Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-41575

Lipella Pharmaceuticals Inc.

(Exact name of registrant as specified in its charter)

Delaware		20-2388040
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7800 Susquehanna St., Suite 505

Pittsburgh, PA 15208

(Address of principal executive offices) (Zip Code)

(412) 901-0315

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act

Title of each class		Trading Symbol(s)		Name of exchange on which registered
Common Stock, par value $0.0001 per share		LIPO		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 8, there were 7,605,636 shares of common stock, par value $0.0001 per share, of the registrant outstanding.

Lipella Pharmaceuticals Inc.

Form 10-Q

March 31, 2024

Table of Contents

		Page
Part I	FINANCIAL INFORMATION	1

Item 1	Financial Statements.	1

	Condensed Balance Sheets as of the Three Months Ended March 31, 2024 (Unaudited) and December 31, 2023	1

	Condensed Statements of Operations (Unaudited) for the Three Months Ended March 31, 2024 and 2023	2

	Condensed Statements of Changes in Stockholders’ Equity (Deficit) (Unaudited) for the Three Months Ended March 31, 2024 and 2023	3

	Condensed Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2024 and 2023	4

	Notes to Condensed Financial Statements (Unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	23

Item 4.	Controls and Procedures.	23

Part II.	OTHER INFORMATION	25

Item 1.	Legal Proceedings.	25

Item 1A.	Risk Factors.	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	25

Item 3.	Defaults upon Senior Securities.	25

Item 4.	Mine Safety Disclosures.	25

Item 5.	Other Information.	26

Item 6.	Exhibits.	26

	Signatures	27

References in this Quarterly Report on Form 10-Q to the “Company,” “Lipella,” “we,” “us,” or “our” mean Lipella Pharmaceuticals Inc. unless otherwise expressly stated or the context indicates otherwise.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Lipella Pharmaceuticals Inc.

CONDENSED BALANCE SHEETS

	March 31, 2024 (Unaudited)			December 31, 2023
Assets
Current Assets
Cash and cash equivalents	$	2,105,299		$	3,293,738
Grants receivable		68,934			32,286
Prepaid expenses		836,857			103,256
Total Current Assets		3,011,090			3,429,280
Property and Equipment
Furniture, fixtures and equipment		140,294			140,294
Furniture, fixtures and equipment (Accumulated Depreciation)		(128,265	)		(127,544	)
Furniture and fixtures, net		12,029			12,750
Other Assets
Operating lease right of use asset		114,038			135,144
Total Assets	$	3,137,157		$	3,577,174
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	293,835		$	138,016
Accrued expenses		84,929			77,280
Operating lease liability		91,705			89,223
Payroll liability		81,412			80,836
Total Current Liabilities		551,881			385,355
Operating lease liability, net of current portion		23,997			47,371
Total Liabilities	$	575,878		$	432,726
Stockholders’ equity:
Convertible preferred stock, $0.0001 par value; 20,000,000 shares authorized; -0- shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	$	—		$	—
Common stock, $0.0001 par value; 200,000,000 shares authorized, 7,039,846 and 6,053,956 shares issued and outstanding at March 31, 2024 and at December 31, 2023, respectively		704			605
Additional paid-in capital		14,076,227			13,467,686
Accumulated deficit		(11,515,652	)		(10,323,843	)
Total stockholders’ equity		2,561,279			3,144,448
Total liabilities and stockholders’ equity	$	3,137,157		$	3,577,174

The accompanying notes are an integral part of these condensed financial statements.

Lipella Pharmaceuticals Inc.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)


	For the three months ended
	March 31, 2024			March 31, 2023
Grant revenues	$	145,880		$	118,048
Total revenues		145,880			118,048

Cost and expenses
Research and development		842,600			693,730
General and administrative		520,926			508,750
Total costs and expenses		1,363,526			1,202,480
Loss from operations		(1,217,646	)		(1,084,432	)

Other income (expense)
Interest income, net		25,837			22,001
Interest expense related party		—			(5,394	)
Total other income (expense)		25,837			16,607
Loss before income taxes		(1,191,809	)		(1,067,825	)
Provision for income taxes		—			—
Net Loss	$	(1,191,809	)	$	(1,067,825	)

Loss per common share
Basic		(0.16	)		(0.19	)
Dilutive		(0.16	)		(0.19	)

Weighted-average of common shares outstanding:
Basic		7,292,396			5,743,945
Dilutive		7,292,396			5,743,945

The accompanying notes are an integral part of these condensed financial statements.

Lipella Pharmaceuticals Inc.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)


					Additional
	Common Stock				paid-in			Accumulated
	Shares		Amount		capital			Deficit			Total
Balances, December 31, 2022		5,743,945	$	574	$	10,379,900		$	(5,704,878	)	$	4,675,596
Net loss		—		—		—			(1,067,825	)		(1,067,825	)
Stock-based compensation		—		—		208,639			—			208,639
Balances, March 31, 2023		5,743,945		574		10,588,539			(6,772,703	)		3,816,410

Balances, December 31, 2023		6,053,956		605		13,467,686			(10,323,843	)		3,144,448
Net loss		—				—			(1,191,809	)		(1,191,809	)
Share based compensation		—				208,640			—			208,640
Warrants converted to Common Stock		500,000		50		(50	)		—			—
Issuance of Common Stock		289,812		29		199,971			—			200,000
Shares issued for services		196,078		20		199,980			—			200,000
Balances, March 31, 2024		7,039,846		704		14,076,227			(11,515,652	)		2,561,279

The accompanying notes are an integral part of these condensed financial statements.

Lipella Pharmaceuticals Inc.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


	For the three months ended
	March 31,
	2024			2023
Cash flow from operating activities:
Net loss	$	(1,191,809	)	$	(1,067,825	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		72			—
Shares issued for services		200,000			—
Non-cash stock option expense		208,640			208,639
Interest expense related party net (non-cash)		—			5,394
Changes in operating assets and liabilities:
Operating right of use asset		214			(34	)
Grants receivable		(36,648	)		29,688
Prepaid expense		(733,601	)		188,605
Accounts payable		155,819			(235,437	)
Accrued expenses		7,649			(208,017	)
Payroll liability		576			997
Net cash used in operating activities		(1,388,439	)		(1,077,990	)
Cash flow from investing activities:		—			—
Cash flow from financing activities:
Proceeds from issuance of common stock, net of issuance costs		200,000			—
Repayment of notes payable		—			(25,000	)
Net cash (used in) provided by financing activities		200,000			(25,000	)
Net decrease in cash, cash equivalents		(1,188,439	)		(1,102,990	)
Cash, and cash equivalents at beginning of period		3,293,738			5,121,743
Cash, and cash equivalents at end of period		2,105,299		$	4,018,753

Supplemental disclosure of cash flow information:
Interest paid	$	6,234		$	—
Income taxes paid	$	—		$	—
Supplemental disclosure of cash flow information:
Issuance of common stock for forgiveness of related party note	$	—		$	—
Issuance of common stock options for consulting services	$	—		$	—

The accompanying notes are an integral part of these condensed financial statements.

Lipella Pharmaceuticals Inc.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Description of Business and Basis of Presentation

Nature of Business

Lipella Pharmaceuticals Inc. (the “Company”, “we”, “us” or “our”) is a clinical-stage biotechnology company focused on developing new drugs by reformulating the active agents in existing generic drugs and optimizing these reformulations for new applications. Our operations consist of research, preclinical development and clinical development activities, and our most advanced program is in Phase 2 clinical development. Since our inception in 2005, we have historically financed our operations through a combination of federal grant revenue, licensing revenue, manufacturing revenue, as well as equity and debt financing. On December 19, 2022, a reverse stock split (hereafter, the “Stock Split”) was effected, with a 2.5 to 1 share conversion ratio for all shares of common stock, par value $0.0001 per share (“Common Stock”), outstanding. The Company’s outstanding share and per share amounts in these financial statements have been adjusted to give effect to the Stock Split, for all periods presented. For more information, see Note 11, “Common Stock.”

Basis of Presentation

The Company’s unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the Company’s financial position, results of operations, and cash flows. The interim results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to instructions, rules, and regulations prescribed by the United States Securities and Exchange Commission (“SEC”). The unaudited condensed interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023 that was filed with the SEC on February 27, 2024 (our “Annual Report”).

Note 2. Going Concern

The accompanying condensed financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. The Company has not established a source of revenues sufficient to cover its operating costs and will require significant additional capital to continue its research and development programs, including progressing clinical product candidates to commercialization and preparing for commercial-scale manufacturing and sales.

The Company’s net loss for the three months ended March 31, 2024 and fiscal year ended December 31, 2023 was $1,191,809 and $4,618,965, respectively. Since inception, the Company has incurred historical losses and has an accumulated deficit of $11,515,652 at March 31, 2024 and $10,323,843 at December 31, 2023, respectively. At March 31, 2024, the Company had available cash and cash equivalents of $2,105,299 and net working capital of $2,459,209. The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to: research, development of product candidates, conducting preclinical studies and clinical trials, and administrative organization. These funds, and our funds available under existing government contracts, may not be sufficient to enable us to meet our obligations as they come due at least for the next twelve months from the issuance date of these financial statements.

If we are unable to obtain additional capital (which is not assured at this time), our long-term business plan may not be accomplished, and we may be forced to curtail or cease operations. These factors individually and collectively raise substantial doubt about our ability to continue as a going concern. The accompanying unaudited condensed financial statements do not include any adjustments that may result from this uncertainty.

Note 3. Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2024. There have been no material changes to the significant accounting policies during the three-month period ended March 31, 2024, except for items mentioned below.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of these financial statements. Actual results could differ from those estimates.

Adoption of New Accounting Pronouncements

During the three months ended March 31, 2024, no new accounting pronouncement was issued or became effective, that had or is expected to have, a material impact on our Financial Statements.

Concentration of Credit Risk

The Company’s grant revenues and grant receivables are from the National Institute of Health (the “NIH”). The NIH is an agency of the United States Department of Health & Human Services, and the Company believes amounts are fully collectible from this agency. Contract revenues were $145,880 for the three months ended March 31, 2024, and $118,048 for the three months ended March 31, 2024.

Earnings Per Share

Basic net loss per share of Common Stock is computed by dividing the net loss for the period by the weighted-average number of shares of Common Stock outstanding during the period. Diluted net loss per common share is computed giving effect to all dilutive Common Stock equivalents, consisting of stock options and warrants. Diluted net loss per share of Common Stock for the three months ended March 31, 2024 and 2023 is the same as basic net loss per share, as the Common Stock equivalents were anti-dilutive due to the net loss.

At March 31, 2024 and 2023 the Common Stock equivalent shares were, as follows:


	March 31,
	2024		2023
Shares of Common Stock issuable under equity incentive plans outstanding		2,893,000		2,054,000
Shares of Common Stock issuable upon exercise of warrants		2,124,257		143,994
Shares of Common Stock issuable upon conversion of Series A Preferred Stock		—		—
Common Stock equivalent shares excluded from diluted net loss per share		5,017,257		2,197,994

Note 4. Fair Value Measurements and Marketable Debt Securities

In accordance with ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), the Company measures its assets and liabilities at fair value. We apply the three-level valuation hierarchy as described in ASC 820, which is based upon the transparency of input as of the measurement date. The three levels of inputs as defined are:

Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

At March 31, 2024 and December 31, 2023, the Company’s financial instruments consist primarily of: cash and cash equivalents, accounts payable and accrued liabilities. For cash equivalents, accounts payable and accrued liabilities, the carrying amounts of these financial instruments as of March 31, 2024 and December 31, 2023 were considered representative of their fair values due to their short term to maturity.

The Company held no marketable securities at March 31, 2024 and December 31, 2023. For cash equivalents at March 31, 2024 and December 31, 2023, the fair value input levels are summarized below:

March 31, 2024	Level 1		Level 2		Level 3		Total
Cash Equivalents (maturity less than 90 days)
Commercial Paper	$	—		—		—	$	—
U.S. Government		—		—		—		—
Money market funds		1,975,063		—		—		1,975,063
Total Cash equivalents		1,975,063						1,975,063

Marketable Securities		—		—		—		—
Total Cash Equivalents and Marketable Securities	$	1,975,063	$	—	$	—	$	1,975,063

December 31, 2023	Level 1		Level 2		Level 3		Total
Cash Equivalents (maturity less than 90 days)
Commercial Paper	$	—		—		—	$	—
U.S. Government		—		—		—		—
Money market funds		3,052,648		—		—		3,052,648
Total Cash equivalents		3,052,648						3,052,648

Marketable Securities		—		—		—		—
Total Cash Equivalents and Marketable Securities	$	3,052,648	$	—	$	—	$	3,052,648

Note 5. Prepaid Expenses

At March 31, 2024, prepaid expenses consisted primarily of prepaid insurance of $85,891, prepaid costs of issuance of $112,548, an advance deposit with our clinical trial management partner of $372,208, and $266,210 in other prepaid expenses related primarily to professional services. At December 31, 2023, prepaid expenses consisted of $88,554 of prepaid insurance, and $14,702 of prepaid expenses.

Note 6. Accrued Expenses

At March 31, 2024, accrued expenses were $84,929, consisting of $19,575 of accrued clinical expenses and $65,354 of unbilled legal expenses. At December 31, 2023, accrued expenses totaled $77,280 and consisted of $19,575 in clinical expenses, $52,050 in franchise tax expense, and $5,655 in unbilled professional services expenses.

Note 7. Notes Payable – Related Party

There were no notes payable outstanding at March 31, 2024 or December 31, 2023.

Note 8. Letter of Credit

The Company has a letter of credit with a bank for an aggregate available amount of $50,000 due upon demand. The letter of credit is collateralized by substantially all of the Company’s assets and personally guaranteed by Dr. Jonathan Kaufman, the Company’s Chief Executive Officer. The outstanding advances under the line of credit bear interest at the lending bank’s prime rate plus 3.10%. The outstanding balance was $0 at March 31, 2024 and December 31, 2023, respectively.

Note 9. Stock Options

The Company has two stock incentive plans (each, a “Stock Option Plan” and collectively, the “Stock Option Plans”), each of which provides for the grant of both incentive stock options and non-qualified stock options. Under the terms of the Stock Option Plans, the maximum number of shares of Common Stock for which incentive and/or non-qualified stock options may be issued is 3,078,000 shares. This number comprises 1,078,000 stock options already issued and outstanding (non-expired) from the 2008 stock option plan, and 2,400,000 shares of Common Stock underlying option awards that may be issuable under the 2020 stock option plan. Incentive stock options are granted with an exercise price determined by the Company’s board of directors (the “Board”). The terms of the vesting of such options, including termination, are as set forth in the Stock Option Plans and their respective award agreements. Such stock options generally expire 10 years from the date of the grant. Subject to certain exceptions for grants made to employees who are large stockholders, stock options granted under the Stock Option Plans have an exercise price not less than the fair market value of the underlying Common Stock on the date of such grant. If an employee leaves the Company prior to fully vesting their option awards and the remaining unvested portion is considered forfeited, the earlier recognition of the unvested shares is reversed during the period of forfeiture. As of March 31, 2024, there were $540,759 in unrecognized compensation costs related to non-vested share-based compensation arrangements granted to be recognized over the remaining vesting period of less than one year.

The Company recognized $208,640 of compensation costs for the three months ended March 31, 2024 and $208,639 for the three months ended March 31, 2023 related to the vesting of stock options.

The following is an analysis of options to purchase shares of Common Stock issued and outstanding as of March 31, 2024 and December 31, 2023:

	*Shares*			*Weighted* *Average* *Exercise* *Price Per* *Share ($)*		*Weighted* *Average* *Remaining* *Contractual* *Term* *(in Years)*		*Aggregate* *intrinsic* *value ($)*
Outstanding as of December 31, 2022		2,054,000			2.84		5.51		605,687
Granted		424,000			2.19		9.96
Expired		—
Cancelled		(25,000	)		2.19
Exercised		—
Outstanding as of December 31, 2023		2,453,000			2.73		5.19	$	—
Granted		440,000			0.77		9.96
Expired		—
Cancelled		—
Exercised		—
Outstanding as of March 31, 2024		2,893,000			2.73		4.94	$	—
Vested as of March 31, 2024		2,346,333
Exercisable as of March 31, 2024		2,346,333
Exercisable as of December 31, 2023		2,272,333

A summary of status of the Company’s non-vested stock options (exercisable for shares of Common Stock on a one-to-one basis) as of, and changes during, the three months ended March 31, 2024 and 2023 is presented below:

	Number of Stock Options			Weighted- Average Fair Value Grant Date
Nonvested at December 31, 2022		434,667		$	2.82
Granted		—			2.84
Vested		(74,000	)		2.83
Expired		—			0.00
Nonvested at March 31, 2023		360,667		$	2.82

Nonvested at December 31, 2023		180,667		$	2.81
Granted		440,000			0.55
Vested		(74,000	)		1.13
Expired		—			—
Nonvested at March 31, 2024		546,667		$	0.66

There were no options granted in the three months ended March 31, 2023. In the three months ended March 31, 2024, the Company granted options as described below.

Stock Option Grants - On March 15, 2024, the Company granted 440,000 stock options at a $0.77 strike price, vesting as follows: one third of such grant vests on April 1, 2024, one third of such grant vests on July 1, 2024, and one third of such grant vests on October 1, 2024.

The weighted-average fair value of stock options on the date of grant and the assumptions used to estimate the fair value of stock options granted during the three months ended March 31, 2024 using the Black-Scholes option-pricing model are as follows:

Three months ended March 31, 2024	2024			2023
Weighted-average fair value of options granted	$	0.55			—
Expected volatility		86.17	%		—	%
Expected life (in years)		5.17			—
Risk-free interest rate (range)		4.33	%		—	%
Expected dividend yield	$	—			—

Note 10. Preferred Stock

The Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), ranks prior, with respect to dividend rights and rights upon a liquidation event, to all Common Stock and any other series of preferred stock which is junior to Series A Preferred Stock. Upon any matter submitted to the shareholders of the Company for a vote, each holder of Series A Preferred Stock is entitled to the number of votes as is equal to the number of shares of Common Stock into which such shares of Series A Preferred Stock are convertible at the time of such vote. The Series A Preferred Stock is not entitled to any mandatory dividends.

The Company issued 1,592,447 shares of Series A Preferred Stock at $0.60 per share over a period beginning September 2008 through June 2013, for gross proceeds of $833,188. The implied price of the Series A Preferred Stock issuance, $0.5232 per share, is $0.0768 per share less than the $0.60 offering price. This difference is associated with the conversion terms of three debt instruments issued from June 2006 through April 2008 that had a total face value of $351,500, and converted into a total of 789,634 of the 1,592,447 shares, which imputes the additional $122,280 to interest and/or conversion discounts. In addition, $351,500 in face value of the debt instruments had associated warrants. All consideration upon the issuance of convertible debt plus warrants was imputed to the debt component leaving the associated warrants having no value. All note-associated warrants have expired.

In the year ended December 31, 2022, all 1,592,447 outstanding shares of Series A Preferred Stock were converted to Common Stock on a 1:1 basis. After giving effect to the Stock Split, this conversion resulted in 636,979 shares of Common Stock. There were no shares of Series A Preferred Stock outstanding at December 31, 2023 or March 31, 2024.

Note 11. Common Stock

The Company’s second amended and restated certificate of incorporation, as amended, authorizes the issuance of 200,000,000 shares of Common Stock. On December 19, 2022, the Company effected the Stock Split, at a 2.5 for 1 ratio for all shares of Common Stock outstanding. The Company’s outstanding share and per share amounts in these unaudited condensed financial statements have been adjusted to give effect to the Stock Split, for all periods presented. There were 7,039,846 shares of Common Stock outstanding as of March 31, 2024 and 6,053,956 shares outstanding as of December 31, 2023.

During the year ended December 31, 2022, the Company issued 22,950 shares of Common Stock in forgiveness of two related party notes. The aggregate principal and interest of the notes was $138,810. On December 22, 2022, we completed an initial public offering (“IPO”) and listing on the Nasdaq Capital Market (“Nasdaq”) of our Common Stock at a price to the public of $5.75 per share, which resulted in the issuance of an additional 1,217,391 shares of Common Stock. The aggregate net proceeds from the IPO were approximately $5,000,000, after deducting underwriting discounts and commissions of $630,000 and offering expenses of approximately $1,160,000.

On September 15, 2023, the Company issued 60,000 shares of Common Stock in exchange for services rendered by a third party.

On November 28, 2023, we issued 250,000 shares of Common Stock for the exercise of the same number of pre-funded warrants. See Note 12 for details of the pre-funded warrants. During the year end December 31, 2023, the Company also issued 60,000 shares of Common Stock in exchange for services rendered by a third party.

On February 2, 2024, we issued 196,078 shares of Common Stock in exchange for services rendered by a third party. On March 4, 2024, 500,000 shares of Common Stock were issued for the exercise of the same number of pre-funded warrants. On March 13, 2024, the Company entered into Affiliate Stock Purchase Agreements with each of Jonathan H. Kaufman, the Company's Chief Executive Officer and Chairman of its board of directors, and Michael B. Chancellor, the Company's Chief Medical Officer and a member of its board of directors, pursuant to which each of Drs. Kaufman and Chancellor purchased $100,000 of shares of common stock of the Company, in cash from the Company at $0.6901 per share, based on the official closing price of The Nasdaq Stock Market LLC for the Common Stock on March 13, 2024, resulting in the issuance of 144,906 shares of Common Stock to each of Drs. Kaufman and Chancellor.

The Common Stock is subject to and qualified by the rights of the Series A Preferred Stock. Upon the dissolution or liquidation of the Company, the holders of Common Stock will be entitled to receive all assets of the Company available for distribution to its stockholders, subject to any preferential rights of any then outstanding Series A Preferred Stock.

Note 12. Warrants

No warrants were issued in the three months ended March 31, 2024. On October 23, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor for the issuance and sale in a private placement (the “Private Placement”) of pre-funded common stock purchase warrants (“Pre-Funded Warrants”) to purchase up to 1,315,790 shares of Common Stock, with an exercise price of $0.001 per share, and common stock purchase warrants (the “Warrants”) to purchase up to 1,315,790 shares of Common Stock, with an exercise price of $1.40 per share. The gross proceeds to the Company from the Private Placement were approximately $2.0 million, before deducting placement agent fees and expenses and offering expenses payable by the Company. The Warrants and the Pre-Funded Warrants are immediately exercisable for three years from issuance and are subject to 4.99% and 9.99% beneficial ownership limitations (as applicable). The combined purchase price for one Pre-Funded Warrant and one accompanying Warrant was $1.519. The closing of the Private Placement contemplated by the Purchase Agreement occurred on October 25, 2023. The Company had no warrant liabilities at March 31, 2024 and December 31, 2023.

Note 13. Commitment and Contingencies

Operating Leases

Operating leases are recorded as ROU assets and lease liabilities on the balance sheet. ROU assets represent our right to use the leased assets for the lease term, and lease liabilities represent our obligation to make lease payments. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate at the commencement date to determine the present value of lease payments. The operating lease ROU assets also include any lease payments made and exclude lease incentives.

The Company entered into a lease agreement beginning July 1, 2020, for the Company’s principal headquarters on the fifth floor of 7800 Susquehanna Street, Pittsburgh, Pennsylvania, which includes office space and sterile manufacturing operations (the “Lease”). The Lease has a five-year term and includes an option for renewal, which is not reasonably certain and is excluded from the right of use calculation. On July 26, 2023, the Company entered a second lease for additional space on the fourth floor of the same building (the “Fourth Floor Lease”), commencing August 1, 2023 and co-terminating with the existing Lease on June 30, 2025. Subsequently effective January 1, 2024, the Company terminated the Fourth Floor Lease early at no penalty upon mutual agreement with the landlord and replaced it with a lease of additional space that had become available immediately adjacent to our existing offices (the “Suite 504 Lease”, and together with the “Lease”, “the Leases”). The Suite 504 Lease term co-terminates with the Lease. Future minimum rent payments under the Leases as of March 31, 2024 are as follows:

Year ending
2024 (nine months remaining)	$	72,316
2025	$	48,519
Total minimum lease payments	$	120,835
Less: amount representing interest	$	(5,133	)
Present value of minimum lease payments	$	115,702

The Leases are accounted for as a ROU asset and liability. As of March 31, 2024, the Company had $114,038 of an operating lease ROU asset, and $91,705 and 23,997 of current and non-current lease liabilities, respectively, recorded on the balance sheets. As of December 31, 2023, the Company had an ROU asset of $135,144 and current and non-current operating lease liabilities of $89,223 and $47,371, respectively. The lease expense for the three months ended March 31, 2024 and March 31, 2023 was $24,438 and $16,368, respectively. Cash paid for the amounts included in the measurement of lease liabilities for the three months ended March 31, 2024 and 2023 was $23,797 and $16,402, respectively. The payments are included in the operating activities in the accompanying statement of cash flows. The discount rates used for our right-of-use leases range from 6.25% to 7.25%.

Contract Commitments

The Company enters into contracts in the normal course of business with contract research organizations (“CROs”), contract manufacturing organizations, universities, and other third parties for preclinical research studies, clinical trials and testing and manufacturing services. These contracts generally do not contain minimum purchase commitments and are cancelable by us upon prior written notice although, purchase orders for clinical materials are generally non-cancelable. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-cancelable obligations of our service providers, up to the date of cancellation or upon the completion of a manufacturing run.

Note 14. Income Taxes

The provision for income taxes for the three months ended March 31, 2024 and 2023 was $0, resulting in an effective income tax rate of 0% for each period. The Company’s effective tax rate for the three months ended March 31, 2024 and 2023 was primarily due to the full valuation allowance against the Company’s net deferred tax assets.

The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be utilized. Because of our cumulative losses, substantially all of the deferred tax assets have been fully offset by a valuation allowance as of March 31, 2024 and December 31, 2023. We have not paid income taxes for the year ended December 31, 2023. The income tax provision attributable to loss before income tax benefit for the three months ended March 31, 2024 differed from the amounts computed by applying the U.S. federal statutory rate of 21% as a result of the following:


Statutory federal income tax rate	21.00	%
State taxes, net of federal benefit	7.11	%
Change in valuation allowance	-28.11	%
Effective tax rate	0.00	%

The Company’s 2019 through 2023 tax years remain subject to examination by the Internal Revenue Service for federal tax purposes and the Commonwealth of Pennsylvania for state tax purposes.

Note 15. Subsequent Events

Subsequent events have been evaluated through the date on which the unaudited condensed financial statements were issued.

On April 10, 2024, the Company eliminated the Series A Preferred Stock, of which there were no shares outstanding.

On May 3, 2024, the Company issued 565,790 shares of Common Stock in conversion of the same number of pre-funded warrants.

Notice of Failure to Satisfy Nasdaq Minimum Bid Price Requirement

As disclosed in our Current Report on Form 8-K filed with the SEC on April 19, 2024, on April 17, 2024, we received a written notification (the “Nasdaq Letter”) from The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that, based upon the closing bid price of the Common Stock for the last 30 consecutive business days, the Company was not in compliance with the requirement to maintain a minimum bid price of $1.00 per share of its Common Stock, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). The Nasdaq Letter had no immediate effect on the listing of the Common Stock, which continues to trade on the Nasdaq Capital Market under the symbol “LIPO” at this time.

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has been given 180 calendar days, or until October 14, 2024, to regain compliance with the Minimum Bid Price Requirement. If at any time before October 14, 2024, the bid price of the Common Stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Nasdaq staff will provide written confirmation that the Company has regained compliance with the Minimum Bid Price Requirement and the matter will be closed.

If the Company does not regain compliance with the Minimum Bid Price Requirement, the Company may be eligible for an additional 180-calendar day grace period. To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period. If the Company does not regain compliance with the Minimum Bid Price Requirement by October 14, 2024, and is otherwise not eligible for such additional 180-day grace period to regain such compliance, the Nasdaq staff will provide written notice to the Company that the Common Stock will be subject to delisting. At that time, the Company may appeal any such delisting determination to a Nasdaq hearings panel.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations for the three and three months ended March 31, 2024 should be read together with our unaudited condensed financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024 (this “Form 10-Q”), as well as the audited financial statements, the related notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2023 contained in our Annual Report on Form 10-K for the year ended December 31, 2023, that was filed with the SEC on February 27, 2024 (our “Annual Report”), and all risk factors disclosed herein and therein. Such discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as information relating to our business that reflect our management’s current views, expectations and assumptions concerning our business, strategies, products, future results and events and financial performance, which are subject to risks and uncertainties that may cause our, or our industry’s, actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements speak only as of the date of this Form 10-Q. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or achievements or that our underlying assumptions will prove to be correct. Except as required by applicable law, including the securities laws of the United States, we expressly disclaim any obligation or undertaking to disseminate any update or revisions to any such forward-looking statement to reflect any change in our expectations with regard thereto or to conform such forward-looking statements to actual results. Statements made in this Form 10-Q, other than statements of historical fact, addressing operating performance, events, or developments which our management expects or anticipates will or may occur in the future, and also statements related to expected or anticipated growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and other non-historical information, are forward-looking statements. In particular, the words “may,” “will,” “expects,” “anticipates,” “aims,” “potential,” “future,” “intends,” “plans,” believes,” “estimates,” “continue,” “likely to,” and variations of such words and similar expressions identify forward-looking statements, but such words are not the exclusive means of identifying such forward-looking statements, and their absence does not necessarily mean that such statement is not forward-looking.

Overview

We are a clinical-stage biotechnology company focused on developing new drugs by reformulating the active agents in existing generic drugs and optimizing these reformulations for new applications. We believe that this strategy combines many of the cost efficiencies and risk abatements derived from using existing generic drugs with potential patent protections for our proprietary formulations; this strategy allows us to expedite, protect, and monetize our product candidates. Additionally, we maintain a therapeutic focus on diseases with significant, unaddressed morbidity and mortality where no approved drug therapy currently exists. We believe that this focus can potentially help reduce the cost, time and risk associated with obtaining marketing approval.

LP-10 is the development name of our reformulation of tacrolimus (an approved generic active agent) specifically optimized for topical deposition to the internal surface of the urinary bladder lumen using a proprietary drug delivery platform that we have developed and that we refer to as our metastable liposome drug delivery platform (our “Platform”). We are developing LP-10 and our Platform to be, to our knowledge, the first drug candidate and drug delivery technology that could be successful in treating cancer survivors who acquire hemorrhagic cystitis. We have received U.S. Food and Drug Administration (“FDA”) “orphan drug” designation covering LP-10 and plan to apply for additional regulatory designations in the event we achieve qualifying results in the current phase 2a clinical trial for LP-10. Market data exclusivity may be available in the U.S. and other jurisdictions in which regulatory approval is obtained for the Company’s product, regardless of patent status.

The safety and efficacy of LP-10 was evaluated in a 13-subject, open-label, multi-center, dose-escalation, phase 2a clinical trial in patients experiencing complications associated with a rare but highly morbid disease called “radiation-induced hemorrhagic cystitis” or “radiation cystitis.” This phase 2a clinical trial commenced on February 15, 2021, and we reported the trial’s summary results in the first quarter of 2023. We met with the FDA in the fourth quarter of 2023 regarding the LP-10 clinical trial results, and expect to receive their response to our proposed phase 2b trial design in the second quarter of 2024. There is currently no FDA approved drug therapy available for radiation cystitis patients, who are all cancer survivors who received pelvic radiation therapy to treat solid pelvic tumors, including prostate and ovarian cancers, and who are now dealing with therapy-associated complications, including urinary bleeding (a radiation cystitis symptom). LP-10’s active ingredient, tacrolimus, which has a well-known pharmacology and toxicology, addresses a reduction (or cessation) of uncontrolled urinary bleeding.

In the fourth quarter of 2023, we received IND approval from the FDA for LP-310, our product for the treatment of oral lichen planus (“OLP”). We have begun the clinical trial process for LP-310, and expect to initiate the first clinical site in the second quarter of 2024 and treat the first patient by the third quarter of 2024. OLP is a chronic, T-cell-mediated, autoimmune oral mucosal disease, and LP-310 contains tacrolimus which inhibits T-lymphocyte activation. To date, upon review of relevant FDA public data resources on approved drugs and biologics, we are not aware of any other liposomal products developed to treat such disease.

In the first quarter of 2024, we received IND approval from the FDA for LP-410, our phase-1/2a product, for the treatment of oral graft-versus-host disease (“GVHD”). LP-410 is an oral rinse, similar to LP-310, but will have a different containment system. Hematopoietic cell transplantation (“HCT”) is used to treat a wide range of malignancies, hematologic and immune deficiency states, and autoimmune diseases. GVHD is a clinical syndrome where donor-derived immunocompetent T-cells react against patient tissues directly or through exaggerated inflammatory responses following HCT. Lipella has developed LP-410 for the topical delivery directly to the mouth surface. LP-410 targets the underlying mechanisms of oral GVHD, potentially providing a safe and effective treatment option for affected individuals. Lipella received “orphan drug” designation approval on November 11, 2023 for tacrolimus for the treatment of oral GVHD. An IND application for LP-410’s treatment of oral GVHD was submitted to the FDA on January 30, 2024.

Since our inception in 2005, we have focused primarily on business planning and progressing our lead product candidates, including progressing LP-10 through clinical development, raising capital, organizing and staffing the Company. On December 22, 2022, we completed our initial public offering (the “IPO”) and issued an aggregate of 1,217,391 shares of Common Stock at a price of $5.75 per share. The aggregate net proceeds from the IPO were approximately $5.0 million after deducting underwriting discounts and commissions of approximately $630,000 and offering expenses of approximately $1.16 million.

Recent Developments

On April 3, 2024, the FDA granted a Type C meeting request to discuss the Company’s proposed Phase-2b clinical trial design for the evaluation of LP-10. Lipella expects to meet with the FDA on May 21, 2024.

Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023 (in thousands):

	For the three months ended
	March 31,						Increase
	2024			2023			(Decrease)
*(in thousands)*
Revenue	$	146			118		$	28
Operating expenses:
Research and development (“R&D”)		843			694			149
General and administrative		521			509			12
Total operating expenses		1,363			1,202			161
Loss from operations		(1,218	)		(1,084	)		(134	)
Other income		26			16			10
Net loss	$	(1,192	)	$	(1,068	)	$	(124	)

Grants and Other Revenue

We have not yet commercialized any products and we do not expect to generate revenue from sales of any product candidates for several years. For the three months ended March 31, 2024 and 2023, we recognized revenue from a grant awarded by the National Institutes of Health (“NIH”) in September of 2022 (the “2022 NIH Grant”), which was an award of an aggregate of $673,000. NIH approved an additional year of funding under the 2022 NIH Grant in June 2023, increasing the total funding provided under the 2022 NIH Grant to $1,353,000.

We recognize revenue from grants when the related costs are incurred and the right to payment is realized. For the three months ended March 31, 2024, we earned $146,000 in connection with the 2022 NIH Grant, recognized as revenue, compared with $118,000 revenue in the three months ended March 31, 2023. The increase in annual grant revenue from 2023 to 2024 is related to the award and the extension of the 2022 NIH Grant.

Operating Expenses

Our operating expenses consist of (i) R&D expenses and (ii) general and administrative expenses.

Research and Development Expenses

R&D costs primarily consist of direct costs associated with consultants and materials, biologic storage, third party CRO costs and contract development and manufacturing expenses, salaries and other personnel-related expenses. R&D costs are expensed as incurred. More specifically, these costs include:

●

costs of funding research performed by third parties that conduct research and development and nonclinical and clinical activities on our behalf;

●

costs of manufacturing drug supply and drug product;

●

costs of conducting nonclinical studies and clinical trials of our product candidates;

●

consulting and professional fees related to research and development activities, including equity-based compensation to non-employees;

●

costs related to compliance with clinical regulatory requirements; and

●

employee-related expenses, including salaries, benefits and stock-based compensation expense for our research and development personnel.

Costs for certain activities are recognized based on an evaluation of the progress to completion of specific tasks using data, such as information provided to us by our vendors, and analyzing the progress of our nonclinical and clinical studies or other services performed. Significant judgment and estimates are made in determining the accrued expense balances at the end of any reporting period. Advance payments that we make for goods or services to be received in the future for use in R&D activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered.

We expect that our R&D expenses will increase substantially in connection with our clinical development activities for our LP-10 and LP-310 programs. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the clinical development of, or obtain regulatory approval for, any of our current or future product candidates. This is due to the numerous risks and uncertainties associated with product development and commercialization, including the specific factors set forth in the section of our Annual Report titled “Risk Factors.” If any events described in the applicable risk factors included in the section of our Annual Report titled “Risk Factors” occur, then the costs and timing associated with the development of any of our product candidates could significantly change. We may never succeed in obtaining regulatory approval for, of commercialization of, LP-10, LP-310, or any of our other product candidates.

R&D expenses increased by approximately $149,000, from $694,000 for the three months ended March 31, 2023 to $843,000 for the three months ended March 31, 2024. The increase in R&D expenses was primarily attributable to an increase in outside services of $58,000 for clinical study trials. Indirect costs related to operational overhead and employee benefits increased $105,000, and legal patent costs decreased $8,000.

General and Administrative Expenses

General and administrative expenses consist primarily of management and business consultants and other related costs, including stock-based compensation. General and administrative expenses also include board of directors’ expenses and professional fees for legal, patent, consulting, accounting, auditing, tax services and insurance costs.

General and administrative expenses were $521,00 for the three months ended March 31, 2024, compared to $509,000 for the three months ended March 31, 2023, an increase of $12,000. These increases were primarily related to payment of salaries and outside services, including investor relations expense.

Net Other Income (Expense)

Net other income for the three months ended March 31, 2024 was $26,000, as compared to $16,000 for the three months ended March 31, 2023. There was a $3,000 increase in interest income on the Company’s short term investment portfolio. It was offset by a reduction in interest expense of $5,000. Interest expense on related party notes decreased during the three months ended March 31, 2024, as the Company had no outstanding debt during such period, as compared to the same period for the prior year, when the Company had $250,000 of notes outstanding. See Note 7 of the notes to our financial statements in our Annual Report for details of such related party notes and accrued interest at the prior period.

Liquidity and Capital Resources

Sources of Liquidity

We have not yet commercialized any products, and we do not expect to generate revenue from sales of any product candidates for several years, if at all. Cash and cash equivalents totaled $2.1 million as of March 31, 2024. We consider all highly liquid investments that mature in 90 days or less when purchased to be cash equivalents.

We have incurred operating losses and experienced negative operating cash flows for the three months ended March 31, 2024 and the year ended December 31, 2023, and we anticipate that we will continue to incur losses for the foreseeable future. Our net loss totaled $1,191,809 and $1,067,825 for the three months ended March 31, 2024 and 2023 respectively, and $4,618,965 for the year ended December 31, 2023.

Historically, we have financed our operations through a combination of grant revenue and equity financing, however our goals for the foreseeable future will likely require significant equity financing. Our ability to achieve significant profitability depends on our ability to successfully complete the development of, and obtain the regulatory approvals necessary to commercialize, LP-10 and/or our other product candidates, which may not occur for several years, if ever. The net losses we incur may fluctuate significantly from quarter to quarter.

Cash Flows

The following table provides information regarding our cash flows for each of the periods presented (in thousands):

	For the three months ended
	March 31,
*Dollars in thousands*	2024			2023

Net cash (used) provided in operating activities	$	(1,388	)		(1,078	)
Net cash provided in financing activities		200			(25	)
Net increase(decrease) in cash and cash equivalents	$	(1,188	)		(1,103	)

Net Cash (Used) Provided in Operating Activities

Net cash used in operating activities for the three months ended March 31, 2024 was approximately $1,388,000. This comprised a net loss for the period of approximately $1,192,000, and decreased operating liabilities of $164,000, offset by increases in the following assets: grants receivable of $37,000 and prepaid expenses (primarily insurance policies and clinical trial operations services) of $733,000. There were also noncash adjustments to net loss of $208,000 in stock option expense and $200,000 in shares of Common Stock issued for services.

Net cash used in operating activities for the three months ended March 31, 2023 was approximately $1,078,000. This comprised a net loss for the period of approximately $1,068,000, and decreased prepaid expenses of $189,000, partially offset by changes in operating assets and liabilities of $443,000 and noncash adjustments to net loss of $209,000 in stock option expense and $5,000 in non-cash interest expense.

Net Cash Used in Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2024 was $200,000, received for the issuance of Common Stock. Net cash used in financing activities for the three months ended March 31, 2023 was $25,000 in cash, which was used to repay a $25,000 line of credit.

Funding Requirements

We expect our expenses to increase substantially in connection with our ongoing R&D activities, particularly as we continue R&D, advance clinical trials of LP-10 and advance the preclinical development of our other programs, including LP-310. In addition, we expect to incur additional costs associated with operating as a public company. As a result, we expect to incur substantial operating losses and negative operating cash flows for the foreseeable future.

Based on our current operating plan, we believe that our existing cash and cash equivalents will be sufficient to fund our operations and capital expenses through the end of 2024. However, we have based this estimate on assumptions that may prove to be wrong, and we could exhaust our capital resources sooner than we expect.

Because of the numerous risks and uncertainties associated with research, development and commercialization of LP-10, LP-310 and our other and future product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on, and could increase significantly as a result of, many factors, including, but not limited to, those referenced above in “— Results of Operations — Operating Expenses — Research and Development Expenses”.

Going Concern

The unaudited condensed financial statements of the Company have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business. We have generated losses from operations since inception. The Company expects operating losses to continue in the foreseeable future because of additional costs and expenses related to research and development activities, plans to expand its product portfolio, and increasing its market share. The Company’s ability to transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support its cost structure. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business.

Management of the Company may raise additional funds through the issuance of equity securities or debt. There can be no assurance that such financing will be available at terms acceptable to the Company, if at all. Failure to generate sufficient cash flows from operations and raise additional capital could have a material adverse effect on the Company’s ability to achieve its intended business objectives. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Off-Balance Sheet Arrangements

We did not have during the three months ended March 31, 2024, or the year ended December 31, 2023, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.

Contractual Obligations

We did not have during the three months ended March 31, 2024 or the year ended December 31, 2023, and we do not currently have, any material contractual obligations, such as license agreements or similar arrangements, other than as described below and in the financial notes to our unaudited condensed financial statements included in this Form 10-Q and in our Annual Report.

Employment Agreements

We are party to employment agreements with each of Drs. Kaufman and Chancellor and Mr. Johnston, executive officers of the Company, the material terms of each of which are described in the section entitled “Executive Compensation – Executive Employment Agreements” of our Annual Report, which descriptions are supplemented by the disclosure of the August 2023 amendments to our agreements with Drs. Kaufman and Chancellor contained in our Current Report on Form 8-K filed with the SEC on August 8, 2023, and as described in our Annual Report.

Lease Agreement

We are party to a lease agreement, dated June 1, 2019, with Bridgeway Development Corporation (“Bridgeway”), as amended, for the lease of 2,690 square feet of office and lab and manufacturing space in Pittsburgh, Pennsylvania commencing on July 1, 2020 (the “Lease”). The Lease term expires on June 30, 2025 and we have the right to exercise a one-time option to extend the Lease term for an additional five-year term. The annual base rent under the Lease is approximately $66,000. On July 26, 2023, the Company entered into a second lease for additional space on the fourth floor of the same building (the “Fourth Floor Lease,” and together with the Lease, the “Leases”), commencing August 1, 2023 and co-terminating with the Lease on June 30, 2025. Annual rent under the Fourth Floor Lease was approximately $28,000. As space became available in the immediate proximity to our existing offices at the beginning of 2024, we terminated the Fourth Floor Lease upon mutual agreement with the landlord and replaced it with a lease for Suite 504 (“the Suite 504 Lease”). The Suite 504 Lease is effective January 1, 2024 and the term co-terminates with the Lease. The annual base rent for the current year for the Suite 504 Lease is approximately $29,000. See Note 13 of the notes to our unaudited condensed financial statements included in this Form 10-Q.

Service Agreements

We enter into service agreements in the normal course of business with CROs and for clinical trials, preclinical research studies and testing, manufacturing, and other services and products for operating purposes. These contracts do not contain any minimum purchase commitments. Certain agreements provide for termination rights subject to termination fees or wind down costs. Under such agreements, we are contractually obligated to make certain payments to vendors, mainly to reimburse them for their unrecoverable outlays incurred prior to cancellation. The exact amounts of such obligations are dependent on the timing of termination, and the exact terms of the relevant agreement and cannot be reasonably estimated. The expense we incurred pursuant to these agreements for the three months ended March 31, 2024 was approximately $204,000, which was consistent with the approximately $204,000 expense incurred for the three months ended March 31, 2023. The spending was primarily attributable to expenses relating to our ongoing research and development work, and costs related to our clinical trials for LP-10.

Critical Accounting Policies and Significant Judgments and Estimates

This management’s discussion and analysis is based on our unaudited condensed financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make judgments and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of expenses during the reported periods. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, will be reflected in the financial statements prospectively from the date of change in estimates.

While our accounting policies are described in more detail in the notes to our financial statements included in our Annual Report, we believe the following accounting policies used in the preparation of our financial statements require the most significant judgments and estimates. See Note 3 of the notes to our financial statements in our Annual Report for a description of our other significant accounting policies.

Accrued Expenses

As part of the process of preparing our financial statements, we are required to estimate our accrued third-party R&D expenses as of each balance sheet date. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf, and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. The significant estimates in our accrued R&D expenses include the costs incurred for services performed by our vendors in connection with R&D activities for which we have not yet been invoiced.

We base our expenses related to R&D activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct R&D activities on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the R&D expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid balance accordingly. Non-refundable advance payments for goods and services that will be used in future R&D activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.

Although we do not expect our estimates to be materially different from amounts incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period. To date, there have been no material differences between our estimates of such expenses and the amounts incurred.

Stock-Based Compensation

We measure stock-based compensation based on the grant date fair value of the stock-based awards and recognize stock-based compensation expense on a straight-line basis over the requisite service period of the awards, which is generally the vesting period of the respective award. For non-employee awards, compensation expense is recognized as the services are provided, which is generally ratably over the vesting period. We account for forfeitures as they occur. On January 1, 2018, we adopted, using the modified retroactive approach, the guidance of Accounting Standard Update 2018-07, Compensation — Stock Compensation (Topic 718) — Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”), and account for awards to non-employees using the grant date fair value without subsequent periodic remeasurement. The adoption of ASU 2018-07 did not have a material effect on our financial statements.

We classify stock-based compensation expense in our statements of operations in the same manner in which the award recipient’s salary and related costs are classified or in which the award recipient’s service payments are classified. In future periods, we expect stock-based compensation expense to increase, due in part to our existing unrecognized stock-based compensation expense and as we grant additional stock-based awards to continue to attract and retain our employees.

We determine the fair value of restricted Common Stock awards granted based on the fair value of our Common Stock. We have historically determined the fair value of the underlying Common Stock based on input from management and the board of directors and the Company’s enterprise value determined utilizing various methods, including the “back-solve” method. The total enterprise value, determined from the back-solve method, is historically then allocated to the various outstanding equity instruments, including the underlying Common Stock, utilizing the option pricing method (“OPM”) or a hybrid of the probability-weighted expected return method (“PWERM”) and the OPM.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and our expected dividend yield. As the public market for our Common Stock has been limited and prior to the IPO there was no such public market, we have historically determined the volatility for awards granted based on an analysis of reported data for a group of guideline companies that issued options with substantially similar terms. The expected volatility has been determined using a weighted-average of the historical volatility measures of this group of guideline companies along with our own. We expect to continue estimating expected volatility based on the group of guideline companies until we have adequate historical data regarding the volatility of our own traded stock price. The expected term of our stock options granted to employees and non-employees has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. We have not paid, and do not anticipate paying, dividends on our Common Stock; therefore, the expected dividend yield is assumed to be zero.

As there was no public market for our Common Stock prior to the IPO, the estimated fair value of our Common Stock prior to our IPO had been approved by our board of directors, with input from management, as of the date of each award grant, considering our most recently available independent third-party valuations of our Common Stock and any additional objective and subjective factors that we believed were relevant and which may have changed from the date of the most recent valuation through the date of each award grant. We estimated the value of our equity using the market approach and a precedent transaction method which “back-solves” the equity value that yielded a specific value for our Series A Stock. We allocated the equity value to our Common Stock and shares of our Series A Stock using either an OPM or a hybrid method, which is a hybrid between the OPM and the PWERM. The hybrid method we utilized estimated the probability-weighted value across multiple scenarios but used the OPM to estimate the allocation of value within at least one of the scenarios. In addition to the OPM, the hybrid method considered the IPO scenario in which the shares of our Series A Preferred Stock converted to Common Stock. The future value of the Common Stock in the IPO scenario was discounted back to the valuation date at an appropriate risk adjusted discount rate. In the hybrid method, the present value indicated for each scenario was probability weighted to arrive at an indication of value for our Common Stock.

In addition to considering the results of the valuations, management considered various objective and subjective factors to determine the fair value of our Common Stock as of each grant date, which may be a date later than the most recent third-party valuation date, including:

	●	the prices of our Series A Preferred Stock sold to or exchanged between outside investors in arm’s length transactions, if any, and the rights, preferences and privileges of our Series A Preferred Stock as compared to those of our Common Stock, including the liquidation preferences of our Series A Preferred Stock;
	●	the progress of our R&D efforts, including the status of preclinical studies;
	●	the lack of liquidity of our equity as a private company;
	●	our stage of development and business strategy and the material risks related to our business and industry;
	●	the achievement of enterprise milestones;
	●	the valuation of publicly traded companies in the life sciences and biotechnology sectors, as well as recently completed mergers and acquisitions of peer companies;
	●	any external market conditions affecting the biotechnology industry, and trends within the biotechnology industry;
	●	the likelihood of achieving a liquidity event for the holders of our Series A Preferred Stock and Common Stock, such as an IPO, or a sale of the Company, given prevailing market conditions; and
	●	the analysis of IPOs and the market performance of similar companies in the biopharmaceutical industry.

There are significant judgments and estimates inherent in these valuations. These judgments and estimates included assumptions regarding our future operating performance, the stage of development of our programs, the timing of a potential offering, or other liquidity event, and the determination of the appropriate valuation methodology at each valuation date. The assumptions underlying these valuations represented management’s best estimates, which involve inherent uncertainties and the application of management judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our stock-based compensation expense could be materially different. Subsequent to the completion of the IPO, the fair value of our Common Stock is determined based on the market price of our Common Stock on Nasdaq.

With respect to stock options granted during the three months ended March 31, 2024 and 2023, the following table sets forth by grant date the (i) number of shares of our Common Stock issuable upon exercise of such stock options, (ii) per share exercise price of such options and (iii) estimated fair value per share of our Common Stock on each such date. We did not grant any shares of restricted Common Stock during this period.

Grant date		Number of shares of Common Stock issuable upon exercise of stock options granted				Exercise price per share of Common Stock				Estimated fair value per share of Common Stock at grant date
03/15/24			440,000			$	0.77			$	0.55

The per share values at each such grant date, which we applied to determine the per share estimated fair value of the respective awards for accounting purposes, were based upon the calculations described above used to determine the fair value of our Common Stock as of each grant date.

Emerging Growth Company Status

In April 2012, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Therefore, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected to avail ourselves of this extended transition period and, as a result, we will not be required to adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

In addition, as an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include, among other things:

	●	reduced disclosure about the compensation paid to our executive officers;

	●	not being required to submit to our stockholders’ advisory votes on executive compensation or golden parachute arrangements;

	●	an exemption from the auditor attestation requirement in the pursuant to the Sarbanes-Oxley Act of 2002; and

	●	an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation.

We may take advantage of these exemptions until such time that we are no longer an emerging growth company. We would cease to be an emerging growth company upon the earliest of

	●	the last day of the fiscal year on which we have $1.235 billion or more in annual revenue;

	●	the date on which we become a “large accelerated filer” (i.e., as of our fiscal year end, the total market value of our common equity securities held by non-affiliates is $700 million or more as of June 30);

	●	the date on which we issue more than $1.0 billion of non-convertible debt over a three-year period; or

	●	the last day of our fiscal year following the fifth anniversary of the date of the completion of the IPO.

We may choose to take advantage of some but not all of these exemptions.

Recent Accounting Pronouncements

We have reviewed all recently issued accounting pronouncements and have determined that, other than as disclosed in Note 3 to our unaudited condensed financial statements included in this Report, such standards will not have a material impact on our financial statements or do not otherwise apply to our operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

As a smaller reporting company, as defined in Item 10(f)(1) of Regulation S-K, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on this evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that its disclosure controls and procedures were effective as of March 31, 2024.

Changes in Internal Controls

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) that occurred during the three months ended March 31, 2024, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Limitations of the Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple errors. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become subject to legal proceedings, claims or litigation arising in the ordinary course of business. We are not presently a party to any legal proceedings that in the opinion of our management, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows.

Item 1A. Risk Factors.

Our business, financial condition and operating results are subject to a number of risk factors, both those that are known to us and identified below and others that may arise from time to time. These risks and uncertainties are not the only ones that we face and additional risks and uncertainties not presently known to us or that we currently consider immaterial may also impair our business operations. These risk factors could cause our actual results to differ materially from those suggested by forward-looking statements in this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024 (this “Report”) and elsewhere, and may adversely affect our business, financial condition or operating results. If any of these risk factors should occur, moreover, the trading price of our Common Stock could decline, and investors in our Common Stock could lose all or part of their investment. These risk factors, along with other information contained in this Report, should be carefully considered in evaluating our prospects.

We have been notified by The Nasdaq Stock Market LLC (“Nasdaq”) of our failure to comply with certain continued listing requirements and, if we are unable to regain compliance with all applicable continued listing requirements and standards of Nasdaq, our Common Stock could be delisted from Nasdaq.

Our Common Stock is currently listed on the Nasdaq Capital Market. In order to maintain that listing, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders’ equity, minimum share price, and certain corporate governance requirements.

As disclosed in our Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on April 19, 2024, on April 17, 2024, we received a written notification from Nasdaq’s Listing Qualifications Department notifying us that we were not in compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market, as set forth under Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”), because the closing bid price of our Common Stock was below $1.00 per share for the previous thirty (30) consecutive business days. We were granted 180 calendar days, or until October 14, 2024, to regain compliance with the Minimum Bid Price Requirement. In the event we do not regain compliance with the Minimum Bid Price Requirement by October 14, 2024, we may be eligible for an additional 180-calendar day grace period. To qualify, we will be required to meet the continued listing requirement for market value of publicly held shares and all other listing standards for the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and will need to provide written notice to Nasdaq of our intent to regain compliance with such requirement during such second compliance period. If we do not regain compliance within the allotted compliance period(s), including any extensions that may be granted, Nasdaq will provide notice that our Common Stock will be subject to delisting from the Nasdaq Capital Market. At that time, we may appeal Nasdaq’s determination to a hearings panel.

We intend to monitor the closing bid price of our Common Stock and assess potential actions, including effecting a reverse stock split, to regain compliance, but there is no assurance that we will be able to regain compliance, including under the specified grace period or any extensions thereof. Even if we were to regain compliance with the deficiency noted above, we may, again, in the future fall out of compliance with such standards. A delisting of our Common Stock could have an adverse effect on the market price of, and the efficiency of the trading market for, our Common Stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and less coverage of us by securities analysts, if any.

There can be no assurances that we will be able to regain compliance with the Minimum Bid Price Requirement or if we do later regain compliance with the Minimum Bid Price Requirement, that we will be able to continue to comply with all applicable Nasdaq listing requirements now or in the future. If we are unable to maintain compliance with these Nasdaq requirements, our Common Stock will be delisted from the Nasdaq Capital Market.

In the event that our Common Stock is delisted from the Nasdaq Capital Market, as a result of our failure to comply with the Minimum Bid Price Requirement, or due to our failure to continue to comply with any other requirement for continued listing on the Nasdaq Capital Market, and is not eligible for listing on another exchange, trading in the shares of our Common Stock could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Market or another over-the-counter market operated by the OTC Markets Group Inc. In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our Common Stock, and it would likely be more difficult to obtain coverage by securities analysts and the news media, which could cause the price of our Common Stock to decline further. Also, it may be difficult for us to raise additional capital if we are not listed on a national exchange.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

	(a)	On February 2, 2024, the Company issued 196,078 shares of Common Stock to a consultant pursuant to that certain consulting services agreement, dated as of January 24, 2024 (the “Consulting Agreement”), as consideration for certain services provided to the Company pursuant to the Consulting Agreement. The shares were issued pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act.
	(b)	On March 13, 2024, the Company entered into Affiliate Stock Purchase Agreements (the “Affiliate Stock Purchase Agreements”) with each of Drs. Kaufman and Chancellor, pursuant to which each purchased $100,000 of shares of Common Stock in cash from the Company at $0.6901 per share, resulting in the issuance of 144,906 shares of Common Stock to each of them. The shares were issued pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act..

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

On January 1, 2024, as space became available in the immediate proximity to the Company’s existing offices covered by the Lease at the beginning of 2024, we terminated the Fourth Floor Lease upon mutual agreement with Bridgeway and replaced it with the Suite 504 Lease, which co-terminates with the Lease on June 30, 2025. Annual rent under the Suite 504 Lease is approximately $29,000. The Company agreed to use such space for office, manufacturing and assembly work and it will be used in addition to Company’s current leased space. The Suite 504 Lease contains customary events of default and various other rights and obligations for leases of this sort, including but not limited to provisions related to termination, liens, insurance, assignment and subleasing, fixtures and alterations, and indemnities. The foregoing description of the Suite 504 Lease is only a summary and is qualified in its entirety by reference to the full text of the Suite 504 Lease, a copy of which is attached as Exhibit 10.1 to this Form 10-Q and incorporated herein by reference.

Item 6. Exhibits.

Exhibit
Number		Description
10.1*		Suite 504 Lease Agreement, by and between the Company and Bridgeway, effective January 1, 2024
31.1*		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

*	Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Lipella Pharmaceuticals Inc.

Date: May 9, 2024	By:	/s/ Jonathan Kaufman
		Jonathan Kaufman
		President and Chief Executive Officer
		(Duly Authorized Officer and Principal Executive Officer)

Date: May 9, 2024	By:	/s/ Douglas Johnston
		Douglas Johnston
		Chief Financial Officer
		(Duly Authorized Officer and Principal Financial and Accounting Officer)

Exhibit 10.1

LEASE AGREEMENT

PART I - BASIC LEASE INFORMATION

This Lease Agreement (“Lease”) is made and executed this 28th day of December 2023, by and between Bridgeway Development Corporation (“Landlord”) and Lipella Pharmaceuticals Inc. (“Tenant”).

This Lease consists of the following two parts: Part I which sets forth terms defined in this Lease (and certain obligations under the Lease) and which is sometimes referred to as the “Basic Lease Information”, and Part II which provides the terms and conditions of this Lease and which is sometimes referred to as the “Lease Terms and Conditions”. Part I and Part II collectively, are referred to as this “Lease.” Capitalized terms not otherwise defined in this Part I - Basic Lease Information shall have the meaning provided in Part II of the Lease.

1.	Landlord:	Bridgeway Development Corporation

2.	Tenant:	Lipella Pharmaceuticals Inc.

3.	Permitted Use:	Office, manufacturing and assembly

4.	Premises:	The Premises identified as Suite 504 consists of approximately 1,964 square feet of floor area located on the fifth floor of the 5 story building located at 7800 Susquehanna Street, Pittsburgh PA 15208 along with the common access to Dock Door 10, the two existing freight elevators, passenger elevator, stairwell access, and bathrooms on the fourth floor.

5.	5^th Floor Common Area:	Bathrooms, elevators, stairwells and common hallway consisting of approximately 3,954 square feet.

6.	5^th Floor Gross Floor Area:	23,920 square feet.

7.	5^th Floor Premises:	1,964 square feet as shown on Exhibit “A-1”.

8.	5^th Floor Rentable Area:	1,964 square feet plus Tenant’s prorata share of the 5^th Floor Common Area (9.84%) or 389 square feet. Total Rentable Square Feet is 2,353 square feet.

11.	Term:	18 months

12.	Term Commencement:	January 1, 2024

13.	Rent Commencement:	January 1, 2024

14.	Expiration of Term:	June 30, 2025

15.	Option to Extend Term:	Five years

16.	Annual/Monthly Rent:

TERM	RENT/SF	ANNUAL	MONTHLY
		RENT	RENT
1/1/24 -6/30/24	$12.00	$28,236.00	$2,353.00

7/1/24 -6/30/25	$12.50	$29,412.50	$2,451.04

OPTION RENT

7/1/25 -6/30/26	$13.00	$30,589.00	$2,549.08

7/1/26 – 6/30/27	$13.50	$31,756.50	$2,647.13

7/1/26 - 6/30/28	$14.00	$32,942.00	$2,745.17

7/1/26 - 6/30/29	$14.50	$34,118.50	$2,843.21

7/1/26 - 6/30/30	$15.00	$35,295.00	$2,941.25

17.	Additional Rent:	All amounts and charges required to be paid by Tenant hereunder (other than Base Rent), including without limitation the Insurance requirements as described more particularly in Section 12 and 13 of Part II of this Lease.

18.	Rent:	Includes both Base Rent and Additional Rent to be paid by Tenant

19.	Landlord’s Address:	Bridgeway Development Corporation 310 Grant Street, Suite 2800 Pittsburgh, PA 15219

20.	Tenant’s Address:	Lipella Pharmaceuticals Inc. 7800 Susquehanna Street, Suite 505 Pittsburgh PA 15208 Attn: Jonathan Kaufman

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IN WITNESS WHEREOF, and intending to be legally bound, Landlord and Tenant have caused the Part I of the Lease to be signed by their dully authorized officers and agents under seal, as of the date set forth above.

		LANDLORD:

		Bridgeway Development Corporation

DATE:	Jan 3, 2024	By:	/s/ Thomas J. Bogdewic
		Name:	Thomas J. Bogdewic
		Title:	President

		TENANT:

		Lipella Pharmaceuticals Inc.

DATE:	Jan 3, 2024	By:	/s/ Jonathan Kaufman
		Name: Jonathan Kaufman

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LEASE AGREEMENT

PART II - LEASE TERMS AND CONDITIONS

1. LEASE OF PREMISES. Landlord hereby leases to Tenant, and Tenant accepts such lease from Landlord, under the terms and conditions set forth in this Lease, the Premises which are identified in the Basic Lease Information.

2. CONDITION OF PREMISES. The Premises shall be delivered by Landlord to Tenant, and Tenant hereby accepts the Premises, in an “AS-IS” “WHERE IS” condition and acknowledges that Landlord has no obligation to alter, improve, decorate or otherwise prepare the Premises for Tenant’s occupancy. Tenant acknowledges that neither Landlord nor any agents of Landlord have made any representations, warranties or covenants or either express or implied, with respect to the Premises or the condition thereof except the Landlord improvements described in Section 7.

3. TERM. Tenant shall have and hold the Premises for the Term set forth in Basic Lease Information, beginning on the Commencement Date and ending at 11:59 p.m. on the Expiration Date, both as specified in the Basic Lease Information. If the Term shall commence or expire on a day which is other than the first day of a calendar month, Rent (as hereafter defined) for such month shall be pro-rated based on a thirty (30) day month.

SECURITY DEPOSIT:

4.1 Amount: TENANT SHALL, BY EVEN DATE HEREWITH, PAY TO LESSOR AND SHALL KEEP ON DEPOSIT WITH LESSOR THE SUM OF $00.00 AS A SECURITY DEPOSIT FOR THE PAYMENT OF DAMAGES TO THE LEASED PREMISES OR DEFAULT IN RENT.

4.2 Maintenance at Original Amount: If the whole or any part of said Security Deposit is so applied or retained, Tenant shall upon demand immediately deposit with Lessor the amount so applied or retained to the end that Tenant shall at all times have and maintain on deposit with Lessor the full amount of said Security Deposit as aforesaid. Said amount, if not expended by Lessor as herein provided, shall, upon the expiration of this Lease Agreement or any renewal, be returnable to Tenant with any unpaid interest due thereon. IT IS UNDERSTOOD, HOWEVER, THAT THE SECURITY DEPOSIT IS NOT TO BE CONSIDERED AS THE LAST MONTHLY RENTAL INSTALLMENT UNDER THIS LEASE AGREEMENT AND SHALL NOT BE SO APPLIED EXCEPT UPON THE APPROVAL OF LESSOR. Security deposit shall be placed in an interest bearing account and if not expended by Lessor pursuant hereto, shall be paid to Tenant at the end of the Lease.

4.3 Forwarding Address: TENANT SHALL PROVIDE LESSOR IN WRITING WITH A FORWARDING ADDRESS UPON TERMINATION OF THIS LEASE AGREEMENT OR UPON SURRENDER AND ACCEPTANCE BY LESSOR OF THE LEASED PREMISES AS PROVIDED FOR IN SECTION 512 OF THE LESSOR AND TENANT ACT OF 1951, 68 P.S. 250.512. FAILURE TO DO SO, SHALL NOT RELIEVE LANDLORD FROM THE OBLIGATION TO RETURN THE SECURITY DEPOSIT SO LONG AS LANDLORD CAN REASONABLY ASCERTAIN TENANT’S ADDRESS.

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5. RENT.

5.1 Base Rent. The annual base rent (“Base Rent”) for the Premises shall be as set forth in the Basic Lease Information. Tenant shall pay Base Rent in the monthly installments set forth in the Basic Lease Information, in advance, on the first day of each calendar month during the Term; provided, however, that Base Rent for the first month of the Term shall be paid upon the signing of this Lease.

5.2 Additional Rent. In addition to Base Rent, Tenant shall pay all sums of money or other charges required to be paid by Tenant under this Lease as additional rent (“Additional Rent”), whether or not same are expressly designated in this Lease as Additional Rent. All Additional Rent shall be due and payable with each monthly installment of Base Rent unless otherwise provided herein.

5.3 Manner of Payment. Base Rent and Additional Rent (together, “Rent”) payable under this Lease shall be paid in lawful money of the United States of America without prior notice or demand therefore, and without deduction, defense, counterclaim, setoff or abatement whatsoever. Rent shall be paid to Landlord at the address designated for Rent in the Basic Lease Information or such other address as Landlord may notify Tenant in accordance with the procedure for notice set forth in this Lease.

5.4 Interest on Delinquent Payments. If any payment of Rent is not paid within ten (10) business days of its due date, Tenant shall pay interest on such delinquent payment, from the original due date of such delinquent payment until paid in full, at an interest rate (“Interest Rate”) equal to the lesser of (a) five percent (5%) per month, or (b) the maximum rate permitted by applicable law, until such amounts are paid in full. This Section shall not relieve Tenant from its obligation to pay Rent at the times and in the manners herein specified. Acceptance by Landlord of interest shall not constitute a waiver of Tenant’s default with respect to said delinquent payment, nor prevent Landlord from exercising any other rights or remedies available to Landlord. Interest at the Interest Rate also shall accrue on any judgment obtained in connection with enforcement of this Lease.

6. TAXES, UTILITY CHARGES AND OTHER RESPONSIBILITIES.

6.1 It is the intent of the Landlord and Tenant that all costs of owning and operating the Premises as described herein during the term hereof shall be paid by Tenant as Additional Rent hereunder, excluding, however, any other payments Landlord agrees to pay as described herein.

6.2 Utility Charges. Tenant shall contract for telephone and internet services directly with Verizon or Comcast and contract directly for electric service with Duquesne Light. Gas, water and sewage is paid by the Landlord.

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6.3 Availability of Utilities and Services. Landlord represents that Landlord will make available, at Landlord’s expense electric, gas, telephone, water and sanitary sewage service at the Leased Premises on or prior to commencement of the Lease. Tenant acknowledges that Landlord is not responsible to Tenant for any disruption or inadequacy of utilities services during the Term except to the extent caused solely by the gross negligence or wilful misconduct of Landlord, its employees or agents. In this regard, Landlord does not warrant that any services supplied to the Premises will not be interrupted. Services may be interrupted because of accidents, repairs, alterations, improvements, or any reason beyond the reasonable control of Landlord. Any such interruption shall not make Landlord liable to Tenant for damages, nor constitute a constructive eviction or entitle Tenant to rent abatement unless same shall have been caused solely by the gross negligence or wilful misconduct of Landlord, its employees or agents.

STRUCTURAL REPLACEMENTS, MAINTENANCE AND SNOW REMOVAL.

a. Landlord, at Landlord’s expense, shall perform all replacements and repairs necessary to maintain the roof, load bearing walls, and the foundation of the building located on the Premises in good condition (“Structural Work”) so long as such Structural Work is not necessitated by Tenant’s negligence. Landlord shall maintain the parking area and access to the Premises in good condition and shall be responsible for removal of snow and debris from the parking lot. If an emergency exists, in Tenant’s reasonable commercial judgment with regard to Structural Work, Tenant is authorized to take such minimal corrective action as is necessary abate the emergency at Landlord’s expense.

b. Tenant’s General Obligations. Subject to the foregoing, Tenant, at Tenant’s expense, shall perform all repairs, maintenance and replacements necessary to maintain the Premises and every part thereof in a good and proper working condition, including without limitation repairs, maintenance and replacements of windows (damaged by Tenant), doors, overhead doors, floors, other structural elements installed by Tenant, HVAC equipment and systems, waste disposal and plumbing systems and fixtures, telephone and cable service and fixtures, interior gas and electric service and fixtures, and all other mechanical elements and building systems serving the interior of the Premises and installed by Tenant as part of Tenant’s build-out of the Premises.

c. Clean Condition. Tenant, at Tenant’s expense, shall keep the Premises in a clean, sanitary, orderly and safe condition to the reasonable satisfaction of Landlord and in accordance with any reasonable rules and regulations from time to time in effect during the Term of this Lease. Tenant shall provide such reasonable pest extermination measures as is necessary to maintain the Premises free from insects, vermin and any other pests. Landlord shall deliver possession of the Premises in a clean, sanitary, and safe condition at the time of execution hereof.

8. ALTERATIONS.

8.1 Consent Required. Except as hereafter provided in Section 8.2 or as required pursuant to Section 7 above, Tenant shall make no alterations, additions or improvements (“Tenant Alterations”) to the Premises without the consent of Landlord, which consent shall not be unreasonably withheld. Landlord may impose such reasonable conditions as part of its consent as Landlord deems appropriate, taking into consideration the nature of the proposed Tenant Alteration, including, without limitation, requiring Tenant to furnish Landlord with security for the payment of all costs to be incurred in connection with such work, insurance, and copies of the plans, specification and permits necessary for such work. Landlord has approved initial Tenant Alterations and these plans and specs have been signed by and between Landlord and Tenant (the “Initial Tenant Alterations”).

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8.2 Permitted Tenant Alterations. Landlord’s consent shall not be required for Tenant Alterations (“Permitted Tenant Alterations”) which satisfy each of the following conditions: (i) do not adversely impact the structural integrity of the Premises or the systems serving the Premises or their operation, (ii) are not visible from the exterior of the Premises and (iii) cost $ 10,000 or less in the aggregate to complete. Tenant shall not be obligated to remove Permitted Tenant Alterations upon the termination of this Lease, including Initial Tenant Alterations, but shall remove trade fixtures, furniture, and shelving and like items. Tenant is permitted to install signage for way finding at the building exterior (location mutually agreed to by Landlord and Tenant) and stairwells.

9. GENERAL CONSTRUCTION/MAINTENANCE PROCEDURES.

9.1 Quality of Performance. All undertakings under Sections 7, 8 and 11 hereof shall be performed in a good and workmanlike manner, using only materials of at least the same quality and integrity as that being repaired, replaced or altered, and performed and furnished in compliance with all applicable laws, regulations, ordinances and requirements of all duly constituted authorities or governmental bodies having jurisdiction over the Premises and of the requirements of any board of underwriters having jurisdiction thereof.

9.2 Prior Plan Approval. With respect to Structural Work and Tenant Alterations other than the Permitted Tenant Alterations, no work shall be performed until the plans therefore have been approved by Landlord, which approval shall not be unreasonably withheld or delayed and shall be deemed approved unless Landlord objects in writing to the proposed plans (stating therein with reasonable specificity the reasons for Landlord’s objection) within ten (10) business days after delivery to Landlord of a complete set of the plans therefor. In connection with such approval, Landlord reserves the right to require the filing of a mechanic’s lien waiver by each contractor performing such Structural Work or Tenant Alterations, or requiring that each such contractor post a mechanic’s or materialmen’s lien bond, performance and/or completion bond. With respect to Permitted Tenant Alterations for which a building permit is required, no work shall be performed until Tenant provides notice to Landlord that Tenant will be undertaking such Permitted Tenant Alteration, which notice describes in reasonable detail the scope of the Permitted Tenant Alteration. Tenant’s delivery to Landlord of a copy of Tenant’s application for a building permit shall be deemed to satisfy the foregoing description of the scope of the Permitted Tenant Alteration. Where applicable given the nature of the Tenant’s Work, Tenant shall provide copies of as-built plans and specifications for all Tenant’s Work to Landlord within a reasonable time of completion of the Tenant’s Work.

9.3 Contractors. Each contractor shall carry contractor’s liability insurance which covers Landlord as additional insured, covering bodily injury in such amounts as may be customary and appropriate for the Tenant’s Work undertaken, as reasonably determined by Landlord. Tenant shall provide proof of such insurance acceptable to Landlord prior to commencement of any Tenant’s Work on the Premises.

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9.4 Mechanic’s Liens. Tenant shall pay all sums of money due for labor, services, materials, supplies and equipment furnished at Tenant's request with respect to the Premises. If a mechanic's, materialman's or other lien (or notice of intent to file such a lien) is filed or recorded against the Premises, or Landlord's interest in the same, based upon labor, services materials, supplies equipment or the like ordered, or alleged to have been ordered by Tenant, and said lien constitutes an encumbrance upon the fee or other title of the Premises, or Landlord's interest therein, Tenant shall indemnify Landlord or any of Landlord’s lenders against any mechanics liens from all contractors and Tenant shall cause such lien to be discharged of record within ten (10) days of filing such lien. If such lien is not discharged within said ten (10) day period, Landlord shall have the right to cause such discharge by payment to the lienor, deposit of substitute security with a court having jurisdiction, bonding, or such other means chosen by Landlord; the entire cost of said discharge, including monies paid to the lienor, into court, as security with a bondsman or otherwise, and costs of effecting same, including the fees of Landlord's attorney, shall be paid to Landlord by Tenant upon demand. Tenant shall, upon request, furnish Landlord with contractor's affidavits, full and final waivers of right to lien and receipted bills covering all labor and materials expended and used in or about the Demised Premises by or at the request of Tenant.

9.5 Landlord’s Approval and Review Reimbursement. By approving any request for Tenant’s Work (including the plans therefor), Landlord does not expressly or implicitly covenant or warrant that the Tenant’s Work or the plans and specifications therefore are accurate, safe or sufficient, or that the same comply with any applicable laws, ordinances, building codes, zoning requirements and like regulations, nor shall Landlord’s approval of any contractor be deemed any endorsement of the qualifications of such contractor. Tenant shall be solely responsible for determining the adequacy and sufficiency of the foregoing and for obtaining all necessary permits and governmental approvals, including a Certificate of Occupancy upon completion of the Tenant’s Work, if and when required by the municipality in which the Premises are located. Tenant shall reimburse Landlord for Landlord’s expenses incurred (including any engineering, architectural or legal fees) in connection with reviewing any request for consent to Tenant’s Work except Initial Tenant Alterations.

10. SIGNS AND APPEARANCE OF PREMISES.

Subject to applicable zoning requirements, Tenant, at its expense, may install and maintain one outside identification sign, which shall be of an appearance that is mutually acceptable to Landlord and Tenant. Tenant shall obtain at its expense all necessary permits or governmental approvals for such sign.

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11.

USE AND COMPLIANCE WITH LAWS.

11.1 Permitted Use. Tenant shall use the Premises only for the Permitted Use set forth in the Basic Lease Information and uses incidental thereto. Tenant shall not permit the Premises to be used for any illegal purpose or in any manner which would tend to damage any portion thereof.

11.2 Insurance Risks. Tenant shall not conduct any activity or permit any activity to be conducted or place any equipment in or about the Premises which would in any way increase the rate of fire insurance or other insurance on the Premises.

11.3 Compliance with Applicable Laws. Tenant shall comply with all applicable laws, regulations, ordinances, and directives of the Federal Government, state and municipality in which the Premises are located as well as all judicial orders and the requirements of any Board of Fire Underwriters (or any other body exercising similar functions) as are in effect during the Term of this Lease, including without limitation, those relating to Hazardous Materials (hereafter defined), those otherwise relating to occupational safety and health, and the Americans With Disabilities Act of 1990, as amended from time to time, and all regulations or judicial interpretations of the requirements thereof. Tenant, at Tenant’s sole expense, shall perform any act or obligation arising from or as is necessary to achieve such compliance except Structural Work. At all times during this Lease, Tenant shall maintain and comply with all permits, licenses or other authorizations required by any governmental authority or agency for Tenant’s occupancy or operations at the Premises.

11.4

Hazardous Materials.

a. Tenant shall comply with all applicable environmental laws, orders, regulations, ordinances and directives now existing or hereafter enacted (“Environmental Laws”) and, at Tenant’s sole cost and expense, shall perform any act or obligation arising from or as is necessary to achieve such compliance arising from its use of the Premises. Landlord shall, at its sole cost and expense, perform any act or obligation in order to comply with all Environmental Laws except those which are Tenant’s obligation hereunder.

b. Tenant shall not cause or permit any portion of the Premises to be used for the production, storage, deposit or disposal of Hazardous Materials, nor shall Tenant permit Hazardous Materials ever to be placed or located upon the Premises. Notwithstanding the above prohibition, Tenant acknowledges that it stores Hazardous Materials (thinners, lacquers, glues, varnishes, etc.) including the listed petrochemicals and finishes containing urea formaldehyde and covenants that same are at all times used, kept and stored in full compliance with the Environmental Laws including the storing of the Hazardous Materials in code-compliant flammable cabinets. As used herein, “Hazardous Materials” means all substances or pollutants which are declared to be or regulated as hazardous, toxic, dangerous or polluting substances under the Environmental Laws at any time during the Term of this Lease, including, without limitation, asbestos, polychlorinated biphenyles (PCBs), urea formaldehyde, foam insulation, and petroleum products and by-products.

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c. Tenant shall promptly notify Landlord of any actual or threatened lien against the Premises of which Tenant becomes aware pursuant to any of the Environmental Laws. Tenant, at Tenant’s sole cost and expense, shall promptly discharge and remove any lien arising from Tenant’s violation of any of the Environmental Laws, such action to be completed within thirty (30) days after Tenant first receives notice of such lien or violation or such shorter period of time if required (1) by the governmental agency enforcing the correction of such violation, or (2) to prevent the holder of any such lien from forcing the sale of the Premises.

11.5

Reserved.

11.6 Landlord’s Inquiries and Inspection. Tenant shall promptly and accurately respond in writing to all inquiries made by Landlord (including without limitation requests for documents) pertaining to Tenant’s obligations under this Lease or use of the Premises. Landlord and any authorized agent or contractor hired by Landlord may enter the Premises at any time and from time to time for purposes of inspecting same and conducting tests thereupon as Landlord deems reasonably necessary to determine that Tenant is in compliance with this Lease, but Landlord shall not be obligated to do so. Unless an emergency exists, as determined by Landlord in its sole discretion, Landlord shall notify Tenant at least one day in advance of any such inspection or testing and, to the extent practicable, shall conduct any such inspection or testing in such manner so as to minimize unreasonable interference with Tenant’s business. The costs of such investigation and inspection shall be paid by Landlord unless it is determined that Tenant is in noncompliance with this Lease, in which case such costs shall be paid solely by Tenant as Additional Rent within ten (10) business days of Landlord’s demand therefore after which time interest at the Interest Rate shall be applied.

11.7 Notice of Violations. Tenant shall promptly notify Landlord of any violation of any applicable law which is alleged to have been committed at the Premises and shall forward to Landlord copies of any written communications, complaints, citations or other notices relating to the condition of the Premises or compliance with applicable laws (“Action Notice”). Tenant promptly shall respond to any Action Notice, cure any violation of applicable laws caused by Tenant and have dismissed any legal action commenced against Tenant or the Premises arising from its activities to the satisfaction of Landlord. Prior to undertaking same, however, Tenant shall propose to Landlord its intended course of action and proceed only with Landlord’s approval of same, which shall not be deemed to be Landlord’s guarantee that such action is appropriate nor impose any liability on same for Landlord and which shall not be unreasonably withheld. In no event, however, shall any curative action be undertaken by Tenant without Landlord’s consent unless same (a) strictly comply with the most stringent relevant criteria for protection of human health, the environment or groundwater quality; or (b) requires no recorded notice or continued institutional control or monitoring.

11.8 Indemnification. Except to the extent covered by insurance and in amplification of Tenant’s obligations under Section 15 and not in limitation thereof, Tenant shall indemnify, defend (with legal counsel selected by Landlord) and hold harmless Landlord and Landlord’s Affiliates (hereafter defined) from and against any and all claims, legal or equitable, damages for personal injury (including death) or harm to Premises (real or personal), liabilities, penalties, fines and costs (including without limitation, investigation and remediation costs, sums paid in private rights of action or in settlement of claims, legal fees, consultant fees and expert fees) and damages in the nature of loss of use of the Premises, arising out of or in any way connected to any condition caused or created by Tenant’s failure to comply with its obligations under this Section 11.

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11.9 Survival. The provisions of this Section 11 shall survive the scheduled expiration or earlier termination of this Lease, and, in addition to performance of the obligations hereby required, Tenant shall continue to pay rent, even though this Lease may have been terminated, until Tenant has completed the performance of all of its obligations hereunder.

12.

INSURANCE.

12.1 Landlord’s Insurance. Landlord shall provide insurance coverage of the Premises, exclusive of Tenant’s leasehold improvements therein (i.e., standard fire and hazard insurance with approved standard extended coverage endorsement), in commercially reasonable amounts and with commercially reasonable deductibles. Landlord shall also maintain comprehensive general liability insurance during the Term with a recognized responsible insurance carrier with limits of coverage of not less than One Million and No/Dollars ($1,000,000.00) combined single limit.

12.2. Tenant’s Insurance. a. Liability. Tenant agrees to place and maintain, at Tenant’s own expense, comprehensive general liability insurance, with respect to Tenant’s use and occupancy of the Premises with limits of coverage not less than One Million and No/Dollars ($1,000,000.00) combined single limit. Tenant shall carry its own insurance on the contents, i.e., personal property, equipment, fixtures, etc., located in the Premises as well as on any non-building-standard improvements in an amount to cover one hundred (100%) percent of the replacement cost of the property and fixtures, subject to a deductible not exceeding Five Thousand and No/Dollars ($5,000.00).

b. Worker’s Compensation/Employer’s Liability. Tenant shall carry worker’s compensation insurance containing statutory limits covering Tenant’s employees and business operations in the Premises, as well as employer’s liability insurance providing coverage of not less than Five Hundred Thousand Dollars ($500,000.00).

c. Automobile. Tenant shall carry Automobile Liability Coverage with limits of coverage not less than One Million and No/Dollars ($1,000,000) each occurrence combined single limit for all owned, non-owned and hired vehicles.

d. Form of Insurance. All insurance policies obtained by Tenant pursuant to this Section 12.2 shall be issued by companies with a rating of “A” by AM Best and which are qualified to do business in the Commonwealth of Pennsylvania. Additionally, each such insurance policy carried by Tenant pursuant to the terms hereof, shall provide for a waiver of recovery against Landlord by way of subrogation pursuant to Section 12.2(e.) of this Lease. All policies required hereby (exclusive of the worker’s compensation policy) shall name Landlord, and such other parties as Landlord shall specify as additional insureds and shall further specify that Landlord shall receive thirty (30) days prior written notice of any proposed cancellation, non-renewal of, or material change in any such policy. Originals, certified policy copies or certificates, as Landlord shall elect, of all policies of insurance obtained by Tenant shall be provided to Landlord to evidence compliance with this Section.

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e. Waiver of Subrogation. Tenant hereby waives, and shall cause its insurers to waive, any and every claim for recovery from Landlord for any and all loss of or damage to the Premises or to the contents thereof, which loss or damage is covered by insurance policies or would have been covered by policies required by this Lease.

12.3. Mutual Release. Notwithstanding anything in this Lease to the contrary, Landlord and Tenant hereby release the other from any and all liability or responsibility to the other or anyone claiming through or under them by way of subrogation or otherwise for any loss or damage to insurable tangible property, even if such loss or damage shall have been caused by the fault or negligence of the other party, or anyone for whom such party may be responsible, provided, however, that this release shall be applicable and in force and effect only with respect to any loss or damage occurring during such time as the policy or policies of insurance covering said loss shall contain a clause or endorsement to the effect that this release shall not adversely affect or impair said insurance or prejudice the right of the insured to recover thereunder. Landlord and Tenant shall each have such clause in its fire and extended coverage insurance policies if available without extra charge, and if there be a charge, shall notify the other such party and, in such event, shall have the clause if the other party agrees to pay such extra charge. In the absence of any such notice, it shall be presumed for purposes of this subsection that the insurance of such party contains the foregoing clause or endorsement without additional charge.

13.

FIRE OR CASUALTY.

13.1

Insured Casualty.

a. In case of damage to the Premises by a risk insured against pursuant to Section 12 hereof and self insurance, Landlord shall repair the Premises to substantially the condition which existed prior to such damage, with reasonable dispatch after receiving from Tenant written notice that damage has occurred, but without obligation to do so until Landlord has received confirmation from the insurance carrier and all mortgagees holding mortgages on the Premises that adequate insurance proceeds will be available for repair or reconstruction. If Landlord does not receive confirmation from the insurance carrier and any self-insurance and any mortgagee and Landlord does not voluntarily repair the Premises, then Landlord or Tenant may terminate this Lease.

b. If damage to the Premises reduces usable space to less than 50%, then either party may terminate this Lease in the manner herein provided, in which event all Rent shall abate and this Lease terminate as of the date said damage occurred. Tenant shall notify Landlord in writing of its decision to terminate this Lease within thirty (30) days after the occurrence (“Tenant’s Notice Period”). Tenant’s failure to terminate this Lease by written notice of termination delivered to Landlord within Tenant’s Notice Period shall be conclusively construed as Tenant’s agreement for this Lease to continue; subject, however, to Landlord’s right to terminate this Lease by written notice delivered to Tenant within thirty (30) days after the occurrence. If neither party terminates this Lease, then Landlord shall commence restoration.

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13.2

Reserved.

13.3 Mortgagee’s Right. If the holder of any indebtedness secured by a mortgage covering the Premises requires that the insurance proceeds be applied to such indebtedness, and Landlord does not repair, then Landlord or Tenant shall have the right to terminate this Lease by written notice of termination delivered to Tenant within thirty (30) days after such requirement has been made in writing upon Landlord, unless Tenant decides to repair the Premises on its own. In such case, this Lease shall terminate as of the date specified in the notice to the other party.

13.4 Damage Near End of Term. Notwithstanding any provision of this Lease to the contrary, Landlord shall not have any obligation whatsoever to repair, reconstruct or restore the Premises when the damage or destruction occurs during the last year of the Term of this Lease (including any exercised renewal thereof). In such event, Landlord shall have the option to terminate this Lease in which case Rent shall abate as of the date said damage occurred.

14.

EMINENT DOMAIN.

14.1 Termination Rights. If such portion of the Premises is condemned or taken by any governmental body or by any other body or agency possessing the power of condemnation as, in the reasonable determination of Landlord; substantially impairs the use or occupancy by Tenant of the Premises or Landlord’s ability to perform its obligations under this Lease (“Taking”), then either party shall have the right to terminate this Lease effective as of the date that possession is required to be surrendered to said authority. If Landlord determines that a Taking is to occur, then Landlord shall so notify Tenant in writing. Either party shall then have the right to terminate this Lease by written notice delivered to the other within thirty (30) days after delivery of Landlord’s notice to Tenant of a Taking. The failure of Tenant or Landlord to deliver termination notice within the time limit set forth above shall be conclusively construed as such party’s agreement for this Lease to continue.

14.2 Repair and Rent Adjustment. If a Taking is not to occur or if neither party terminates this Lease under subsection 14.1 above, Landlord shall promptly restore the Premises to substantially the same condition prior to such condemnation (less the portion thereof lost in such condemnation), Base Rent shall be proportionately reduced by the portion of the Premises of which Tenant shall have been deprived on account of said condemnation, such adjustment to be effective as of the date possession is required to be surrendered to the condemning authority.

14.3 Temporary Condemnation. If such condemnation or taking is for temporary use only, this Lease shall continue in full force and effect, and Tenant shall continue to comply with all of the provisions hereof, except as such compliance shall be rendered impossible or impracticable by reason of such temporary taking. Rent shall abate during the course of a temporary taking of the Premises or a portion thereof to the extent and for the period of time that the Premises or portion thereof so taken shall have been rendered untenantable.

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14.4 Condemnation Awards. Tenant shall not be entitled to receive any part of any award or awards that may be made to or received by Landlord relating to loss of the Premises or any part thereof, and Tenant hereby assigns to Landlord any share of such award as may be granted to Tenant. Notwithstanding the foregoing, Tenant, at its sole cost and expense, may pursue independent proceedings against the public authority exercising the power of condemnation to prove and establish any damage Tenant may have sustained relating to Tenant’s business and relocation expenses, provided any such compensation does not diminish Landlord’s award.

14.5 Mortgagee’s Rights. If the holder of any indebtedness secured by a mortgage covering the Premises requires that the condemnation proceeds be applied to such indebtedness, then Landlord shall have the right to terminate this Lease by written notice of termination delivered to Tenant within thirty (30) days after such requirement has been made in writing upon Landlord. In such case, this Lease shall terminate as of the date specified in Landlord’s notice to Tenant.

15.

NONLIABILITIES AND INDEMNIFICATION OF LANDLORD.

15.1 Release. Tenant hereby agrees that Landlord and Landlord’s Affiliates shall not be liable to Tenant and hereby releases Landlord and Landlord’s Affiliates for all liability to Tenant for injury to any person (including bodily damage or death) or damage to any Premises (including real or personal Premises, whether by theft or any other casualty) happening in any manner in, on or about the Premises from any cause whatsoever, unless caused solely by the gross negligence or willful misconduct of Landlord or Landlord’s Affiliates, but neither Landlord nor Landlord’s Affiliates shall be liable to Tenant for any such damage or loss to the extent that Tenant is compensated therefor by Tenant’s insurance or would have been compensated therefor under policies which Tenant is required to carry under this Lease. In no event, however, shall Landlord or Landlord’s Affiliates be liable for consequential damages. Tenant agrees to the foregoing and makes the foregoing release on behalf of Tenant and any party claiming a right or interest through Tenant, including without limitation Tenant’s agents, contractors, subcontractors, employees, licensees, or invitees (collectively, “Tenant’s Agents”).

15.2 Indemnification. Except to the extent covered by insurance, Tenant shall indemnify, defend (with legal counsel selected by Tenant) and hold harmless Landlord and Landlord’s Affiliates from and against liability whatsoever which may be imposed upon, incurred by, or asserted against Landlord and/or Landlord’s Affiliates by reason of any of the following which shall occur during the Term of this Lease: (a) use of the Premises by Tenant or Tenant’s Agents; (b) any Tenant’s Work done in, on or about the Premises (including without limitation as a result of defect in design, material, workmanship or mechanic’s liens) made by, or at the direction of Tenant or Tenant’s Agents; (c) any accident, injury or damage to persons (including bodily injury and death) or Premises (real or personal) occurring in, or about the Premises, but not if caused solely by the gross negligence or willful misconduct of Landlord and/or Landlord’s Affiliates; and (d) any failure on the part of Tenant to perform or comply with any provision of this Lease. Without limiting the generality of the foregoing, Tenant’s obligations hereunder shall include all damages, obligations, penalties, lines, liens, claims, reasonable fees for legal counsel selected by Tenant, investigation costs, remediation costs and all other reasonable costs and expenses incurred by Landlord or Landlord’s Affiliates. Tenant shall not settle or compromise any such liability for which indemnification is sought hereunder without first obtaining Landlord’s prior written consent, which shall not be unreasonably withheld. Landlord shall indemnify, defend and hold Tenant harmless from and against any liability whatsoever which may be imposed during the term of the Lease for personal injury or death or loss or damage to any of Tenant’s alterations or trade fixtures, equipment, furniture, inventory and personal property arising out of or resulting from any failure on the part of Landlord to perform or comply with any provision of the Lease.

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15.3 Limitation on Landlord’s Liability; Landlord’s Affiliates. The liability of Landlord and/or Landlord’s Affiliates to Tenant or anyone claiming by or through Tenant shall be limited to Landlord’s interest in the Premises. The foregoing shall be absolute and without exception whatsoever. When used in this Lease, the term Landlord’s Affiliates shall mean any entity affiliated with Landlord through common ownership, Landlord’s property manager and their respective, officers, directors, equity members, employees, agents, contractors and subcontractors.

15.4 Survival. This Section 15 shall survive the termination of this Lease with respect to any damage, injury, death or claim occurring before such termination, irrespective of when such claim is presented.

16.

ASSIGNMENT AND SUBLEASING.

16.1

General Provisions.

a. Tenant shall not sell, assign, transfer, mortgage or pledge the Premises, or any part thereof, nor permit occupancy of the Premises by any party other than Tenant without Landlord’s prior written consent, which Landlord may withhold in its sole discretion. Consent to one or more assignments shall not destroy or waive this provision. For purposes of this Lease, any merger, consolidation, or sale or transfer of a controlling interest in Tenant (being 51% or more, whether accomplished in a single transaction or in a series of transactions) or a sale of substantially all of the assets of Tenant shall be deemed an assignment of this Lease. All of the foregoing events described in this Section shall be deemed to be a “Transfer.”

b. If Landlord’s consent is required, Tenant shall deliver to Landlord its request in writing along with notice as to (1) the identity, business and financial condition of the proposed assignee, (2) the terms and conditions of the proposed assignment, and (3) the nature of the use of the Premises proposed by such assignee or. Tenant shall deliver such further information as Landlord may request to make its decision.

c. If Landlord consents to any Transfer, Landlord shall be provided with a written agreement evidencing same which is acceptable in form and content to Landlord and by which the transferee assumes all obligations of Tenant hereunder. At Landlord’s option, upon any Transfer, (1) any amounts to be paid to Tenant in excess of Rent due hereunder shall be paid to Landlord without Landlord’s application of same to Rent, and (2) the transferee shall remit directly to Landlord all rental amounts due or any consideration paid to Tenant on account of such Transfer when and as due to be paid to Tenant. The foregoing shall apply to any Transfer, even if Landlord has not consented thereto, but application thereof by Landlord shall not be deemed to release Tenant of liability for failure to obtain Landlord’s consent or otherwise be deemed to prejudice Landlord’s rights hereunder.

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d. No Transfer shall relieve Tenant of any obligation under this Lease, and any purported Transfer undertaken without Landlord’s consent shall be void at Landlord’s option and constitute an Event of Default hereunder. Landlord’s consent to any Transfer shall not constitute a waiver of the necessity of such consent to any subsequent Transfer.

e. The prohibitions in this Lease against assignment by Tenant shall be construed to include assignments by operation of law or by voluntary assignment or for the benefit of creditors or which might otherwise be affected or accomplished by bankruptcy, receivership, attachment, execution or other judicial process or proceeding. If any such assignment shall be made or deemed made by Tenant, or if a voluntary of involuntary petition in bankruptcy or for reorganization, or for an arrangement shall be filed by or against Tenant, or if Tenant shall be adjudicated a bankrupt or insolvent, or if a receiver is appointed for Tenant or for all or a substantial part of its Premises, or if any such assignment or transfer operation or law shall occur, then and in any such event, Landlord shall have the option to immediately terminate this Lease by written notice to Tenant.

f. Tenant shall pay all of Landlord’s cost and expenses (including reasonable fees for legal counsel) in connection with any request for Landlord’s consent required hereby.

16.2 Subleasing. Tenant may not, without the prior written consent of Landlord, sublease the Premises or any part thereof, or permit the use of the Premises by any party other than Tenant. Landlord agrees that its consent to any request for subletting shall not be unreasonably withheld. Consent to one or more assignments or subleases shall not destroy or waive this provision. Subtenants approved by the Landlord shall become directly liable to Landlord for all obligations of Tenant hereunder without relieving Tenant’s liability under this Lease, which shall continue notwithstanding such subletting. Consent to one or more subleases shall not destroy or waive this provision.

17.

RESERVED.

18.

DEFAULT OF TENANT.

18.1 Events of Default. In addition to defaults or Events of Default specified in other sections of this Lease, the occurrence of any of the following shall be a default by Tenant, and each shall constitute an “Event of Default” hereunder without notice from Landlord unless expressly required herein:

a. Tenant shall fail to pay Base Rent within seven (7) days of its due date (regardless of whether or not any legal or formal demand has been made therefor);

b. Tenant shall fail to pay Additional Rent within five (5) days of its due date or shall fail to make any other payment when required pursuant to this Lease, except that Landlord shall allow Tenant to cure such default within fifteen (15) days after written notice of such default;

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c. Tenant shall violate or fail to perform any of the terms, conditions, covenants or agreements herein made by Tenant (other than those set forth in subsections 18.l (a) and (d)-(h) inclusive or where expressly declared to be an immediate default in other sections of this Lease) within ten (10) days after written notice thereof from Landlord;

d. Reserved;

e. Tenant shall be adjudicated a bankrupt or file a voluntary petition in any bankruptcy or insolvency proceeding, or if any involuntary petition in any bankruptcy or insolvency proceeding shall be filed against Tenant and not discharged by Tenant within sixty (60) days from the date of filing;

f. Tenant shall make or consent to an assignment for the benefit of creditors or a common law composition of creditors, without the prior written consent of Landlord;

g. A receiver or trustee shall be appointed for all or substantially all of Tenant’s assets; and/or

h. Tenant shall make a transfer in fraud of creditors.

18.2 Remedies. Upon the occurrence of any Event of Default, Landlord shall have the option to pursue any and all of the following rights and remedies without any notice or demand whatsoever:

a. Lease Termination. Landlord shall have the right to immediately terminate this Lease and all rights of Tenant hereunder, in which event Tenant shall immediately surrender the Premises to Landlord. If Tenant fails to do so, Landlord may, after twenty (20) days written notice, enter upon and take possession of the Premises and expel or remove Tenant and its effects without being liable to prosecution or any claim for damages therefor and Tenant shall indemnify Landlord for all costs and expenses incurred by Landlord in connection with such termination. Such Lease termination shall not be a bar to Landlord from pursuing the remedy of Rent acceleration pursuant to Section 18.2(b) below and Tenant agrees to waive any defense to Landlord pursuing such Rent acceleration if based on the Lease termination.

b. Rent Acceleration. Upon Lease termination, Landlord shall have the right to accelerate Rent in which event Tenant shall be liable for the total of: (1) any unpaid Rent which had accrued at the time of such termination, plus (2) Base Rent for the then entire unexpired Term of this Lease along with all amounts due as Additional Rent for the then entire unexpired Term of this Lease which shall be capable of precise determination at the time of Landlord’s election to recover accelerated Rent, plus (3) Landlord’s good faith estimate of all other amounts due as Additional Rent for the then entire unexpired Term of this Lease which shall not be capable of precise determination as aforesaid (and for such purposes no estimate of any such component of Additional Rent shall be less than the amount which would have been due if each such component continued at the highest monthly rate or amount in effect during the twelve (12) months immediately preceding the Event of Default). For purposes of such calculation the Term of this Lease shall be the Term originally stated in the Basic Lease Information along with any exercised renewals thereof, taken without regard to any early termination of the Term by virtue of an Event of Default. Tenant also shall pay any other amount necessary to compensate Landlord for all damages arising from Tenant’s failure to perform Tenant’s obligations under this Lease until and including time of termination and except as provided for under this Section. Rent which accrued through the date of the Event of Default, shall include interest thereon at the Interest Rate, and accelerated Rent thereafter due shall accrue interest at the Interest Rate until paid in full.

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Mitigating Rent.

(1) Upon termination, Landlord shall use commercially reasonable efforts to relet the Premises or any part thereof for such Rent and upon such terms as Landlord in good faith deems appropriate in its sole discretion under the circumstances (“Mitigating Rent”) with the right to make alterations and improvements to the Premises required by any new tenant as to place the Premises in a first-class rentable condition. If an amount equal to the full Rent which would have been paid by Tenant hereunder, plus the expenses incurred by Landlord in connection with such reletting, including without limitation, costs of cleaning, painting, repairing or refitting the Premises, advertising, broker fees, municipal fees, and legal fees for preparation and negotiation of the replacement lease (“Relet Charges”), shall not be realized by Landlord in connection with such reletting, Tenant shall remain liable for all damages sustained by Landlord under this Section, including without limitation, any deficiency between the Mitigating Rent and the Rent and Relet Charges.

(2) Should that portion of the amounts received by Landlord as the Mitigating Rent during any month be less than the Rent payable during that month by Tenant hereunder, then Tenant shall pay such deficiency to Landlord immediately upon Landlord’s demand therefor, and such amount shall accrue interest at the Interest Rate from the date of demand until paid in full. Landlord shall have the right to bring suit for collection of Rent on a monthly basis without prejudice to Landlord’s right to enforce collection of Rent for any subsequent month or, at Landlord’s option, may be deferred until the expiration of the Term of this Lease, in which event Tenant hereby agrees that the cause of action shall not be deemed to have accrued until the date of the scheduled expiration of the Term of this Lease.

d. Dispossession. The provisions of this Section 18 shall automatically operate as a notice to quit (any notice to quit being hereby expressly waived), and Landlord may proceed to recover possession under and by virtue of the laws of the jurisdiction where the Premises are located by legal process after twenty (20) days written notice.

CONFESSION OF JUDGMENT FOR POSSESSION.

(1) UPON THE EXPIRATION OF THE TERM OF THIS LEASE OR SURRENDER HEREOF AS PROVIDED IN THIS LEASE, IT SHALL BE LAWFUL FOR ANY ATTORNEY TO APPEAR AS ATTORNEY FOR TENANT AS WELL AS FOR ALL PERSONS CLAIMING BY, THROUGH OR UNDER TENANT AND TO SIGN AN AGREEMENT FOR ENTERING IN ANY COMPETENT COURT AN AMICABLE ACTION IN EJECTMENT AGAINST TENANT AND ALL PERSONS CLAIMING BY, THROUGH OR UNDER TENANT AND THEREIN CONFESS JUDGMENT FOR THE RECOVERY BY LANDLORD OF POSSESSION OF THE PREMISES, FOR WHICH THIS LEASE SHALL BE ITS SUFFICIENT WARRANT, WHEREUPON, IF LANDLORD SO DESIRES, A WRIT OF POSSESSION OR OTHER APPROPRIATE WRIT UNDER THE RULES OF CIVIL PROCEDURE THEN IN EFFECT MAY ISSUE FORTHWITH, WITHOUT ANY PRIOR WRIT OR PROCEEDINGS; PROVIDED, HOWEVER, IF FOR ANY REASON AFTER SUCH ACTION SHALL HAVE BEEN COMMENCED, THE SAME SHALL BE DETERMINED AND THE POSSESSION OF THE PREMISES REMAIN IN OR BE RESTORED TO TENANT, LANDLORD SHALL HAVE THE RIGHT AND UPON ANY SUBSEQUENT DEFAULT OR DEFAULTS, OR UPON THE TERMINATION OF THIS LEASE UNDER ANY OF THE TERMS OF THIS LEASE TO BRING ONE OR MORE FURTHER AMICABLE ACTION OR ACTIONS AS HEREINBEFORE SET FORTH TO RECOVER POSSESSION OF THE PREMISES AND CONFESS JUDGMENT FOR THE RECOVERY OF POSSESSION OF THE PREMISES AS HEREINABOVE PROVIDED.

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(2) IN ANY AMICABLE ACTION OF EJECTMENT LANDLORD SHALL FIRST CAUSE TO BE FILED IN SUCH ACTION AN AFFIDAVIT MADE BY IT OR SOMEONE ACTING FOR IT, SETTING FORTH THE FACTS NECESSARY TO AUTHORIZE THE ENTRY OF JUDGMENT AND IF A TRUE COPY OF THIS LEASE BE FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL AS A WARRANT OF ATTORNEY, ANY RULE OF COURT, CUSTOM OR PRACTICE TO THE CONTRARY NOTWITHSTANDING. IF PROCEEDINGS SHALL BE COMMENCED BY LANDLORD TO RECOVER POSSESSION UNDER THE ACTS OF ASSEMBLY AND RULES OF CIVIL PROCEDURE, EITHER AT THE END OF THE TERM OR EARLIER TERMINATION OF THIS LEASE, OR FOR NONPAYMENT OF RENT OR ANY OTHER REASON, TENANT WAIVES THE RIGHT TO ANY NOTICE TO REMOVE WHICH MAY BE REQUIRED BY THE LANDLORD AND TENANT ACT OF 1951, AS AMENDED (OR ANY SIMILAR OR SUCCESSOR LAW), AND AGREES THAT TWENTY (20) DAYS NOTICE SHALL BE SUFFICIENT WHERE A LONGER PERIOD MAY BE STATUTORILY SPECIFIED.

f. Waiver of Redemption Rights. Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future law in the event this Lease is terminated or Tenant is evicted or dispossessed following an Event of Default.

g. Removal of Contents by Landlord. Upon lawful termination of the Lease, Landlord shall have the right to re-enter the Premises and remove all persons and goods from the Premises. All goods removed by Landlord may be stored in a public warehouse or elsewhere at the cost of and for the amount of Tenant; provided no goods shall be removed until 20 days after notice of Landlord’s intention to do so is given to Tenant and Tenant fails to remove such goods within said 20 days.

h. Sale of Tenant’s Property. Landlord may sell, at public or private sale, all or any part of Tenant’s goods recovered by Landlord in accordance with the foregoing Section with or without having such goods at sale. At any such sale, Landlord or its assigns may purchase unless otherwise prohibited by law. The proceeds from any such disposition, less any and all expenses (including legal fees) connected with the taking of possession, holding and selling of Tenant’s goods, first shall be paid from the proceeds realized on such sale and the balance applied to amounts due to Landlord hereunder. Any surplus shall be paid to Tenant or as otherwise required by law, and Tenant shall remain responsible for any deficiencies. In connection herewith, Landlord shall have any and all of the remedies afforded to secured parties under the provisions of the Uniform Commercial Code, as codified in state where the goods are located.

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18.3 No Waiver. No waiver by Landlord of any breach of any covenant, condition or agreement herein contained shall operate as a waiver of such covenant, condition, or agreement, or of any subsequent breach thereof. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly installment of Rent herein stipulated shall be deemed to be other than on account of Rent, nor shall any endorsement or statement on any check or letter accompanying a check for payment of Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or to pursue any other remedy provided in this Lease. Payment received by Landlord when Tenant is in arrears shall be applied as Landlord determined. No re-entry by Landlord and no acceptance by Landlord of keys from Tenant shall be considered an acceptance of a surrender of this Lease.

18.4 Right of Landlord to Cure Tenant’s Default. Whenever Tenant defaults in the making of any payment required hereunder or in the doing of any act herein required to be made or done by Tenant, then Landlord, with five (5) days prior notice to Tenant, may make such payment or do such act on Tenant’s behalf but shall not be required to do so. All costs incurred by Landlord to satisfy Tenant’s obligations, including without limitation payment of any penalty or fine which may be imposed as a result of Tenant’s failure or violation, shall be paid by Tenant as Additional Rent within ten (10) business days of Landlord’s demand for reimbursement (unless otherwise expressly provided herein), after which time interest shall be applied at the Interest Rate. The making of such payment or the taking of such action by Landlord shall not operate to cure or waive such default by Tenant nor prevent Landlord from exercising any other remedy available to Landlord.

18.5 Collection Expenses. If Tenant is in Default under this Lease and if Landlord consults an attorney or collection agency for the collection of any sums due from Tenant or otherwise in connection with Tenant’s performance hereunder, Tenant, whether or not proceedings are instituted, shall reimburse Landlord for the reasonable fees for legal counsel and court costs, if any, incurred by Landlord within ten (10) business days of Landlord’s demand for reimbursement (unless otherwise expressly provided herein, after which time interest shall be applied at the Interest Rate. If Landlord is in Default under the Lease and if Tenant consults an attorney in connection with Landlord’s performance hereunder, Landlord shall reimburse Tenant for reasonable fees for legal counsel.

19. SURRENDER AT LEASE TERMINATION. Upon the scheduled expiration or earlier termination of this Lease, Tenant shall promptly surrender to Landlord the Premises, together with all building apparatus, machinery, replacements to mechanical and other systems serving the Premises, Tenant’s Work, including any fixtures installed by Tenant other than Tenant’s trade fixtures, furniture, shelving and like items except for items which Landlord, in writing, may have permitted or required Tenant to remove at the termination of this Lease. Tenant shall return the Premises in substantially the same condition as the Premises were delivered to Tenant at the commencement of this Lease, reasonable wear and tear accepted and subject to Tenants Alterations and other permitted work.

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20. HOLDING OVER. If Tenant shall not immediately surrender the Premises on the scheduled expiration or earlier termination of this Lease, then, in addition to all remedies available to Landlord for Tenant’s default, Tenant, as a result of such holding over, shall become a tenant at will, at twice (2x) the monthly installment of Base Rent due for the last month of the Term of this Lease together with all Additional Rent due hereunder up to and including the time Tenant vacates the Premises, and otherwise upon the terms, conditions, covenants and agreements of this Lease, except for provisions which by their terms have expired. Tenant also shall be liable to Landlord for all damages which Landlord suffers because of any holding over by Tenant (whether with or without Landlord’s consent), and Tenant shall indemnify Landlord against all claims made by any other tenant or prospective tenant against Landlord resulting from delay in delivering possession of the Premises to such other tenant or prospective tenant arising from the holding over of the Premises by the Tenant.

21.

SUBORDINATION, NONDISTURBANCE AND ATTORNMENT.

21.1 Estoppel Certificate. Within ten (10) business days after Landlord’s request, Tenant shall provide an estoppel certificate in recordable form certifying (if such be the case) that this Lease is in full force and effect and that there are no defenses or offsets thereto, or stating those claimed by Tenant, along with such other information as Landlord reasonably may request. Tenant’s failure to deliver such statement within the time required shall be conclusive evidence of Tenant’s certification that this Lease is in full force and effect, that there are no defenses or offsets thereto, and of such other information as Landlord has reasonably requested.

21.2

Attornment. Tenant shall attorn to any mortgagee or purchaser of the Premises.

21.3 Subordination. Tenant’s rights hereunder are subordinate to the lien of any mortgage or mortgages, or to the lien resulting from any other method of financing or refinancing, or to any ground lease, now or hereafter in force against the land of which the Premises are a part, to all advances made upon the security thereof, and to all renewals, extensions or modifications thereof provided any such made hereafter contain terms of non-disturbance of this Lease. Regardless of the self-operating provision of this Section, if a prospective mortgagee or ground lessor requests Tenant to sign a subordination agreement, Tenant shall do so promptly so long as such subordination language contains nondisturbance language.

21.4 Rights of Mortgagee. If any act or omission of Landlord hereunder which would give Tenant the right to cancel or terminate this Lease, or to claim a total or partial eviction, Tenant shall not exercise such right (a) until it has given written notice of such act or omission to the holder if each mortgage and ground lease whose name and address shall have been furnished previously to Tenant in writing, and (b) until a reasonable period for remedying such act or omission shall have elapsed following the giving of such notice.

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22. SUBDIVISION AND EASEMENTS. Tenant’s use of the Premises shall be subject to all covenants, conditions, easements and restrictions now or hereafter affecting or encumbering the land on which same are located. Landlord reserves the right to (a) subdivide the land on which the Premises are located, (b) alter the boundaries of the land on which the Premises are located, and (c) grant easements on the land on which the Premises are located and dedicate for public use portions thereof; provided, however, that none of the foregoing shall materially interfere with Tenant’s use of the Premises. Tenant hereby consents, and subordinates this Lease, to such subdivision, boundary revision, and/or grant or dedication of easements and agrees from time to time, at Landlord’s request, to execute, acknowledge and deliver to Landlord, in accordance with Landlord’s instructions, all reasonable documents or instruments necessary to effectuate Tenant’s consent thereto.

23. LIMITED ATTORNEY-IN-FACT. If Tenant shall fail to execute any such instruments or certificates to carry out the intent of Subsections 21.1, 21.2, 21.3, 21.4, or 22 within ten (10) business days of Landlord’s written request for Tenant to execute such instruments or certificates, then Tenant hereby irrevocably appoints Landlord as attorney-in-fact for Tenant with full power and authority to execute and, deliver in the name of Tenant any such instruments or certificates.

24. LANDLORD’S COVENANT OF QUIET ENJOYMENT. Landlord covenants that Tenant, and all those claiming through Tenant and permitted hereunder, shall have quiet and peaceable enjoyment of the Premises, and all those claiming through Tenant and permitted hereunder, are not in default of this Lease.

25. LANDLORD RIGHT OF ENTRY AND TENANT’S RENEWAL. Tenant shall give Landlord six (6) months written notice prior to expiration of the Term or of any extension of any options to extend this Lease. Landlord shall have the right, during the last six (6) months of the Term, to place on any portion of the Premises signs or billboards indicating that the Premises are “For Sale” or “For Rent,” but such signs shall be of such size and so placed as not to materially interfere with Tenant’s occupancy. At all times during this Lease, Landlord, and Landlord’s agents, upon reasonable notice to Tenant, shall be admitted to the Premises at reasonable hours of the day to view the Premises, including without limitation, the right to show the Premises to prospective purchasers, mortgagees, tenants or contractors.

26. RULES AND REGULATIONS. At all times during the Term, Tenant shall comply with, and cause its employees, contractors, invitees and licensees to comply with, all rules and regulations established by Landlord, together with such amendments and supplements thereto as Landlord may from time to time reasonably adopt.

27. TENANT ANNUAL REPORTS. Landlord will be required to report to certain government agencies and funding sources the total employment at the Property, Homewood residents employed and gross sales. On an annually basis, Tenant agrees to provide Landlord upon 10 days written notice a count of total employees working at the Premises (designating full time and part time employment), total number of Homewood residents employed and gross sales.

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28. CORPORATE/PARTNERSHIP AUTHORITY. Tenant represents that the person who executed this Lease on Tenant’s behalf has been duly authorized to enter into this Lease and that the execution and consummation of this Lease by Tenant does not and shall not violate any provision of any by-laws, certificate of incorporation, partnership agreement, or other agreement, order, judgment, governmental regulation or any other obligations to which Tenant is a party or is subject.

29. BROKER. Landlord shall pay all real estate broker and agents commissions in connection with this transaction.

30. CHANGE IN OWNERSHIP. If the Premises is sold, or in the event of any change of legal title or equitable ownership thereof, all obligations and rights of Landlord hereunder shall be transferred to such purchaser or assignee, and Landlord’s obligations shall terminate and Landlord shall be released and relieved from all liability and responsibility to Tenant. Tenant shall look solely to such purchaser or assignee for the performance of said obligations or for the enforcement thereof. Each purchaser of assignee shall in turn have like privileges of sale, assignment and release.

31. SUCCESSORS AND ASSIGNS. This Lease shall inure to the benefit of and shall bind the parties hereto and their respective heirs, successors and permitted assigns to the extent that such rights hereunder may succeed and be assigned according to the terms hereof.

32. NOTICE. All notices, demands and communications required or permitted by this Lease shall be effective only if in writing (unless otherwise provided herein) and shall be sent by United States certified mail, return receipt requested or overnight mail deposited with a nationally recognized carrier with a receipt therefore, postage prepaid in each case and using the address for such recipient designated in accordance herewith. Notices shall be addressed to the other party at the addresses set forth in the Basic Lease Information, or at such other address as either party may have furnished to the other in accordance with this Section. Any notice so provided shall be deemed to have been delivered upon the earlier of (a) actual receipt, or (b) two (2) business days after mailing by certified mail, return receipt requested, or (c) one (1) business day after depositing with a nationally recognized carrier.

33. SEVERABILITY. If any term, covenant, condition of provision of this Lease, or the application thereof to any person or circumstance, shall to any extent be held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, covenants, conditions or provisions of this Lease, or the application thereof to any person or circumstance, shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

34. ENTIRE AGREEMENT; GOVERNING LAW AND CONSENT TO JURISDICTION. This Lease is the entire agreement of Landlord and Tenant and shall be governed, construed and enforced in accordance with substantive laws, and not the laws of conflict, of the Commonwealth of Pennsylvania. Tenant and Landlord consent to the exclusive jurisdiction and venue of the federal and state courts located in Allegheny County, Pennsylvania in any action on, relating to or mentioning of this Lease. This Lease shall not be amended or supplemented unless by written agreement signed by Landlord and Tenant.

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35. CONSOLIDATION AND COUNTERPARTS. This Part II along with the accompanying Part I constitute one agreement and may be signed in any number of counterparts, each of which shall be an original and all of which together constitute one agreement binding on the parties hereto.

36. WAIVER OF TRIAL BY JURY. LANDLORD AND TENANT EACH WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES AGAINST THE OTHER ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE AND OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, and intending to be legally bound, Landlord and Tenant have caused this Lease to be signed by their duly authorized officers or agents under seal, the day and year first above written.

	LANDLORD

	Bridgeway Development Corporation

Jan 3, 2024	By:	/s/ Thomas J. Bogdewic
Date	Name:	Thomas J. Bogdewic
	Title:	President

	TENANT

	Lipella Pharmaceuticals Inc.

Jan 3, 2024	By:	/s/ Jonathan Kaufman
Date	Name:	Jonathan Kaufman

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Exhibit 31.1

CERTIFICATION

OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Jonathan Kaufman, as the principal executive officer of the registrant, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2024, of Lipella Pharmaceuticals Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2024	By:	/s/ Jonathan Kaufman
		Jonathan Kaufman
		Chief Executive Officer
		(Duly Authorized Officer and Principal Executive Officer)

Exhibit 31.2

CERTIFICATION

OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Douglas Johnston, as the principal financial officer of the registrant, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2024, of Lipella Pharmaceuticals Inc.;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2024	By:	/s/ Douglas Johnston
		Douglas Johnston
		Chief Financial Officer
		(Duly Authorized Officer and Principal Financial and Accounting Officer)

Exhibit 32.1

CERTIFICATION

OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Lipella Pharmaceuticals Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jonathan Kaufman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

	(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 9, 2024	By:	/s/ Jonathan Kaufman
		Jonathan Kaufman
		Chief Executive Officer
		(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION

OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Lipella Pharmaceuticals Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas Johnston, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

	(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 9, 2024	By:	/s/ Douglas Johnston
		Douglas Johnston
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Cover - shares	3 Months Ended
Cover - shares	Mar. 31, 2024	May 08, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2024
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	001-41575
Entity Registrant Name	Lipella Pharmaceuticals Inc.
Entity Central Index Key	0001347242
Entity Tax Identification Number	20-2388040
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	7800 Susquehanna St.
Entity Address, Address Line Two	Suite 505
Entity Address, City or Town	Pittsburgh
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	15208
City Area Code	(412)
Local Phone Number	901-0315
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	LIPO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		7,605,636

CONDENSED BALANCE SHEETS (Unaudited) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Current Assets
Cash and cash equivalents	$ 2,105,299	$ 3,293,738
Grants receivable	68,934	32,286
Prepaid expenses	836,857	103,256
Total Current Assets	3,011,090	3,429,280
Property and Equipment
Furniture, fixtures and equipment	140,294	140,294
Furniture, fixtures and equipment (Accumulated Depreciation)	(128,265)	(127,544)
Furniture and fixtures, net	12,029	12,750
Other Assets
Operating lease right of use asset	114,038	135,144
Total Assets	3,137,157	3,577,174
Current liabilities
Accounts payable	293,835	138,016
Accrued expenses	84,929	77,280
Operating lease liability	91,705	89,223
Payroll liability	81,412	80,836
Total Current Liabilities	551,881	385,355
Operating lease liability, net of current portion	23,997	47,371
Total Liabilities	575,878	432,726
Stockholders’ equity:
Convertible preferred stock, $0.0001 par value; 20,000,000 shares authorized; -0- shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively
Common stock, $0.0001 par value; 200,000,000 shares authorized, 7,039,846 and 6,053,956 shares issued and outstanding at March 31, 2024 and at December 31, 2023, respectively	704	605
Additional paid-in capital	14,076,227	13,467,686
Accumulated deficit	(11,515,652)	(10,323,843)
Total stockholders’ equity	2,561,279	3,144,448
Total liabilities and stockholders’ equity	$ 3,137,157	$ 3,577,174

CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares, outstanding	7,039,846	6,053,956
Common stock, shares, issued	7,039,846	6,053,956

CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Total revenues	$ 145,880	$ 118,048
Cost and expenses
Research and development	842,600	693,730
General and administrative	520,926	508,750
Total costs and expenses	1,363,526	1,202,480
Loss from operations	(1,217,646)	(1,084,432)
Other income (expense)
Interest income, net	25,837	22,001
Interest expense related party		(5,394)
Total other income (expense)	25,837	16,607
Loss before income taxes	(1,191,809)	(1,067,825)
Provision for income taxes
Net Loss	$ (1,191,809)	$ (1,067,825)
Loss per common share
Basic	$ (0.16)	$ (0.19)
Dilutive	$ (0.16)	$ (0.19)
Weighted-average of common shares outstanding:
Basic	7,292,396	5,743,945
Dilutive	7,292,396	5,743,945
Grantrevenues [Member]
Total revenues	$ 145,880	$ 118,048

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2022	$ 574	$ 10,379,900	$ (5,704,878)	$ 4,675,596
Balance at beginning (in shares) at Dec. 31, 2022	5,743,945
Net loss			(1,067,825)	(1,067,825)
Share based compensation		208,639		208,639
Ending balance, value at Mar. 31, 2023	$ 574	10,588,539	(6,772,703)	3,816,410
Balance at ending (in shares) at Mar. 31, 2023	5,743,945
Beginning balance, value at Dec. 31, 2023	$ 605	13,467,686	(10,323,843)	3,144,448
Balance at beginning (in shares) at Dec. 31, 2023	6,053,956
Net loss			(1,191,809)	(1,191,809)
Share based compensation		208,640		208,640
Warrants converted to Common Stock	$ 50	(50)
Warrants converted to Common Stock (in shares)	500,000
Issuance of Common Stock	$ 29	199,971		200,000
Issuance of Common Stock (in shares)	289,812
Shares issued for services	$ 20	199,980		200,000
Shares issued for services (in shares)	196,078
Ending balance, value at Mar. 31, 2024	$ 704	$ 14,076,227	$ (11,515,652)	$ 2,561,279
Balance at ending (in shares) at Mar. 31, 2024	7,039,846

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flow from operating activities:
Net loss	$ (1,191,809)	$ (1,067,825)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	72
Shares issued for services	200,000
Non-cash stock option expense	208,640	208,639
Interest expense related party net (non-cash)		5,394
Changes in operating assets and liabilities:
Operating right of use asset	214	(34)
Grants receivable	(36,648)	29,688
Prepaid expense	(733,601)	188,605
Accounts payable	155,819	(235,437)
Accrued expenses	7,649	(208,017)
Payroll liability	576	997
Net cash used in operating activities	(1,388,439)	(1,077,990)
Cash flow from investing activities:
Cash flow from financing activities:
Proceeds from issuance of common stock, net of issuance costs	200,000
Repayment of notes payable		(25,000)
Net cash (used in) provided by financing activities	200,000	(25,000)
Net decrease in cash, cash equivalents	(1,188,439)	(1,102,990)
Cash, and cash equivalents at beginning of period	3,293,738	5,121,743
Cash, and cash equivalents at end of period	2,105,299	4,018,753
Supplemental disclosure of cash flow information:
Interest paid	6,234
Income taxes paid
Issuance of common stock for forgiveness of related party note
Issuance of common stock options for consulting services

Description of Business and Basis of Presentation

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Description of Business and Basis of Presentation

Note 1. Description of Business and Basis of Presentation

Nature of Business

Basis of Presentation

Going Concern

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Going Concern

Note 2. Going Concern

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 3. Summary of Significant Accounting Policies

Use of Estimates

Adoption of New Accounting Pronouncements

During the three months ended March 31, 2024, no new accounting pronouncement was issued or became effective, that had or is expected to have, a material impact on our Financial Statements.

Concentration of Credit Risk

Earnings Per Share

At March 31, 2024 and 2023 the Common Stock equivalent shares were, as follows:


	March 31,
	2024		2023
Shares of Common Stock issuable under equity incentive plans outstanding		2,893,000		2,054,000
Shares of Common Stock issuable upon exercise of warrants		2,124,257		143,994
Shares of Common Stock issuable upon conversion of Series A Preferred Stock		—		—
Common Stock equivalent shares excluded from diluted net loss per share		5,017,257		2,197,994

Fair Value Measurements and Marketable Debt Securities

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements and Marketable Debt Securities

Note 4. Fair Value Measurements and Marketable Debt Securities

Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company held no marketable securities at March 31, 2024 and December 31, 2023. For cash equivalents at March 31, 2024 and December 31, 2023, the fair value input levels are summarized below:

March 31, 2024	Level 1		Level 2		Level 3		Total
Cash Equivalents (maturity less than 90 days)
Commercial Paper	$	—		—		—	$	—
U.S. Government		—		—		—		—
Money market funds		1,975,063		—		—		1,975,063
Total Cash equivalents		1,975,063						1,975,063

Marketable Securities		—		—		—		—
Total Cash Equivalents and Marketable Securities	$	1,975,063	$	—	$	—	$	1,975,063

December 31, 2023	Level 1		Level 2		Level 3		Total
Cash Equivalents (maturity less than 90 days)
Commercial Paper	$	—		—		—	$	—
U.S. Government		—		—		—		—
Money market funds		3,052,648		—		—		3,052,648
Total Cash equivalents		3,052,648						3,052,648

Marketable Securities		—		—		—		—
Total Cash Equivalents and Marketable Securities	$	3,052,648	$	—	$	—	$	3,052,648

Prepaid Expenses

3 Months Ended

Mar. 31, 2024

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid Expenses

Note 5. Prepaid Expenses

Accrued Expenses

3 Months Ended

Mar. 31, 2024

Payables and Accruals [Abstract]

Accrued Expenses

Note 6. Accrued Expenses

Notes Payable – Related Party

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Notes Payable – Related Party

Note 7. Notes Payable – Related Party

There were no notes payable outstanding at March 31, 2024 or December 31, 2023.

Letter of Credit

3 Months Ended

Mar. 31, 2024

Letter Of Credit

Letter of Credit

Note 8. Letter of Credit

Stock Options

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Stock Options

Note 9. Stock Options

The Company recognized $208,640 of compensation costs for the three months ended March 31, 2024 and $208,639 for the three months ended March 31, 2023 related to the vesting of stock options.

The following is an analysis of options to purchase shares of Common Stock issued and outstanding as of March 31, 2024 and December 31, 2023:

	*Shares*			*Weighted* *Average* *Exercise* *Price Per* *Share ($)*		*Weighted* *Average* *Remaining* *Contractual* *Term* *(in Years)*		*Aggregate* *intrinsic* *value ($)*
Outstanding as of December 31, 2022		2,054,000			2.84		5.51		605,687
Granted		424,000			2.19		9.96
Expired		—
Cancelled		(25,000	)		2.19
Exercised		—
Outstanding as of December 31, 2023		2,453,000			2.73		5.19	$	—
Granted		440,000			0.77		9.96
Expired		—
Cancelled		—
Exercised		—
Outstanding as of March 31, 2024		2,893,000			2.73		4.94	$	—
Vested as of March 31, 2024		2,346,333
Exercisable as of March 31, 2024		2,346,333
Exercisable as of December 31, 2023		2,272,333

	Number of Stock Options			Weighted- Average Fair Value Grant Date
Nonvested at December 31, 2022		434,667		$	2.82
Granted		—			2.84
Vested		(74,000	)		2.83
Expired		—			0.00
Nonvested at March 31, 2023		360,667		$	2.82

Nonvested at December 31, 2023		180,667		$	2.81
Granted		440,000			0.55
Vested		(74,000	)		1.13
Expired		—			—
Nonvested at March 31, 2024		546,667		$	0.66

There were no options granted in the three months ended March 31, 2023. In the three months ended March 31, 2024, the Company granted options as described below.

Three months ended March 31, 2024	2024			2023
Weighted-average fair value of options granted	$	0.55			—
Expected volatility		86.17	%		—	%
Expected life (in years)		5.17			—
Risk-free interest rate (range)		4.33	%		—	%
Expected dividend yield	$	—			—

Preferred Stock

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

Preferred Stock

Note 10. Preferred Stock

Common Stock

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

Common Stock

Note 11. Common Stock

On September 15, 2023, the Company issued 60,000 shares of Common Stock in exchange for services rendered by a third party.

Warrants

3 Months Ended

Mar. 31, 2024

Warrants

Warrants

Note 12. Warrants

Commitment and Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitment and Contingencies

Note 13. Commitment and Contingencies

Operating Leases

Year ending
2024 (nine months remaining)	$	72,316
2025	$	48,519
Total minimum lease payments	$	120,835
Less: amount representing interest	$	(5,133	)
Present value of minimum lease payments	$	115,702

Contract Commitments

Income Taxes

3 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note 14. Income Taxes


Statutory federal income tax rate	21.00	%
State taxes, net of federal benefit	7.11	%
Change in valuation allowance	-28.11	%
Effective tax rate	0.00	%

The Company’s 2019 through 2023 tax years remain subject to examination by the Internal Revenue Service for federal tax purposes and the Commonwealth of Pennsylvania for state tax purposes.

Subsequent Events

3 Months Ended

Mar. 31, 2024

Subsequent Events

Subsequent Events

Note 15. Subsequent Events

Subsequent events have been evaluated through the date on which the unaudited condensed financial statements were issued.

On April 10, 2024, the Company eliminated the Series A Preferred Stock, of which there were no shares outstanding.

On May 3, 2024, the Company issued 565,790 shares of Common Stock in conversion of the same number of pre-funded warrants.

Notice of Failure to Satisfy Nasdaq Minimum Bid Price Requirement

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

Adoption of New Accounting Pronouncements

Adoption of New Accounting Pronouncements

During the three months ended March 31, 2024, no new accounting pronouncement was issued or became effective, that had or is expected to have, a material impact on our Financial Statements.

Concentration of Credit Risk

Concentration of Credit Risk

Earnings Per Share

Earnings Per Share

At March 31, 2024 and 2023 the Common Stock equivalent shares were, as follows:


	March 31,
	2024		2023
Shares of Common Stock issuable under equity incentive plans outstanding		2,893,000		2,054,000
Shares of Common Stock issuable upon exercise of warrants		2,124,257		143,994
Shares of Common Stock issuable upon conversion of Series A Preferred Stock		—		—
Common Stock equivalent shares excluded from diluted net loss per share		5,017,257		2,197,994

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

At March 31, 2024 and 2023 the Common Stock equivalent shares were, as follows:


	March 31,
	2024		2023
Shares of Common Stock issuable under equity incentive plans outstanding		2,893,000		2,054,000
Shares of Common Stock issuable upon exercise of warrants		2,124,257		143,994
Shares of Common Stock issuable upon conversion of Series A Preferred Stock		—		—
Common Stock equivalent shares excluded from diluted net loss per share		5,017,257		2,197,994

Fair Value Measurements and Marketable Debt Securities (Tables)

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

For cash equivalents at March 31, 2024 and December 31, 2023, the fair value input levels are summarized below:

The Company held no marketable securities at March 31, 2024 and December 31, 2023. For cash equivalents at March 31, 2024 and December 31, 2023, the fair value input levels are summarized below:

March 31, 2024	Level 1		Level 2		Level 3		Total
Cash Equivalents (maturity less than 90 days)
Commercial Paper	$	—		—		—	$	—
U.S. Government		—		—		—		—
Money market funds		1,975,063		—		—		1,975,063
Total Cash equivalents		1,975,063						1,975,063

Marketable Securities		—		—		—		—
Total Cash Equivalents and Marketable Securities	$	1,975,063	$	—	$	—	$	1,975,063

December 31, 2023	Level 1		Level 2		Level 3		Total
Cash Equivalents (maturity less than 90 days)
Commercial Paper	$	—		—		—	$	—
U.S. Government		—		—		—		—
Money market funds		3,052,648		—		—		3,052,648
Total Cash equivalents		3,052,648						3,052,648

Marketable Securities		—		—		—		—
Total Cash Equivalents and Marketable Securities	$	3,052,648	$	—	$	—	$	3,052,648

Stock Options (Tables)

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

The following is an analysis of options to purchase shares of Common Stock issued and outstanding as of March 31, 2024 and December 31, 2023:

	*Shares*			*Weighted* *Average* *Exercise* *Price Per* *Share ($)*		*Weighted* *Average* *Remaining* *Contractual* *Term* *(in Years)*		*Aggregate* *intrinsic* *value ($)*
Outstanding as of December 31, 2022		2,054,000			2.84		5.51		605,687
Granted		424,000			2.19		9.96
Expired		—
Cancelled		(25,000	)		2.19
Exercised		—
Outstanding as of December 31, 2023		2,453,000			2.73		5.19	$	—
Granted		440,000			0.77		9.96
Expired		—
Cancelled		—
Exercised		—
Outstanding as of March 31, 2024		2,893,000			2.73		4.94	$	—
Vested as of March 31, 2024		2,346,333
Exercisable as of March 31, 2024		2,346,333
Exercisable as of December 31, 2023		2,272,333

	Number of Stock Options			Weighted- Average Fair Value Grant Date
Nonvested at December 31, 2022		434,667		$	2.82
Granted		—			2.84
Vested		(74,000	)		2.83
Expired		—			0.00
Nonvested at March 31, 2023		360,667		$	2.82

Nonvested at December 31, 2023		180,667		$	2.81
Granted		440,000			0.55
Vested		(74,000	)		1.13
Expired		—			—
Nonvested at March 31, 2024		546,667		$	0.66

Three months ended March 31, 2024	2024			2023
Weighted-average fair value of options granted	$	0.55			—
Expected volatility		86.17	%		—	%
Expected life (in years)		5.17			—
Risk-free interest rate (range)		4.33	%		—	%
Expected dividend yield	$	—			—

Commitment and Contingencies (Tables)

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Future minimum rent payments under the Leases as of March 31, 2024 are as follows:

Year ending
2024 (nine months remaining)	$	72,316
2025	$	48,519
Total minimum lease payments	$	120,835
Less: amount representing interest	$	(5,133	)
Present value of minimum lease payments	$	115,702

Income Taxes (Tables)

3 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Schedule of income tax provision attributable to loss before income tax benefit


Statutory federal income tax rate	21.00	%
State taxes, net of federal benefit	7.11	%
Change in valuation allowance	-28.11	%
Effective tax rate	0.00	%

Going Concern (Details Narrative) - USD ($)	3 Months Ended
Going Concern (Details Narrative) - USD ($)	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net loss	$ (1,191,809)	$ (1,067,825)
Accumulated deficit	(11,515,652)		$ (10,323,843)
Cash and cash equivalents	2,105,299		$ 3,293,738
Working capital deficit	$ 2,459,209

At March 31, 2024 and 2023 the Common Stock equivalent shares were, as follows: (Details) - shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Accounting Policies [Abstract]
Shares of Common Stock issuable under equity incentive plans outstanding	2,893,000	2,054,000
Shares of Common Stock issuable upon exercise of warrants	2,124,257	143,994
Shares of Common Stock issuable upon conversion of Series A Preferred Stock
Common Stock equivalent shares excluded from diluted net loss per share	5,017,257	2,197,994

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Accounting Policies [Abstract]
Revenues	$ 145,880	$ 118,048

For cash equivalents at March 31, 2024 and December 31, 2023, the fair value input levels are summarized below: (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 1,975,063	$ 3,052,648
Marketable Securities
Total cash equivalents and marketable securities	1,975,063	3,052,648
Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents
US Government Corporations and Agencies Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents
Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	1,975,063	3,052,648
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	1,975,063	3,052,648
Marketable Securities
Total cash equivalents and marketable securities	1,975,063	3,052,648
Fair Value, Inputs, Level 1 [Member] \| Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents
Fair Value, Inputs, Level 1 [Member] \| US Government Corporations and Agencies Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents
Fair Value, Inputs, Level 1 [Member] \| Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	1,975,063	3,052,648
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable Securities
Total cash equivalents and marketable securities
Fair Value, Inputs, Level 2 [Member] \| Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents
Fair Value, Inputs, Level 2 [Member] \| US Government Corporations and Agencies Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents
Fair Value, Inputs, Level 2 [Member] \| Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable Securities
Total cash equivalents and marketable securities
Fair Value, Inputs, Level 3 [Member] \| Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents
Fair Value, Inputs, Level 3 [Member] \| US Government Corporations and Agencies Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents
Fair Value, Inputs, Level 3 [Member] \| Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents

Prepaid Expenses (Details Narrative) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid insurance	$ 85,891	$ 88,554
Prepaid costs	836,857	103,256
Prepaid costs	372,208
Other prepaid expenses	$ 266,210
Prepaid expenses		$ 14,702

Accrued Expenses (Details Narrative) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Accrued expenses	$ 84,929	$ 77,280
Clinical expenses	19,575	19,575
Professional services expenses	$ 65,354	5,655
Franchise tax expense		$ 52,050

Letter of Credit (Details Narrative) - Letter of Credit [Member] - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Variable Interest Entity [Line Items]
Aggregate available borrowing	$ 50,000
Prime rate	3.10%
Oustanding amount	$ 0	$ 0

The following is an analysis of options to purchase shares of Common Stock issued and outstanding as of March 31, 2024 and December 31, 2023: (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]
Outstanding at beginning	2,453,000	2,054,000
Outstanding at beginning	$ 2.73	$ 2.84
Outstanding at beginning (in years)	5 years 2 months 8 days	5 years 6 months 3 days
Outstanding at beginning		$ 605,687
Granted	440,000	424,000
Granted	$ 0.77	$ 2.19
Granted (in years)	9 years 11 months 15 days	9 years 11 months 15 days
Expired
Cancelled		(25,000)
Cancelled		$ 2.19
Exercised
Outstanding at ending	2,893,000	2,453,000
Outstanding at ending	$ 2.73	$ 2.73
Outstanding at ending (in years)	4 years 11 months 8 days
Outstanding at ending
Options vested	2,346,333
Options exercisable	2,346,333	2,272,333

A summary of status of the Company’s non-vested stock options (exercisable for shares of Common Stock on a one-to-one basis) as of, and changes during, the three months ended March 31, 2024 and 2023 is presented below: (Details) - $ / shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Nonvested at beginning	180,667	434,667
Nonvested at beginning	$ 2.81	$ 2.82
Granted	440,000
Granted	$ 0.55	$ 2.84
Vested	(74,000)	(74,000)
Vested	$ 1.13	$ 2.83
Expired
Expired		$ 0.00
Nonvested at ending	546,667	360,667
Nonvested at ending	$ 0.66	$ 2.82

The weighted-average fair value of stock options on the date of grant and the assumptions used to estimate the fair value of stock options granted during the three months ended March 31, 2024 using the Black-Scholes option-pricing model are as follows: (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Weighted-average exercise price of options granted	$ 0.55
Expected volatility	86.17%
Expected life (in years)	5 years 2 months 1 day
Risk-free interest rate (range)	4.33%
Expected dividend yield

Stock Options (Details Narrative) - USD ($)		3 Months Ended		12 Months Ended
Stock Options (Details Narrative) - USD ($)	Mar. 15, 2024	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock shares issued		7,039,846		6,053,956
Common stock, shares outstanding		7,039,846		6,053,956
Expected term (in years)		5 years 2 months 1 day
Weighted average remaining contractual life		5 years 2 months 8 days		5 years 6 months 3 days
Strike price		$ 0.77		$ 2.19
Stock Option Plans [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock shares issued	440,000
Expected term (in years)		10 years
Unrecognized compensation		$ 540,759
Weighted average remaining contractual life		1 year
Compensation cost		$ 208,640	$ 208,639
Strike price	$ 0.77
Common Class A [Member] \| Stock Option Plans [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock shares issued		3,078,000
Common Class A [Member] \| Stock Option Plans 2008 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock, shares outstanding		1,078,000
Common Class A [Member] \| Stock Option Plans 2020 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock shares issued		2,400,000

Preferred Stock (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended		23 Months Ended	58 Months Ended
Preferred Stock (Details Narrative) - USD ($)	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023	Dec. 31, 2022	Apr. 30, 2008	Jun. 30, 2013
Class of Stock [Line Items]
Preferred Stock, Shares Issued	0		0
Preferred stock, par value (in dollars per share)	$ 0.0001		$ 0.0001
Proceeds from issuance of common stock	$ 200,000				$ 351,500	$ 833,188
Shares converted					789,634
Conversion discounts					$ 122,280
Preferred stock, shares outstanding	0		0
Description of shaes conversion				Series A Preferred Stock were converted to Common Stock on a 1:1 basis. After giving effect to the Stock Split, this conversion resulted in 636,979 shares of Common Stock.
Warrant [Member]
Class of Stock [Line Items]
Face value of the debt instruments	$ 351,500
Common Stock [Member]
Class of Stock [Line Items]
Shares converted			60,000	636,979
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred Stock, Shares Issued						1,592,447
Preferred stock, par value (in dollars per share)						$ 0.60
Preferred stock, shares outstanding				1,592,447
Series A Preferred Stock [Member] \| Minimum [Member]
Class of Stock [Line Items]
Preferred stock, par value (in dollars per share)						0.0768
Series A Preferred Stock [Member] \| Maximum [Member]
Class of Stock [Line Items]
Preferred stock, par value (in dollars per share)						$ 0.60

Common Stock (Details Narrative) - USD ($)								3 Months Ended	12 Months Ended		23 Months Ended
Common Stock (Details Narrative) - USD ($)	Mar. 13, 2024	Mar. 04, 2024	Feb. 02, 2024	Nov. 28, 2023	Sep. 15, 2023	Dec. 22, 2022	Dec. 09, 2022	Mar. 31, 2024	Dec. 31, 2023	Dec. 31, 2022	Apr. 30, 2008
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock, shares authorized								200,000,000	200,000,000
Common stock, shares outstanding								7,039,846	6,053,956
Common stock, shares issued								7,039,846	6,053,956
Issued common stock in exchange for services											789,634
Purchase Agreement [Member] \| Board of Directors Chairman [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Description of stock agreements	the Company entered into Affiliate Stock Purchase Agreements with each of Jonathan H. Kaufman, the Company's Chief Executive Officer and Chairman of its board of directors, and Michael B. Chancellor, the Company's Chief Medical Officer and a member of its board of directors, pursuant to which each of Drs. Kaufman and Chancellor purchased $100,000 of shares of common stock of the Company, in cash from the Company at $0.6901 per share, based on the official closing price of The Nasdaq Stock Market LLC for the Common Stock on March 13, 2024, resulting in the issuance of 144,906 shares of Common Stock to each of Drs. Kaufman and Chancellor.
IPO [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Proceeds from initial public offering						$ 5,000,000
Underwriting fees						630,000
Offering expense						$ 1,160,000
Common Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock, shares authorized	144,906							200,000,000
Description of stock split							at a 2.5 for 1 ratio
Common stock, shares outstanding								7,039,846	6,053,956
Accrued interest - related party										$ 138,810
Shares issued, price per share	$ 0.6901
Issued common stock in exchange for services			196,078		60,000			196,078
Shares of common stock for the execution		500,000		250,000
Issued common stock in exchange for services									60,000	636,979
Purchase shares of common stock	100,000
Common Stock [Member] \| IPO [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock, shares issued						1,217,391
Shares issued, price per share						$ 5.75
Common Stock One [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Common stock, shares issued										22,950

Warrants (Details Narrative) - USD ($) $ / shares in Units, $ in Millions				3 Months Ended
	Mar. 04, 2024	Nov. 28, 2023	Oct. 23, 2023	Mar. 31, 2024
Proceeds from issuance of private placement				$ 2
Warrant other descripion				The Warrants and the Pre-Funded Warrants are immediately exercisable for three years from issuance and are subject to 4.99% and 9.99% beneficial ownership limitations (as applicable). The combined purchase price for one Pre-Funded Warrant and one accompanying Warrant was $1.519.
Warrant exercise period				P3Y
Common Stock [Member]
Number of warants converted	500,000	250,000
Common Stock [Member] \| Private Placement [Member]
Number of warants converted			1,315,790
Exercise price			$ 0.001
Warrant [Member]
Number of warants converted			1,315,790
Exercise price			$ 1.40

Future minimum rent payments under the Leases as of March 31, 2024 are as follows: (Details)	Mar. 31, 2024 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2024	$ 72,316
2025	48,519
Total minimum lease payments	120,835
Less: amount representing interest	(5,133)
Present value of minimum lease payments	$ 115,702

Commitment and Contingencies (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Loss Contingencies [Line Items]
Operating lease ROU assets	$ 114,038		$ 135,144
Operating lease liability current	91,705		89,223
Operating lease liability noncurrent	23,997		$ 47,371
Lease expense	24,438	$ 16,368
Lease liabilities	$ 23,797	$ 16,402
Minimum [Member]
Loss Contingencies [Line Items]
Discoun rates on right of use leases	6.25%
Maximum [Member]
Loss Contingencies [Line Items]
Discoun rates on right of use leases	7.25%

Schedule of income tax provision attributable to loss before income tax benefit (Details)	3 Months Ended
	Mar. 31, 2024
Income Tax Disclosure [Abstract]
Statutory federal income tax rate	21.00%
State taxes, net of federal benefit	7.11%
Change in valuation allowance	(28.11%)
Effective tax rate	0.00%

Income Taxes (Details Narrative) - USD ($)	3 Months Ended
Income Taxes (Details Narrative) - USD ($)	Mar. 31, 2024	Mar. 31, 2023
Income Tax Disclosure [Abstract]
Provision for income taxes
Effective income tax rate	0.00%	0.00%
Statutory rate	21.00%

Subsequent Events (Details Narrative)	Oct. 14, 2024 Number $ / shares	May 03, 2024 shares	Mar. 04, 2024 shares	Nov. 28, 2023 shares	Oct. 23, 2023 shares	Mar. 31, 2024 $ / shares	Dec. 31, 2023 $ / shares
Common stock, par value (in dollars per share) \| $ / shares						$ 0.0001	$ 0.0001
Common Stock [Member]
Conversion shares of common stock			500,000	250,000
Common Stock [Member] \| Private Placement [Member]
Conversion shares of common stock					1,315,790
Subsequent Event [Member] \| Private Placement [Member]
Description of subsequent event	Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has been given 180 calendar days, or until October 14, 2024, to regain compliance with the Minimum Bid Price Requirement. If at any time before October 14, 2024, the bid price of the Common Stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Nasdaq staff will provide written confirmation that the Company has regained compliance with the Minimum Bid Price Requirement and the matter will be closed.
Subsequent Event [Member] \| Common Stock [Member]
Conversion shares of common stock		565,790
Common stock, par value (in dollars per share) \| $ / shares	$ 1.00
Consecutive business days \| Number	10