What changed in this filing

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Item 1. Financial Statements

2023-08-10 compared with 2023-05-11 · 313 added, 235 removed, 633 unchanged (46% of the section changed)

19 unchanged sentences

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:

12 unchanged sentences

Consolidated Statements of Operations and Comprehensive Loss

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses:

5 unchanged sentences

( 3,527,531 )

( 8,294,239 )

( 6,659,170 )

Other income (expense):

1 unchanged sentence

Interest expense

Unrealized gain (loss) on warrant liability

Total other income (expense), net

Unrealized gain on warrant liability

Gain on litigation settlement liability

Total other income, net

Loss before income tax expense

1 unchanged sentence

( 2,631,777 )

( 7,418,659 )

( 6,119,358 )

Income tax expense

1 unchanged sentence

( 2,631,777 )

( 7,418,859 )

( 6,119,558 )

Issuance of Series B preferred stock dividend

2 unchanged sentences

$ ( 2,631,777 )

$ ( 7,418,948 )

$ ( 6,119,558 )

Basic loss per share attributable to common stock

5 unchanged sentences

$ ( 2,631,777 )

$ ( 7,418,859 )

$ ( 6,119,558 )

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

2 unchanged sentences

$ ( 2,649,268 )

$ ( 7,414,350 )

$ ( 6,186,449 )

accompanying notes to unaudited condensed consolidated financial statements

1 unchanged sentence

Consolidated Statements of Changes in Stockholders’ Equity

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

the Three and Six Months Ended June 30, 2023 and 2022

Stockholder’s

B Preferred Stock

Accumulated Other

Comprehensive

Stockholders’

Balances at March 31, 2022

$ 218,663,319

$ ( 176,154,188 )

( 2,631,777 )

Unrealized net loss on marketable investment securities

Stock-based compensation

Option exercises

Costs associated with ATM Offering

Balances at June 30, 2022

$ 218,792,479

$ ( 178,785,965 )

$ 218,792,479

$ ( 178,785,965 )

Stockholder’s

B Preferred Stock

Accumulated Other

Comprehensive

Stockholders’

Balances at December 31, 2021

6 unchanged sentences

Option exercises

Costs associated with ATM Offering

Balances at June 30, 2022

$ 218,792,479

$ ( 178,785,965 )

$ 218,792,479

$ ( 178,785,965 )

Stockholder’s

B Preferred Stock

Accumulated Other

Comprehensive

Stockholders’

Balances at March 31, 2023

3 unchanged sentences

$ ( 187,295,362 )

Series B Preferred Stock

Treasury Stock

Number of Shares

Additional Paid-In Capital

Other Comprehensive Gain (Loss)

Accumulated Deficit

Total Stockholders’ Equity

( 3,548,629 )

Unrealized net loss on marketable investment securities

Stock-based compensation

Redemption of Series B preferred stock

Costs associated with ATM offering

Balances at June 30, 2023

$ 219,443,674

$ ( 190,843,991 )

$ 219,443,674

$ ( 190,843,991 )

Stockholder’s

B Preferred Stock

Comprehensive

Stockholders’

Balances at December 31, 2022

5 unchanged sentences

( 7,418,859 )

Unrealized net gain on marketable investment

Unrealized net gain loss on marketable investment securities

Unrealized net gain on marketable investment securities

Stock-based compensation

Issuance of Series B referred stock dividend

Issuance of Series B preferred stock dividend

Redemption of Series B preferred stock

Costs associated with ATM Offering

Balances at March 31, 2023

Balances at June 30, 2023

$ 219,443,674

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accompanying notes to unaudited condensed consolidated financial statements

LIPOCINE INC.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Three Months Ended March 31, 2023

Six Months Ended June 30,

Cash flows from operating activities:

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Non-cash interest expense

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

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

Amortization of premium (discounts) on marketable investment securities

4 unchanged sentences

Accrued expenses

Litigation settlement liability

( 1,250,000 )

Gain on extinguishment of litigation settlement liability

Cash used in operating activities

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Debt repayments

Costs associated with At the Market Offering

( 1,666,667 )

End of loan payment

Costs associated with ATM Offering

Proceeds from stock option exercises

Cash provided used in financing activities

Cash used in financing activities

( 2,121,088 )

Net increase in cash and cash equivalents

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in accordance with rules and regulations of the SEC.

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

Operating results for the three and six months ended June 30, 2023 are not necessarily

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

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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

requirements through at least August 10, 2024 which includes an on-going clinical study for LPCN 1148 in the management of decompensated

cirrhosis, a confirmatory pivotal pharmacokinetic (“PK”) study for LPCN 1154 in Postpartum Depression (“PPD”), and compliance

with regulatory requirements.

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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

least August 10, 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.

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design or suspends on-going clinical studies.

May 10, 2023, at the 2023 annual meeting of the stockholders, the Company’s stockholders approved an amendment to the Company’s

Amended and Restated Certificate of Incorporation to effect a reverse stock split at a ratio not less than 1-for-5 and not more than

1-for-20, with the exact ratio to be set within that range at the discretion of the Company’s board of directors (the “Board”)

without further approval or authorization from our stockholders in order to achieve a minimum bid price of $1.00 per share for a minimum

of 10 consecutive trading days, as required for continuous listing of the common stock on the Nasdaq Capital Market pursuant to Nasdaq

Listing Rule 5550(a)(2).

May 10, 2023, the Company’s Board approved a reverse stock split ratio of 1-for-17 .

filed an Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware on May 10, 2023, and the

Amendment became effective at 5:00 p.m.

Eastern Time on Thursday, May 11, 2023.

The Company’s shares began trading on a split-adjusted

basis on the Nasdaq Capital Market commencing upon market open on May 12, 2023.

accompanying consolidated financial statements and notes to consolidated financial statements give retroactive effect to the reverse

stock split for all periods presented.

The reverse stock split did not change the number of authorized shares of common stock or its

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

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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 as of June 30, 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.

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, the Company estimates that it will receive a royalty payment of

approximately $ 579,000 relating to the contract asset in the third quarter of 2023.

Concentration

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

of the Company’s total revenues.

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

The Company recognized revenue

of $ 0 and $ 500,000 for the three months ended June 30, 2023, and 2022, respectively.

The Company recognized revenue of approximately

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.

$ 55,000 and $ 500,000 for the six months ended June 30, 2023, and 2022, respectively.

Revenue recognized in 2023 was 100 % from a related-party,

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 months ended

March 31, 2023 and 2022:

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, 2023 and 2022:

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Basic loss per share attributable to common stock:

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$ ( 2,631,777 )

$ ( 7,418,859 )

$ ( 6,119,558 )

Weighted avg.

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$ ( 2,631,777 )

$ ( 7,418,859 )

$ ( 6,119,558 )

Effect of dilutive securities on net loss:

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$ ( 3,215,222 )

$ ( 7,544,448 )

$ ( 6,325,015 )

Weighted avg.

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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:

computation of diluted loss per share for the three and six months ended June 30, 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

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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 as of March 31, 2023, and December 31, 2022, were as follows:

securities by major security type and class of security as of June 30, 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

June 30, 2023

holding gains

Government treasury bills

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December 31, 2022

Amortized Cost

Gross unrealized holding gains

Gross unrealized holding losses

Aggregate fair value

holding gains

Government treasury bills

1 unchanged sentence

government agency securities

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

of debt securities classified as available-for-sale securities as of June 30, 2023, are as follows:

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

March 31, 2023

June 30, 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.

were no sales of marketable investment securities during the three and six months ended June 30, 2023, and 2022 and therefore no realized

gains or losses.

Additionally, during the three months ended June 30, 2023 and 2022, $ 5.9 million and $ 8.6 million of marketable investment

securities matured, and during the six months ended June 30, 2023 and 2022, $ 17.9 million and $ 33.8 million of marketable investment

securities matured, respectively.

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

ended June 30, 2023, and 2022.

(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 as of March 31, 2023 and December 31, 2022:

and liabilities that are measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022:

of Fair Value, Assets Measured on Recurring Basis

Fair value measurements at reporting date using

March 31, 2023

June 30, 2023

Level 1 inputs

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

Corporate bonds, notes commercial paper and U.S.

Corporate bonds, notes and commercial paper and U.S.

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

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The significant

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

assumptions used in preparing the option pricing model for valuing the warrant liability as of June 30, 2023, include (i) volatility

of 100 %, (ii) risk free interest rate of 5.25 %, (iii) strike price of $ 8.50 , (iv) fair value of common stock of $ 5.04 , 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 months ended

March 31, 2023.

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

months ended June 30, 2023.

(6) Loan and Security Agreements

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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.

March 31, 2023 and December 31, 2022, the Company had a full valuation allowance against its deferred tax assets, net of expected reversals

June 30, 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.

(8) Contractual Agreements

Abbott Products, Inc.

Products, Inc.

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

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TLANDO was commercially launched on June 7, 2022.

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

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

Antares Pharma, Inc.

The Company incurred royalty expense of approximately $ 9,000 and $ 17,000 during the

three months ended June 30, 2023 and 2022, respectively and royalty expense of approximately $ 13,000 and $ 17,000 during the six months

ended June 30, 2023 and 2022, respectively.

(b) Antares Pharma,

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

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inside or outside the United States.

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

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

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

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

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 did not recognize any revenue under the Antares Licensing Agreement during the three or six months ended June 30, 2023 or 2022.

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 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.

The Company incurred expenses of $ 1.7 million and $ 2.1 million, respectively, for the three months ended

June 30, 2023 and 2022 and $ 3.8 million and $ 3.2 million, respectively, for the six months ended June 30, 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.

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has been extended through February 28, 2024.

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

minimum lease payments under the non-cancelable operating lease as of June 30, 2023 are:

of Future Minimum Rental Payments for Operating Leases

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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.

Company’s rent expense was $ 89,000 and $ 86,000 for the three months ended June 30, 2023 and 2022, respectively.

The Company’s

rent expense was $ 176,000 and $ 170,000 for the six months ended June 30, 2023 and 2022, respectively.

(10) Stockholders’ Equity

May 10, 2023, at the 2023 annual meeting of the stockholders, the Company’s stockholders approved an amendment to the Company’s

Amended and Restated Certificate of Incorporation to effect a reverse stock split at a ratio not less than 1-for-5 and not more than

1-for-20, with the exact ratio to be set within that range at the discretion of the Board without further approval or authorization from

our stockholders.

May 10, 2023, the Company’s Board approved a reverse stock split ratio of 1-for-17 .

filed the Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware on May 10, 2023, and the

Amendment became effective at 5:00 p.m.

Eastern Time on Thursday, May 11, 2023.

The Company’s shares began trading on a split-adjusted

basis on the Nasdaq Capital Market commencing upon market open on May 12, 2023.

common stock share data and per share price data of the Company reflect the reverse stock split effective May 11, 2023.

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

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of State of the State of Delaware.

Issuance of Common Stock

of Common Stock

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

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

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.

of June 30, 2023, the Company had sold an aggregate of 883,711

shares at a weighted-average sales price of $ 37.23

per share under the At the Market Offering (the “ATM Offering”) 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 and six months ended

June 30, 2023, and 2022, the Company did not sell any shares of its common stock pursuant to the Sales Agreement.

As of June 30,

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 the Company’s common stock pursuant to the

Sales Agreement having an aggregate offering price of up to $ 15.7

B Preferred Stock

March 7, 2023, 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.

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

of a share of Series B Preferred Stock had 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

was entitled to 1,000 votes.

The outstanding shares of Series B Preferred Stock were 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

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“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

the Reverse Stock Split (the “Adjournment Proposal”) in conjunction with the Company’s 2023 annual meeting of

stockholders.

shares of Series B Preferred Stock that were not present in person or by proxy at the 2023 annual meeting as of immediately prior to

the opening of the polls (the “Initial Redemption Time”) were automatically redeemed

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”).

The remaining shares of Series B Preferred Stock that were not redeemed pursuant to the Initial Redemption were redeemed

automatically upon the effectiveness of the amendment to the Certificate of Incorporation implementing the Reverse Stock Split (the “Subsequent

Redemption”).

As of June 30, 2023, all shares of Series B Preferred Stock have been redeemed by the Company.

“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 shares of Series B Preferred Stock redeemed in the redemptions described above has the right to receive an amount equal to $0.01 in

cash for each ten whole shares of Series B Preferred Stock that were “beneficially owned” by the beneficial owner 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 beneficial owner to the corporate secretary of the Company following the applicable redemption time.

Series B Preferred Stock was 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 had no stated maturity and was 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

was 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.

Company was not solely in control of the redemption of the shares of Series B Preferred Stock prior to the annual meeting of stockholders

since the holders had the option of deciding whether to vote in respect of the above-described Reverse Stock Split, which determined

whether a given holder’s shares of Series B Preferred Stock was redeemed in the Initial Redemption or the Subsequent Redemption.

Since the redemption of the Series B Preferred Stock was not solely in the control of the Company, the shares of Series B Preferred Stock

were classified within the mezzanine equity in the Company’s unaudited consolidated statement of stockholder’s equity.

issuance, the shares of Series B Preferred Stock were measured at redemption value.

As of June 30, 2023, all shares of Series B Preferred

Stock have been redeemed by the Company.

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.

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

Share-Based Payments

(d) Share-Based

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

is allocated as follows:

operations amounted to approximately $ 165,000 and $ 140,000 , for the three months ended June 30, 2023 and 2022, respectively,

and approximately $ 343,000 and $ 311,000 , for the six months ended June 30, 2023 and 2022, respectively, and is allocated as follows:

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

Three Months Ended

Three Months Ended June 30,

Six Months Ended June 30,

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.

Company issued 8,820 and 26,467 stock options, respectively, during the three and six months ended June 30, 2023, and issued 10,086 and

29,643 stock options during the three and six months ended June 30, 2022.

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 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:

options granted during the six months ended June 30, 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

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in future periods.

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.

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.

of June 30, 2023, there was approximately $ 766,000

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 1.64

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

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

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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 .

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

An aggregate of 58,823 shares were authorized for issuance under the 2014 Plan.

Additionally, 15,994 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

74,817 to 145,405 .

The Board, 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 145,405

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 189,522 to 336,582 .

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.

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.

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 336,582 shares

of common stock are authorized for issuance under the 2014 Plan, with 46,519 shares remaining available for grant as of June 30, 2023.

summary of stock option activity is as follows:

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Outstanding stock options

Number of shares

Weighted average exercise price

Weighted average

exercise price

Balance at December 31, 2022

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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:

Balance at June 30, 2023

Options exercisable at June 30, 2023

following table summarizes information about stock options outstanding and exercisable at June 30, 2023:

of Share-based Compensation of Stock Options Outstanding and Exercisable

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Options exercisable

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.

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

Common Stock Warrants

and 12 stock options exercised during the three months ended June 30, 2023 and 2022, respectively.

There were 0 and 12,261 stock options

exercised during the six months ended June 30, 2023 and 2022, respectively.

Stock Warrants

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

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upon a fundamental transaction.

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 June 30, 2023, the Company had 64,362 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

The fair value of these warrants on June 30, 2023 and on December 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

June 30, 2023

December 31, 2022

Expected life in years

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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:

the three and six months ended June 30, 2023, the Company recorded non-cash gains of approximately $ 27,000 and $ 126,000 , respectively,

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

During the three and six months ended June 30, 2022, the Company

recorded a non-cash gain of approximately $ 583,000 and $ 205,000 , respectively, from the change in fair value on the November 2019 Offering

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

of Reconciliation of Warrant Liability

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Change in fair value of common stock warrants

Balance at March 31, 2023

Balance at June 30, 2023

Additionally,

in the February 2020 Offering, the Company issued 5,042,017 common stock warrants, however, because these warrants do not provide the

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

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.

in the February 2020 Offering, the Company issued 296,593 common stock warrants.

However, because these warrants do not provide the warrant

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

As of June 30, 2023, and 2022, there

were 49,433 warrants outstanding that were issued in the February 2020 Offering.

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

of Number of Warrants Outstanding and the Weighted Average Exercise Price

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:

Balance at June 30, 2023

were no common stock warrants exercised during either the three or six months ended June 30, 2023 and 2022.

following table summarizes information about common stock warrants outstanding at June 30, 2023:

Schedule of Common Stock Warrants Outstanding

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Number exercisable

Weighted average remaining contractual life (Years)

Weighted average exercise price

Aggregate intrinsic value

Weighted average

contractual life

Weighted average

exercise price

Aggregate intrinsic

(11) Commitments and Contingencies

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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.

(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.

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.

On April 29, 2022, the Company agreed to an amendment to Section 3.1 of the Global Agreement (the “Amendment

to the Global Agreement”), pursuant to which the Company agreed to pay Clarus $ 1,250,000 in May 2022, with no additional payments

required thereafter.

No future royalties are owing from either party.

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(12) 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.

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 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 ;

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.

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

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;

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.

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.

Additionally, during the three months and six months ended June 30, 2023, the Company received licensing revenue from Spriaso of

approximately $ 0

and $ 55,000 ,

respectively.

During each of the three and six months ended June 30, 2022, the Company received licensing revenue of $ 0 .

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

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