UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(RULE
14a-101)
SCHEDULE
14A INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE
ACT OF 1934
(AMENDMENT
NO. )
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
| ☒ |
Preliminary
Proxy Statement |
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| ☐ |
Confidential,
For Use of the Commission Only (as Permitted by Rule 14a-6(e)(2)) |
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| ☐ |
Definitive
Proxy Statement |
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| ☐ |
Definitive
Additional Materials |
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| ☐ |
Soliciting
Material under §240.14a-12 |
Lipella
Pharmaceuticals Inc.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
| ☒ |
No
fee required |
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| ☐ |
Fee
paid previously with preliminary materials. |
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| ☐ |
Fee
computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11. |
7800
Susquehanna St., Suite 505
Pittsburgh,
PA
(412)
894-1853
Important
Notice Regarding the Availability of Proxy Materials
for
the Special Meeting of Stockholders to Be Held on December 6, 2024
The
Notice of Special Meeting and Proxy Statement
are
available at:
www.proxyvote.com
NOTICE
OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 6, 2024
To
the Stockholders of Lipella Pharmaceuticals Inc.:
NOTICE
IS HEREBY GIVEN that a special meeting of stockholders (the “Special Meeting”) of Lipella Pharmaceuticals Inc.
(the “Company”) will be held online on December 6, 2024 at 2:00 p.m. Eastern Time. The Special Meeting will be a virtual
stockholder meeting, conducted via live audio webcast, through which you can submit questions and vote online. The Special Meeting
can be accessed by visiting www.virtualshareholdermeeting.com/LIPO2024SM and entering your
16-digit control number (included on the proxy card attached to this proxy statement, which is being mailed to stockholders of
record on or about November __, 2024).
The
Special Meeting is being held for the purposes of considering and voting on the following proposals:
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1. |
To
approve, for purposes of Rule 5635(d) of The Nasdaq Stock Market LLC,
the issuance of 20% or more of our outstanding shares of common stock, par value $0.0001 per share, of the Company (the “Common
Stock”) pursuant to a securities purchase agreement entered into in connection with a new equity line of credit transaction (“Proposal
No. 1”); and |
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2. |
To
transact such other business as may properly come before the Special Meeting or any adjournments or postponements thereof. |
The
foregoing items of business are more fully described in the proxy statement (the “Proxy Statement”) that is attached
and made a part of this notice of Special Meeting. Only stockholders of record of the Common Stock at the close of business (5:00
p.m. Eastern Time) on October 28, 2024 will be entitled to notice of, and to vote at, the Special Meeting or any adjournment thereof.
Your vote is important regardless of the number of shares of Common Stock that you own.
The
Board of Directors recommends that you vote “FOR” Proposal No. 1.
All
stockholders who are record or beneficial owners of shares of Common Stock as of the close of business on October 28, 2024 are
cordially invited to attend the virtual Special Meeting. Whether or not you expect to attend the virtual Special Meeting, please
complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope in order to ensure representation
of your shares of Common Stock. It will help in our preparations for the Special Meeting if you would check the box on the form
of proxy if you plan on attending the virtual Special Meeting. Your proxy is revocable in accordance with the procedures set forth
in the Proxy Statement.
Voting
materials, which include this Proxy Statement and the enclosed proxy card, will be first mailed to stockholders on or about November
__, 2024. If you desire to submit your vote via internet or telephone, follow the instructions at www.proxyvote.com and use the
16-digit control number provided in the proxy materials.
If
you hold shares in the name of a brokerage firm, bank, nominee or other institution, you must provide a legal proxy from that
institution in order to vote your shares at the Special Meeting, except as otherwise discussed in the Proxy Statement.
If
you have any questions regarding the Proxy Statement, please call the toll-free number 1-800-690-6903.
All
stockholders are cordially invited to attend the virtual Special Meeting.
| Pittsburgh,
Pennsylvania |
By
Order of the Board of Directors, |
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| __________,
2024 |
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Jonathan
Kaufman |
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President,
Chief Executive Officer and Chairman of the Board |
Important
Notice Regarding the Availability of Proxy Materials for the Special Meeting to be held on December 6, 2024: This notice of
Special Meeting and the Proxy Statement are available at www.proxyvote.com.
TABLE
OF CONTENTS
PROXY
STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
In
this proxy statement (“Proxy Statement”), Lipella Pharmaceuticals Inc., a Delaware corporation, is referred to as
“Lipella,” the “Company,” “we,” “us” and “our.”
Information
Concerning the Proxy Materials and the Special Meeting
Proxies
in the form enclosed with this Proxy Statement are being solicited by our board of directors (the “Board”) for use
at our special meeting of stockholders (the “Special Meeting”) to be held online on December 6, 2024 at 2:00
p.m. Eastern Time. Your vote is very important. For this reason, the Board is requesting that you permit your shares of
common stock, par value $0.0001 per share (the “Common Stock”), to be represented at the Special Meeting by the proxies
named on the enclosed proxy card. This Proxy Statement contains important information for you to consider when deciding how to
vote on the matters brought before the Special Meeting. Please read it carefully.
Voting
materials, which include this Proxy Statement and the enclosed proxy card, will be first mailed to stockholders on or about November
__, 2024. Voting materials, which include this Proxy Statement and the enclosed proxy card, are available at www.proxyvote.com.
Only
stockholders of record of our shares of Common Stock as of the close of business on October 28, 2024 (the “Record Date”)
will be entitled to notice of, and to vote at, the Special Meeting. As of the Record Date, 9,671,636 shares of Common Stock were
issued and outstanding. Stockholders may vote and submit proxy via the internet, by phone, or by signing, dating and returning
a proxy card; however, granting a proxy does not in any way affect a stockholder’s right to attend the Special Meeting and
vote. Any stockholder giving a proxy has the right to revoke that proxy by (i) filing a later-dated proxy or a written notice
of revocation via internet at any time before the original proxy is exercised or (ii) attending the Special Meeting via internet
and voting.
Dr.
Jonathan Kaufman is named as attorney-in-fact in the proxy. Dr. Kaufman is our President and Chief Executive Officer and will
vote all shares represented by properly executed proxies returned in time to be counted at the Special Meeting, as described below
under “Voting Procedures and Vote Required.” Where a vote has been specified in the proxy with respect to the
matters identified in the Notice of the Special Meeting, the shares represented by the proxy will be voted in accordance with
those voting specifications. If no voting instructions are indicated, your shares will be voted as recommended by the Board on
all matters and as the proxy holders may determine in their discretion with respect to any other matters properly presented for
a vote before the Special Meeting.
The stockholders will consider and vote upon
a proposal to approve, for purposes of Rule 5635(d) of The Nasdaq Stock Market LLC (“Nasdaq”), the issuance of 20% or more
of our outstanding shares of Common Stock pursuant to a securities purchase agreement entered into in connection with a new equity line
of credit transaction (the “ELOC”) (“Proposal No. 1”). Stockholders also will consider and act upon such other
business as may properly come before the Special Meeting.
Voting
Procedures and Vote Required
Dr.
Kaufman will vote all shares represented by properly executed proxies returned in time to be counted at the Special Meeting. The
presence, via internet or by proxy, of at least one-third (1/3) of the outstanding shares of Common Stock entitled to vote at
the Special Meeting is necessary to establish a quorum for the transaction of business. Shares represented by proxies which contain
withhold votes or abstention votes, as well as “broker non-vote” shares (described below), are counted as present
for purposes of determining the presence of a quorum for the Special Meeting.
All
properly executed proxies delivered pursuant to this solicitation and not revoked will be voted at the Special Meeting as specified
in such proxies.
Vote
Required for Approval of the Issuance of 20% or More of Our Shares of Common Stock Pursuant to the ELOC (Proposal No. 1).
The Company’s second amended and restated by-laws (the “Bylaws”) provide that, on all matters (other than the
election of directors and except to the extent otherwise required by the Company’s second amended and restated certificate
of incorporation, as amended (the “Certificate of Incorporation”), Bylaws or applicable Delaware law), the affirmative
vote of a majority of the votes cast by holders of the shares of Common Stock present and entitled to vote on the matter will
be required for approval. Accordingly, the affirmative vote of a majority of the votes cast by the holders of shares of Common
Stock present and entitled to vote on the matter will be required to authorize the Board to approve the issuance of 20% or more
of our shares of Common Stock pursuant to the ELOC. Abstentions and broker non-votes, if any, will have no effect on the outcome
of this Proposal No. 1.
If
you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute
“broker non-votes.” Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter
without instructions from the beneficial owner and instructions are not given. Brokers that have not received voting instructions
from their clients cannot vote on their clients’ behalf on “non-routine” proposals. Broker non-votes are not
counted in tabulating the voting result for any particular proposal where the voting standard calls for the approval of “a
majority of the votes cast by holders of shares of Common Stock and entitled to vote on the matter”. However, such shares
that constitute broker non-votes are counted as “shares present” at the Special Meeting for purposes of determining
the presence of a quorum.
The
vote on Proposal No. 1 is considered “non-routine.”
Abstentions
are counted as “shares present” at the Special Meeting for purposes of determining the presence of a quorum but are
not counted where the voting standard for such approval calls for the approval of “a majority of the votes cast by holders
of shares of Common Stock and entitled to vote on the matter,” which is the voting standard for Proposal No. 1.
Votes
at the Special Meeting will be tabulated by one or more inspectors of election appointed by the Chief Executive Officer.
Stockholders
will not be entitled to dissenter’s rights with respect to any matter to be considered at the Special Meeting.
Delivery
of Documents to Stockholders Sharing an Address
The
Company is required to provide a proxy statement to all stockholders of record. If you have more than one account in your name
or at the same address as other stockholders, the Company or your broker may discontinue mailings of multiple copies. If you are
voting by Internet and you wish to receive multiple copies, you may notify us at the address and phone number at the end of the
following paragraph if you are a stockholder of record or notify your broker if you hold through a broker.
Once
you have received notice from your broker or us that they or we will discontinue sending multiple copies to the same address,
you will receive only one copy until you are notified otherwise or until you revoke your consent. If you received only one copy
of this proxy statement and wish to receive a separate copy for each stockholder at your household, or if, at any time, you wish
to resume receiving separate proxy statements, or if you are receiving multiple statements and wish to receive only one, please
notify your broker if your shares are held in a brokerage account or us if you hold registered shares. You can notify us by sending
a written request to Lipella Pharmaceuticals Inc., c/o Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717
or by calling Broadridge at 1-800-690-6903, and we will promptly deliver additional materials as requested.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding the beneficial ownership of our capital stock as of October 31, 2024
by (a) each person, or group of affiliated persons, who is known to us to own beneficially 5% or more of our outstanding voting
securities; (b) each of our directors; (c) each of our named executive officers; and (d) all of our named executive officers and
directors as a group. Except as otherwise indicated in the footnotes below, we believe, based on the information provided to us,
that all persons listed below have sole voting power and investment power with respect to their shares of Common Stock or other
equity securities that they beneficially own, subject to community property laws where applicable.
For
purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of Common
Stock or other equity securities of the Company that such person has the right to acquire within sixty (60) days of October 31,
2024. For purposes of computing the percentage of outstanding shares of our Common Stock or other equity securities of the Company
held by each person or group of persons named above, any shares that such person or persons has the right to acquire within sixty
(60) days of October 31, 2024 is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person. The inclusion herein of any shares of Common Stock or other equity securities of the
Company listed as beneficially owned does not constitute an admission of beneficial ownership.
| Shares
Beneficially Owned |
| |
| Name
of and Address of Beneficial Owner(1)(2): |
|
Shares
of
Common Stock
Beneficially
Owned (3) |
|
|
Percentage
of
Common Stock
Beneficially
Owned (3) |
|
| Directors
and executive officers |
|
|
|
|
|
|
| Jonathan
Kaufman (4) |
|
|
1,698,348 |
|
|
|
16.22 |
% |
| Michael
Chancellor (5) |
|
|
1,677,136 |
|
|
|
16.02 |
% |
| Douglas
Johnston (6) |
|
|
100,000 |
|
|
|
1.02 |
%
|
| Lori
Birder (7) |
|
|
25,000 |
|
|
|
* |
|
| Byong
(Christopher) Kim (8) |
|
|
60,000 |
|
|
|
* |
|
| Ryan
Pruchnic (9) |
|
|
60,000 |
|
|
|
* |
|
| Naoki
Yoshimura (10) |
|
|
64,000 |
|
|
|
* |
|
| Daniel
Cohen (11) |
|
|
50,000 |
|
|
|
* |
|
| All
executive officers and directors as a group (8 persons) |
|
|
3,734,484 |
|
|
|
32.11 |
% |
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|
|
|
|
|
|
|
|
| 5%
or greater stockholders: |
|
|
|
|
|
|
|
|
| Leaf
Huang (12) |
|
|
555,556 |
|
|
|
5.74 |
% |
| Richa
Mishra (13) |
|
|
508,939 |
|
|
|
5.26 |
% |
*
Less than 1%
| (1) |
Except
as otherwise indicated, the persons named in the table above have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them. |
| (2) |
Unless
specified otherwise, the address of each of our directors and executive officers is c/o Lipella Pharmaceuticals Inc., 7800
Susquehanna St., Suite 505, Pittsburgh, Pennsylvania. |
| (3) |
Based
on 9,671,636 shares of Common Stock issued and outstanding as of October 31, 2024. |
| (4) |
Number
of shares of Common Stock beneficially owned consists of (i) 898,849 shares of Common Stock and (ii) 799,499 shares of Common
Stock issuable upon the exercise of stock options held by Dr. Kaufman. Such stock options held by Dr. Kaufman are exercisable
for shares of Common Stock at prices ranging from $0.77 to $5.00 per share. |
| (5) |
Number
of shares of Common Stock beneficially owned consists of (i) 877,637 shares of Common Stock and (ii) 799,499 shares of Common
Stock issuable upon the exercise of stock options held by Dr. Chancellor. Such stock options held by Dr. Chancellor are exercisable
for shares of Common Stock at prices ranging from $0.77 to $5.00 per share. |
| (6) |
Number
of shares of Common Stock beneficially owned consists of 100,000 shares of Common Stock issuable upon the exercise of stock
options held by Mr. Johnston. Such stock options held by Mr. Johnston are exercisable for shares of Common Stock at prices
ranging from $0.77 to $2.19 per share. |
| (7) |
Number
of shares of Common Stock beneficially owned consists of 25,000 shares of Common Stock issuable upon the exercise of stock
options held by Dr. Birder. Such stock options held by Dr. Birder are exercisable for shares of Common Stock at $0.77 per
share. |
| (8) |
Number
of shares of Common Stock beneficially owned consists of 60,000 shares of Common Stock issuable upon the exercise of stock
options held by Dr. Kim. Such stock options held by Dr. Kim are exercisable for shares of Common Stock at prices ranging from
$0.77 to $5.00 per share. |
| (9) |
Number
of shares of Common Stock beneficially owned consists of 60,000 shares of Common Stock issuable upon the exercise of stock
options held by Mr. Pruchnic. Such stock options held by Mr. Pruchnic are exercisable for shares of Common Stock at prices
ranging from $0.77 to $5.00 per share. |
| (10) |
Number
of shares of Common Stock beneficially owned consists of 64,000 shares of Common Stock issuable upon the exercise of stock
options held by Dr. Yoshimura. Such stock options held by Dr. Yoshimura are exercisable for shares of Common Stock at prices
ranging from $0.77 to $5.00 per share. |
| (11) |
Number
of shares of Common Stock beneficially owned consists of 50,000 shares of Common Stock issuable upon the exercise of stock
options held by Mr. Cohen. Such stock options held by Mr. Cohen are exercisable for shares of Common Stock at prices ranging
from $0.77 to $2.19 per share. |
| |
|
| (12) |
Number
of shares of Common Stock beneficially owned is based solely on an Amendment No. 1 to Schedule 13G filed by Leaf Huang with
the U.S. Securities and Exchange Commission (the “SEC”) on January 25, 2024 (the “Huang Schedule 13G”).
In accordance with the disclosures set forth in the Huang Schedule 13G, Mr. Huang reports sole voting and sole dispositive
power over 555,556 shares of Common Stock. Based on the information provided in the Huang Schedule 13G, the address of Mr.
Huang is 4201 Branchwood Dr., Durham, NC 27705. |
(13) |
Based
on information provided from a list of non-objecting beneficial owners list for the Common Stock as of October 31, 2024, such
holder beneficially owns 508,939 shares of Common Stock and such holder’s address is c/o Lipella Pharmaceuticals Inc., 7800
Susquehanna Street, Suite 505, Pittsburgh, PA 15208. |
APPROVAL
OF THE ISSUANCE OF 20% OR MORE OF OUR SHARES OF COMMON STOCK
PURSUANT TO AN EQUITY LINE OF CREDIT TRANSACTION
(Proposal
No. 1)
Summary
The
purpose of this Proposal No. 1 is to obtain the stockholder approval necessary under applicable Nasdaq rules to approve the issuance
of 20% or more of our shares of Common Stock in connection with an ELOC.
General
Information About the ELOC
The Company intends to enter into a securities
purchase agreement (the “Purchase Agreement”) with an institutional investor (the “Investor”), providing for a
committed equity financing facility, pursuant to which, upon the terms and subject to the satisfaction of the conditions contained in
the Purchase Agreement, the Investor will agree to be committed to purchase, at the Company’s direction in its sole discretion,
up to a certain amount of shares of our Common Stock or other securities of the Company (the “Purchase Securities”), subject
to certain limitations set forth in the Purchase Agreement, from time to time during the term thereof (the “Committed Equity Financing”).
However, no assurance at this time can be given that the Company and the Investor will enter into a definitive agreement for a Committed
Equity Financing.
Concurrently with the execution of the Purchase
Agreement, the Company may enter into a registration rights agreement with the Investor (the “Registration Rights Agreement”),
pursuant to which the Company will agree to file with the SEC one or more registration statements, to register under the Securities Act
of 1933, as amended, the offer and resale by the Investor of all of the Purchase Securities that may be issued and sold by the Company
to the Investor from time to time under the Purchase Agreement.
Additionally, as consideration for the Investor’s
irrevocable commitment to purchase shares of Common Stock or other securities of the Company upon the terms of and subject to satisfaction
of the conditions set forth in the Purchase Agreement, concurrently with the execution and delivery of the Purchase Agreement, we may
also issue to the Investor a percentage (between 1% and 3%) of the total ELOC amount payable in either cash, shares of Common Stock or
other securities of the Company. We have not determined the particular terms for such prospective Committed Equity Financing and the Company
may issue shares of Common Stock, other securities of the Company, and/or any combination thereof pursuant to the Purchase Agreement in
connection with a Committed Equity Financing. Because we may take actions and seek additional capital that triggers the requirements of
Nasdaq Rule 5635(d), we are seeking stockholder approval now, so that we will be able to move quickly to take full advantage of any opportunities
that may develop.
The proposed Committed Equity Financing will
occur, if at all, approximately three (3) months after the date of the Special Meeting, unless a shorter time is required by Nasdaq.
Nasdaq
Marketplace Requirements and the Necessity of Stockholder Approval
Our
Common Stock is listed on the Nasdaq Capital Market and, as such, we are subject to the Nasdaq rules. Nasdaq Rule 5635(d) requires
the Company to obtain stockholder approval prior to the issuance of shares of Common Stock in connection with certain non-public
offerings involving the sale, issuance or potential issuance by the Company of shares of Common Stock (and/or securities convertible
into or exercisable for shares of Common Stock) equal to 20% or more of the shares of Common Stock outstanding prior to such issuance
where the price of the Common Stock to be issued is below the “Minimum Price.” The “Minimum Price” is
defined as a price equal to the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding
the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of the common stock (as reflected on Nasdaq.com)
for the five trading days immediately preceding the signing of the binding agreement. Shares of common stock issuable upon the
exercise or conversion of warrants, options, debt instruments, preferred stock or other equity securities issued or granted in
such non-public offerings will be considered shares issued in such a transaction in determining whether the 20% limit has been
reached, except in certain circumstances such as issuing warrants that are not exercisable for a minimum of six months and have
an exercise price that exceeds market value.
We would not issue or sell any shares of Common Stock or other securities of the Company, and the Investor would not purchase or
acquire any such shares of Common Stock or other Company securities pursuant to the Purchase Agreement, to the extent that after giving
effect thereto, the aggregate number of shares of Common Stock that would be issued pursuant to the Purchase Agreement and the transactions
contemplated thereby would exceed an amount of shares of Common Stock representing 19.99% of the shares of Common Stock issued and outstanding
immediately prior to the execution of the Purchase Agreement (the number of shares which may be issued without violating the applicable
Nasdaq rules, the “Exchange Cap”), unless the Company’s stockholders have approved the issuance of Common Stock in
excess of the Exchange Cap in accordance with the applicable Nasdaq rules. The Company anticipates that the issuance of all shares of
Common Stock or other Company securities in connection with the ELOC would require stockholder approval.
Purpose
of the ELOC
As previously disclosed in the Current Report on Form 8-K filed by the Company with the SEC on August
23, 2024, the Company received a letter from the Nasdaq Listing Qualifications staff of Nasdaq (the “Staff”) on August
21, 2024 stating that it was not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires companies listed on the Nasdaq
Capital Market to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing (the “Stockholders’
Equity Requirement”). The Company reported stockholders’ equity of $1,703,798 in its Quarterly Report on Form 10-Q
for the quarter ended June 30, 2024, and, as a result, it was not in compliance with the Stockholders’ Equity Requirement.
As previously disclosed in the Current Report on Form 8-K filed by the Company with the SEC on October 18, 2024, the Staff notified
the Company on October 16, 2024 that it would delist the Common Stock from the Nasdaq Capital Market, and in response, the Company
timely requested an appeal of such notice to a Nasdaq hearing panel (the “Panel”). The Nasdaq hearing date has been
set for December 12, 2024. While the appeal process is pending, the suspension of trading of the Common Stock on the Nasdaq Capital
Market will be stayed until the hearing process concludes and the Panel issues a decision. The Company is diligently working to
regain compliance with the Stockholders’ Equity Requirement, and the Company intends to effect the contemplated Committed
Equity Financing in order to assist it with regaining compliance with such requirement. However, no assurance at this time can
be given that the Company and the Investor will enter into a definitive agreement. We will use the proceeds, if any, from the proposed
Committed Equity Financing to implement our business strategy, to enhance our overall capitalization, and for working capital.
The
Board has considered the potential harm to the Company and its stockholders should Nasdaq delist our Common Stock from the Nasdaq
Capital Market based on any failure to comply with the Stockholders’ Equity Requirement. Delisting our Common Stock could
adversely affect the liquidity of our Common Stock because alternatives, such as the OTC Bulletin Board, OTC Markets and the Pink
Sheets, on which our Common Stock may be quoted are generally considered to be less efficient markets. An investor likely would
find it less convenient to sell, or to obtain accurate quotations in seeking to buy our Common Stock on an over-the-counter market.
Many investors likely would not buy or sell our Common Stock due to difficulty in accessing over-the-counter markets, policies
preventing them from trading in securities not listed on a national exchange or other reasons. The Board believes that the proposed
Committed Equity Financing will be an effective means to assist the Company with regaining compliance with the Stockholders’
Equity Requirement.
What
is the Effect on Current Stockholders if Proposal No. 1 is Approved?
If our stockholders approve this proposal, we
will be able to eliminate the Exchange Cap in the Purchase Agreement and therefore have the option to issue the maximum number of shares
of Common Stock or other securities of the Company issuable under the Purchase Agreement which would potentially exceed 19.99% of our
issued and outstanding shares of Common Stock as of the date we execute the Purchase Agreement. This will allow the Company flexibility
in accessing the ELOC to regain and maintain compliance with the Stockholders’ Equity Requirement and continue to pursue its business
growth.
If stockholders approve Proposal No. 1, the rights
or privileges of our existing stockholders will not be affected, except that the economic and voting interests of each of our existing
stockholders will be significantly diluted should we choose to require the Investor to purchase those shares pursuant to the Purchase
Agreement. Although the number of shares of our Common Stock that our existing stockholders own will not decrease, the shares of our
Common Stock owned by our existing stockholders may represent a smaller percentage of our total outstanding shares of our Common Stock
after any such issuance. The issuance of shares of Common Stock or other securities of the Company in connection with the ELOC
could have an anti-takeover effect. Such issuance could dilute the voting power of a person seeking control of the Company, thereby deterring
or rendering more difficult a merger, tender offer, proxy contest, election of members to the Board or an extraordinary corporate transaction
opposed by the Company.
What
is the Effect on Current Stockholders if the Proposal No. 1 is NOT approved?
If our stockholders do not approve this Proposal No. 1, we may be limited in the amount of money we can draw down on ELOC pursuant
to the Purchase Agreement and more importantly, we face an increased risk of delisting from the Nasdaq Capital Market if we do not otherwise
find an effective means to assist us with regaining compliance with the Stockholders’ Equity Requirement. In addition, if the Company
is limited in the number of shares of Common Stock or other securities of the Company that it can issue under the ELOC, dilution to stockholders
will be limited and have the effect of limiting the Company’s growth potential with no additional capital.
Vote
Required and Recommendation of the Board
The
Bylaws provide that, on all matters (other than the election of directors and except to the extent otherwise required by the Certificate
of Incorporation, the Bylaws or applicable Delaware law), the affirmative vote of a majority of the votes cast by holders of the
shares of Common Stock present and entitled to vote on the matter will be required for approval. Accordingly, the affirmative
vote of a majority of the votes cast by the holders of shares of Common Stock present and entitled to vote on the matter will
be required to approve the issuance of 20% or more of our shares of Common Stock in connection with the ELOC.
Abstentions
will be counted for purposes of determining the presence or absence of a quorum but will not be counted as votes cast and therefore
will not be counted for purposes of determining whether Proposal No. 1 has been approved. Since broker non-votes are not entitled
to vote on Proposal No. 1, broker non-votes, if any, will be counted for purposes of determining the presence or absence of a
quorum but will not be counted for purposes of determining whether Proposal No. 1 has been approved.
At
the Special Meeting a vote will be taken on a proposal to approve the issuance of 20% or more of our shares of Common Stock in
connection with the ELOC.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE APPROVAL OF THE ISSUANCE OF 20% OR MORE OF OUR SHARES OF
COMMON STOCK IN CONNECTION WITH THE ELOC.
EXPENSES
AND SOLICITATION
We
will bear the costs of printing and mailing proxies if such proxies are physically mailed to our stockholders. In addition to
soliciting stockholders by mail or through our regular employees, we may request banks, brokers and other custodians, nominees
and fiduciaries to solicit their customers who have shares of our Common Stock registered in the name of a nominee and, if so,
will reimburse such banks, brokers and other custodians, nominees and fiduciaries for their reasonable out-of-pocket costs. Solicitation
by our officers and employees may also be made of some stockholders following the original solicitation.
OTHER
BUSINESS
Other
Matters Brought Before the Meeting
The
Board knows of no other items that are likely to be brought before the Special Meeting except those that are set forth in the
Notice of the Special Meeting. If any other matters properly come before the Special Meeting, the persons designated on the enclosed
proxy will vote in accordance with their judgment on such matters.
ADDITIONAL
INFORMATION
Stockholders
Entitled to Vote
The
Common Stock is the only class of voting securities outstanding and entitled to vote at the Special Meeting. As of 5:00 p.m. Eastern
Time on the Record Date, 9,671,636 shares of Common Stock, were outstanding and entitled to vote. Each share is entitled to one
vote on each matter.
How
to Vote
Your
vote is very important no matter how many shares of Common Stock you own. Whether or not you plan to attend the virtual Special
Meeting live via the Internet at www.virtualshareholdermeeting.com/LIPO2024SM, we urge you to vote your shares of Common Stock today.
Instructions
regarding each method of voting are provided in the proxy materials and stockholders can access proxy materials and vote at www.proxyvote.com.
If you desire to submit your vote via internet or telephone, or if you desire to submit questions while connected to the Special
Meeting on the Internet, follow the instructions at www.proxyvote.com and use the 16-digit control number included in the enclosed
proxy card mailed to you.
If
You Are a Registered Holder of Common Stock
If
you are a registered holder of shares of Common Stock, you may vote such shares either by voting by proxy in advance of the Special
Meeting or by voting at the virtual Special Meeting while connected to the virtual Special Meeting on the internet. By submitting
a proxy (on a proxy card or in the manner provided in the proxy materials), you are legally authorizing another person to vote
your shares on your behalf. If you submit your executed proxy card or submit a proxy in the manner provided in the proxy materials,
unless you direct otherwise, your shares will be voted in accordance with the Board’s recommendations set forth in this
Proxy Statement, and if any other matters are brought before the Special Meeting (other than the proposals contained in this Proxy
Statement), then the individual(s) listed on the proxy will have the authority to vote your shares on those other matters in accordance
with their discretion and judgment.
In
the event that a quorum is not present at the Special Meeting, the chairman of the Special Meeting or the holders of a majority
of the voting power of the shares of Common Stock present at the Special Meeting or represented by proxy, and cast at the Special
Meeting, may adjourn the Special Meeting (without notice other than announcement of adjournment at the Special Meeting) to another
time or to another time and place.
Whether
or not you plan to attend the virtual Special Meeting, we urge you to promptly vote over the internet, by mail or by telephone
in the manner provided on the website listed in the proxy materials or by completing and returning a proxy card. If you later
decide to vote while connected to the Special Meeting on the internet, the vote you cast at the virtual Special Meeting will automatically
revoke any previously submitted proxy.
Revocability
of Proxies
Any
stockholder may revoke a submitted proxy by (i) filing a later-dated proxy or a written notice of revocation via internet at any
time before the original proxy is exercised or (ii) attending the Special Meeting via internet and voting.
Please
note, however, that only your last dated proxy will be counted, and any proxy may be revoked at any time prior to its exercise
at the Special Meeting, as described in this Proxy Statement.
If
your shares of Common Stock are held in the name of a brokerage firm, bank, nominee or other institution, and you have instructed
your brokerage firm, bank, nominee or other institution to vote such shares, you must follow the instructions received from your
brokerage firm, bank, nominee or other institution to change your voting instruction. Please contact your custodian for detailed
instructions on how to revoke your voting instruction and the applicable deadlines.
Information
Regarding the Company
Our
principal executive offices are located at 7800 Susquehanna St., Suite 505, Pittsburgh, PA.
The
Company’s website address, www.lipella.com, is included in this Proxy Statement as a textual reference only, and the information
in the Company’s website is not incorporated by reference into this Proxy Statement.
Notice
Regarding the Availability of Proxy Materials
Voting
materials, which include this Proxy Statement and the enclosed proxy card, will be first mailed to stockholders on or about November
___, 2024.
Proxies
may be solicited by directors, executive officers, and other employees of the Company in person or by telephone or mail only for
use at the Special Meeting or any adjournment thereof. The Company has retained Broadridge Financial Solutions to assist with
the solicitation of proxies for a project management fee of
$8,000, plus reimbursement for out-of-pocket expenses. All solicitation costs will be
borne by the Company.
| __________,
2024 |
By
Order of the Board of Directors, |
| |
|
| |
|
| |
Jonathan
Kaufman |
| |
President,
Chief Executive Officer and Chairman of the Board |
| |
 |
|
LIPELLA
PHARMACEUTICALS INC.
7800
SUSQUEHANNA ST., SUITE 505
PITTSBURGH,
PA 15208 |
VOTE
BY INTERNET
Before
The Meeting - Go to www.proxyvote.com or scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern
Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow
the instructions to obtain your records and to create an electronic voting instruction form.
During
The Meeting - Go to www.virtualshareholdermeeting.com/LIPO2024SM
You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked
by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off
date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE
BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
|
|
|
|
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
|
|
|
|
|
|
V59330-TBD |
KEEP THIS PORTION FOR YOUR RECORDS |
|
DETACH AND RETURN THIS PORTION ONLY |
| THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
LIPELLA PHARMACEUTICALS INC.
| The Board of Directors recommends
you vote FOR the following proposal: |
For |
Against |
Abstain |
| 1. | To
approve, for purposes of Rule 5635(d) of The Nasdaq Stock Market LLC, the issuance of
20% or more of our outstanding shares of common stock, par value $0.0001 per share, of
the Company pursuant to a securities purchase agreement entered into in connection
with a new equity line of credit transaction. |
☐ |
☐ |
☐ |
NOTE:
Such other business as may properly come before the meeting or any adjournment thereof.
| Please sign
exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full
title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in
full corporate or partnership name by authorized officer. |
|
| |
|
| |
|
| Signature
[PLEASE SIGN WITHIN BOX] |
Date |
| |
|
| |
|
Signature
(Joint Owners)
|
Date |
Important
Notice Regarding the Availability of Proxy Materials for the Special Meeting of
Stockholders to be held on December 6, 2024 at 2:00
p.m. ET:
The Notice of Proxy Statement is available at: www.proxyvote.com
V59331-TBD
LIPELLA
PHARMACEUTICALS INC.
SPECIAL MEETING OF STOCKHOLDERS
December 6, 2024 at 2:00 p.m. Eastern Time
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
stockholder(s) hereby appoint(s) Dr. Jonathan Kaufman, as proxy, with the power to appoint his substitute, and hereby authorize(s)
him to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of Lipella Pharmaceuticals
Inc. that the stockholder(s) is/are entitled to vote at the Special Meeting of Stockholders to be held at 2:00 p.m. Eastern Time,
on December 6, 2024, virtually at www.virtualshareholdermeeting.com/LIPO2024SM, and any adjournment or postponement thereof.
This
proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted
in accordance with the Board of Directors' recommendations.
Continued
and to be signed on reverse side
Lipella Pharmaceuticals (NASDAQ:LIPO)
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