agreements

Abbott Products, Inc.

Products, Inc.

March 29, 2012, the Company terminated its collaborative agreement with Solvay Pharmaceuticals, Inc.

(later acquired by Abbott

Products, Inc.) for TLANDO.

(later acquired by Abbott Products,

Inc.) for TLANDO.

As part of the termination, the Company reacquired the rights to the intellectual property from Abbott.

All obligations under the prior license agreement have been completed except that Lipocine will owe Abbott a perpetual 1 % royalty on

Such royalties are limited to $ 1.0 million in the first two calendar years following product launch, after which period

there is not a cap on royalties and no maximum aggregate amount.

If generic versions of any such product are introduced, then

royalties are reduced by 50 %.

The Company incurred royalty expense of $ 17,000 during the three and six months ended June 30, 2022

and did not incur any royalties expense during the three and six months ended June 30, 2021.

Antares Pharma, Inc.

All obligations

under the prior license agreement have been completed except that Lipocine will owe Abbott a perpetual 1 % royalty on net sales.

royalties are limited to $ 1.0 million in the first two calendar years following product launch, after which period there is not a cap

on royalties and no maximum aggregate amount.

If generic versions of any such product are introduced, then royalties are reduced by 50 %.

TLANDO was commercially launched on June 7, 2022.

The Company incurred royalty expense of approximately $ 0 and $ 17,000 during the three

and nine months ended September 30, 2022 and did not incur any royalties expense during the three and nine months ended September 30,

October 14, 2021, the Company entered into a license agreement (“License Agreement”) with Antares Pharma, Inc.

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with respect to testosterone replacement therapy in males for conditions associated with a deficiency or absence of endogenous testosterone,

as indicated in NDA No.

208088, treatment of Klinefelter syndrome, and pediatric indications relating to testosterone replacement therapy

in males for conditions associated with a deficiency or absence of endogenous testosterone (the “Field”), in each case within

the United States.

The Antares License Agreement also provided Antares with an option, exercisable on or before March 31, 2022, to license

TLANDO XR (LPCN 1111), the Company’s potential once-daily oral product candidate for testosterone replacement therapy.

1, 2022, the Company entered into the First Amendment to the License Agreement (the “Amendment”), pursuant to which the License

Agreement was amended to extend the deadline by which Antares shall exercise its option to license TLANDO XR to June 30, 2022.

as indicated in New Drug Application (“NDA”) No.

208088, treatment of Klinefelter syndrome, and pediatric indications relating

to testosterone replacement therapy in males for conditions associated with a deficiency or absence of endogenous testosterone (the “Field”),

in each case within the United States.

TLANDO received FDA approval on March 29, 2022.

execution of the Antares License Agreement, Antares paid to the Company an initial payment of $ 11.0 million.

Antares will also make additional payments of $ 5.0 million

to the Company on each of January 1, 2025, and January 1, 2026, provided that certain conditions are satisfied.

The Company is also

eligible to receive milestone payments of up to $ 160.0 million

in the aggregate, depending on the achievement of certain sales milestones in a single calendar year with respect to TLANDO, as

licensed by Antares under the Antares License Agreement.

In addition, upon commercialization, the Company will receive tiered

royalty payments at rates ranging from percentages in the mid-teens to up to 20 %

of net sales of TLANDO in the United States, subject to certain minimum royalty obligations.

The Company retains development and

commercialization rights in the rest of the world, and with respect to applications outside of the Field inside or outside the

United States.

Antares also purchased certain existing inventory of licensed products from the Company.

Finally, pursuant to the

terms of the Antares License Agreement, Antares is generally responsible for expenses relating to the development (including the

conduct of any clinical trials) and commercialization of TLANDO in the Field in the United States, while the Company is generally

responsible for expenses relating to development activities outside of the Field and/or the United States.

The Antares License

Agreement also provided Antares with an option, exercisable on or before March 31, 2022, to license TLANDO XR (LPCN 1111), the

Company’s potential once-daily oral product candidate for testosterone replacement therapy.

On April 1, 2022, the Company

entered into the First Amendment to the License Agreement (the “Amendment”), pursuant to which the License Agreement was

amended to extend the deadline by which Antares was to exercise its option to license TLANDO XR to June 30, 2022.

As consideration

for the Company agreeing to enter into the Amendment, in April 2022 Antares paid the Company a non-refundable cash fee of $ 500,000 .

June 24, 2022, Antares informed the Company that they would not be exercising their option to license TLANDO XR.

Lipocine retains all

development and commercialization rights to TLANDO XR.

Upon execution of the Antares License Agreement, Antares paid to the Company an

initial payment of $ 11.0 million.

Antares will also make additional payments of $ 5.0 million to the Company on each of January 1, 2025,

and January 1, 2026, provided that certain conditions are satisfied.

The Company is also eligible to receive milestone payments of up

to $ 160.0 million in the aggregate, depending on the achievement of certain sales milestones in a single calendar year with respect to

TLANDO, as licensed by Antares under the Antares License Agreement.

In addition, upon commercialization, the Company will receive tiered

royalty payments at rates ranging from percentages in the mid-teens to up to 20 % of net sales of TLANDO in the United States, subject

to certain minimum royalty obligations.

The Company retains development and commercialization rights in the rest of the world, and with

respect to applications outside of the Field inside or outside the United States.

Antares also purchased certain existing inventory of

licensed products from the Company.

Finally, pursuant to the terms of the Antares License Agreement, Antares is generally responsible

for expenses relating to the development (including the conduct of any clinical trials) and commercialization of TLANDO in the Field

in the United States, while the Company is generally responsible for expenses relating to development activities outside of the Field

and/or the United States.

The Company recognized license revenue under the Antares Licensing Agreement of $ 500,000 during the three and six months ended June 30, 2022, and zero during the three months and six months ended June 30, 2021.

On June 30, 2022, Antares’ option to license TLANDO XR expired and was not exercised.

Lipocine retains all development and

commercialization rights to TLANDO XR.

The Company recognized revenue under the Antares Licensing Agreement of $ 0 and

$ 500,000 during

the three and nine months ended September 30, 2022, and

$ 0 during the three months and nine months

ended September 30, 2021.

May 24, 2022, Halozyme Therapeutics completed an acquisition of Antares Pharma Inc.

through the merger of a wholly owned subsidiary

of Halozyme with and into Antares, with Antares continuing as the surviving corporation and becoming a wholly owned subsidiary of

Contract Research and Development

through the merger of a wholly owned subsidiary of

Halozyme with and into Antares, with Antares continuing as the surviving corporation and becoming a wholly owned subsidiary of Halozyme.

Research and Development

Company has entered into agreements with various contract organizations that conduct pre-clinical, clinical, analytical and manufacturing

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as advisors to the Company.

The Company incurred expenses of $ 2.1 million and $ 786,000 , respectively, for the three months ended June

30, 2022 and 2021 and $ 3.2 million and $ 1.7 million, respectively, for the six months ended June 30, 2022 and 2021 under these agreements

and has recorded these expenses in research and development expenses.

The Company incurred expenses of $ 1.4 million and $ 1.8 million, respectively, for the three months ended

September 30, 2022 and 2021 and $ 4.6 million and $ 3.4 million, respectively, for the nine months ended September 30, 2022 and 2021 under

these agreements and has recorded these expenses in research and development expenses.

Company has a non-cancelable operating lease for office space and laboratory facilities in Salt Lake City, Utah.

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has been extended through February 28, 2023.

minimum lease payments under non-cancelable operating leases as of June 30, 2022 are:

minimum lease payments under non-cancelable operating leases as of September 30, 2022 are:

Schedule of Future Minimum Rental Payments for Operating Leases

ending December 31:

Year ending December

minimum lease payments

Company’s rent expense was $ 86,000 and $ 83,000 for the three months ended June 30, 2022 and 2021, respectively.

Company’s rent expense was $ 86,000 and $ 83,000 for the three months ended September 30, 2022 and 2021, respectively.

The Company’s

rent expense was $ 170,000 and $ 165,000 for the six months ended June 30, 2022 and 2021, respectively.

rent expense was $ 256,000 and $ 248,000 for the nine months ended September 30, 2022 and 2021, respectively.

(10) Stockholders’ Equity

June 8, 2022, at the 2022 annual meeting of the stockholders, the Company’s stockholders approved an amendment to the

Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s

common stock, par value $ 0.0001 , from 100,000,000 shares to 200,000,000 shares.

The Company filed the amendment to the Restated

Certificate with the Secretary of State of the State of Delaware on June 28, 2022.

The amendment to the Restated Certificate became

effective upon filing with the Secretary of State of the State of Delaware.

Issuance of Common Stock

June 8, 2022, at the 2022 annual meeting of the stockholders, the Company’s stockholders approved an amendment to the Company’s

Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock, par

value $ 0.0001 , from 100,000,000 shares to 200,000,000 shares.

The Company filed the amendment to the Restated Certificate with the Secretary

of State of the State of Delaware on June 28, 2022.

The amendment to the Restated Certificate became effective upon filing with the Secretary

of State of the State of Delaware.

of Common Stock

January 28, 2021, the Company completed a public offering of securities registered under an effective registration statement filed pursuant

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the Sales Agreement at any time upon ten days’ prior notice.

of June 30, 2022, the Company had sold an aggregate of 15,023,073 shares at a weighted-average sales price of $ 2.19 per share under the

Sales Agreement for aggregate gross proceeds of $ 32.9 million and net proceeds of $ 31.7 million, after deducting sales agent commission

of September 30, 2022, the Company had sold an aggregate of 15,023,073 shares at a weighted-average sales price of $ 2.19 per share under

the Sales Agreement for aggregate gross proceeds of $ 32.9 million and net proceeds of $ 31.7 million, after deducting sales agent commission

and discounts and our other offering costs.

During the three months ended June 30, 2022 and 2021, the Company did not sell any shares

During the three months ended September 30, 2022 and 2021, the Company did not sell any shares

of its common stock pursuant to the Sales Agreement.

During the six months ended June 30, 2022 and 2021, the Company sold zero and 1,811,238

shares of our common stock pursuant to the Sales Agreement.

The shares sold during the six months ended June 30, 2021, were sold at a

weighted-average sales price of $ 1.95 per share, resulting in net proceeds of approximately $ 3.4 million under the Sales Agreement which

is net of $ 112,000 in expenses.

As of June 30, 2022, the Company had $ 41.2 million available for sale under the Sales Agreement.

Rights Agreement

During the nine months ended September 30, 2022 and 2021, the Company sold zero

and 1,811,238 shares of our common stock pursuant to the Sales Agreement.

The shares sold during the nine months ended September 30,

2021, were sold at a weighted-average sales price of $ 1.95 per share, resulting in net proceeds of approximately $ 3.4 million under the

Sales Agreement which is net of $ 112,000 in expenses.

As of September 30, 2022, the Company had $ 41.2 million available for sale under

the Sales Agreement.

November 13, 2015, the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent, entered into a Rights Agreement.

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to November 1, 2024, unless the rights are earlier redeemed or exchanged by the Company.

Share-Based Payments

Company recognizes stock-based compensation expense for grants of stock option awards, restricted stock units and restricted stock under

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Stock-based compensation cost that has been expensed in the statements of

operations amounted to approximately $ 140,000 and $ 147,000 , respectively, for the three months ended June 30, 2022 and 2021, and approximately $ 311,000 and $ 294,000 , respectively, for the six months ended June 30, 2022 and 2021, and is allocated as follows:

operations amounted to approximately $ 160,000 and $ 155,000 , respectively, for the three months ended September 30, 2022 and 2021,

and approximately $ 471,000 and $ 449,000 , respectively, for the nine months ended September 30, 2022 and 2021, and is allocated as follows:

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

Months Ended September 30,

and development

and administrative

Company issued 171,500 stock options and 504,000 stock options, respectively, during the three and six months ended June 30, 2022 and

issued 66,000 and 376,000 stock options during the three and six months ended June 30, 2021.

Company issued 27,000 stock options and 531,000 stock options, respectively, during the three and nine months ended September 30, 2022

and issued zero and 376,000 stock options during the three and nine months ended September 30, 2021.

assumptions used in the determination of the fair value of stock options granted are as follows:

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The volatility factor is based solely on the Company’s trading history.

options granted during the six months ended June 30, 2022 and 2021, the Company calculated the fair value of each option grant on the

respective dates of grant using the following weighted average assumptions:

options granted during the nine months ended September 30, 2022 and 2021, the Company calculated the fair value of each option grant

on the respective dates of grant using the following weighted average assumptions:

Schedule of Key Assumption of Fair Value of Stock Options Granted

Expected term

interest rate

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in future periods.

of June 30, 2022, there was $ 1.1 million of total unrecognized compensation cost related to unvested share-based compensation

arrangements granted under the Company’s stock option plan.

That cost is expected to be recognized over a weighted average

period of 2.0 years and will be adjusted for subsequent changes in estimated forfeitures.

Stock Option Plan

of September 30, 2022, there was $ 956,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements

granted under the Company’s stock option plan.

That cost is expected to be recognized over a weighted average period of 1.8 years

and will be adjusted for subsequent changes in estimated forfeitures.

April 2014, the board of directors adopted the 2014 Stock and Incentive Plan (“2014 Plan”) subject to shareholder approval

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An aggregate of 5,721,906 shares of common stock are authorized for issuance under the 2014 Plan, with 1,287,586 shares

remaining available for grant as of June 30, 2022.

remaining available for grant as of September 30, 2022.

summary of stock option activity is as follows:

3 unchanged sentences

at December 31, 2021

at June 30, 2022

at September 30, 2022

Options exercisable

at June 30, 2022

following table summarizes information about stock options outstanding and exercisable at June 30, 2022:

at September 30, 2022

following table summarizes information about stock options outstanding and exercisable at September 30, 2022:

Schedule of Share-based Compensation of Stock Options Outstanding and Exercisable

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There were 11,667

and 208,474 , respectively, stock options exercised during the three and six months ended June 30, 2022, and there were zero and 4,584

stock options exercised during the three and six months ended June 30, 2021.

Common Stock Warrants

and 220,141 , respectively, stock options exercised during the three and nine months ended September 30, 2022, and there were zero and

4,584 stock options exercised during the three and nine months ended September 30, 2021.

Stock Warrants

Company accounts for its common stock warrants under ASC 480, Distinguishing Liabilities from Equity , which requires any financial

9 unchanged sentences

upon a fundamental transaction.

of June 30, 2022, the Company had 1,094,030 common stock warrants outstanding from the November 2019 Offering to purchase an equal number

of shares of common stock.

The fair value of these warrants on June 30, 2022 and on December 31, 2021 was determined using the Black-Scholes

option pricing model with the following Level 3 inputs (as defined in the November 2019 Offering):

of September 30, 2022, the Company had 1,094,030 common stock warrants outstanding from the November 2019 Offering to purchase an equal

number of shares of common stock.

The fair value of these warrants on September 30, 2022 and on December 31, 2021 was determined using

the Black-Scholes option pricing model with the following Level 3 inputs (as defined in the November 2019 Offering):

Schedule of Fair Value of Warrants

1 unchanged sentence

interest rate

the three and six months ended June 30, 2022, the Company recorded a non-cash gain of $ 583,445 and $ 205,457 , respectively, from the change

in fair value of the November 2019 Offering warrants.

During the three and six months ended June 30, 2021, the Company recorded a non-cash

gain of $ 221,000 and $ 26,000 from the change in fair value of the November 2019 Offering warrants.

The following table is a reconciliation

of the warrant liability measured at fair value using level 3 inputs:

the three and nine months ended September 30, 2022, the Company recorded a non-cash gain of $ 326,000 and $ 532,000 , respectively, from

the change in fair value of the November 2019 Offering warrants.

During the three and nine months ended September 30, 2021, the Company

recorded a non-cash gain of $ 480,000 and $ 506,000 from the change in fair value of the November 2019 Offering warrants.

The following

table is a reconciliation of the warrant liability measured at fair value using level 3 inputs:

Schedule of Reconciliation of Warrant Liability

2 unchanged sentences

in fair value of common stock warrants

at June 30, 2022

at September 30, 2022

Additionally,

1 unchanged sentence

warrant holder the option to put the warrant back to the Company, the warrants are classified as equity.

As of June 30, 2022, there were

840,336 warrants outstanding that were issued in conjunction with the February 2020 Offering.

As of September 30, 2022, there

were 840,336 warrants outstanding that were issued in conjunction with the February 2020 Offering.

following table summarizes the number of common stock warrants outstanding and the weighted average exercise price:

2 unchanged sentences

at December 31, 2021

at June 30, 2022

the three and six months ended June 30, 2022, no common stock warrants were exercised.

During the three and six months ended June

30, 2021, zero and 10,000 common stock warrants to purchase one share of our common stock were exercised, resulting in proceeds of

approximately $ 5,000 .

following table summarizes information about common stock warrants outstanding at June 30, 2022:

at September 30, 2022

the three and nine months ended September 30, 2022, no common stock warrants were exercised.

During the three and nine months ended September

30, 2021, zero and 10,000 common stock warrants to purchase one share of our common stock were exercised, resulting in proceeds of approximately

following table summarizes information about common stock warrants outstanding at September 30, 2022:

average remaining contractual life (Years)

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March 13, 2020, the Company filed U.S.

patent application serial number 16/818,779 (“the Lipocine ‘779

Application”) with the USPTO.

On October 16 and November 3, 2020, Lipocine filed suggestions for interference with the USPTO

requesting that a patent interference be declared between the Lipocine ‘779 Application and US patent application serial

number 16/656,178 to Clarus Therapeutics, Inc.

patent application serial number 16/818,779 (“the Lipocine ‘779 Application”)

with the USPTO.

On October 16 and November 3, 2020, Lipocine filed suggestions for interference with the USPTO requesting that a patent

interference be declared between the Lipocine ‘779 Application and US patent application serial number 16/656,178 to Clarus Therapeutics,

(“the Clarus ‘178 Application”).

Pursuant to the Company’s

request, the Patent Trial and Appeal Board (“PTAB”) at the USPTO declared the interference on January 4, 2021 to

ultimately determine, as between the Company and Clarus, who is entitled to the claimed subject matter.

The interference number is

106,128, and the Company was initially declared Senior Party.

A conference call with the PTAB was held on January 25, 2021 to

discuss proposed motions.

On February 1, 2021, the PTAB issued an order authorizing certain motions and setting the schedule for the

preliminary motions phase.

On July 13, 2021, Clarus and the Company entered into the Global Agreement to resolve interference No.

Pursuant to the Company’s request, the Patent Trial and Appeal Board (“PTAB”)

at the USPTO declared the interference on January 4, 2021 to ultimately determine, as between the Company and Clarus, who is entitled

to the claimed subject matter.

The interference number is 106,128, and the Company was initially declared Senior Party.

call with the PTAB was held on January 25, 2021 to discuss proposed motions.

On February 1, 2021, the PTAB issued an order authorizing

certain motions and setting the schedule for the preliminary motions phase.

On July 13, 2021, Clarus and the Company entered into the

Global Agreement to resolve interference No.

106,128 among other items.

On July 26, 2021, the PTAB granted the Company’s request for adverse judgment in interference No.

On July 26, 2021, the PTAB granted the Company’s request

for adverse judgment in interference No.

106,128 in accordance with the Global Agreement.

Solomon Abady v.

the Solomon Abady v.

Lipocine Inc.

et al., 2:19-cv-00906-PM matter, management does not currently believe that any other matter, individually

or in the aggregate, will have a material adverse effect on our financial condition, liquidity or results of operations.

et al., 2:19-cv-00906-PM matter, management does not currently believe that any other matter,

individually or in the aggregate, will have a material adverse effect on our financial condition, liquidity or results of

and Indemnifications

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In addition, Spriaso received all rights and obligations under the Company’s product development agreement with a third-party.

In exchange, the Company will receive a royalty of 20

percent of the net proceeds received by Spriaso,

up to a maximum of $ 10.0

Spriaso also granted back to the Company

an exclusive license to such intellectual property to develop products outside of the cough and cold field.

Company also agreed to continue providing up to 10 percent of the services of certain employees to Spriaso for a period of time.

agreement to provide services expired in 2021;

it may be extended upon written agreement of Spriaso and the Company.

The Company did not receive any reimbursements from Spriaso for

the three and six months ended June 30, 2022 and 2021, respectively.

Additionally, during the three and six months ended June 30, 2022

and 2021, the Company did not receive any royalty revenue from Spriaso.

Spriaso filed its first NDA and as an affiliated entity of the

Company, and used up the one-time waiver for user fees for a small business submitting its first new drug application to the FDA.

is considered a variable interest entity under the FASB ASC Topic 810-10, Consolidations , however the Company is not the primary

beneficiary and has therefore not consolidated Spriaso.

In exchange, the Company will receive a royalty of 20 percent of the net proceeds received by Spriaso, up to a maximum of $ 10.0 million.

Spriaso also granted back to the Company an exclusive license to such intellectual property to develop products outside of the cough

and cold field.

The Company also agreed to continue providing up to 10 percent of the services of certain employees to Spriaso for a

period of time.

The agreement to provide services expired in 2021 ;

however, it may be extended upon written agreement of Spriaso and

The Company did not receive any reimbursements from Spriaso for the three and nine months ended September 30, 2022 and 2021,

respectively.

Additionally, during the three and nine months ended September 30, 2022, the Company did not receive any royalty revenue

from Spriaso.

During each of the three and nine months ended September 30, 2021, the Company received $55,000 in licensing payments from

Spriaso filed its first NDA as an affiliated entity of the Company and used up the one-time waiver for user fees for a small

business submitting its first new drug application to the FDA.

Spriaso is considered a variable interest entity under the FASB ASC Topic

810-10, Consolidations , however the Company is not the primary beneficiary and has therefore not consolidated Spriaso.

(13) Recent Accounting Pronouncements

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The Company has historically not had

credit losses on financial instruments and is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated

financial statements.

credit losses on financial instruments and does not anticipate that the adoption of ASU 2016-13 will

have a material impact on its consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements