Material Agreement (Form 8-K)

Offering of Series B Preferred Stock

As previously disclosed in the Current Reports on Form 8-K filed by Lipella Pharmaceuticals Inc. (the "Company") with the U.S. Securities and Exchange Commission (the "SEC") on December 30, 2024, January 6, 2025, March 3, 2025 and March 11, 2025 (collectively, the "Prior Form 8-Ks"), the Company sold an aggregate of 71,115 shares of Series B non-voting convertible preferred stock, par value $0.0001 per share, of the Company (the "Series B Preferred Stock") to certain investors for a purchase price of $100 per sharein connection with closings (collectively, the "Prior Closings") of a best efforts private placement offering of up to $6,000,000 of shares of Series B Preferred Stock (the "Offering") (subject to a $1,200,000 over-allotment option (the "Over-allotment Option")), with Spartan Capital Securities, LLC ("Spartan") providing placement agent and consulting services in connection therewith.

Final Closing of the Offering

On March 12, 2025, in connection with the final closing of the Offering and exercise by Spartan of the remaining portion of the Over-allotment Option (the "Final Closing"), the Company formally entered into a subscription agreement (the "Subscription Agreement") with an investor (the "Final Closing Investor"), pursuant to which the Company issued and sold to the Final Closing Investor 885 shares of Series B Preferred Stock and received gross proceeds of $88,500. Such shares of Series B Preferred Stock are convertible into 40,596 shares of common stock, par value $0.0001 per share, of the Company (the "Common Stock") at a conversion price of $2.18 per share, subject to customary adjustments, which is equal to the Minimum Price (as defined in Rule 5635(d)(1)(A) of The Nasdaq Stock Market LLC ("Nasdaq")) of the Common Stock immediately prior to the execution of such Subscription Agreement. Other than the conversion price for such shares of Series B Preferred Stock, the Subscription Agreement between the Company and the Final Closing Investor is nearly identical to the subscription agreements that were executed in connection with the Prior Closings. The Company received net proceeds of $73,455 in connection with the Final Closing and currently intends to use all proceeds raised in the Offering for working capital and general corporate purposes. In connection with the Final Closing, the Company and the Final Closing Investor also entered into a registration rights agreement (a "Registration Rights Agreement"), which is nearly identical to the registration rights agreements executed in connection with the Prior Closings. For additional details regarding the terms of the Subscription Agreements and Registration Rights Agreements, please see the Prior Form 8-Ks and the applicable exhibits filed therewith.

In connection with the Final Closing and in accordance with the Spartan Agreements (as defined in the Prior Form 8-Ks), the Company paid Spartan an aggregate of $15,045 in placement agent and consulting fees and issued to Spartan and its designee (i) an aggregate of 10,326 shares of the Company's Series C voting convertible preferred stock, par value $0.0001 per share (the "Series C Preferred Stock"), and (ii) placement agent warrants (the "Placement Agent Warrants") to purchase up to 4,060 shares of Common Stock. Other than the holders, the number of shares and expiration date, the Placement Agent Warrants are nearly identical to the placement agent warrants issued to Spartan in connection with the Prior Closings. Also in connection with the Final Closing, pursuant to that certain irrevocable proxy and power of attorney between Spartan and Jonathan Kaufman, Chief Executive Officer of the Company (the "Irrevocable Proxy"), Spartan agreed to grant to Dr. Kaufman all voting power over and power of attorney with respect to all such shares of Series C Preferred Stock, and all shares of Common Stock issuable upon conversion of such shares or exercise of the Placement Agent Warrants, issued or issuable to Spartan or its Attribution Parties (as defined in the Irrevocable Proxy) in connection with the Final Closing. For additional details regarding the terms of the Irrevocable Proxy, such shares of Series C Preferred Stock and the Placement Agent Warrants, please see the Prior Form 8-Ks and the applicable exhibits filed therewith.

Such shares of Series B Preferred Stock were offered and sold to the Final Closing Investor, and such Placement Agent Warrants and shares of Series C Preferred Stock were issued to Spartan and its designee, as applicable, pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. In connection with the offer, sale and/or issuance of such securities, the Company relied on the written representations of the Final ClosingInvestor, Spartan and its designee, as applicable, that they were each an "accredited investor" as defined in Rule 501(a) of Regulation D. In addition, neither the Company nor anyone acting on its behalf offered or sold such securities by any form of general solicitation or general advertising.