What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-11 compared with 2022-11-09 · 555 added, 589 removed, 313 unchanged (79% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

and cash equivalents

investment securities

interest income

asset - current portion

and other current assets

Current assets:

investment securities

asset - non-current portion

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

and Stockholders’ Equity

- current portion

settlement liability - current portion

Cash and cash equivalents

Marketable investment securities

Accrued interest income

Contract asset - current portion

Prepaid and other current assets

Total current assets

Contract asset - non-current portion

Property and equipment, net of accumulated depreciation of $ 1,158,349 and $ 1,153,530 respectively

Liabilities and Stockholders’ Equity

Current liabilities:

settlement liability - non-current portion

and contingencies (notes 6, 8, 9 and 11)

Stockholders’

stock, par value $ 0.0001 per share, 10,000,000 shares authorized;

zero issued and outstanding

stock, par value $ 0.0001 per share, 200,000,000 shares authorized;

88,516,501 and 88,296,360 issued and 88,510,791 and 88,290,650

paid-in capital

stock at cost, 5,710 shares

other comprehensive loss

Accounts payable

Accrued expenses

Total current liabilities

Warrant liability

Total liabilities

Commitments and contingencies (notes 6, 8, 9 and 11)

Mezzanine equity:

Preferred stock, par value $ 0.0001 per share ($ 0.001 per share redemption value), 10,000,000 shares authorized;

88,511 and zero issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Stockholders’ equity:

Common stock, par value $ 0.0001 per share, 200,000,000 shares authorized;

88,516,501 issued and 88,510,791 outstanding

Additional paid-in capital

Treasury stock at cost, 5,710 shares

Accumulated other comprehensive loss

Accumulated deficit

( 187,295,362 )

( 183,425,043 )

stockholders’ equity

liabilities and stockholders’ equity

Total stockholders’ equity

Total liabilities and stockholders’ equity

accompanying notes to unaudited condensed consolidated financial statements

1 unchanged sentence

Consolidated Statements of Operations and Comprehensive Loss

Months Ended September 30,

and development

and administrative

Three Months Ended March 31,

Operating expenses:

( 2,899,371 )

( 3,533,673 )

( 9,558,542 )

( 9,638,444 )

income (expense):

and investment income

gain on warrant liability

(loss) litigation settlement liability

( 4,000,000 )

other income (expense), net

( 3,619,776 )

before income tax expense

( 2,409,165 )

( 3,081,297 )

( 8,528,523 )

( 13,258,220 )

Research and development

General and administrative

Total operating expenses

Operating loss

( 4,338,633 )

( 3,131,640 )

Other income (expense):

Interest and investment income

Interest expense

Unrealized gain (loss) on warrant liability

Total other income (expense), net

Loss before income tax expense

( 3,870,030 )

( 3,487,581 )

loss per share attributable to common stock

average common shares outstanding, basic

loss per share attributable to common stock

average common shares outstanding, diluted

Comprehensive

Income tax expense

( 3,870,230 )

( 3,487,781 )

Issuance of Series B preferred stock dividend

Net loss attributable to common shareholders

$ ( 3,870,319 )

$ ( 3,487,781 )

unrealized gain (loss) on available-for-sale securities

Comprehensive

Basic loss per share attributable to common stock

Weighted average common shares outstanding, basic

Diluted loss per share attributable to common stock

Weighted average common shares outstanding, diluted

Comprehensive loss:

$ ( 3,870,319 )

$ ( 3,487,781 )

Net unrealized gain (loss) on available-for-sale securities

Comprehensive loss

$ ( 3,846,757 )

3 unchanged sentences

Consolidated Statements of Changes in Stockholders’ Equity

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

Paid-In Capital

Comprehensive Loss

Stockholders’

at June 30, 2021

$ 217,986,752

$ ( 182,209,131 )

( 3,081,297 )

net loss on marketable investment securities

associated with ATM offering

at September 30, 2021

$ 218,136,818

$ ( 185,290,428 )

Paid-In Capital

Comprehensive Loss

Stockholders’

at December 31, 2020

the Three Months Ended March 31, 2023 and 2022

Mezzanine Equity

Stockholder’s Equity

Series B Preferred Stock

Treasury Stock

Number of Shares

Additional Paid-In Capital

Other Comprehensive Loss

Accumulated Deficit

Total Stockholders’ Equity

Balances at December 31, 2021

$ 218,286,324

2 unchanged sentences

( 3,487,781 )

net loss on marketable investment securities

stock sold through equity offering

stock issued for warrant exercises

of warrant liability on warrant exercises

stock sold through ATM offering

at September 30, 2021

Unrealized net loss on marketable investment securities

Stock-based compensation

Option exercises

Balances at March 31, 2022

$ 218,663,319

$ ( 176,154,188 )

Comprehensive Gain (Loss)

Stockholders’

at June 30, 2022

$ 218,663,319

$ ( 176,154,188 )

Series B Preferred Stock

Treasury Stock

Number of Shares

Additional Paid-In Capital

Other Comprehensive Gain (Loss)

Accumulated Deficit

Total Stockholders’ Equity

Balances at December 31, 2022

$ 219,112,164

$ ( 183,425,043 )

net gain on marketable investment securities

associated with ATM offering

at September 30, 2022

$ 219,112,164

$ ( 183,425,043 )

Comprehensive Loss

Stockholders’

at December 31, 2021

( 3,870,230 )

Unrealized net gain on marketable investment

Unrealized net gain loss on marketable investment securities

Stock-based compensation

Issuance of Series B referred stock dividend

Costs associated with ATM offering

Balances at March 31, 2023

$ 219,284,000

$ ( 187,295,362 )

net loss on marketable investment securities

net Gain/loss on marketable investment securities

associated with ATM offering

at September 30, 2022

$ 219,284,000

3 unchanged sentences

Consolidated Statements of Cash Flows

Months Ended September 30,

flows from operating activities:

$ ( 8,528,723 )

$ ( 13,258,420 )

to reconcile net loss to cash used in operating activities:

compensation expense

interest expense

gain on change in fair value of warrant liability

of premium on marketable investment securities

in operating assets and liabilities:

interest income

and other current assets

settlement liability

( 1,250,000 )

on extinguishment of litigation settlement liability

used in operating activities

( 10,129,905 )

( 13,405,843 )

flows from investing activities:

of fixed assets

of marketable investment securities

( 33,567,544 )

Three Months Ended March 31, 2023

Cash flows from operating activities:

$ ( 3,870,230 )

of marketable investment securities

provided by (used in) investing activities

$ ( 3,487,781 )

flows from financing activities:

Adjustments to reconcile net loss to cash used in operating activities:

Depreciation expense

Stock-based compensation expense

Non-cash interest expense

Non-cash (gain) loss on change in fair value of warrant liability

Amortization of premium (discounts) on marketable investment securities

Changes in operating assets and liabilities:

Accrued interest income

Prepaid and other current assets

Accounts payable

Accrued expenses

Cash used in operating activities

( 3,928,057 )

( 3,885,402 )

of loan payment

proceeds from common stock offering

from (costs associated with) ATM

from stock option exercises

proceeds from exercise of warrants

provided by (used in) financing activities

Cash flows from investing activities:

Purchase of property and equipment

Purchases of marketable investment securities

( 6,441,243 )

decrease in cash and cash equivalents

( 17,906,250 )

cash equivalents, and restricted cash at beginning of period

cash equivalents, and restricted cash at end of period

disclosure of cash flow information:

disclosure of non-cash investing and financing activity:

of warrant liability on warrant exercises

unrealized loss on available-for-sale securities

final payment charge on debt

Maturities of marketable investment securities

Cash provided by investing activities

Cash flows from financing activities:

Debt repayments

Costs associated with At the Market Offering

Proceeds from stock option exercises

Cash provided used in financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental disclosure of cash flow information:

Interest paid

Income taxes paid

Supplemental disclosure of non-cash investing and financing activity:

Net unrealized gain (loss) on available-for-sale securities

Accrued final payment charge on debt

Issuance of Series B preferred stock dividend

accompanying notes to unaudited condensed consolidated financial statements

12 unchanged sentences

in accordance with rules and regulations of the SEC.

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.

Operating results for the three months ended March 31, 2023 are not necessarily

indicative of the results that may be expected for any future period or for the year ending December 31, 2023.

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

4 unchanged sentences

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 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.

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

requirements through at least May 11, 2024 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 clinical

studies for LPCN 1148, LPCN 1154, LPCN 1144 for non-cirrhotic non-alcoholic steatohepatitis (“NASH”), LPCN 1111 an oral TRT

product with the potential for once daily dosing, LPCN 1107 for the prevention of recurrent preterm birth, 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 May 11, 2024, 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 will 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.

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

Company reduces expenses, reduces the number of activities currently contemplated under its operating plan, or terminates, modifies the

design or suspends on-going clinical studies.

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

6 unchanged sentences

the uncertainty associated with the variable consideration is subsequently resolved.

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

become known.

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 become known.

Note 8 for a description of the license agreement with Antares Pharma, Inc.

See Note 12 for a description of

the agreement with Spriaso.

the agreement with Spriaso, a related party.

For distinct license performance obligations, upfront license fees are recognized when the Company satisfies the underlying

performance obligation.

This generally occurs upon transfer of the right to use the Company’s licensed technology to the customer.

In addition, license arrangements may include contingent milestone payments, which are due following achievement by our licensee of specified

sales or regulatory milestones and the licensee and/or Company will fulfill its performance obligation prior to achievement of these

Because of the uncertainty of the milestone achievement, and/or the dependence on sales of our licensee, variable consideration

for contingent milestones is fully constrained and is not recognized as revenue until the milestone is achieved by our licensee, to the

extent collectability is reasonably certain.

Performance obligations under these licenses, which consist of the right to use the Company’s proprietary

technology, are satisfied at a point in time corresponding with delivery of the underlying technology rights to the licensee, which is

generally upon transfer of the licensed technology/product to the customer.

In addition, license arrangements may include contingent

milestone payments, which are due following achievement by our licensee of specified sales or regulatory milestones and the licensee

and/or Company will fulfill its performance obligation prior to achievement of these milestones.

Because of the uncertainty of the milestone

achievement, and/or the dependence on sales of our licensee, variable consideration for contingent milestones is fully constrained and

is not recognized as revenue until the milestone is achieved by our licensee, to the extent collectability is reasonably certain.

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

Performance obligations

under these licenses, which consist of the right to use the Company’s proprietary technology, are satisfied at a point in time

corresponding with delivery of the underlying technology rights to the licensee, which is generally upon transfer of the licensed technology/product

to the customer.

Sales-based royalties revenue represents variable consideration under the license agreements and is recognized in the

period a customer sells products incorporating the Company’s licensed technologies/products.

The Company estimates sales-based

royalties revenue earned but unpaid at each reporting period using information provided by the licensee.

The Company’s license

arrangements may also provide for minimum royalties, which the Company recognizes upon the satisfaction of the underlying performance

obligation, which generally occurs with delivery of the underlying technology rights to the licensee.

Sales-based and minimum royalties

are generally due within 45 days after the end of each quarter in which they are earned.

Contract assets consist of minimum royalty revenue earned in relation to the license agreement but not yet payable based

on the terms of the contract.

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.

Sales-based royalties

revenue represents variable consideration under the license agreements and is recognized in the period a customer sells products incorporating

the Company’s licensed technologies/products.

The Company estimates sales-based royalties revenue earned but unpaid at each reporting

period using information provided by the licensee.

The Company’s license arrangements may also provide for minimum royalties, which

the Company recognizes upon the satisfaction of the underlying performance obligation, which generally occurs with delivery of the underlying

technology rights to the licensee.

Sales-based and minimum royalties are generally due within 45 days after the end of each quarter in

which they are earned.

assets consist of minimum royalty revenue earned in relation to the license agreement but not yet due based on the terms of the contract.

The contract asset as of March 31, 2023 is related to the Antares License Agreement.

The contract asset was reduced by approximately

$ 218,000 for royalty payments received during 2022.

These royalties were received from Antares under the terms of our license agreement

based on net sales of TLANDO.

Based on the terms of the license agreement and sales estimates for the first quarter of 2023 provided

by Antares, the Company estimates that it will not receive a royalty payment on estimated first quarter 2023 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.

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.

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

of the Company’s total revenues.

The Company recognized revenue of approximately $ 55,000

for the three months ended March 31, 2023, and March 31, 2022, respectively.

The revenue recognized in 2023 was 100 %

from one major related-party partner, Spriaso.

Earnings (Loss) per Share

4 unchanged sentences

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

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

Three Months Ended

September 30,

Nine Months Ended

September 30,

loss per share attributable to common stock:

$ ( 2,409,165 )

$ ( 3,081,297 )

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

March 31, 2023 and 2022:

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

Three Months Ended March 31,

Basic loss per share attributable to common stock:

$ ( 3,870,230 )

$ ( 3,487,781 )

Weighted avg.

common shares outstanding

loss per share attributable to common stock

loss per share attributable to common stock:

$ ( 2,409,165 )

$ ( 3,081,297 )

$ ( 8,528,723 )

$ ( 13,258,420 )

of dilutive securities on net loss:

stock warrants

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

Basic loss per share attributable to common stock

Diluted loss per share attributable to common stock:

$ ( 3,870,230 )

$ ( 3,487,781 )

Effect of dilutive securities on net loss:

Common stock warrants

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

$ ( 3,968,364 )

$ ( 3,487,781 )

Weighted avg.

common shares outstanding

average effect of dilutive securities:

stock warrants

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 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

Weighted average effect of dilutive securities:

Common stock warrants

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

Diluted loss per share attributable to common stock

computation of diluted loss per share for the three months ended March 31, 2023 and 2022 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:

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

Stock options

Marketable Investment Securities

7 unchanged sentences

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 September 30, 2022 and December 31, 2021 were as follows:

Schedule of Available for Sale Securities

unrealized holding gains

unrealized holding losses

treasury bills

bonds, notes and commercial paper

unrealized holding gains

unrealized holding losses

treasury bills

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 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

securities by major security type and class of security as of March 31, 2023, and December 31, 2022, were as follows:

of Available for Sale Securities

March 31, 2023

Amortized Cost

Gross unrealized holding gains

Gross unrealized holding losses

Aggregate fair value

Government treasury bills

Corporate bonds, notes and commercial paper

government agency securities

December 31, 2022

Amortized Cost

Gross unrealized holding gains

Gross unrealized holding losses

Aggregate fair value

Government treasury bills

Commercial paper

government agency securities

of debt securities classified as available-for-sale securities as of March 31, 2023, are as follows:

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

March 31, 2023

Due within one year

were no sales of marketable investment securities during the three months ended March 31, 2023, and 2022 and therefore no realized gains

Additionally, $ 12.0 million and $ 25.2 million of marketable investment securities matured during the three months ended March

31, 2023 and March 31, 2022, respectively.

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

ended March 31, 2023, and March 31, 2022.

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

3 unchanged sentences

fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Quoted prices for identical instruments in active markets.

Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets

that are not active, and model-derived valuation in which all significant inputs and significant value drivers are observable in

active markets.

Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Level 1 Inputs:

prices for identical instruments in active markets.

Level 2 Inputs:

prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active,

and model-derived valuation in which all significant inputs and significant value drivers are observable in active markets.

Level 3 Inputs:

derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

of the Company’s financial instruments are valued using quoted prices in active markets or based on other observable inputs.

2 unchanged sentences

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 September 30, 2022 and December 31, 2021:

Schedule of Fair Value, Assets Measured on Recurring Basis

value measurements at reporting date using

equivalents - money market funds

treasury bills

bonds and notes

value measurements at reporting date using

equivalents - money market funds

treasury bills

bonds and notes

following methods and assumptions were used to determine the fair value of each class of assets and liabilities recorded at fair

value in the balance sheets:

and liabilities that are measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022:

of Fair Value, Assets Measured on Recurring Basis

Fair value measurements at reporting date using

March 31, 2023

Level 1 inputs

Level 2 inputs

Level 3 inputs

Cash equivalents - money market funds

Government treasury bills

Commercial paper

Corporate bonds and notes

Government agency securities

Warrant liability

Fair value measurements at reporting date using

December 31, 2022

Level 1 inputs

Level 2 inputs

Level 3 inputs

Cash equivalents - money market funds

Government treasury bills

Commercial paper

Corporate bonds and notes

government agency securities

Warrant liability

following methods and assumptions were used to determine the fair value of each class of assets and liabilities recorded at fair value

in the balance sheets:

Cash equivalents primarily consist of highly-rated money market funds and treasury bills with original maturities to the

8 unchanged sentences

and reportable trades.

bonds, notes, and commercial paper:

bonds, notes, commercial paper and U.S.

government agency securities:

The Company uses a third-party pricing service to value these investments.

Corporate bonds, notes

and commercial paper are classified within Level 2 of the fair value hierarchy because they are valued using broker/dealer quotes, bids

and offers, benchmark yields and credit spreads and other observable inputs.

Corporate bonds, notes commercial paper and U.S.

government agency securities are classified within Level 2 of the fair value hierarchy

because they are valued using broker/dealer quotes, bids and offers, benchmark yields and credit spreads and other observable inputs.

The warrant liability (which relates to warrants to purchase shares of common stock)

4 unchanged sentences

The significant

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

assumptions used in preparing the option pricing model for valuing the warrant liability as of March 31, 2023, include (i) volatility

of 100 %, (ii) risk free interest rate of 4.34 %, (iii) strike price of $ 0.50 , (iv) fair value of common stock of $ 0.32 , and (v) expected

5 unchanged sentences

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 nine

months ended September 30, 2022.

(6) Loan and Security Agreements and Other Liabilities

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

March 31, 2023.

Loan and Security Agreements

Valley Bank Loan

11 unchanged sentences

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

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

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

2 unchanged sentences

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

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.

March 31, 2023 and December 31, 2022, 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.

Contractual Agreements

Products, Inc.

Abbott Products, Inc.

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

9 unchanged sentences

The Company incurred royalty expense of approximately $ 4,000 and $ 0 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,

months ended March 31, 2023, and 2022, respectively.

Antares Pharma, Inc.

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

8 unchanged sentences

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.

execution of the Antares License Agreement, Antares paid 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, 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.

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

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 .

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.

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 .

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.

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

1 unchanged sentence

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

Research and Development

Company did not recognize any revenue under the Antares Licensing Agreement during either the three months ended March 31, 2023, or March

Contract Research and Development

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

1 unchanged sentence

as advisors to the Company.

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.

The Company incurred expenses of $ 2.1 and $ 1.0 million, respectively, for the three months ended March 31,

2023 and 2022 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.

1 unchanged sentence

has been extended through February 28, 2024.

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

Schedule of Future Minimum Rental Payments for Operating Leases

minimum lease payments under the non-cancelable operating lease as of March 31, 2023 are:

of Future Minimum Rental Payments for Operating Leases

Year ending December 31:

minimum lease payments

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

Total minimum lease payments

Company’s rent expense was $ 87,000 and $ 84,000 for each of the three months ended March 31, 2023 and 2022, respectively.

Stockholders’ Equity

6 unchanged sentences

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

to the Securities Act of 1933, as amended (“January 2021 Offering”).

The gross proceeds from the January 2021 Offering were

approximately $ 28.7 million, before deducting underwriter fees and other offering expenses of $ 1.9 million.

In the January 2021 Offering,

the Company sold 16,428,571 shares of its common stock.

February 27, 2020, the Company completed a registered direct offering of securities registered under an effective registration statement

filed pursuant to the Securities Act of 1933, as amended (“February 2020 Offering”).

The gross proceeds from the February

2020 Offering were approximately $ 6.0 million, before deducting placement agent fees and other offering expenses of $ 347,000 .

February 2020 Offering, the Company sold 10,084,034 Class A Units at an offering price of $ 0.595 per unit, with each Class A Unit consisting

of one share of its common stock and one-half of a common warrant to purchase one share of common stock at an exercise price of $ 0.53

per share of common stock.

Additionally, the common stock warrants were immediately exercisable and expire on February 27, 2025.

terms, however, the common stock warrants cannot be exercised at any time that the common stock warrant holder would beneficially own,

after such exercise, more than 4.99% (or, at the election of the holder, 9.99%) of the shares of common stock then outstanding after

giving effect to such exercise.

November 18, 2019, the Company completed a public offering of securities registered under an effective registration statement filed pursuant

to the Securities Act of 1933, as amended (“November 2019 Offering”).

The gross proceeds from the November 2019 Offering

were approximately $ 6.0 million, before deducting placement agent fees and other offering expenses of $ 404,000 .

In the November 2019

Offering, the Company sold (i) 10,450,000 Class A Units, with each Class A Unit consisting of one share of its common stock and a common

warrant to purchase one share of its common stock, and (ii) 1,550,000 Class B Units, with each Class B Unit consisting of one pre-funded

warrant to purchase one share of its common stock and a common warrant to purchase one share of its common stock, at a price of $ 0.50

per Class A Unit and $ 0.4999 per Class B Unit.

The pre-funded warrants, which were exercised for common stock in December 2019, were

issued in lieu of common stock in order to ensure the purchaser did not exceed certain beneficial ownership limitations.

The pre-funded

warrants were immediately exercisable at an exercise price of $ .0001 per share, subject to adjustment.

Additionally, the common stock

warrants were immediately exercisable at an exercise price of $ 0.50 per share, subject to adjustment, and expire on November 17, 2024.

By their terms, however, neither the pre-funded warrants nor the common stock warrants can be exercised at any time that the pre-funded

warrant holder or the common stock warrant holder would beneficially own, after such exercise, more than 4.99% (or, at the election of

the holder, 9.99%) of the shares of common stock then outstanding after giving effect to such exercise.

On the date of the November 2019

Offering, the Company allocated approximately $ 768,000 and $ 4.8 million to common stock/additional paid-in capital and warrant liability,

respectively.

Issuance of Common Stock

March 6, 2017, the Company entered into the Sales Agreement with Cantor Fitzgerald & Co.

22 unchanged sentences

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

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 September 30, 2022 and 2021, the Company did not sell any shares

of its common stock pursuant to the Sales 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.

of March 31, 2023, the Company had sold an aggregate of 15,023,073 shares at a weighted-average sales price of $ 2.19 per share under

the ATM 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 March 31, 2023 and 2022, the Company did not sell any shares of its common

stock pursuant to the Sales Agreement.

As of March 31, 2023, the Company had $ 41.2 million available for sale under the Sales Agreement.

However, as of April 3, 2023, the Company is now subject to General Instruction I.B.6 of Form S-3 which limits the amounts that we may

sell under the registration statement.

As a result of such limitations, the Company has currently registered the offer and sale of shares

of our common stock pursuant to the Sales Agreement having an aggregate offering price of up to $ 15.7 million.

Series B Preferred Stock

March 7, 2023, the board of directors (the “Board”) of the Company declared a dividend of one one-thousandth (1/1,000 th )

of a share of Series B Preferred Stock, par value $ 0.0001 per share (“Series B Preferred Stock”), for each outstanding share

of common stock of the Company, to stockholders of record on March 24, 2023.

The Certificate of Designation of Series B Preferred Stock

(the “Certificate of Designation”) was filed with the Delaware Secretary of State and became effective on March 10, 2023.

dividend was based on the number of shares of outstanding common stock on March 24, 2023, and resulted in 88,511 Series B Preferred shares

being issued.

Each whole share of Series B Preferred Stock entitles the holder thereof to 1,000,000 votes per share, and each fraction

of a share of Series B Preferred Stock has a ratable number of votes.

Thus, each one-thousandth of a share of Series B Preferred Stock

is entitled to 1,000 votes.

The outstanding shares of Series B Preferred Stock are entitled to vote together with the outstanding shares

of common stock as a single class exclusively with respect to any proposal to adopt an amendment to the Company’s Amended and Restated

Certificate of Incorporation, as amended (the “Certificate of Incorporation”), to effect a reverse stock split of the outstanding

shares of Common Stock at a ratio determined in accordance with the terms of such amendment (the

“Reverse Stock Split”), and (ii) any proposal to adjourn any meeting of stockholders called for the purpose of voting on

the Reverse Stock Split (the “Adjournment Proposal”) in conjunction with the Company’s Annual Shareholder Meeting

(the “Meeting”).

shares of Series B Preferred Stock that are not present in person or by proxy at the Meeting as of immediately prior to the opening of

the polls (the “Initial Redemption Time”) w ill automatically be redeemed in whole,

but not in part, by the Company without further action on the part of the Company or the holder of shares of Series B Preferred Stock

(the “Initial Redemption”).

Any outstanding shares of Series B Preferred Stock that have not been redeemed pursuant to an

Initial Redemption will be redeemed in whole, but not in part, (i) if such redemption is ordered by the Board in its sole discretion,

automatically and effective on such time and date specified by the Board in its sole discretion or (ii) automatically upon the effectiveness

of the amendment to the Certificate of Incorporation implementing the Reverse Stock Split (the “Subsequent Redemption”).

share of Series B Preferred Stock redeemed in any redemption described above will be redeemed in consideration for the right to receive

an amount equal to $0.01 in cash for each ten whole shares of Series B Preferred Stock that are “beneficially owned” by the

“beneficial owner” (as such terms are defined in the Certificate of Designation with respect to the Series B Preferred Stock)

thereof as of immediately prior to the applicable redemption time and redeemed pursuant to such redemption, payable upon receipt by the

Company of a written request submitted by the applicable holder to the corporate secretary of the Company following the applicable redemption

Series B Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities

of the Company.

The Series B Preferred Stock has no stated maturity and is not subject to any sinking fund.

The Series B Preferred Stock

is not subject to any restriction on the redemption or repurchase of shares by the Company while there is any arrearage in the payment

of dividends or sinking fund installments.

Company is not solely in control of the redemption of the shares of Series B Preferred Stock since the holders have the option of deciding

whether to vote in respect of the above described Reverse Stock Split, which determines whether a given holder’s shares of Series

B Preferred Stock are redeemed in the Initial Redemption or the Subsequent Redemption.

Since the redemption of the Series B Preferred

Stock is not solely in the control of the Company, the shares of Series B Preferred Stock are classified within the mezzanine equity

in the Company’s audited consolidated statement of stockholder’s equity.

The shares of Series B Preferred Stock will be measured

at redemption value.

Subsequent Events, Redemption and Elimination of Series B Preferred Stock.

foregoing description of the Series B Preferred Stock does not purport to be complete and is qualified in its entirety by reference to

the Certificate of Designation, which is filed as Exhibit 3.2 to the Form 8-K filed with the SEC on March 10, 2023.

Rights Agreement

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

Also on November 12, 2015, the board of directors of the Company authorized and the Company declared a dividend of one preferred stock

purchase right (each a “Right” and collectively, the “Rights”) for each outstanding share of common stock of

The dividend was payable to stockholders of record as of the close of business on November 30, 2015 and entitles the registered

holder to purchase from the Company one one-thousandth of a fully paid non-assessable share of Series A Junior Participating Preferred

Stock of the Company at a price of $ 63.96 per one-thousandth share (the “Purchase Price”).

The Rights will generally become

exercisable upon the earlier to occur of (i) 10 business days following a public announcement that a person or group of affiliated or

associated persons has become an Acquiring Person (as defined below) or (ii) 10 business days (or such later date as may be determined

by action of the board of directors prior to such time as any person or group of affiliated or associated persons becomes an Acquiring

Person) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of

which would result in the beneficial ownership by a person or group of 15% or more of the outstanding common stock of the Company.

in certain situations, a person or group of affiliated or associated persons becomes an “Acquiring Person” upon acquiring

beneficial ownership of 15% or more of the outstanding shares of common stock of the Company.

Also on November 12, 2015, the Board of the Company authorized and the Company declared a dividend of one preferred stock purchase right

(each a “Right” and collectively, the “Rights”) for each outstanding share of common stock of the Company.

dividend was payable to stockholders of record as of the close of business on November 30, 2015 and entitles the registered holder to

purchase from the Company one one-thousandth of a fully paid non-assessable share of Series A Junior Participating Preferred Stock of

the Company at a price of $ 63.96 per one-thousandth share (the “Purchase Price”).

The Rights will generally become exercisable

upon the earlier to occur of (i) 10 business days following a public announcement that a person or group of affiliated or associated

persons has become an Acquiring Person (as defined below) or (ii) 10 business days (or such later date as may be determined by action

of the Board prior to such time as any person or group of affiliated or associated persons becomes an Acquiring Person) following the

commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in

the beneficial ownership by a person or group of 15% or more of the outstanding common stock of the Company.

Except in certain situations,

a person or group of affiliated or associated persons becomes an “Acquiring Person” upon acquiring beneficial ownership of

15% or more of the outstanding shares of common stock of the Company.

general, in the event a person becomes an Acquiring Person, then each Right not owned by such Acquiring Person will entitle its holder

12 unchanged sentences

The rights plan was originally set to expire on November 12, 2018;

however, on November 5, 2018 our board of directors

approved an Amended and Restated Rights Agreement pursuant to which the expiration date was extended to November 5, 2021, and again on

November 2, 2021, the Company adopted a Second Amended and Restated Rights Agreement pursuant to which the expiration date was extended

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

however, on November 5, 2018 our Board approved

an Amended and Restated Rights Agreement pursuant to which the expiration date was extended to November 5, 2021, and again on November

2, 2021, the Company adopted a Second Amended and Restated Rights Agreement pursuant to which the expiration date was extended 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

the Company’s Incentive Plan to employees, nonemployees and nonemployee members of the Company’s board of directors based

on the grant-date fair value of those awards.

The grant-date fair value of an award is generally recognized as compensation expense over

the award’s requisite service period.

In addition, the Company has granted performance-based stock option awards and restricted

stock units, which vest based upon the Company satisfying certain performance conditions.

Potential compensation cost, measured on the

grant date, related to these performance options will be recognized only if, and when, the Company estimates that these options or units

will vest, which is based on whether the Company considers the performance conditions to be probable of attainment.

The Company’s

estimates of the number of performance-based options or units that will vest will be revised, if necessary, in subsequent periods.

the Company’s Incentive Plan to employees, nonemployees and nonemployee members of the Company’s Board based on the grant-date

fair value of those awards.

The grant-date fair value of an award is generally recognized as compensation expense over the award’s

requisite service period.

In addition, the Company has granted performance-based stock option awards and restricted stock units, which

vest based upon the Company satisfying certain performance conditions.

Potential compensation cost, measured on the grant date, related

to these performance options will be recognized only if, and when, the Company estimates that these options or units will vest, which

is based on whether the Company considers the performance conditions to be probable of attainment.

The Company’s estimates of the

number of performance-based options or units that will vest will be revised, if necessary, in subsequent periods.

Company uses the Black-Scholes model to compute the estimated fair value of stock option awards.

8 unchanged sentences

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

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 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.

operations amounted to approximately $ 178,000 and $ 171,000 , respectively, for the three months ended March 31, 2023 and 2022 and

is allocated as follows:

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

Three Months Ended

Research and development

General and administrative

Company issued 300,000 and 332,500 stock options, respectively, during the three months ended March 31, 2023 and 2022.

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

The expected term represents the period that the stock-based awards are expected to be outstanding.

Due to limited historical

experience of similar awards, the expected term was estimated using the simplified method in accordance with the provisions of Staff

Accounting Bulletin (“SAB”) No.

107, Share-Based Payment, for awards with stated or implied service periods.

The simplified

method defines the expected term as the average of the contractual term and the vesting period of the stock option.

For awards with performance

conditions, and that have the contractual term to satisfy the performance condition, the contractual term was used.

The expected term was estimated

using the simplified method in accordance with the provisions of Staff Accounting Bulletin (“SAB”) No.

107, Share-Based

Payment for awards with stated or implied service periods.

The simplified method defines the expected term as the average of the

contractual term and the vesting period of the stock option.

For awards with performance conditions, and that have the contractual term

to satisfy the performance condition, the contractual term was used.

Interest Rate:

6 unchanged sentences

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

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

options granted during the three months ended March 31, 2023 and 2022, the Company calculated the fair value of each option grant on

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

of Key Assumption of Fair Value of Stock Options Granted

Expected term

interest rate

dividend yield

Risk-free interest rate

Expected dividend yield

Expected volatility

ASC 718, Stock Compensation, requires the Company to recognize compensation expense for the portion of options that are expected

2 unchanged sentences

in future periods.

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

of March 31, 2023, there was $ 940,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements

granted under the Company’s stock option plan.

1 unchanged sentence

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

which was received in June 2014.

The 2014 Plan provides for the granting of nonqualified and incentive stock options, stock appreciation

rights, restricted stock units, restricted stock and dividend equivalents.

An aggregate of 1,000,000 shares were authorized for issuance

under the 2014 Plan.

Additionally, 271,906 remaining authorized shares under the 2011 Equity Incentive Plan (“2011 Plan”)

were issuable under the 2014 Plan at the time of the 2014 Plan adoption.

Upon receiving shareholder approval in June 2016, the 2014 Plan

was amended and restated to increase the authorized number of shares of common stock of the Company issuable under all awards granted

under the 2014 Plan from 1,271,906 to 2,471,906 .

Additionally, upon receiving shareholder approval in June 2018, the 2014 Plan was further

amended and restated to increase the authorized number of shares of common stock of the Company issuable under all awards granted under

the 2014 Plan from 2,471,906 to 3,221,906 .

Finally, upon receiving shareholder approval in June 2020, the 2014 Plan was further amended

Stock Option Plan

April 2014, the Board adopted the 2014 Stock and Incentive Plan (“2014 Plan”) subject to shareholder approval which was received

in June 2014.

The 2014 Plan provides for the granting of nonqualified and incentive stock options, stock appreciation rights, restricted

stock units, restricted stock and dividend equivalents.

An aggregate of 1,000,000 shares were authorized for issuance under the 2014

Additionally, 271,906 remaining authorized shares under the 2011 Equity Incentive Plan (“2011 Plan”) were issuable

under the 2014 Plan at the time of the 2014 Plan adoption.

Upon receiving shareholder approval in June 2016, the 2014 Plan was amended

and restated to increase the authorized number of shares of common stock of the Company issuable under all awards granted under the 2014

Plan from 1,271,906 to 2,471,906 .

The board of directors, on an option-by-option basis, determines the number of shares, exercise price,

term, and vesting period for options granted.

Additionally, upon receiving shareholder approval in June 2018, the 2014 Plan was further amended and

restated to increase the authorized number of shares of common stock of the Company issuable under all awards granted under the 2014

Plan from 2,471,906 to 3,221,906 .

Finally, upon receiving shareholder approval in June 2020, the 2014 Plan was further amended and restated

to increase the authorized number of shares of common stock of the Company issuable under all awards granted under the 2014 Plan from

3,221,906 to 5,721,906 .

The Board, on an option-by-option basis, determines the number of shares, exercise price, term, and vesting period

for options granted.

Options granted generally have a ten -year contractual life.

The Company issues shares of

common stock upon the exercise of options with the source of those shares of common stock being either newly issued shares or shares

held in treasury.

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 September 30, 2022.

The Company issues shares of common stock upon the exercise

of options with the source of those shares of common stock being either newly issued shares or shares held in treasury.

of 5,721,906 shares of common stock are authorized for issuance under the 2014 Plan, with 814,092 shares remaining available for grant

as of March 31, 2023.

summary of stock option activity is as follows:

Schedule of Stock Option Activity

stock options

average exercise price

at December 31, 2021

at September 30, 2022

of Stock Option Activity

Outstanding stock options

Number of shares

Weighted average exercise price

Balance at December 31, 2022

Options granted

Options exercised

Options forfeited

Options cancelled

Balance at March 31, 2023

Options exercisable at March 31, 2023

following table summarizes information about stock options outstanding and exercisable at March 31, 2023:

of Share-based Compensation of Stock Options Outstanding and Exercisable

Options outstanding

Options exercisable

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

average remaining contractual life (Years)

average exercise price

intrinsic value

average remaining contractual life (Years)

average exercise price

intrinsic value

Number outstanding

Weighted average remaining contractual life (Years)

Weighted average exercise price

Aggregate intrinsic value

Number exerciseable

Weighted average remaining contractual life (Years)

Weighted average exercise price

Aggregate intrinsic value

intrinsic value for stock options is defined as the difference between the current market value and the exercise price.

There were 11,667

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

and 208,274 stock options exercised during the three months ended March 31, 2023 and March 31, 2022, respectively.

Common Stock Warrants

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

4 unchanged sentences

The liability is adjusted to fair value at each reporting period, with the changes in fair value recognized as gain (loss)

on change in fair value of warranty liability in the Company’s consolidated statements of operations.

on change in fair value of warrant liability in the Company’s consolidated statements of operations.

The warrants issued in the

2 unchanged sentences

upon a fundamental transaction.

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

life in years

interest rate

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

at December 31, 2021

of liability on warrant exercise

in fair value of common stock warrants

at September 30, 2022

of March 31, 2023, 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 March 31, 2023 and on March 31, 2022 was determined using the Black-Scholes

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

March 31, 2023

March 31, 2022

Expected life in years

Risk-free interest rate

Dividend yield

the three months ended March 31, 2023, and March 31, 2022, the Company recorded a non-cash gain of approximately $ 98,000 and a non-cash

loss of $ 378,000 , respectively, 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:

of Reconciliation of Warrant Liability

Warrant Liability

Balance at December 31, 2022

Settlement of liability on warrant exercise

Change in fair value of common stock warrants

Balance at March 31, 2023

Additionally,

1 unchanged sentence

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

As of September 30, 2022, there

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

As of March 31, 2023, and March

31, 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:

Schedule of Number of Warrants Outstanding and the Weighted Average Exercise Price

Average Exercise Price

at December 31, 2021

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)

average exercise price

intrinsic value

of Number of Warrants Outstanding and the Weighted Average Exercise Price

Weighted Average Exercise Price

Outstanding at December 31, 2022

Balance at March 31, 2023

were no common stock warrants exercised during the three months ended March 31, 2023, or the three months ended March 31, 2022.

following table summarizes information about common stock warrants outstanding at March 31, 2023:

Schedule of Common Stock Warrants Outstanding

Warrants outstanding

Number exercisable

Weighted average remaining contractual life (Years)

Weighted average exercise price

Aggregate intrinsic value

Commitments and Contingencies

4 unchanged sentences

and 6,923,988.

on February 11, 2020, the Company voluntarily dismissed allegations of patent infringement for expired

However, on February 11, 2020, the Company voluntarily dismissed allegations of patent infringement for expired

6,569,463 and 6,923,988 in an effort to streamline the issues and associated costs for dispute.

Clarus has answered

the complaint and asserted counterclaims of non-infringement, inequitable conduct and invalidity.

The Company answered Clarus’s

counterclaims on April 29, 2019.

The Court held a scheduling conference on August 15, 2019, a claim construction hearing on February

11, 2020 and a Summary Judgment Hearing on January 15, 2021.

In May 2021, the Court granted Clarus’ motion for Summary Judgment,

finding the asserted claims of Lipocine’s U.S.

Clarus answered the

complaint and asserted counterclaims of non-infringement and invalidity.

The Company answered Clarus’s counterclaims on April 29,

The Court held a scheduling conference on August 15, 2019, a claim construction hearing on February 11, 2020, and a summary judgment

hearing on January 15, 2021.

In May 2021, the Court granted Clarus’ motion for Summary Judgment, finding the asserted claims of

Lipocine’s U.S.

patents 9,034,858;

and 9,757,390 invalid for failure to satisfy

the written description requirement of 35 U.S.C.

Clarus still had remaining counterclaims before the Court.

On July 13, 2021,

Clarus and the Company entered into a global settlement agreement (“Global Agreement’) which resolved all outstanding claims

of this litigation as well as the on-going United States Patent and Trademark Office (“USPTO”) Interference No.

106,128 between

Under the terms of the Global Agreement, the Company agreed to pay Clarus $ 4.0 million payable as follows:

$ 2.5 million

immediately, $ 1.0 million on July 13, 2022 and $ 500,000 on July 13, 2023.

No future royalties are owing from either party.

and 9,757,390 invalid for failure to satisfy the written description requirement

Clarus still had remaining claims before the Court.

On July 13, 2021, the Company entered into the Global Agreement

with Clarus which resolved all outstanding claims of this litigation as well as the on-going United States Patent and Trademark Office

(“USPTO”) Interference No.

106,128 between the parties.

Under the terms of the Global Agreement, the Company agreed to pay

Clarus $ 4.0 million payable as follows:

$ 2.5 million immediately, $ 1.0 million on July 13, 2022 and $ 500,000 on July 13, 2023.

29, 2022, the Company agreed to an amendment to Section 3.1 of the Global Agreement, pursuant to which the Company agreed to pay Clarus

$ 1,250,000 in May 2022, with no additional payments required thereafter.

On July 15, 2021, the Court dismissed with prejudice the Company’s

claims and Clarus’ counterclaims.

No future royalties are owing from either party.

November 14, 2019, the Company and certain of its officers were named as defendants in a purported shareholder class action lawsuit,

3 unchanged sentences

The complaint

alleges that the defendants made false and/or misleading statements and/or failed to disclose that our filing of the NDA for TLANDO to

the FDA contained deficiencies and as a result the defendants’ statements about our business and operations were false and misleading

and/or lacked a reasonable basis in violation of federal securities laws.

The lawsuit seeks certification as a class action (for a purported

class of purchasers of the Company’s securities from March 27, 2019 through November 8, 2019), compensatory damages in an unspecified

amount, and unspecified equitable or injunctive relief.

The Company has insurance that covers claims of this nature.

The retention amount

payable by the Company under our policy is $ 1.25 million.

The Company filed a motion to dismiss the class action lawsuit on July 24,

In response, the plaintiffs filed their response to the motion to dismiss the class action lawsuit on September 22, 2020 and the

Company filed its reply to its motion to dismiss on October 22, 2020.

A hearing on the motion to dismiss occurred on January 12, 2022.

The Company intends to vigorously defend itself against these allegations and has not recorded a liability related to this shareholder

class action lawsuit as the outcome is not probable nor can an estimate be made of loss, if any.

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,

(“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.

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.

106,128 in accordance with the Global Agreement.

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

alleges that the defendants made false and/or misleading statements and/or failed to disclose that the Company’s filing of the

NDA for TLANDO to the FDA contained deficiencies and as a result the defendants’ statements about our business and operations were

false and misleading and/or lacked a reasonable basis in violation of federal securities laws.

The lawsuit sought certification as a

class action (for a purported class of purchasers of the Company’s securities from March 27, 2019 through November 8, 2019), compensatory

damages in an unspecified amount, and unspecified equitable or injunctive relief.

The Company has insurance that covers claims of this

The retention amount payable by the Company under its policy is $ 1.25 million.

The Company filed a motion to dismiss the class

action lawsuit on July 24, 2020.

In response, the plaintiffs filed their response to the motion to dismiss the class action lawsuit on

September 22, 2020 and the Company filed its reply to its motion to dismiss on October 22, 2020.

A hearing on the motion to dismiss occurred

on January 12, 2022.

On April 14, 2023, a judgment was issued ordering the case dismissed with prejudice and closure of the action.

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.

and Indemnifications

3 unchanged sentences

its directors and officers to the maximum extent permitted under the laws of the State of Delaware.

(12) Related Party Transactions

LLC Service Agreement

Company has a license and a services agreement with Spriaso, LLC (“Spriaso”), a related-party that is majority-owned by certain

current and former directors of Lipocine Inc.

Agreement with Spriaso, LLC

Company has a license and a services agreement with Spriaso, a related-party that is majority-owned by certain current and former directors

of Lipocine Inc.

and their affiliates.

Under the license agreement, the Company assigned and transferred

to Spriaso all of the Company’s rights, title and interest in its intellectual property to develop products for the cough and cold

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 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.

Under the license agreement, the Company assigned and transferred to Spriaso all of the Company’s

rights, title and interest in its intellectual property to develop products for the cough and cold field.

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 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.

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.

Additionally, during

the three months ended March 31, 2023 and 2022, the Company received licensing revenue from Spriaso of $ 55,000 and $ 0 , respectively.

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

submitting its first human 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

Pronouncements Issued Not Yet Adopted

2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments

(“ASU 2016-13”).

This standard replaces the incurred loss impairment methodology in current GAAP with a methodology that

reflects expected credit losses on instruments within its scope, including trade receivables, and requires entities to measure all expected

credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable

The original effective date for ASU 2016-13 was for annual and interim periods beginning after December 15, 2019.

in October 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses, Derivatives and Hedging, and Leases:

Dates , which deferred the effective date of ASU 2016-13 for certain entities, including those that are eligible to be smaller reporting

A company’s determination about whether it is eligible for the deferral is a one-time assessment as of November

15, 2019 based on its most recent determination of its small reporting company eligibility as of the last business day of the most recently

completed second quarter.

Based on this determination, the Company qualifies as a smaller reporting entity and is therefore eligible

for the deferral of adoption of ASU 2016-13, resulting in a new effective date of January 1, 2023.

The Company has historically not had

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.

Subsequent Events

Redemption of Series B Preferred Stock

shares of Series B Preferred Stock that were not present in person or by proxy at the Annual Shareholder Meeting as of immediately prior

to the opening of the polls on May 10, 2023 were automatically redeemed in whole, but not in part,

by the Company at the Initial Redemption Time.

Any outstanding shares of Series B Preferred Stock that have not been redeemed pursuant

to the Initial Redemption will be redeemed in whole, but not in part, (i) if such redemption is ordered by the Board in its sole discretion,

automatically and effective on such time and date specified by the Board in its sole discretion or (ii) automatically upon the effectiveness

of the amendment to the Certificate of Incorporation implementing the Reverse Stock Split.

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